Micro-data in Macroeconomics Empirical Corporate Finance Political Economy
Figure 3 of my Job Market Paper:
a network representation of the US economy in 2004, created by applying a gravity-directed layout algorithm to the dataset of Hoberg and Phillips (2016)
Job Market Paper (on the market in 2019-2020)
As concentration and profit rates have increased in American industries, a growing literature in macro and financial economics has been devoted to measuring the welfare costs of market power using micro data. Yet, current models of imperfect competition are forced by data limitations to abstract away from the key consideration of what is the competitor peer group of each individual firm. In this paper, I present a tractable general equilibrium model that overcomes this challenge by using a hedonic demand system to identify competitor relationships between firms. I take my model to the data for every year between 1997 ad 2017 using a publicly-available dataset of bilateral measures of product similarity that covers all publicly-traded firms in the United States. A key advantage of my theoretical framework is that, unlike similar models, it allows to simulate anti-trust counterfactuals for specific groups of firms. My empirical analysis uncovers substantial welfare losses from market power, amounting to 10.9% of the surplus produced by public companies. Furthermore, I find that these welfare losses occur primarily through factor misallocation, that they have been increasing over the last twenty years, and that M&A activity was a significant contributor to this trend, thus validating the hypothesis that increasing markups and corporate consolidation have resulted into sizable welfare losses to the consumer.
American Economic Association - 2019 Annual Meeting
I'm organizing a session at the next AEA (Jan 6th 2019) titled "The economic consequences of cronyism and corruption", which I invite you to attend. The following papers will be presented:
Connecting to Power: Political Connections, Innovation, and Firm Dynamics
- by Ufuk Akcigit*, Salome Baslandze and Francesca Lotti
Corruption And Firms: Evidence From Randomized Audits In Brazil
- by Emanuele Colonnelli* and Mounu Prem
Electoral Incentives and the Allocation of Public Funds
- by Frederico Finan and Maurizio Mazzocco*
Diagnosing the Italian Disease
- by Bruno Pellegrino* and Luigi Zingales
Session abstract: A number of different measures, rankings and indices indicate that countries and regions that are less developed tend to have, or are at least perceived to have, a set of common institutional features: corruption is more endemic, connections (particularly political) are an important part of doing business and people tend to attain their position in hierarchies based on networks rather than than merit. What is the economic significance of these phenomena? Previous country-level studies have provided evidence of their effects on development. This session presents recent evidence from newly available datasets from Brazil and Italy, with the aim of offering fresh insights on this topic. The focus will be on the mechanisms through which cronyism and corruption affect economic development. In particular, the four papers from this session will cover the effects of corruption and cronyism in terms resource allocation, innovation, firm dynamics and productivity growth.