
Publications
Building the City Under Financial Frictions Review of Economic Dynamics Vol 52, 2024.[Working paper]
Merchant Networks in Big Cities Journal of Urban Economics Vol 129, 2022. [Working paper]
Exporting Costs and Multi-Product Shipments (with Alexander Tarasov), Scandinavian Journal of Economics, Vol 124, 2022. [Working paper]
Sectarian Aid Sanctions and Subnational Development (with Eren Arbatli), European Economic Review, Vol 139, 2021. [Working paper]
Voting Retrospectively: Critical Junctures and Party Identification (with Eren Arbatli), European Economic Review, Vol 119, 2019. [Working paper | Video interview]
Building the City Under Financial Frictions Review of Economic Dynamics Vol 52, 2024.[Working paper]
Abstract
Weak financial institutions may affect developing countries due to slowing the much-needed construction process of residential housing. Using novel data collected from Nairobi, I document considerable heterogeneity in the construction duration of new residential buildings, with about 40% of buildings started in 2009 still unfinished in 2018. To understand the role of financial development in constructing residential housing, I develop a heterogeneous agent model with financial frictions in which households construct individual housing units. Counterfactual simulations show that improvements in credit provision can substantially speed up the expansion of the aggregate housing stock and increase the city’s density by enabling the construction of taller buildings. The model also predicts that investments in incomplete structures emerge as an alternative savings vehicle in the absence of reliable savings accounts.
Merchant Networks in Big Cities Journal of Urban Economics Vol 129, 2022. [Working paper]
Abstract
In the 18th century, every second merchant ship sailing from Britain to the Baltic did not carry any exports. This was caused by trade imbalances that were driven by high demand for grains and other raw materials in Britain. Trip level data show that merchant ships based in larger British cities were more likely to make non-empty trips and carried more varieties. This paper argues that wider and denser networks of merchants in large cities, which facilitated information flows and improved the efficiency of matching, allowed them to outperform merchants from smaller British ports. Furthermore, ships that were based in smaller ports did not improve their performance when they departed from larger cities. This finding and additional tests provide evidence against competing explanations.
Exporting Costs and Multi-Product Shipments (with Alexander Tarasov), Scandinavian Journal of Economics, Vol 124, 2022. [Working paper]
Abstract
In this paper, employing transaction-level data for Russian imports, we explore the role of multi-product shipments in explaining shipping patterns across countries. In our data, an average shipment includes five different products. We document that firms from higher-income countries on average include a larger number of different products into a single shipment and have a larger number of shipments per period with a lower average quantity and value. We then propose a mechanism that reconciles both facts. Specifically, multi-product shipments allow firms to split fixed costs per shipment across many products and, therefore, reduce total shipment costs. As a result, higher-income countries tend to have lower fixed costs per shipment. Finally, we construct a simple partial equilibrium model that enables us to quantify the potential increases in trade volumes and welfare created by the multi-product shipment option.
Sectarian Aid Sanctions and Subnational Development (with Eren Arbatli), European Economic Review, Vol 139, 2021. [Working paper]
Abstract
Hezbollah, a Shia Islamist political party and militant group based in Lebanon, is believed to receive a significant amount of informal funding from Iran. In this paper, we evaluate whether this funding has had any economically meaningful effect on subnational development in Lebanon. Since the amount of funding is not observed, we use Iranian oil rents and the intensity of sanctions against Iran as plausibly exogenous drivers of transfers to Hezbollah. Then, we leverage the well-established sectarian bias in Hezbollah’s spending to obtain conservative estimates of the direct effect of funding to Hezbollah. Studying the 1993–2010 period, we find a positive and economically significant relationship between Iranian oil windfalls and nighttime lights. This effect is significantly stronger in areas with greater concentration of Shia population. Also, nighttime lights are relatively lower in Shia areas than elsewhere during periods when sanctions against Iran intensified. These novel results attest to the non-negligible developmental effects of informal aid as well as how economic sanctions against donors might offset such effects.
Voting Retrospectively: Critical Junctures and Party Identification (with Eren Arbatli), European Economic Review, Vol 119, 2019. [Working paper | Video interview]
Abstract
This paper provides evidence for retrospective voting in the very long-term by exploiting a unique quasi-natural experiment of history. We trace the origins of party identification to a critical juncture in the local history of Sasun, a mountainous region of the Ottoman Empire located in Eastern Turkey. Sasun received vital support from the Armenian Revolutionary Federation (ARF) both during the Great Massacres against Armenians at the end of the 19th century and during the Armenian Genocide (1915–1917). With the help of the ARF, some of the survivors from Sasun were resettled in various villages in modern-day Armenia. Although the party was not active in Armenia during seven decades of Soviet rule, we find that villages with Sasun ancestry display substantially higher electoral support for the ARF than other villages. Evidence from first names of current residents and our field work suggest that this differential support can, at least in part, be explained by historical gratitude and sympathy for the party. We offer suggestive evidence to explain why this sympathy might have endured over generations.
Working Papers
The Global Software Production Network (with Carlo Birkholz).
The Joint Venture.
Favoritism and Firms: Micro Evidence and Macro Implications (with Zareh Asatryan, Thushyanthan Baskaran and Carlo Birkholz).
The Global Software Production Network (with Carlo Birkholz).
Abstract
In this paper we use data on 2.57 million software projects linked to individuals working in over 7000 locations to study the global software production network. To this end we estimate an economic geography model in which locations trade tasks. Our results show that (i) there are large differences in locations' productivity levels within and across countries; (ii) estimated productivity gaps between the richest and poorest countries are very close in magnitudes to those obtained from macro data for broad sectors; (iii) geographic distance hinders the flow of tasks in space but to a lesser extent compared with the conventional estimates for goods trade; (iv) the movements of software developers exhibit strong sorting patterns within and across countries.
The Joint Venture.
Abstract
Financial frictions may prevent entrepreneurs from undertaking projects requiring large upfront investments with uncertain outcomes. By forming joint ventures entrepreneurs can overcome fixed costs and diversify away risk. I use historical data on slave voyages and document that joint ventures were used both to overcome the entry barrier and for diversification purposes. The extent to which joint ventures were practiced differed across countries. I develop a model of entrepreneurship with joint venture formation subject to institutional friction and calibrate it to the historical data to quantify the economic effect of this arrangement.
Favoritism and Firms: Micro Evidence and Macro Implications (with Zareh Asatryan, Thushyanthan Baskaran and Carlo Birkholz).
Abstract
We study the economic implications of regional favoritism, a form of distributive politics that redistributes resources geographically within countries. Using enterprise surveys from low- and middle-income countries, we document that firms located close to leaders’ birthplaces grow substantially in sales and employment after leaders assume office. Firms in favored areas also experience increases in sales per worker, wages, and measured total factor productivity. These effects are short-lived, and operate through rising (public) demand for the non-tradable sector. We calibrate a simple structural model of resource misallocation on our estimates. This exercise implies that favoritism reduces output by 0.5% annually.
Other Papers
- The Roman Origins of Modern Migration.
- Rise of the Machines: Evidence from the Container Revolution.
- Optimal Fiscal Rules.
- The Incidence of VAT Enforcement (with Zareh Asatryan).
- Immigrant Religious Practices and Criminality (with Carlo Birkholz) Journal of Comparative Economics, Vol 51.