“The Role of Trade in Structural Transformation” (pdf)

This paper examines the effects of international trade on structural transformation and economic growth. I introduce international trade into a neoclassical growth model with two sectors: agriculture and the rest of the economy. A key feature of the model is the low-income elasticity of the agricultural good. In the closed economy model, as countries get richer, labor moves out of agriculture and into the other sector. International trade can accelerate this transition for countries with low agricultural productivity because it allows them to import food and thus reduce their agricultural employment. I calibrate and simulate the model to show it can match three different structural transformations: the United States in the 20th century, the United Kingdom in the 19th century, and South Korea for nearly the last 50 years. The results show that trade had large effects in the United Kingdom, and smaller but positive effects in South Korea. Agricultural production subsidies and agricultural import tariffs reduced the role of trade in South Korea. Without these policies, the volume of trade would have been larger and the country would have experienced a faster transformation, as well as higher real income growth and higher welfare.

“Sectoral Composition and Cross-Country TFP Differences”

This paper analyzes the extent to which low aggregate productivity in poor countries can be explained by these countries employing a much larger fraction of the production resources in the agricultural sector. The results obtained show that the TFP variation in the nonagricultural sector is much lower than the one in the agricultural sector. Moreover the fraction of sectoral output per worker differences explained by TFP differences is also lower in the nonagricultural than in the agricultural sector. This conclusion is similar to the one obtained by other authors in the literature, and suggests that poor countries have most of its resources in the sector where they are more unproductive.

“Cross-Country Comparison of Technology Adoption: the Case of Mobile Phones”

This paper studies whether the differences in observed rates of adoption of mobiles phones across countries can be attributed to barriers to technology adoption. For  the analysis, I estimate the income distribution for each country, and the income threshold at which people adopt this technology. The estimated income thresholds are lower in poor countries than in rich countries, which implies that we cannot conclude from this exercise that there are barriers to technology adoption in poor countries. In fact, if poor countries had the same adoption thresholds as rich countries, there would be significantly fewer cell phones in poor countries.

“Trade Policy Analysis under Learning-by-Doing Externalities”

This paper examines the welfare effects of different trade policies in an environment with two sectors. One of the sectors has productivity growth due to learning-by-doing externalities, while the other sector has constant production technology. In the example considered, the poor country has a comparative advantage in the good without the learning-by-doing externality. As a result, free trade reduces the income growth of the poor country. However, if the poor country is small enough relative to its trade partner and the externality is not too large, international trade unambiguously raises its welfare and the optimal import tariff is zero. If the externality size is large enough, on the other hand, then the welfare of the country increases when the country remains under autarky and introduces a production subsidy in the externality sector, and then opens up to trade once it has comparative advantage in the production of the good with the externality.

“What Determines the Degree of Intergenerational Mobility?”

The goal of this paper is to study what determines the degree of intergenerational mobility. First, I analyze whether intergenerational mobility changes depending on the parents' economic status. Then, I investigate whether participation in welfare programs affects it. Next, I look for the causes of economic status persistence by including different individual characteristics in the analysis. Finally, I examine the effects of different public policies on intergenerational mobility by comparing the US states. My main results are the following: mobility is larger when parents' income and earnings are lower, welfare participation does not reduce intergenerational mobility, education and race seem to be important reasons for the existence of intergenerational income persistence, and differences in public policies across US states do not seem to have strong consequences on mobility.

“Measuring the Sustainability of Countries” (joint with Clara Garcia, Jose Pineda; work in progress)

The environmental challenges faced by the world have led to a growing concerns about the sustainability of development. Monitoring the sustainability of countries is thus essential, but it requires measuring changes in aspects like knowledge, technology, natural resources or the pollution absorptive capacity of the environment as well as valuing these changes so that they can be compared. One of the most frequently used indicator of aggregate sustainability is the Adjusted Net Savings (ANS), which is calculated by adding spending on education to the Gross National Saving and subtracting the value of the natural resources depleted and the damages from the carbon dioxide emissions. This measure has some important flaws and it has been criticized by many authors because of the fact it uses education expenditures as a proxy for human capital increase, the fact that pollutant emissions damages are underestimated, and the fact that it ignores technology and population growth and the contributions of some natural resources like forests to the ecosystem functions. In this paper, we examine the sensitivity of the ANS results to the data used and the assumptions made, and propose an alternative indicator of sustainability that takes into account many of the existing criticisms.

“Costs and Benefits of the Financial Sector” (joint with Lorenzo Caliendo, Francisco Rivadeneyra; work in progress)

Financial services allow a better allocation of capital, which increases the aggregate technology and aggregate income of the economy. At the same time, however, they also amplify the business cycles of the economy and thus increase the volatility of income. In this paper we first present a general equilibrium model which captures both positive and negative effects of the financial sector. We then parametrize the model to analyze the quantitative effects on future income of policies aimed at reducing the income volatility caused by the financial system. Finally, we study whether limiting the size and sophistication of the financial sector is welfare enhancing in the context of this model.