Research
Job Market Paper
2025
- Sourcing Frictions Meet Inventories: A Dynamic Ricardian Framework for the Impact of Trade Shocks2025Relative to long-run outcomes, short-run import responses to tariff increases may be smaller due to lower trade elasticities across sourcing countries, but larger due to inventory-driven timing adjustments in ordering. This paper develops a unifying Ricardian framework that accommodates both mechanisms while preserving tractability for solving dynamic general equilibrium responses with a realistic production network involving many industries and countries. In this model, traders set optimal intertemporal prices based on individual inventory positions and perceived future changes. Switching to optimal suppliers occurs occasionally based on expected future profits. Aggregation is simple due to a novel proportionality feature that avoids the need to track distributions of inventory levels across individual traders. A tariff shock persisting for one month, comparable in magnitude to the 2025 Liberation Day tariffs, induces a sharp decline in U.S. imports, featuring ordering pauses among traders with sufficient inventories, and substantial cumulative welfare losses that unfold gradually over time.
Working Paper
2024
- Dynamic Adjustment to Trade Shocks2024Global trade flows and supply chains adjust gradually. Empirical estimates of the trade elasticity for the short run are about half as large as those for the long run and suggest that trade is subject to substantive adjustment frictions. We develop a tractable framework that provides microfoundations for dynamic trade adjustment and rationalizes reduced-form estimation of a time-varying trade elasticity. The model features sticky sourcing, forward-looking firms, and nests the Eaton-Kortum model as the limiting long-run case. We calibrate the model to observed time-varying elasticities and quantify the welfare impacts of two events: the 2018 US-China trade war (an arguably unanticipated change) and the 2004 EU enlargement (an anticipated change). Our findings suggest that sourcing frictions and anticipation effects alter the time pattern of welfare changes, can result in short-term welfare losses but long-term gains, and can drive marked trade share adjustments before anticipated shocks occur.Selected for the NBER Summer Institute 2024, the 2025 ASSA Annual Meeting
2023
- Supply Chain Frictions and the Dynamic Behavior of Durable Input Inventories2023The positive contemporaneous comovement between aggregate inventories and sales is a well-known stylized fact that guides the assessment of models and aggregate implications of inventory behavior. This paper highlights an overlooked feature that durable input inventory movements lag sales movements by around three quarters. This lagged comovement is discernible both in the unconditional cyclical components of data and in the impulse responses to identified aggregate shocks. To assess its quantitative significance, I develop a tractable supply chain production problem that is capable of reproducing the lagged comovement. In this model, producers are required to order critical inputs from suppliers one quarter in advance and they occasionally adjust their optimal order sizes based on forecasts of their own future sales subject to information frictions. I embed the production problem into a multisector New Keynesian model with input-output relations. Following a monetary shock, relative to a counterfactual scenario in which the inventory-sales comovement is fully synchronized, the estimated model demonstrates dampened responses of aggregate output over the first year but more gradual recovery over later horizons due to the reduced sensitivity of user cost of capital with respect to real interest rate changes.
Work in Progress
2025
- Inventories and Incomplete Tariff Passthrough2025
- The General Equilibrium Impact of Trade War on Regional and Sectoral China Labor Market2025