Research

Money and Bannking, Financial Economics, Macroeconomics

"Macroeconomic Implications of Bank Loan Commitments,"  [pdf]

     Abstract: This paper analyzes how bank loan commitments affect loan supply and macroeconomic volatility. Using testable implications derived from a model in which a bank faces stochastic loan commitment takedown, our bank-level empirical test provides evidence that when financial markets get tighter, increased loan takedown crowds out loans made without commitment, implying asymmetric effects depending on the relative access to loan commitments and ordinary term loans. At the state level, we find macroeconomic volatility tends to rise as market-wide liquidity dries up and loan commitments tend to stabilize the economy by partially offsetting negative liquidity shocks. This evidence adds support to the financial market explanation for the causes of increased stability of the U.S. economy from the early 1980s.

"Does Monetary Policy Help Least Those Who Need It Most?"        

with Eric Hurst (Chicago GSB) and Michael Hanson (Wesleyan), presented in NBER Summer Institute 2004, (revise and resumit)

     Abstract: We estimate the impact of U.S. monetary policy on the cross-sectional distribution of state economic activity for a 35-year panel. Our results indicate that the effects of policy have a significant history dependence, in that relatively slow growth regions contract more following contractionarymonetary shocks. Moreover, policy is asymmetric, in that expansionary shocks have less of a beneficial impact upon relatively slow growth areas. As a result, we conclude that monetary policy on average widens the dispersion of growth rates among U.S. states, and those locations initially at the low end of the cross-sectional distribution benefit least from any given change inmonetary policy.

Applied Econometrics/Econometrics

"Modal Choice in Product Shipments: Analysis of Non-Public Census Micro Data,"

with Gale Boyd, Marianne Mintz and Anant Vyas (Argonne National Laboratory), Presented at TRB (Transportation Research Board) Commodity Flow Survery Conference, Boston, 2005

    Abstract: Modal choice of product shipments has changed in the last 20-25 years, which has implications for the shipping sector, transportation patterns, energy use, and pollution. However, the aggregate data is insufficient to isolate the combined effects of the shipper-specific, i.e. the establishment the shipment originated from, and shipment-specific, i.e. the shipment characteristics in terms of size, distance, and value of the item shipped, on mode choice. We use novel data by linking the raw, non-public shipments data from CFS (Commodity Flow Survey) to the corresponding establishments data from CM (Census of Manufacturing). Multinomial logit analysis reveals that the value-to-weight relationship can explain a lot of observed product-specific differences, which were regarded as industry-specific effects in the aggregate data.

Other Personal Interest: Social Mobility, Education, Public Policy

    Abstract: The effect of genetic inheritance on income distribution and social mobility is analyzed using the model of Becker and Tomes (1979) and the simplified version of Benabou (2001). Epstein-Zin style utility function is used to highlight the role of risk aversion. The result shows that higher genetic inheritability leads to lower per capita income, higher income variance and lower aggregate welfare at the steady state. This tendency is intensified when the elasticity of child's income to parent's educational investment is higher. In this setup, it is shown that progressive income tax can be a welfare-enhancing tool by increasing social mobility. The optimal progressive income tax rate is obtained in the benchmark model and its positive effect is discussed in the context of 'veil of ignorance,' a concept proposed by Rawls (1971).