“Finance, Trade, and the Missing Manufacturing Window”
with Santiago Etchegaray
Draft available upon request
Why do some economies develop through manufacturing while others move more directly into low-skilled services? This paper shows that financial underdevelopment is an important part of the answer. Weak financial systems reduce export competitiveness in finance-dependent sectors and raise the effective cost of investment, limiting demand for manufacturing-intensive capital goods. In a dynamic multi-country model, improving financial development raises manufacturing employment, output, and consumption in flat-manufacturing economies. Most of the manufacturing response comes from stronger investment demand, while export finance expands world-market participation. Lowering nonfinancial trade costs alone slightly reduces manufacturing employment, but openness reinforces manufacturing gains when accompanied by financial development. Finance shapes what globalization amplifies.
“The Demographic Origins of Premature Deindustrialization”
Draft coming soon!
This paper examines whether accelerated demographic transitions—by shrinking the young-adult (25–34) population share earlier—contribute to premature deindustrialization and lower output per capita. Using a country–year panel and instrumenting young-adult shares with fertility lagged 25–34 years, I show that larger young-adult cohorts predict higher manufacturing employment and a larger manufacturing-employment “hump,” while earlier aging shifts employment toward services at lower income levels. Harmonized IPUMS International census microdata from more than 80 countries indicate that manufacturing work and durable goods spending are concentrated among younger workers and households, while both low- and high-skill services rise with age and feature steeper wage–age profiles. A multi-sector overlapping-generations model with age-varying task productivity rationalizes these facts and implies sizable aggregate effects: shifting from an older to a younger age structure raises cumulative output per capita by 17.1 percentage points. Employment per capita explains 10.5 points of the gap; life-cycle reallocation and its interaction with durables explain the remaining 6.6 points.
“A Trade Based Optimal Voting Rule for the International Monetary Fund”
with Martín Gonzalez-Eiras
Draft available upon request
We study how IMF voting power should be allocated when crisis lending creates cross-border spillovers and is financed collectively. In a quantitative Ricardian trade model, optimal voting weights equal each member’s ex-ante welfare sensitivity to intervention net of expected financing costs, implying sharp departures from size-based quota rules. When crisis risk is concentrated among high-yield members, voice shifts towards them and their key trading partners; results are robust, and participation remains attractive because contributions align with expected net benefits.
“Tariffs in a Networked Economy with Capital Goods”
with Rubén Domínguez-Díaz, José-Elías Gallegos and Javier Quintana
We develop a multi-country, multi-sector New Keynesian model with production networks in both intermediate inputs and capital goods, so tariffs propagate through supply chains and investment, affecting capital accumulation. The model stresses capital durability and the concentration of capital-goods sourcing, and is disciplined using a new investment-network dataset linking origin to destination country–sectors alongside standard input–output tables. We use the framework to quantify the output and inflation effects of large tariff shocks and isolate the contribution of the capital-goods channel.
“The Global Reach of EU Regulation: Evidence from Third-Country Trade”
This paper tests the “Brussels effect”: whether EU non-tariff measures (NTMs) shape not only trade with the EU but also third-country trade in the same products. Using UN TRAINS NTM data matched to HS6 bilateral flows from UN Comtrade/WITS, it estimates how changes in EU NTMs affect the comovement between an exporter’s shipments to the EU and its shipments to non-EU destinations, controlling for tariffs and rich fixed effects. The results show a positive and significant propagation effect, consistent with EU regulation influencing firms’ global market choices.