I am a Ph.D. candidate in Economics at the University of Minnesota, Twin Cities. My areas of interest are Macroeconomics, Firm Dynamics, Industrial Organization, and Public Finance.
I will join the School of Economics at the University of Kent as a Lecturer in the Fall 2021.
[Aggregate Implications of Merger Policy] (Job Market Paper)
To what degree, should antitrust agencies allow firms to merge? While this question has been frequently investigated, lifecycle of industries has been often neglected in the context. To take into account the importance of lifecycle consideration in merger analysis, we build a multi-industry macroeconomic model with oligopolistic competition. The model captures a typical lifecycle of industries: an industry starts with a few firms, then have many firms, and experiences a drop in the number of firms, and a smaller number of firms survive. When the industry is old, merger is detrimental to consumers because it allows firms to obtain large market power and limit production. On the other hand, merger opportunities induce entry at the early stage of an industry lifecycle. Death and birth of industries generate heterogeneity of industries in terms of age. Since households consumer goods from industries some of which are young and others of which are old, they care about outputs from both young and old industries. If merger analysis of industries is conducted at later periods of the lifecycle, when antitrust issues are typically recognized, the antitrust authority finds tougher regulation is more favorable than households do, leading bias towards older industries.
Taxation of Paid- and Self-Employment (joint with Anmol Bhandari and Ellen McGrattan)
We compute optimal tax rates on income from paid- and self-employment and find estimates for both that are much lower than current estimates of marginal labor tax rates in the United States. This finding is based on a model of occupational choice with labor inputs allocated to production and to the building of business sweat capital—brands, customer bases, client lists and other intangible assets. With greater opportunities to substitute across sectors and activities, taxes become more distortionary and optimal tax rates will in general be lower. Our model incorporates an additional role for tax policy to induce a better allocation of hours, with more hours employed in the diversified C-corporate sector relative to the undiversified private business sector. Furthermore, at an optimum, those that choose self-employment are highly productive owners with significant sweat capital.
Oligopoly and Effiencies (joint with Erzo G.J. Luttmer)
We describe a model of long-run growth with a growing measure of industries, and discrete numbers of differentiated goods within each industry. A pioneer entrepreneur can start a new industry by creating an initial prototype blueprint and an industry-specific fixed asset. In every industry, this asset can be combined with labor to create blueprints for new differentiated goods in the same industry. In addition, blueprints in a particular industry can also be combined with labor to produce blueprints for new differentiated goods in the same industry. Given the right blueprint, the technology for producing a particular differentiated good is linear in labor only. A Roy model governs the supplies of entrepreneurial activity and labor. Household preferences imply a constant elasticity of substitution between differentiated goods within an industry that is strictly larger than the constant elasticity of substitution across the composite goods produced by the various industries. In the allocation chosen by a social planner, new industries grow towards stochastic steady states that have more variety when the gap between these two elasticities is small. Long-run growth is governed by population growth and the elasticity of substitution across industries only. Within-industry variety only affects the level of the balanced growth path. When households do not value leisure, the allocation chosen by the social planner can be implemented by assigning both the initial prototype blueprint and the industry-specific fixed asset to the pioneer entrepreneur, who then acts as a monopolistic competitor with producers in other industries. Alternative market arrangements produce the same long-run growth rate, but balanced growth paths may differ quite significantly in terms of levels. In particular, we consider a strong antitrust policy that enables entry into existing industries by assigning the industry-specific fixed asset to households and forcing incumbents to spin off any blueprints above a low threshold. This policy closely approximates the allocation chosen by the planner if the supply elasticity of entrepreneurial activity is zero. When this elasticity is positive, the antitrust regime produces too few industries and too many varieties within industries. The cost in terms of steady state consumption can be large when there is a substantial gap between the within and across-industry elasticities of substitution.