Does Where You are From Affect How You Land? Evidence from Land Transactions of Chinese Manufacturers, Applied Economics Letters (2019) : 1-8.
Abstract: Leveraging the unique matched land transaction and firm survey data, we empirically examine if firm ownership will affect the access to land factor for Chinese manufacturers. The state-owned firms display no advantage in paying less when acquiring land, while it is more costly for foreign-owned firms. Consistent with this finding, we find land acquisitions for foreign-owned firms are more likely to take place via the non-market based transaction in the early stage of China's land market reform with the goal of eliminating corruption. The research suggests that potential land miss-allocation (if any) could be resulted from "tax" to the foreign firm rather than "subsidy" to state-owned firms.
Misallocation in Chinese Land Market, 2019. (R&R at Canadian Journal of Economics)
Abstract: We quantify the welfare losses of land market frictions in China by proposing a spatial equilibrium model where heterogeneous firms in a variety of sectors choose their locations across regions with costly trade, labor migration frictions, and land distortions. We match land transaction and firm-level survey data to estimate land distortions for firms. Misallocation arises because similar firms are faced with various land prices, which effectively preventing more productive firms to choose bigger cities where they could benefit from agglomeration forces and access to higher productivity. Our framework incorporating land market frictions could explain the undersized cities in China. Our estimates suggest large negative effects of land policies on the economic welfare in China. Further counterfactual exercise indicates that land reforms conducted together with labor migration reforms in China could generate larger welfare gains and smaller regional inequality at the same time.
Real Effective Exchange Rate and Trade Balance Adjustment: The Case of Turkey, with Plamen Iossifov, IMF Working Paper No. 19/131.
IMF WP Version
Abstract: There is an ongoing debate on whether there is a disconnect between the large, postcrisis, foreign exchange rate movements and global trade flows. The question has important policy implications for the role of exchange rates in growth and restoring external balances. As a large emerging market with sizeable external imbalances and large swings of the real effective exchange rate (REER), Turkey is a good case study on the topic. Our findings chime with the WEO (2015) results that the link between REER and trade flows is alive and well, though we also uncover important structural breaks. Interestingly, the trade balance appears to have become more responsive to the REER in recent large depreciation episodes.
Trade Liberalization and Structural Changes: Prefecture-level Evidence from China.
Abstract: Notable heterogeneity regarding international trade freeness and level of development across different regions with significant cross-provincial migration has been a prominent feature in contemporary China. This paper studies the particular role of international trade in the structural transformation of each region in China. Combining several databases, I find that there exhibits a non-monotone, hump-shaped relationship between international trade freeness and prefecture-level manufacture labor share in China. I rationalize this stylized fact in a spatial equilibrium model with multi-region, multi-sector, costly trade and endogenous allocation of labor, capital, and land. The analysis highlights the role of internal geography in the international trade's impact of shaping the structural changes.