Refereed Publications:

Working Papers:

Abstract:  We provide a unified framework to quantify the cross-country and cross-sector interactions between trade, innovation and knowledge spillovers. We study the effect of trade liberalization in a  multi-country and multi-sector endogenous growth model in which comparative advantage and the stock of knowledge are endogenously determined by innovation and knowledge spillovers.  A reduction in trade costs induces a reallocation of innovation and comparative advantage across sectors, which translates into higher growth in the counterfactual balanced growth path (BGP). Welfare gains from trade are significantly larger than in static models of trade.  Heterogeneous knowledge spillovers generate dispersion in comparative advantage, becoming additional sources of growth and welfare. 

Abstract:  This paper provides an empirical investigation on whether trade costs in prime export sectors can explain current account dynamics in a sample of around 40 countries for the period 1970-2014.  By imposing a parsimonious structure of trade, we first  infer comparative advantages and trade costs, by sector, from a gravity framework. We then construct a measure of  effective trade costs---that is, trade costs weighted by sectoral comparative advantage---to gauge the height of a country's overall trade costs. Results reveal that, although higher effective exporting costs are associated with lower current account balances, the impact of those costs is quantitatively limited; furthermore, the effective costs of importing often have no statistically significant effect. While the average effect of exporting costs tend to be small, it is sizable for some countries, such as the United States. Overall, effective trade costs have contributed little to the global imbalances.

Abstract: This paper examines whether the rapidly growing firm patenting activity in China is associated with real economic outcomes by building a unique dataset uniting detailed firm balance sheet information with firm patent data for the period 1998-2007. We find strong evidence that within-firm increases in patent stock are associated with increases in firm size, export, and more importantly, firm productivity and new product revenue share. Event studies of initial patent applications, using first-time patentees as the treatment group, and nonpatenting firms---selected based on the Propensity-Score Matching method---as the control group, also generate similar findings. State-owned enterprises have higher productivity-patenting elasticities than private firms. Changes in productivity associated with patenting, however, should not be interpreted as being caused by patenting, as our instrumental variable analysis does not indicate that patenting has a significant effect on productivity.

Abstract: This paper studies how the composition of knowledge, in addition to the amount of knowledge capital, a country possesses matters for development. We develop a multi-sector model of innovation, trade and growth, in which sectors differ in terms of their knowledge applicability in innovation in other sectors. The model describes how countries allocate R&D in different sectors and how the endogenous cross-country variations in knowledge composition matters for income difference. It yields new insights that trade costs—besides reducing trade volume— impede aggregate innovation efficiency through the within-country allocation of R&D towards sectors with lower knowledge applicability, demonstrating a “composition effect”. We construct measures quantifying the sector-specific knowledge applicability using cross-sector patent citations. Based on this index, we present cross-country evidence that supports the model’s main implications: (a) countries that are more geographically remote tend to export disproportionately less in highly applicable sectors; (b) the “applicability bias” of a country’s knowledge structure is positively associated with its income level.

Work in Progress
  • "The Granularity of Corporate Saving" with Mai Dao, Isabel Hanisch, Callum Jones, 2018.
  • "Predicting Sudden Stops: A Machine Learning Analysis" with Suman Basu, Roberto Perrelli and Weining Xin, 2018
  • "Learning about Structural Reforms" with Chris Papageorgiou, Tong Xu and Tao Zha, 2018. 
  • "Fear of Floating and Product Structure" with Chuan Li, 2016.
  • "Large and Persistent Current Account Surpluses and Their Reversals" with Emine Boz, 2017.

Other Writings

Comments and Discussions

  • Discussion of "Technology Shocks: Novel Implications for International Business Cycles"  by Andrea Raffo, NBER Summer Institute IFM, July 2009

  • Discussion of "Capital Obsolescence and Agricultural Productivity" by Julieta Caunedo and Elisa Keller, 2nd Workshop on Macroeconomic Policy and Income Inequality, IMF, Oct 2015

  • Discussion of "Firm Entry and Regional growth Disparities: the Effect of SOEs in China" by Loren Brandt, Gueorgui Kambourov and Kjetil Storelsetten, 1st IMF-Atlanta Fed Joint Workshop on China's Economy, May 2016.