WORKING PAPERS
Gains from Trade with Heterogeneous Households (Job Market Paper)
In this paper, I investigate the distributional consequences of international trade within countries by taking into account different dimensions of heterogeneity across households and allowing them to interact with each other. I consider the welfare consequences of differences between households’ expenditures, the effect of trade costs on wages, and the impact of these costs on households’ intertemporal consumption-saving decisions. I develop a two-country, multi-sector dynamic model of trade with households heterogeneous in wealth, earning abilities and education (skill) level. The model features non-homothetic preferences, idiosyncratic income shocks, endogenous consumption-saving decisions, and capital-skill complementarity. I calibrate the model to the United States and Mexico to analyze the distributional implications of the North American Free Trade Agreement. The results imply that considering three dimensions of heterogeneity - wealth, income and education - and the interaction between the mechanisms that they generate is crucial to measure gains from trade accurately. I find that in both countries, an unanticipated permanent elimination of import tariffs relatively favors the poor within each education level. However, the gap between the gains of the poor and the rich is larger for college graduates compared to non-college workers. In addition, I show that although college graduates experience larger gains than non-college workers at the same wealth level, poor non-college workers gain more than rich college graduates. Finally, I find that an anticipated permanent elimination of tariffs results in lower gains than an unanticipated fall, especially for the poor.
How to Increase Household Savings in Turkey
There was a dramatic fall in the growth rate of Turkey during the financial crisis of 2008-2009, which mostly resulted from the outflow of international capital. Although Turkey was able to increase its growth rate via new capital inflows after the crisis, the rate has slowed down recently because of improved economic conditions in the United States and the Euro zone, which attracts international funds. We can say that developing countries, like Turkey, face significant difficulties in financing their investments, and consequently growth, during a sudden stop or outflow of international capital as a result of low levels of domestic saving. In this paper, I study the effects of demographic and socio-economic factors on household savings behavior and discuss policies which can increase savings in Turkey due to the importance of domestic saving for the long-run growth. I use the Household Budget Surveys published by Turkish Statistical Institute between 2003 and 2013. I find the determinants of household savings by using the instrumental variable quantile regression method. I show that the effect of significant determinants of household savings varies across households with different levels of saving rate. Additionally, I indicate that some variables accepted as the statistically significant determinants of household saving rate by the literature which ignores the endogeneity issue cannot be identified as significant determinants for some of the saving rate quantiles. The results suggest that policies aiming better income distribution and high levels of income, encouraging households to own a house and to earn interest income, decreasing unemployment rate and increasing female labor force participation can help increase savings.
In this paper, I investigate the distributional consequences of international trade within countries by taking into account different dimensions of heterogeneity across households and allowing them to interact with each other. I consider the welfare consequences of differences between households’ expenditures, the effect of trade costs on wages, and the impact of these costs on households’ intertemporal consumption-saving decisions. I develop a two-country, multi-sector dynamic model of trade with households heterogeneous in wealth, earning abilities and education (skill) level. The model features non-homothetic preferences, idiosyncratic income shocks, endogenous consumption-saving decisions, and capital-skill complementarity. I calibrate the model to the United States and Mexico to analyze the distributional implications of the North American Free Trade Agreement. The results imply that considering three dimensions of heterogeneity - wealth, income and education - and the interaction between the mechanisms that they generate is crucial to measure gains from trade accurately. I find that in both countries, an unanticipated permanent elimination of import tariffs relatively favors the poor within each education level. However, the gap between the gains of the poor and the rich is larger for college graduates compared to non-college workers. In addition, I show that although college graduates experience larger gains than non-college workers at the same wealth level, poor non-college workers gain more than rich college graduates. Finally, I find that an anticipated permanent elimination of tariffs results in lower gains than an unanticipated fall, especially for the poor.
How to Increase Household Savings in Turkey
There was a dramatic fall in the growth rate of Turkey during the financial crisis of 2008-2009, which mostly resulted from the outflow of international capital. Although Turkey was able to increase its growth rate via new capital inflows after the crisis, the rate has slowed down recently because of improved economic conditions in the United States and the Euro zone, which attracts international funds. We can say that developing countries, like Turkey, face significant difficulties in financing their investments, and consequently growth, during a sudden stop or outflow of international capital as a result of low levels of domestic saving. In this paper, I study the effects of demographic and socio-economic factors on household savings behavior and discuss policies which can increase savings in Turkey due to the importance of domestic saving for the long-run growth. I use the Household Budget Surveys published by Turkish Statistical Institute between 2003 and 2013. I find the determinants of household savings by using the instrumental variable quantile regression method. I show that the effect of significant determinants of household savings varies across households with different levels of saving rate. Additionally, I indicate that some variables accepted as the statistically significant determinants of household saving rate by the literature which ignores the endogeneity issue cannot be identified as significant determinants for some of the saving rate quantiles. The results suggest that policies aiming better income distribution and high levels of income, encouraging households to own a house and to earn interest income, decreasing unemployment rate and increasing female labor force participation can help increase savings.
WORK IN PROGRESS
The Effect of COVID-19 on International Trade and Welfare Implications
The Distributional Effects of the Belt and Road Initiative and Its Debt Implications
The Distributional Effects of the Belt and Road Initiative and Its Debt Implications