Working papers
Why Do Firms Own Production Chains? (with Ali Hortaçsu and
Chad Syverson), 2012. Download industry-level indices of vertical integration.
[Show Abstract]
Abstract:
We use broad-based yet detailed data from the economy's goods-producing sectors to investigate firms' ownership of production chains. It does not appear that vertical ownership is primarily used to facilitate transfers of goods along the production chain, as is often presumed: Roughly one-half of upstream plants report no shipments to their firms' downstream units. We propose an alternative explanation for vertical ownership, namely that it promotes efficient intra-firm transfers of intangible inputs. We show evidence consistent with this hypothesis, including the fact that upon a change of ownership, an acquired plant begins to resemble the acquiring firm along multiple dimensions.
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Materials Prices and Productivity, 2012. Slides.
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Abstract: There is substantial within-industry variation in the prices that plants pay for their material inputs. Using plant-level data from the U.S. Census Bureau, I explore the consequences and sources of this variation in materials prices. For a sample of industries with relatively homogeneous products, the standard deviation of plant-level productivity would be 7% smaller if all plants faced the same materials prices. Moreover, plant-level materials prices are both persistent across time and predictive of exit. The contribution of net entry to aggregate productivity growth is smaller for productivity measures that strip out differences in materials prices. After documenting these patterns, I discuss three potential sources of materials price variation: geography, differences in suppliers' marginal costs, and suppliers' price discriminatory behavior. Together, these variables reduce the unexplained variation of materials prices by 13%. Finally, I demonstrate that plants' marginal costs are correlated with the marginal costs of their intermediate input suppliers. [Hide Abstract]
Sources of Variation in Social Networks, 2011. Download code used to make the tables and figures.
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Abstract: What explains the large variation in the number of contacts (degree) that different participants of social networks have: age, randomness, or some unobservable quality measure? The model presented in Jackson and Rogers (2007), which emphasizes age as the main source of variation, successfully fits the degree distributions observed in real-world social networks, but is inconsistent with the relationship between age and degree that is also observed. After documenting this fact, I extend the Jackson-Rogers model to allow for individuals to vary in some unobservable quality measure. This quality measure embodies individuals' abilities to attract new contacts. Within-cohort variation in degree identifies variability in quality. I find that heterogeneity in age and quality are both important in explaining the variation in degree that is observed in social networks. [Hide Abstract]
Quantifying the Benefits of a Liquidity-Saving Mechanism (with Antoine Martin and Jamie McAndrews), 2010. Federal Reserve Bank of New York Staff Reports, #447.
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Abstract: This paper attempts to quantify the benefits associated with operating a liquidity-saving mechanism (LSM) in Fedwire, the large-value payment system of the Federal Reserve. Calibrating the model of Martin and McAndrews (2008), we find that potential gains are large compared to the likely cost of implementing an LSM, on the order of hundreds of thousands of dollars per day.
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The Welfare Effects of a Liquidity-Saving Mechanism (with Antoine Martin and Jamie McAndrews), 2010. Federal Reserve Bank of New York Staff Reports, #331.
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Abstract: This paper considers the welfare effects of introducing a liquidity-saving mechanism (LSM) in a real-time gross settlement (RTGS) payment system. We study the planner’s problem to get a better understanding of the economic role of an LSM and find that an LSM can achieve the planner’s allocation for some parameter values. The planner’s allocation cannot be achieved without an LSM, as long as some payments can be delayed without cost. In equilibrium with an LSM, we show that there can be either too few or too many payments settled early compared with the planner’s allocation, depending on the parameter values.
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Publications
Network Structure of Production (with Ali Hortaçsu, Jimmy Roberts, and
Chad Syverson) Proceedings of the National Academy of Sciences, 2011. Supplemental material. [Show Abstract]
Abstract:
Complex social networks have received increasing attention from researchers. Recent work has focused on mechanisms that produce scale-free networks. We theoretically and empirically characterize the buyer–supplier network of the US economy and find that purely scale-free models have trouble matching key attributes of the network. We construct an alternative model that incorporates realistic features of firms’ buyer–supplier relationships and estimate the model’s parameters using microdata on firms’ self-reported customers. This alternative framework is better able to match the attributes of the actual economic network and aids in further understanding several important economic phenomena.
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The Topology of the Federal Funds Market (with Morten Bech) Physica A, 2010. Working paper versions: ECB and NYFRB.
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Abstract: We explore the network topology of the federal funds market. This market is important for distributing liquidity throughout the financial system and for the implementation of monetary policy. The recent turmoil in global financial markets underscores its importance. We find that the network is sparse, exhibits the small-world phenomenon, and is disassortative. Centrality measures are useful predictors of the interest rate of a loan.
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I am a 4th year graduate student in the University of Chicago Department of Economics. To contact me, please send an e-mail to atalay@uchicago.edu.