Buera F J, Hopenhayn H, Shin Y, et al. Big Push in Distorted Economies[R]. National Bureau of Economic Research, 2021.
Abstract: Why don"t poor countries adopt more productive technologies? Is there a role for policies that coordinate technology adoption? To answer these questions, we develop a quantitative model that features complementarity in firms" technology adoption decisions: The gains from adoption are larger when more firms adopt. When this complementarity is strong, multiple equilibria and hence coordination failures are possible. More important, even without equilibrium multiplicity, the model elements responsible for the complementarity can substantially amplify the effect of distortions and policies. In what we call the Big Push region, the impact of idiosyncratic distortions is over three times larger than in models without such complementarity. This amplification enables our model to nearly fully account for the income gap between India and the US without coordination failures playing a role.2
Gaubert C, Itskhoki O, Vogler M. Government Policies in a Granular Global Economy[R]. National Bureau of Economic Research, 2021.
Abstract: We use the granular model of international trade developed in Gaubert and Itskhoki (2020) to study the rationale and implications of three types of government interventions typically targeted at large individual firms -- antitrust, trade and industrial policies. We find that in antitrust regulation, governments face an incentive to be overly lenient in accepting mergers of large domestic firms, which acts akin to beggar-thy-neighbor trade policy in sectors with strong comparative advantage. In trade policy, targeting large individual foreign exporters rather than entire sectors is desirable from the point of view of a national government. Doing so minimizes the pass-through of import tariffs into domestic consumer prices, placing a greater portion of the burden on foreign producers. Finally, we show that subsidizing `national champions" is generally suboptimal in closed economies as it leads to an excessive build-up of market power, but it may become unilaterally welfare improving in open economies. We contrast unilaterally optimal policies with the coordinated global optimal policy and emphasize the need for international policy cooperation in these domains.3
Peters M. Market size and spatial growth-Evidence from Germany’s post-war population expulsions[J]. 2019.
Revise and resubmit, Econometrica
Abstract: Can increases in the size of the local workforce raise productivity and spur economic development? This paper uses a particular historical episode to study this question empirically. After the Second World War, between 1945 and 1948, about 8m Ethnic Germans were expelled from their domiciles in Middle and Eastern Europe and transferred to Western Germany. At the time, this inflow amounted to almost 20% of the Western German population. Using variation across counties I show that refugee inflows are positively correlated with income per capita and manufacturing employment. Importantly, the long-run effects are much larger than the short-run effects. I show that these findings are quantitatively consistent with a parsimonious model of spatial growth. The model makes tight predictions on the spatial distribution of economic activity in the long-run and shows that the productivity effects of a shock to the local population can build up slowly if labor mobility is limited. The theory also shows that the spatial distribution of economic activity is stationary if and only if growth is semi-endogeneous. When calibrated to the empirical estimates, the model implies that the inflow of refugees increased aggregate income per capita by 7% after 15 years.4
Cagé J, Hervé N, Viaud M L. The production of information in an online world[J]. The Review of Economic Studies, 2020.
Abstract: News production requires investment, and competitors’ ability to appropriate a story may reduce a media’s incentives to provide original content. Yet, there is little legal protection of intellectual property rights in online news production, which raises the issue of the extent of copying online and the incentives to provide original content. In this article, we build a unique >5
Klein P, Ventura G. Taxation, expenditures and the Irish miracle[J]. Journal of Monetary Economics, 2021.
Abstract: We examine the role of fiscal policy in accounting for the remarkable rise of Ireland from one of Western Europe’s poorest countries to one of its richest in just a few years. We focus on the importance of business tax reform and overall changes in fiscal policy, in conjunction with other factors, which we model as a residual rise in Total Factor Productivity (TFP). We conduct our analysis using a two-sector, small open economy model where production requires tangible and intangible capital services, and where inflows of capital are limited by a collateral constraint (disciplined to account for the GNP to GDP gap). We find that the much discussed reductions of business taxes played a significant, but secondary, role in the Irish miracle. However, tax reform and other changes strongly reinforce each other. We also find that Ireland’s openness to capital movements was crucial: under the same driving forces, a closed economy would have experienced a significantly smaller rise in GDP.