Importing, Exporting, and Firms’ Productivity Evolution in China (Job Market Paper)
Firms display remarkable persistence in exporting and importing status. However, export and import status do not overlap perfectly, as some exporters do not import while some importers do not export. Motivated by these facts, I develop a dynamic discrete choice model of a firm's decision to import and export. A firm needs to pay sunk costs to initiate an activity or fixed costs to maintain that activity, anticipating that decision would impact its future productivity and expected revenue. Estimating the model for a range of Chinese industries, I find that both activities benefit a firm's future productivity. Then, I investigate the impact of trade liberalization and government subsidy policies on firms' importing and exporting behavior using the estimated model. A simulation of market expansion raises both exporting and importing participation rates and generates a modest increase in mean productivity. Subsidizing either the sunk costs or the fixed costs of one activity raises the activity's participation rate while discouraging the other activity. However, subsidizing the fixed costs of exporting generates a larger increase in total foreign market revenue compared to subsidizing the sunk costs of exporting.
Trade Policy Uncertainty and Manufacturing Employment Growth in China (draft available upon request)
This paper links the grant of permanent normal trade relations (PNTR) status to China by the U.S. Congress in 2000 to manufacturing employment evolution in China from 1998 to 2007. Generalized difference-in-difference estimates show that Chinese manufacturing industries with high-NTR gaps see a greater employment increase than industries with low-NTR gaps after the grant of PNTR. Possible mechanisms include that more firms enter the ordinary exporting market, foreign firms invest more, and exports grow more to the U.S. than to the rest of the world in high-NTR gap industries after PNTR.
Quantile house price indices in Beijing (with Lei Zhang ), Regional Science and Urban Economics 63, 85-96 (2017).
Using a comprehensive micro-level dataset of newly-built residential housing units in Beijing, we examine the determinants of house prices from 2013 to 2015, and construct a regular house price index using Ordinary Least Squares estimation and quantile house price indices using quantile regression. Our findings suggest a high appreciation rate of house prices from 2013 to 2015. Moreover, we find that most housing attributes are valued differently across the complete distribution of house prices, and the distribution of house prices changes according to the different value of housing attributes. The result shows that even though the trend of house price indices is similar, the magnitude of appreciation rates vary across different quantiles.
What contributes to the rising house prices in Beijing? A decomposition approach (with Lei Zhang ), Journal of Housing Economics 41, 72-84 (2018).
The average real house price in Beijing rose by roughly 41.8% between 2012 and 2015, and the appreciation differs across low- versus high-priced homes. The rising house price might be caused by changes in the characteristics of housing units, and it might also be induced by the changing returns to housing characteristics in the underlying hedonic price functions. In this paper, we use a comprehensive housing transaction dataset and analyze the changes in the distribution of house prices over time through a decomposition approach. The result of Oaxaca-Blinder mean decomposition suggests that the proportion of the price gap between 2012 and 2015 due to altered returns over time is greater than the proportion caused by changes in housing characteristics. The quantile decomposition shows that the decomposition effects are heterogenous across the complete distribution of house prices. We also find that low-priced homeowners are exposed to a decline in house prices, while there are deteriorating housing conditions from 2012 to 2015. The high-priced homeowners experience an improvement in living conditions, but a rise in house prices.
India’s Weak Links to America’s Supply Chains (with Mary Lovely ), PIIE Briefing 20-2, 27-46 (2020).
This chapter assesses the potential for Indian merchandise exports to displace Chinese merchandise exports to the United States given current conditions. The assessment is based on a comparison of current US trade and investment patterns with the two countries. A main conclusion drawn from the data is that the profile of Indian exports to the United States differs systematically from that of China, limiting Indian capacity to seize an advantage in the sectors dominated by multinational supply chains. Although India has steadily reduced trade and investment barriers, the flow of inward foreign investment has grown slowly. American multinational enterprise activity in India is skewed away from manufacturing, in contrast to US investment in China. While India’s services sector, particularly in information, telecommunications, and other high-technology sectors has drawn foreign investment, manufacturing has lagged. Accordingly, despite the opportunity presented by the US-China trade war, India is not yet poised to supplant China in American supply chains. Indeed, collapsing world trade and supply chain retrenchment due to the global pandemic now pose additional challenges for India’s attempts to expand its manufacturing sector.
The Return to Protectionism in The Presence of Supply Chains (with Mary Lovely and David Xu)
Innovation, Trade, and Dynamic Firm Productivity: Evidence from China (joint with Mengxiao Liu and Luhang Wang), 2020
Improving Subway Access, Rising Ticket Price, and Residential Property Values in Beijing, China, 2018.
Merging PATSTAT with S&P Capital IQ: An Application of Machine Learning Algorithm (joint with Mengxiao Liu ), 2019.