Search Results
Working Paper
Financial Frictions and International Trade
This paper reviews recent studies on the impact of financial frictions on international trade. We first present evidence on the relation between measures of access to external finance and export decisions. We then present an analytical framework to analyze the impact of financial frictions on firms' export decisions. Finally, we review recent applications of this framework to investigate the impact of financial frictions on international trade dynamics across firms, industries, and in the aggregate. We discuss related empirical, theoretical, and quantitative studies throughout.
Working Paper
Shortages of Critical Goods in a Global Economy: Optimal Trade and Industrial Policy
This paper studies the role for optimal trade and industrial policy to mitigate shortages of critical goods following global shocks. We develop a dynamic model of trade with producers of essential and non-essential goods owned by heterogeneous households under incomplete markets. Shocks that increase global demand for critical goods lead to underinvestment relative to an economy with a representative household or complete markets. Trade exacerbates the shock as producers reallocate domestic sales toward exports. Shortages can be mitigated, increasing welfare, by taxing exports while ...
Working Paper
Financial Development and International Trade
This paper studies the industry-level and aggregate implications of financial development on international trade. I set up a multi-industry general equilibrium model of international trade with input-output linkages and heterogeneous firms subject to financial frictions. Industries differ in capital-intensity, which leads to differences in external finance dependence. The model is parameterized to match key features of firm-level data. Financial development leads to substantial reallocation of international trade shares from labor- to capital-intensive industries, with minor effects at the ...
Working Paper
Navigating the Waves of Global Shipping: Drivers and Aggregate Implications
This paper studies the drivers of global shipping dynamics and their aggregate implications. We document novel evidence on the dynamics of global shipping supply, demand, and prices. Motivated by this evidence, we set up a multi-country dynamic model of international trade with a global shipping market where shipping companies and importers endogenously determine shipping supply and prices. We find the model can successfully account for the dynamics of global shipping observed in the aftermath of COVID-19 and that accounting for these has important implications for the dynamics of aggregate ...
Working Paper
International Trade and Intertemporal Substitution
This paper quantitatively investigates the extent to which variation in the intertemporal marginal rate of substitution can help account for puzzling features of cyclical fluctuations of international trade volumes. Our insight is that, because international trade is time-intensive, variation in the rate at which agents are willing to substitute across time affects how trade volumes respond to changes in output and prices. We use a standard small open economy model with time-intensive international trade, calibrated to match key features of U.S. data and disciplining the variation in the ...
Working Paper
Artificial Intelligence and Inflation Forecasts
We explore the ability of Large Language Models (LLMs) to produce in-sample conditional inflation forecasts during the 2019-2023 period. We use a leading LLM (Google AI's PaLM) to produce distributions of conditional forecasts at different horizons and compare these forecasts to those of a leading source, the Survey of Professional Forecasters (SPF). We find that LLM forecasts generate lower mean-squared errors overall in most years, and at almost all horizons. LLM forecasts exhibit slower reversion to the 2% inflation anchor.
Journal Article
Artificial Intelligence and Inflation Forecasts
We explore the ability of large language models (LLMs) to produce in-sample conditional inflation forecasts during the 2019–23 period. We use a leading LLM (Google AI’s PaLM) to produce distributions of conditional forecasts at different horizons and compare these forecasts to those of a leading source, the Survey of Professional Forecasters (SPF). We find that LLM forecasts generate lower mean-squared errors overall in most years and at almost all horizons. LLM forecasts exhibit slower reversion to the 2 percent inflation anchor.
The Allocation of Immigrant Talent across Countries: Employment Gaps
A cross-country analysis found immigrants were more likely than natives to work in fields like food service and less likely to be in fields like engineering.
Journal Article
International Trade Dependence and Inventory Dynamics
US manufacturers that source their intermediate inputs from abroad have been more likely to increase their inventories in the aftermath of unexpected events and heightened uncertainty.
Working Paper
The Allocation of Immigrant Talent: Macroeconomic Implications for the U.S. and Across Countries
We quantify the labor market barriers that immigrants face, using an occupational choice model with natives and immigrants of multiple types subject to wedges that distort their allocations. We find sizable output gains from removing immigrant wedges in the U.S., representing 25% of immigrants' overall economic contribution, and that these wedges alter the impact of alternative immigration policies. We harmonize microdata across 19 economies and exploit cross-country variation in immigrant outcomes and estimated wedges to examine the drivers of differences in wedges and gains from their ...