I am an economist at the Ifo Institute in Munich, Germany and I recently graduated from the University of Munich. My research focuses on issues related to international trade, migration, and international finance. From January to March 2017 I am visiting the Yale School of Management and in September 2017 I will join the Economics Department at the University of Oslo.
I obtained my undergraduate education from Tuebingen University, Germany. In the course of my graduate studies I visited Stanford University and the University of Colorado at Boulder.
Firms facing uncertain demand at the time of production expose their shareholders to volatile returns. Risk-averse investors trading multiple assets will favor stocks that tend to yield high returns in bad times, that is, when the marginal utility of consumption is high. In this paper, I develop a firm-level gravity model of trade with risk-averse investors to show that firms seeking to maximize their present value will take into account that shareholders discount expected profits depending on the correlation with their expected marginal utility of consumption. The model predicts that, ceteris paribus, firms sell more to markets where profits covary less with the income of their investors. This holds true even in the presence of complete and internationally integrated financial markets. To test the model's prediction, I use data on stock returns to estimate correlations between demand growth in export markets and expected marginal utility growth of U.S. investors. I then show that the pattern of U.S. exports across destination markets and time is consistent with the predictions of my model. I conclude that by maximizing shareholder value, exporters are actively engaged in global risk sharing. PDF
We introduce horizontal skill differentiation among workers into a standard monopolistic competition model of trade. We show that with a non-convex technology this leads to monopsony power on the labor market as well as to endogenous average productivity through matching of workers to firms with different skill requirements. We assume translog preferences and a ''labor only'' technology, and we focus on a symmetric equilibrium. Trade induces firm exit, thus aggravating the wage distortion from monopsony power on the labor market as well as lowering the average quality of matches between firms and workers. The gains from trade theorem survives, but welfare is non-monotonic in the level of real trade costs and trade increases wage inequality. Opening borders to international migration leads to two-way migration between similar countries. Migration leads to firm entry and an increase in the average quality of matches between firms, with an ambiguous effect on wage inequality. A "trade cum migration" equilibrium is welfare-superior to "free trade only" equilibrium, and welfare is monotonically increasing with lower real migration costs. PDF
Fragmentation of the global value chain makes it difficult to assess the effects of trade liberalization on the global pattern of production. Gross bilateral trade flows no longer reveal a country's or a sector's value added contribution. Yet, it is value added that matters for employment and welfare. We derive a structural equation for value added trade flows and theory-based measures for production networks from a multi-sector gravity model with inter-sectoral linkages to analyze the effects of trade liberalization in the presence of globally fragmented value chains. We estimate the model's key parameters, calibrate it to the year 2000 using the World Input-Output Database, and perform a counterfactual analysis of China's WTO accession. We find that China's WTO entry accounts for about 45% of the decrease in China's value added exports to exports ratio and for about 7% of the decline in this figure on the world level as observed between 2000 and 2007. Furthermore, our results imply that China's WTO accession was the driving force behind the strengthening of production networks with its neighbors and led to significant welfare gains for China, Australia, and the proximate Asian economies. [Most recent version] [CESifo Working Paper No. 6062, 2016] R&R Journal of International Economics.
The European Union is the world's largest and deepest free trade zone. Amongst its members, it has abolished tariffs and lowered non-tariff barriers. This has led to trade creation within Europe and to trade diversion between EU countries and outsiders. The Transatlantic Trade and Investment Partnership TTIP (or other trade agreements with third countries) will undo some of these effects by means of preference erosion, so that cross-country trade links within Europe may lose relative prominence at the expense of additional trade with the US. However, the presence of a rich fabric of regional value chains in Europe and substantial income effects could counter this development. In this paper, we provide insights based on a New Quantitative Trade Model. We show that TTIP could indeed lower trade integration in Europe since predicted income effects turn out not to be large enough to overcome the effects of preference erosion. Moreover, trade diversion effects in value added terms tend to be even more pronounced than in gross (official) trade flows. However, there is substantial heterogeneity across sectors and countries. To avoid the political costs associated with weaker intra-EU ties, Europe should deepen the single market alongside the formation of large trade agreements with outsiders. Jahrbücher für Nationalökonomie und Statistik / Journal of Economics and Statistics, 236(6), 2016, 639–664. [ifo Working Paper No. 220, 2016]
Since July 2013, the EU and the United States have been negotiating a preferential trade agreement, the Transatlantic Trade and Investment Partnership (TTIP). We use a multi-country, multi-industry Ricardian trade model with national and international input-output linkages to quantify its potential economic consequences. We structurally estimate the model's unobserved parameters and the effect of existing preferential trade agreements on trade cost. With those estimates in hand, we simulate the trade, value added, and welfare effects of the TTIP, assuming that the agreement would eliminate all transatlantic tariffs and reduce non-tariff barriers as other deep PTAs have done in the past. We find a long-run increase of real income of .4% for the EU, by .5% for the United States, and by -.02% for the rest of the world relative to the status quo. However, there is substantial heterogeneity across the 140 geographical entities that we investigate. Gross value of EU-US trade is predicted to increase by 50%, but the content of EU and US value added would decrease, signaling a deepening of the transatlantic production network. Moreover, we quantify trade diversion effects on third countries and find that those are less severe for value added trade than for gross trade. This highlights the importance of global value chains in understanding the effects of the TTIP on outsiders and the global economy. [ifo Working Paper No. 219, 2016]
This paper updates the results presented in Going Deep: The Trade and Welfare Effects of TTIP, with R. Aichele and G. Felbermayr. [CESifo Working Paper No. 5150, 2014]
Many countries offer state credit guarantee programs to improve access to finance for exporting firms. In the case of Germany, accumulated returns to the scheme deriving from risk-compensating premia have outweighed accumulated losses over the past 60 years. Why do private financial agents not step in? We build a simple model with heterogeneous firms that rationalizes demand for state guarantees with specific cost advantages of the government. We test the model's predictions with detailed firm-level data and find supportive evidence: State credit guarantees in Germany increase firms' exports. This effect is stronger for firms that are dependent on external finance, if the value at risk is large, and at times when refinancing conditions are tight. [CESifo Working Paper No. 5176, 2015]
Reportedly, firms often find it impossible to finance large and long-term projects despite positive net present values. Should governments step in and can their assistance be effective? This paper studies the case of public export credit guarantees in Germany. Covering the default risk of exporters' foreign customers, the policy is supposed to enable funding of international business opportunities that would otherwise remain unexploited. Using German firm-level data covering the universe of publicly insured firms for the years 2000 to 2010, this study tests for the causal effect of guarantees on sales and employment. It employs a difference-in-differences strategy combined with a matching approach, to create an appropriate control group of untreated firms. It finds that guarantees increase firm-level sales and employment on average by about 4.5 and 3.0 percentage points, respectively. During the financial crisis of 2008/09, effects turn out larger. These findings suggest the presence of credit constraints and provide an argument justifying the observed government intervention. [CESifo Working Paper No. 3908, 2012]