Research

Working Papers


This paper studies the impacts of the recent energy price shock resulting from the Russia-Ukraine war on Europe's real economy and banking sector. To this end, I develop a model of energy-importing countries with varying energy intensities, where financial intermediaries are interconnected through firms' working capital loans. Two potential sources of inefficiency are identified within this framework. First, due to the interconnectedness of banks across borders through shared customers, suboptimal equilibria may prevail, leading to excessive financial constraints on banks and a reduction in aggregate output. Second, given the energy price hikes, the initial distribution of net worth across banks may not be ideal. I show that a well-designed reallocation of net worth towards banks that supply firms with the highest exposure to energy prices can mitigate financial distress effectively.

Presented at: SEA Annual Meeting 2023 (New Orleans, LA); Korea-America Economic Association (Virtual); MEA Annual Meeting 2023 (Cleveland, OH)


A growing body of literature has demonstrated that distortions in allocative efficiency among heterogeneous firms can lead to significant aggregate consequences. This paper examines the extent of these effects when idiosyncratic (firm-specific) distortions not only impact the allocation of resources but also influence firms' incentives to enhance productivity. To address this, I develop a heterogeneous firm model where the progression of firm-level productivity is endogenously determined by allowing firms to engage in risky R&D projects each period. The findings indicate that when distortions are linked to productivity, firm-level innovation plays a pivotal role in creating substantial cross-country disparities by amplifying the decline in aggregate productivity and consumption.


I present an OLG model to investigate how households make educational decisions and to scrutinize its aggregate implications for human capital accumulation. The model is distinguished by dynastic altruism, which establishes a unique link between a household and its successive generations. On the balanced growth path, I discover that higher degrees of dynastic altruism and intergenerational knowledge spillover foster investment in human capital, expediting economic growth. Furthermore, I observe a countercyclical pattern in human capital investment. When combined with the procyclical behavior of physical capital investment, this suggests that households perceive investment in physical and human capital as substitutes, aimed at smoothing their consumption profiles. Lastly, I assess the empirical relevance of these model predictions. The results reveal that the response of human capital investment, along both the extensive (college enrollment) and intensive (hours devoted to education) margins, exhibits a countercyclical pattern.


Work in Progress


In this study, we delve into the implications of cost-push shocks (e.g., energy price hikes) on monetary policy in emerging economies characterized by sovereign risk. To this end, we develop a New Keynesian model for a small open economy where the government can issue defaultable debt. Within this framework, we first examine how the interplay between cost-push shocks and sovereign risk shapes macroeconomic outcomes and price stability. Subsequently, we compare three distinct monetary policy regimes—tightening the money supply, targeting producer prices, and targeting consumer prices—and elucidate the conditions under which each regime emerges as the optimal policy choice.

Presented at: SEA Annual Meeting 2024 (Washington D.C., Scheduled)


Pre-doctoral Work


This study reexmaines the nonlinear relationship between inequality and economic growth within a dynamic context, shedding light on the specific functional form of its nonlinearity. Employing nonlinear flexible inference techniques, we delve into the previously unknown functional relationship, drawing on an extensive panel dataset covering 77 countries from 1982 to 2019. Our findings corroborate earlier conclusions concerning the nonlinear interplay between inequality and growth. Significantly, we identify a discernible threshold in both the Gini Coefficient and the level of inequality. When inequality surpasses this threshold, the act of reducing it appears to contribute positively to economic growth. Conversely, when inequality falls below the threshold, efforts to decrease it seem to impede economic growth. The incorporation of this threshold specification effectively characterizes the intricate nonlinear relationship, thus aptly capturing the nuanced nature of this phenomenon.