Working Papers
Quantitative trade with ships, with Inga Heiland and Hendrik Mahlkow. Forthcoming.
Abstract: Recent shocks to global shipping reveal that the impact on trade flows depends crucially on the characteristics of vessels used for transportation. Yet vessel heterogeneity and their substitutability within the merchant fleet remains a largely unexplored margin of adjustment. We therefore construct a comprehensive dataset linking US bill of lading records with ship registry and AIS port call data, which allows us to track the changing composition of vessels serving US imports across products, origins, and carriers. Using these data, we document novel stylized facts on vessel switching, the long-run shipbuilding specialization of countries and the composition of fleets serving different country pairs. Exploiting the 2016 Panama Canal expansion as a quasi-natural experiment, we further provide the first direct estimate for the elasticity of substitution across vessels. Building on this empirical evidence, we introduce endogenous vessel choice to a benchmark quantitative general equilibrium trade model that features multiple transport modes and a global market for shipping services. The model provides a tractable framework to quantify the trade and welfare implications of two recent policy proposals that target specific ship categories, namely, fees for Chinese-built vessels entering US ports and the inclusion of the maritime transport sector in the EU Emission Trading System. Simulations reveal that both policies generate significant global spillovers through adjustments in shipping prices and vessel allocation across routes.
Renminbi rising? Exporters' response to China's currency internationalization. DIW Berlin Discussion Paper 2085, 2024. (Revise and resubmit at IMF Economic Review)
Abstract: This paper investigates the heterogeneous responses of exporters to policy reforms undertaken by the People’s Bank of China to internationalize the Renminbi (RMB). Using detailed customs data from France for the initial years of these reforms (2011-2017), it documents several novel stylized facts on RMB adoption, highlighting both the growth and extreme skewness in RMB’s uptake across firms and varieties. It further examines various mechanisms underpinning self-selection into RMB and proposes a novel channel that strongly predicts RMB adoption. This channel exploits information on firms’ invoicing currency strategies in existing markets and is observed to be a valid instrument for RMB adoption. Leveraging this new instrument, the paper shows that RMB adoption was accompanied by higher prices, suggesting that firms charged a premium to buyers for the reduction in transaction frictions and exchange rate uncertainty.
Publications
Brothers in arms: The value of coalitions in sanctions regimes, with Julian Hinz, Katrin Kamin and Joschka Wanner. Economic Policy, Volume 39, Issue 118, April 2024, Pages 471–512.
Abstract: This paper examines the impact of coalitions on the economic costs of the 2012 Iran and 2014 Russia sanctions. By estimating and simulating a quantitative general equilibrium trade model under different coalition setups, we (i) dissect welfare losses for sanctions senders and target; (ii) compare prospective coalition partners and; (iii) provide bounds for the sanctions potential — the maximum welfare change attainable — when sanctions are scaled vertically, i.e. with measures deepening up to an embargo, and horizontally, i.e. with coalitions expanding up to a global regime. To gauge the significance of simulation outcomes, we implement a Bayesian bootstrap procedure that generates confidence bands. Relative to unilateral action, we find that coalitions magnify welfare losses imposed while their impact on domestic welfare loss incurred depends on the design and sectoral dimension of sanctions. Hypothetical cooperation of large developing economies such as China additionally raises the deterrent force of coalitions. Finally, we quantify transfers that equalise welfare losses across coalition members to further demonstrate asymmetries in the relative economic burden of sanctions.
Trade Liberalization along the Firm Size Distribution: The Case of the EU-South Korea FTA, with Gabriel Felbermayr. Review of International Economics, 2023.
Abstract: Leading theories suggest that amongst continuing exporters, lower variable trade costs should boost exports of smaller firms by the same or greater percentage rate than larger firms. However, investigating the impact of the deep EU-South Korea FTA with French customs data, we find robust evidence to the contrary. Applying a triple-difference framework, we report that the FTA increased sales in the top quartile of continuous exporters by 71.5% points more than in the bottom quartile. More than 90% of that growth premium is driven by reductions in NTBs. These findings suggest an additional channel driving the distributional effects of FTAs.
Après-ski: The Spread of Coronavirus from Ischgl through Germany, with Gabriel Felbermayr and Julian Hinz. German Economic Review, 2021.
Abstract: The Austrian ski resort of Ischgl is commonly claimed to be ground zero for the diffusion of the SARS-CoV-2 virus in the first wave of infections experienced by Germany. Drawing on data for 401 German counties, we find that conditional on geographical latitude and testing behavior by health authorities, road distance to Ischgl is indeed an important predictor of infection cases, but – in line with expectations – not of fatality rates. Were all German counties located as far from Ischgl as the most distant county of Vorpommern-Rügen, Germany would have seen about 45 % fewer COVID-19 cases. A simple diffusion model predicts that the absolute value of the distance-to-Ischgl elasticity should fall over time when inter- and intra-county mobility are unrestricted. We test this hypothesis and conclude that the German lockdown measures have halted the spread of the virus.