Working papers

Privatization Reform and Trade Liberalization in China: A Quantitative Analysis (JMP) [Link]

Earlier draft presented at: 2022 SEA 92rd Annual Conference, 2022 WEAI 97th Annual Conference.

Abstract: While previous research has explored the effects of privatization reform and trade liberalization on domestic markets, there remains a need for a thorough explanation of the interaction between these reforms and the underlying mechanisms.  To address this gap, I utilize a heterogeneous firms model that incorporates both private-owned enterprises and state-owned enterprises, and construct a privatization index that captures the degree of privatization in China.  I show that privatization reform also elicits a pro-competitive effect, similar to trade liberalization, which augments competition within domestic markets and boosts export performances. Using a merged Chinese data set, I estimate the privatization index and trade cost across different periods between 1998 and 2007. Counterfactual analysis indicates that, in the absence of privatization reforms, productivity growth from trade liberalization would have been 60 percent weaker and the percentage of export revenue would have been 12 percent lower. This examination also proposes that the government can counteract short-term decreases in consumer surplus and industrial labor outflows caused by domestic privatization reform by committing to trade liberalization, which provides an additional channel for gains from trade.

Quantifying U.S. GATT Trade Liberalization    (with Kristy Buzard and Ross Jestrab) [Link]

Earlier draft presented at: 2023 Mid-West Trade Conference, 2021 SEA 91st Annual Conference,  2021 Canadian Economic Association Meetings 

Abstract: Large-scale tariff reductions within the framework of the General Agreement on Tariffs and Trade (GATT) have come as a result of a series of eight rounds of negotiations that began in 1947. Bown and Irwin (2017) have documented the available data---all applied tariffs---and found it to be frustratingly sparse. Somewhat surprisingly, data on the tariff commitments made by the GATT signees has not been widely available, preventing empirical studies on the workings of the GATT and the dynamics of this important episode of trade liberalization. We have located, digitized and concorded both U.S. tariff commitments at product level from 1930 through the first round of GATT negotiation at Geneva in 1947. Crucially, by merging with another set of digitized the import data of the universe of product imported by the U.S. government, we are able to calculate the ad valorem equivalent tariffs to construct the panel. We summarize this rich data and demonstrate the interesting patterns that emerge across time and industries. Further, using this novel data set, we test the Terms-of-Trade theory in this ideal setting of a large country moving from unilateral non-cooperative tariff setting to cooperative tariff setting. We found strong and robust evidence of the Terms-of-Trade theory. In additional, our results suggest that the bilateral agreements and unilateral tariff reduction caps are also important in understanding the formation of multilateral trade agreements.