Research

Research Interests:

International Trade, Empirical Microeconomics and Public Economics.

Working Papers

  1. "Integrated Analysis of the Effect of the Free Trade Agreement on Multilateral Trade Liberalization." (Job Market Paper), October 2022.

Abstract: Does formation of a Free Trade Agreement (FTA) lead to more or less protectionist trade policies towards non-member countries? This paper builds on existing theoretical literature of FTAs to identify key channels through which preferential tariff reductions towards one group of countries may lead to either increased or reduced tariffs towards other countries. We develop a novel empirical strategy to identify the causal effect of FTAs on external tariffs of their members and estimate both channels using a sample that covers most FTAs formed since the 1990s. We find that countries tend to reduce their tariffs following FTA formation. Specifically, our results indicate that for an average industry and a pair of FTA partner countries, a one percentage point reduction in FTA tariff leads to 0.012-0.017 percentage points decrease in the MFN tariff. The effect is relatively small because most FTAs are between countries with small bilateral trade flows, but it is substantially larger for FTAs between main trade partners. For example, the mean elasticity of the MFN tariff with respect to the preferential tariff for the Canada-U.S. Free Trade Agreement is in the range of 0.2-0.25. Our findings support the idea that FTA formation provides member countries with economic incentives to liberalize their trade policies.

  1. "Did the Intended Beneficiaries of the Generalized System of Preferences Benefit from It?", October 2022.

Abstract: The goal of the Generalized System of Preferences (GSP), one of the provisions of the WTO, is to foster export-led economic growth in developing countries by means of granting preferential access to developed countries’ markets. However, there has been a lot of skepticism regarding the efficiency of the policy, raised by concerns of low utilization rate of GSP preferences and high GSP tariffs on industries that matter the most for developing countries, such as agriculture and textiles. The challenges in evaluating efficiency of the GSP are our limited understanding of the factors underlying the choice of preferential tariffs by the donor countries, and also whether the concern for economic development in the receiving countries is one driving force behind this policy. In this project I assess the extent to which the donor countries consider the economic interests of the target countries in devising the structure of their GSP tariff rates. I construct a theoretical model in which the donor countries internalize the effect of GSP rates on welfare of the recipient countries. The model predicts that a donor’s concern on welfare of recipient countries results in a positive relationship between the GSP tariff and the share of the recipient country in the donor’s market. I test this relationship using tariff and trade data for all GSP-granting countries between 1988 and 2017. My results show that, on average, a one percentage point decrease in the market share of GSP-eligible countries is associated with 0.39 percentage point reduction in GSP tariff rate. This result implies that the donors do internalize the effect of their GSP tariffs on profits of firms from developing countries, and are thus concerned, at least partially, about the effect of GSP on welfare of developing countries. However, I do not find empirical evidence for donor countries to internalize the effect of GSP on welfare of the least developed countries.

  1. "The Effect of Regulation on the Employment Rate in the US." (with Andrey Stoyanov and Nick Zubanov), October 2022.

Abstract: As the complexity of economic activities increases over time, there has been a rising trend of government regulations in all developed countries to tackle the problem of market failures and inefficiencies. However, the increase in intangible costs for businesses, which tends to be overlooked by policy makers while proposing new regulations, could outweigh the benefits of what the new regulations could bring. Hence, the economic costs of government regulations need to be carefully assessed to provide references for policy makers in the decision-making process. In order to study the cumulative effects of all regulations and also the possible cross-effects of different regulatory acts on economic activities, we conduct the analysis using novel data that quantifies the restrictiveness of each section of the US Regulation Code. By combining it with the US Census data and estimating the changes in regulation intensity on the local labor market, we conclude that the introduction of new regulations decreases employment and increases income inequality. Our research findings suggest that the cost-benefit analysis is an indispensable step for proposing new government regulations and further studies could be conducted to facilitate policy makers to set up standardized cost-assessment practice.

Work in Progress

  1. "The Presence of Multilateral Tariff Cooperation in Free Trade Agreements." (with Andrey Stoyanov).

  1. "The Economic Cost of National Regulation in Canada." (with Andrey Stoyanov).

  1. "The Effect of Occupational Licensing on Labor Market Outcomes." (with Andrey Stoyanov).