Papers Containing Keywords(s): 'macroeconomic'
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Viewing papers 1 through 10 of 165
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Working PaperDid Foreigners Pay America's Tariffs? Quantity Discounts, Scale Economies and Incomplete Pass-Through
February 2026
Working Paper Number:
CES-26-17
Transaction-level quantity discounts are a pervasive feature of US trade, shaping both price variation and tariff incidence. Using administrative microdata, we show that these discounts reflect transaction-level scale economies rather than market power. Accounting for these micro-level economies resolves a key puzzle: while observed import prices rose one-for-one with 2018-2019 US tariffs, we show this was driven by the loss of scale economies as transaction sizes collapsed. Controlling for this scale effect, the strategic pass-through of tariffs to scale-free prices falls to 60 percent, implying foreign exporters absorbed a significant share of the burden through reduced markups.View Full Paper PDF
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Working PaperTrade and Welfare (across Local Labor Markets)
February 2026
Working Paper Number:
CES-26-16
What are the welfare implications of trade shocks? Theoretically, we provide a sufficient statistic that measures changes in welfare (to a first-order approximation) for the set of workers who start within a region, taking into account adjustment in frictional unemployment, labor force participation, the sectors to which workers apply for jobs, and the regions in which workers choose to live. Our theory is flexible; for instance, it allows for arbitrary heterogeneity in worker productivity and non-pecuniary returns (amenities) across unemployment, labor force non-participation, sectors, and regions. Empirically, we apply these insights to measure changes in welfare between 2000-2007 across workers who start in different commuting zones (CZs) in the U.S. in the year 2000. Finally, we identify the differential impact across CZs of a particular trade shock: granting China permanent normal trade relations.View Full Paper PDF
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Working PaperEstablishment-Level Life Cycle and Analysts' Forecasts
February 2026
Working Paper Number:
CES-26-12
This paper examines how multi-unit firms' life-cycle stages affect analyst forecast accuracy. While prior studies focus on the firm-level life cycle, we utilize the Census data and focus on the establishment level. We find that analyst forecast accuracy is lower for multi-unit firms whose establishments are in different life-cycle stages than those in the same life-cycle stage. This finding suggests that the forecasting difficulty of more diversified firms can be attributed to the different life-cycle stages of each establishment. We also find that for firms whose units are in different stages, analyst forecast accuracy is lower if the establishments in earlier stages are larger (i.e., generate more revenue) than those in later stages. As a comparison, we estimate the life-cycle stages using firms' segment classifications in their 10-K filings. We find that analysts' forecast accuracy is lower when firms report fewer segments than the number of establishments, suggesting that aggregating more establishments for segment reporting could complicate analysts' forecasting. To our knowledge, this is the first study that focuses on the establishment-level life cycle. This study highlights that firm-level life cycles should not be taken without caution, as aggregating multiple units' life cycles may be misleading. In order to provide better forecasts to investors, analysts should have a deeper understanding of firms' subunits, especially when the establishments are in different life-cycle stages.View Full Paper PDF
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Working PaperSame Shock, Separate Channels: House Prices and Firm Performance in the Great Recession
January 2026
Working Paper Number:
CES-26-03
Combining confidential business-level microdata with housing and banking data, I document large and persistent effects of local house prices on employment at small businesses, and particularly young businesses, during the Great Recession. I show that the effect on entry is important for explaining the disproportionate effect on young businesses, while young firm exit is also disproportionately affected. I then explore the channels through which house prices affect business outcomes. I use survey data to show that reliance on either personal assets or home equity is associated with increased sensitivity to house prices. I then use local bank balance sheet information to show both young and old firms are sensitive to local credit shocks, with some evidence of a larger effect on young businesses. I develop a macroeconomic model that is consistent with these findings where house prices work through two channels: a bank credit supply channel and a housing collateral channel.View Full Paper PDF
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Working PaperFood Fight: U.S. Exporters' Adjustments to Russia's 2014 Agricultural Import Ban
December 2025
Working Paper Number:
CES-25-79
This paper examines the impact of Russia's 2014 food-import ban on U.S. firms that exported banned products to Russia. Using confidential customs transaction data, we implement triple-difference and dosage-response approaches to identify how firms adjust to the sudden loss of a market. Following the ban, treated firms experienced a 30 percentage-point decrease in the probability of exporting banned food to Russia relative to control firms. However, there is substantial heterogeneity by pre-ban reliance on the Russian market: heavily reliant firms were significantly less likely to survive once the ban was in place, and survivors experienced large reductions in revenue (19%) and total export value (49%) for each standard deviation increase in Russian market exposure. We find evidence of export redirection to neighboring countries, though it is insufficient to offset losses. Any negative impacts on survivors dissipate by five years post-ban.View Full Paper PDF
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Working PaperTrapped or Transferred: Worker Mobility and Labor Market Power in the Energy Transition
December 2025
Working Paper Number:
CES-25-76
Using matched employer-employee data covering 1.35 million US workers separated from the fossil fuel extraction industry between 1999 and 2019, I estimate how local fossil fuel labor demand shocks affect employment and earnings. Employment probabilities fall markedly after exposure, and earnings decline gradually over the first seven years with only partial recovery by ten years since exposure to the shocks. Workers who remain in the fossil fuel sector, disproportionately men in sector-specific roles, experience nearly twice the earnings losses of those who switch sectors, possibly due to limited occupational mobility. Among non-switchers, losses are larger in labor markets with high employer concentration, indicating that scarce outside options translate into lower reemployment wages and weaker bargaining positions. Geographic movers fare worse than stayers, reflecting negative selection (younger, lower-earning) and relocation to metropolitan areas where fossil fuel or low-skilled service sectors remain highly concentrated, leaving monopsony power intact.View Full Paper PDF
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Working PaperBorrowing Constraints, Markups, and Misallocation
December 2025
Working Paper Number:
CES-25-75
We document new facts that link firms' markups to borrowing constraints: (1) less constrained firms within an industry have higher markups, especially in industries where assets are difficult to borrow against and firms rely more on earnings to borrow; (2) markup dispersion is also higher in industries where firms rely more on earnings to borrow. We explain these relationships using a standard Kimball demand model augmented with borrowing against assets and earnings. The key mechanism is a two-way feedback between markups and borrowing constraints. First, less constrained firms charge higher markups, as looser constraints allow them to attain larger market shares. Second, higher markups relax borrowing constraints when firms rely on earnings to borrow, as those with higher markups have higher earnings. This two-way feedback lowers TFP losses from markup dispersion, particularly when firms rely on earnings to borrow.View Full Paper PDF
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Working PaperThe Effect of the Minimum Wage on Childcare Establishments
August 2025
Working Paper Number:
CES-25-53
Childcare is essential for working families, yet it remains increasingly unaffordable and inaccessible for parents and offers poverty-level wages to many employees. While research suggests minimum wage policies may improve the welfare of low-wage workers, there is also evidence they may increase firm exits, especially among smaller, low-profit firms, which could reduce access and harm consumer well-being. This study is the first to examine these trade-offs in the childcare industry, a labor-intensive, highly regulated sector where capital-labor substitution is limited, and to provide evidence on how minimum wage policies affect a dual-sector labor market in the U.S., where self-employed and waged providers serve overlapping markets. Using variation from state-level minimum wage increases between 1995 and 2019 and unique microdata, I implement a cross-state county border discontinuity design to estimate impacts on the stocks, flows, and composition of childcare establishments. I find that while county-level aggregate establishment stocks and employment remained stable, establishment-level turnover increased, and employment decreased. I reconcile these findings by showing that minimum wage increases prompted reallocation, with larger establishments in the waged-sector more likely to enter and less likely to exit, making this one of the first studies to link null aggregate effects to shifts in establishment composition. Finally, I show that minimum wage increases may negatively affect the self-employed sector, resulting in fewer owners with advanced degrees and more with only high school education. These findings suggest that minimum wage policies reshape who provides care in ways that could affect both quality and access.View Full Paper PDF
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Working PaperDynamics of High-Growth Young Firms and the Role of Venture Capitalists
June 2025
Working Paper Number:
CES-25-38
Motivated by the substantial growth and upfront investments of venture capital (VC) backed firms observed in administrative US Census data, this paper develops a firm dynamics model over the life cycle. In the model, startups choose the source of financing from VC, Angel investors, or banks, depending on their growth potential, and invest in innovation. The calibrated model explains the life-cycle dynamics of firms with different sources of financing and implies that venture capitalists' advice accounts for around 22% of the growth of VC-backed firms. A counterfactual economy without VC financing would lose aggregate consumption by around 0.4%.View Full Paper PDF
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Working PaperThe Rise of Industrial AI in America: Microfoundations of the Productivity J-curve(s)
April 2025
Working Paper Number:
CES-25-27
We examine the prevalence and productivity dynamics of artificial intelligence (AI) in American manufacturing. Working with the Census Bureau to collect detailed large-scale data for 2017 and 2021, we focus on AI-related technologies with industrial applications. We find causal evidence of J-curve-shaped returns, where short-term performance losses precede longer-term gains. Consistent with costly adjustment taking place within core production processes, industrial AI use increases work-in-progress inventory, investment in industrial robots, and labor shedding, while harming productivity and profitability in the short run. These losses are unevenly distributed, concentrating among older businesses while being mitigated by growth-oriented business strategies and within-firm spillovers. Dynamics, however, matter: earlier (pre-2017) adopters exhibit stronger growth over time, conditional on survival. Notably, among older establishments, abandonment of structured production-management practices accounts for roughly one-third of these losses, revealing a specific channel through which intangible factors shape AI's impact. Taken together, these results provide novel evidence on the microfoundations of technology J-curves, identifying mechanisms and illuminating how and why they differ across firm types. These findings extend our understanding of modern General Purpose Technologies, explaining why their economic impact'exemplified here by AI'may initially disappoint, particularly in contexts dominated by older, established firms.View Full Paper PDF
