Working Papers

Carbon Taxes and Misallocation in Chile with Pete Klenow and Ernesto Pasten, August 2024.

We examine the impact of carbon taxes on aggregate output, productivity and consumption in inefficient economies, focusing on Chile. We find that a unilateral carbon tax could improve allocative efficiency by reallocating inputs from low-quality, low-markup firms to high-quality, high-markup firms, ultimately increasing consumption and welfare.

The Aggregate Importance of Intermediate Input Substitutability with Alessandra Peter, September 2022. NBER Working Paper 31233

Revise and Resubmit at Econometrica.

Young Economist Award, European Economic Association Conference 2019. Media Coverage: The Economist

We estimate long-run elasticities of substitution between intermediate inputs for Indian manufacturing plants using India's trade liberalization for identification. We find a high degree of substitutability at the plant-level between 8 broad categories of material inputs, significantly above the Cobb-Douglas benchmark of 1; intermediates and value added as well as energy, materials, and services are complements even in the long run.

Distribution Costs with Alessandra Peter, May 2022.

Revise and Resubmit at American Economic Journal: Macroeconomics.

Distribution expenses incurred by Indian manufacturing firms are large -- over half of labor costs; disproportionately higher for larger firms and declined by one third between 2000 and 2010. Through the lens of a quantitative model, improvements in the distribution sector over that time lead to consumption gains of 41%.

Published and Forthcoming Papers

Worker Mobility in Production Networks, with Marvin Cardoza, Francesco Grigoli and Nicola Pierri, July 2024. STEG Working Paper WP066

accepted at review of economic studies.

Media Coverage: VoxDev

We show that production networks play an essential role in the job search and matching process using administrative data for the Dominican Republic. One in five workers who change firm move to a buyer or supplier of their original employer---significantly more than predicted by standard labor market characteristics. These moves are associated with a persistent earnings premium. Survey evidence points to supply chain-specific human capital and better information about job applicants as the main reasons for hiring within the supply chain.

China’s Declining Business Dynamism with Diego A. Cerdeiro, August 2024.

CANADIAN JOURNAL OF ECONOMICS, Vol. 57, Issue 3, August 2024, 726-752.

Covered in China: IMF 2021 Article IV Staff Report and Selected Issues

We document new stylized facts showing that the business dynamism of Chinese manufacturing firms declined between 2003 and 2018. Lower life-cycle productivity growth of young firms reduces manufacturing productivity growth by 0.8 percentage points annually, and worsening allocative efficiency of capital between young and old firms reduced manufacturing TFP by 1.25 percent between the early 2000s and late 2010s.

Informality and Aggregate Productivity: The Case of Mexico, with Jorge Alvarez.

European Economic Review.167, August 2024.

We develop and estimate a quantitative model to analyze the aggregate productivity consequences of informality in Mexico. We document a high and rising share of large informal firms between 1998 and 2013. We find that the factors most important for the decline in aggregate productivity were not important drivers of the increase in informality, and conversely, the factors most important for the increase in informality had little impact on aggregate productivity.

Misallocation or Mismeasurement? with Mark Bils & Pete Klenow. (Slides) (Online Appendix)

Journal of Monetary Economics 124, November 2021, 39-56.

We propose a way to estimate the gaps in true marginal products in the presence of measurement error. For Indian manufacturing from 1985 to 2013, our correction lowers potential gains from reallocation by 20%. For the U.S. the effect is even more dramatic, reducing potential gains by 60% and eliminating 2/3 of a severe downward trend in allocative efficiency over 1978 to 2013.

Discussions

Misallocation in Firm Production: A Nonparametric Analysis Using Procurement Lotteries by Paul Carrillo, Dave Donaldson, Dina Pomeranz and Monica Singhal,

NBER Summer Institute, Macroeconomics and Productivity, July 2023.

Annual Meeting of the CEPR Macroeconomics and Growth Programme joint with STEG, November 2022.

Unreliable Firms: Evidence from Rwanda by Vishan Nigam and Brandon Tan, North East Universities Development Consortium, 2021.

Measuring Cross-Country Differences in Misallocation by Martin Rotemberg and T. Kirk White, 2020 ASSA/SGE Sessions, January 2020.

Good Dispersion, Bad Dispersion by Matthias Kehrig and Nicolas Vincent, 2nd IMF Annual Macro-Financial Research Conference, April 2019.

Reports, Policy Contributions and Other Publications

A User Manual for the DIGNAD Toolkit, IMF Technical Note and Manual, June 2023. Link to DIGNAD Toolkit.

External Sector Impact of Disaster Shocks, Box in IMF External Sector Report Chapter 1, August 2022.

Building Resilience to Natural Disasters and Climate Change: A Model Application to Timor-Leste, SI, Timor-Leste IMF Country Report 308, September 2022.

China: 2021 Article IV Consultation Staff Report, IMF Country Report 021, 2022.

Resource Misallocation Among Listed Firms in China: The Evolving Role of State-Owned Enterprises, IMF Working Paper, No. 2021/075.

Chinese State-Owned Enterprises, Resource (Mis)allocation, and Productivity, Selected Issues, China IMF Country Report 006, 2021.

China: 2020 Article IV Consultation Staff Report, IMF Country Report 006, 2021.

Reigniting Growth in Emerging Market and Low-Income Economies: What Role for Structural Reforms?, IMF, World Economic Outlook, Chapter 3, October 2019.

Is Misallocation Really Mismeasurement? When Models Meet the Micro Data, in IMF Research Perspectives, Vol. 20, No. 1, Spring/Summer 2019.

Dormant Papers

The Industrial Revolution and Irish Manufacturing Quality. (Slides)

In this paper I present empirical evidence from an industrial exhibition in Ireland as to the geographic distribution of the quality of Irish manufactured products in 1883. My main finding is that manufacturers from the north-east were on average producing higher quality products than those from other parts of the country. This finding is consistent with the fact that Irish industrialization between 1850 and 1900 was mostly confined to the north-east of Ireland. Further research into the evolution of Irish manufacturing activity may help discriminate between existing theories explaining the localized industrialization which characterized Ireland in the 19th century.