Department of Economics
Cambridge, MA 02138
NBER Program Affiliations:
NBER Affiliation: Faculty Research Fellow
NBER Working Papers and Publications
|October 2018||Linear IV Regression Estimators for Structural Dynamic Discrete Choice Models|
with Paul T. Scott, Eduardo Souza-Rodrigues: w25134
In structural dynamic discrete choice models, the presence of serially correlated unobserved states and state variables that are measured with error may lead to biased parameter estimates and misleading inference. In this paper, we show that instrumental variables can address these issues, as long as measurement problems involve state variables that evolve exogenously from the perspective of individual agents (i.e., market-level states). We define a class of linear instrumental variables estimators that rely on Euler equations expressed in terms of conditional choice probabilities (ECCP estimators). These estimators do not require observing or modeling the agent’s entire information set, nor solving or simulating a dynamic program. As such, they are simple to implement and computationally ...
|July 2017||Geography, Search Frictions and Endogenous Trade Costs|
with Giulia Brancaccio, Theodore Papageorgiou: w23581
In this paper we study the role of the transportation sector in world trade. We build a spatial model that centers on the interaction of the market for (oceanic) transportation services and the market for world trade in goods. The model delivers equilibrium trade flows, as well as equilibrium trade costs (shipping prices). Using detailed data on vessel movements and shipping prices, we document novel facts about shipping patterns; we then flexibly estimate our model. We use this setup to demonstrate that the transportation sector (i) implies that net exporters (importers) face higher (lower) trade costs leading to misallocation of productive activities across countries; (ii) creates network effects in trade costs; and (iii) dampens the impact of shocks on trade flows. These three mechanism...
|September 2015||Identification of Counterfactuals in Dynamic Discrete Choice Models|
with Paul T. Scott, Eduardo Souza-Rodrigues: w21527
Dynamic discrete choice models (DDC) are not identified nonparametrically. However, the non-identification of DDC models does not necessarily imply non-identification of counterfactuals of interest. Using a novel approach that can accommodate both nonparametric and restricted payoff functions, we provide necessary and sufficient conditions for the identification of counterfactual behavior and welfare for a broad class of counterfactuals. The conditions are simple to check and can be applied to virtually all counterfactuals in the DDC literature. To explore the robustness of counterfactual results to model restrictions in practice, we consider a numerical example of a monopolist's entry problem, as well as an empirical model of agricultural land use. In each case, we provide examples of bot...
|May 2014||Detection and Impact of Industrial Subsidies: The Case of World Shipbuilding|
This paper provides a model-based empirical strategy to, (i) detect the presence and gauge the magnitude of government subsidies and (ii) quantify their impact on production reallocation across countries, industry prices, costs and consumer surplus. I construct and estimate an industry model that allows for dynamic agents in both demand and supply and apply my strategy to world shipbuilding, a classic target of industrial policy. I find strong evidence consistent with China having intervened and reducing shipyard costs by 13-20%, corresponding to 1:5 to 4:5 billion US dollars, between 2006 and 2012. The subsidies led to substantial reallocation of ship production across the world, with Japan, in particular, losing significant market share. They also misaligned costs and production, while l...