Research
Job Market Paper (New)
"Incumbent's Advantage and the Decline of the Entry Rate" (April 2022) (Slides / Recording) ─ presented at: UCSC Brown Bag, Wisconsin Macro Brown Bag, WEAI, MEA, AMES, CMES, ESEM, KER-KAEA
[Previously titled: "Selective Accumulation of Ideas: Accounting for the Decline in Entry Rate and Productivity Growth"]
This paper studies the role of the incumbent's advantage for explaining the decline in the entry rate of new firms. I define the incumbent's advantage in a dynamic sense, which captures the relative speed of improvement between incumbents and potential entrants. While greater incumbent's advantage implies a faster decline of the entry rate, zero incumbent's advantage still implies a declining entry rate due to the "accumulation effect." The incumbent's advantage can be estimated using aggregate level employment data by the firm's entry cohort, at both the industry level and the aggregate level. In the U.S. over the past 40 years, the incumbent's advantage in the aggregate has been slightly negative, which I attribute to the expanding set of industries such as the IT industry.
Publications
"The Uncovered Interest Parity Puzzle, Exchange Rate Forecasting, and Taylor Rules" (with Charles Engel, Chang Liu, Chenxin Liu, and Steve Pak Yeung Wu) Journal of International Money and Finance 95, July 2019, 317-331.
In the recent periods, high U.S. inflation forecasts dollar appreciation, while interest differentials lose forecasting power on exchange rates. A simple NK model with liquidity shocks in addition to monetary shocks can potentially account for this empirical finding.
Working Papers
"Offshoring and Segregation by Skill: Theory and Evidence" (June 2022, with Gueyon Kim and Dario Pozzoli)
We study the labor market consequences of offshoring through the lens of a matching model. Offshoring is modeled as an increase in the pool of workers available for matching with domestic firms, induced by a decrease in the fixed cost of offshoring. The model yields predictions for matching, reallocation, and inequality across occupations with different degrees of offshorability. We use the Danish employer-employee matched data together with the newly constructed skill measures based on textual analysis to test the model predictions.
"Optimal Monetary Policy in an Open Economy with Shocks to UIP" (June 2020)
This paper studies optimal cooperative monetary policy in a two-country New Keynesian model with shocks to UIP (uncovered interest parity) condition. Optimal monetary policy can improve efficiency by reducing the distortions in output at the expense of a modest increase in price dispersion.
Work in Progress
"The Impact of Import Competition on Marketing and Innovation" (with Gueyon Kim)
"Intergenerational Occupational Mobility and Trade" (with Steven Durlauf, Gueyon Kim, and Xi Song)
"Incumbent's Advantage and the Decline of the Entry Rate" (April 2022) (Slides / Recording) ─ presented at: UCSC Brown Bag, Wisconsin Macro Brown Bag, WEAI, MEA, AMES, CMES, ESEM, KER-KAEA
[Previously titled: "Selective Accumulation of Ideas: Accounting for the Decline in Entry Rate and Productivity Growth"]
This paper studies the role of the incumbent's advantage for explaining the decline in the entry rate of new firms. I define the incumbent's advantage in a dynamic sense, which captures the relative speed of improvement between incumbents and potential entrants. While greater incumbent's advantage implies a faster decline of the entry rate, zero incumbent's advantage still implies a declining entry rate due to the "accumulation effect." The incumbent's advantage can be estimated using aggregate level employment data by the firm's entry cohort, at both the industry level and the aggregate level. In the U.S. over the past 40 years, the incumbent's advantage in the aggregate has been slightly negative, which I attribute to the expanding set of industries such as the IT industry.
Publications
"The Uncovered Interest Parity Puzzle, Exchange Rate Forecasting, and Taylor Rules" (with Charles Engel, Chang Liu, Chenxin Liu, and Steve Pak Yeung Wu) Journal of International Money and Finance 95, July 2019, 317-331.
In the recent periods, high U.S. inflation forecasts dollar appreciation, while interest differentials lose forecasting power on exchange rates. A simple NK model with liquidity shocks in addition to monetary shocks can potentially account for this empirical finding.
Working Papers
"Offshoring and Segregation by Skill: Theory and Evidence" (June 2022, with Gueyon Kim and Dario Pozzoli)
We study the labor market consequences of offshoring through the lens of a matching model. Offshoring is modeled as an increase in the pool of workers available for matching with domestic firms, induced by a decrease in the fixed cost of offshoring. The model yields predictions for matching, reallocation, and inequality across occupations with different degrees of offshorability. We use the Danish employer-employee matched data together with the newly constructed skill measures based on textual analysis to test the model predictions.
"Optimal Monetary Policy in an Open Economy with Shocks to UIP" (June 2020)
This paper studies optimal cooperative monetary policy in a two-country New Keynesian model with shocks to UIP (uncovered interest parity) condition. Optimal monetary policy can improve efficiency by reducing the distortions in output at the expense of a modest increase in price dispersion.
Work in Progress
"The Impact of Import Competition on Marketing and Innovation" (with Gueyon Kim)
"Intergenerational Occupational Mobility and Trade" (with Steven Durlauf, Gueyon Kim, and Xi Song)