Research

This paper studies the drivers of the US real exchange rate (RER), with a particular focus on its comovement with net trade (NT) flows. We consider the entire spectrum of frequencies, as the low-frequency variation accounts for 61 and 64 percent of the unconditional variance of the RER and NT, respectively. We develop a generalization of the standard international business cycle model that successfully rationalizes the joint dynamics of the RER and NT while accounting for the major puzzles of the RER. We find that, while financial shocks are necessary to capture high frequency variation in RER, trade shocks are essential for the lower frequency fluctuations.

Formerly circulated as "Rising Current Account Dispersion: Financial or Trade Integration?"

We study the reasons for the large, coincident increases in unbalanced international trade and overall trade from 1970 to 2019. We show that these two salient features--a rise in net and gross international trade--are largely a consequence of a reduction in intratemporal trade barriers rather than a substantial reduction in the frictions on intertemporal trade or greater asymmetries in business cycles. Beyond explaining changes in the distribution of gross and net trade, the decline in intratemporal trade frictions is consistent with a fall in the dispersion across countries in other key macro time series, including the real exchange rate, terms of trade, export-import ratio, relative spending, and relative GDP. 

From aggregate bilateral trade data, recent studies have found that U.S. tariff increases during the U.S.-China trade war were entirely passed on to U.S. importers. Using confidential data from U.S. Census, we show that the pass-through on U.S. importers is incomplete at the disaggregated firm-product-country level. In order to reconcile the discrepancy at different levels of aggregation, we consider the firm and product heterogeneity in various aspects: sourcing countries, number of imported varieties, import intensity from China, inventories, upstreamness, order frequency, etc. [Result disclosures coming soon]

This paper studies the dynamic effect of the Free Trade Agreement with Korea, exploiting cross-state variation in the United States. A key feature is a theoretically sound measure of regional exposure, which considers three different margins of trade. This approach yields more precise and intuitive estimates. For instance, improved access to export markets, equivalent to a 1 percentage point tariff cut, results in a 0.37 percentage point increase in GDP by the 12th quarter, whereas reduced protection from foreign competition is associated with a 0.48 percentage point decrease in GDP. The impact of cheaper access to imported inputs is found to be negligible. Additionally, I find that the changes are primarily driven by the expansion of the labor force and population, rather than by changes in the employment rate. The results suggest that the effects of trade take time to materialize and that regional mobility is crucial.