Work in Progress

• "Public Debt and Investment in Aging Developed Economies"

  (Job Market Paper) Paper

  Abstract: This paper investigates government foreign investment as a strategy to manage public debt in aging developed economies. Using a quantitative overlapping generations model with incomplete markets, calibrated to Japan's experience since the mid-1990s, it shows that a government can sustain a finite debt level with permanent fiscal deficits, even when the domestic interest rate exceeds the economy's growth rate. This is achievable if the return on foreign investment is high enough or if the government pursues its strategy aggressively enough, even without a fiscal feedback rule. The model accounts for almost three quarters of the increase in the debt-to-GDP ratio in the data, with roughly half due to population aging and half from the foreign investment strategy. Increased longevity is substantially more impactful than low fertility. If the Japanese government had not ramped up its foreign investment, the debt-to-GDP ratio would have increased to only 145.9% by 2020, compared to over 250% in the data, but the debt would eventually settle at much higher levels. Aggressive foreign investment hurt most individuals alive in 1995, except the very rich, and benefited future generations. The strategy caused an improvement from a utilitarian point of view but is not implementable as a Pareto improvement via budget-neutral lump-sum transfers. The model finds that restoring debt sustainability with consumption tax increases is better than reforming the pension system, either through a lower replacement rate or a higher retirement age. Finally, this paper quantifies the risk to Japan's strategy from uncertain foreign returns via counterfactuals and a case with aggregate uncertainty.

• "Granular Search in Monopsonistic Labor Market"

  (with Sean McCrary) | Draft coming soon!

  Abstract: We develop a model of monopsonistic labor markets with the granular search protocol, à la Jarosch, Nimczik and Sorkin(2024), where the firm size distribution is endogenously determined. We introduce a simple static model to show that the monopsonist’s effective Nash bargaining power is endogenously determined by the firm’s relative size. Monopsonistic firms choose the optimal vacancy postings taking into account the wage determination, ending up with overposting vacancies to suppress wages. We then extend the model to a dynamic model and solve its stationary equilibrium. The dynamic model delivers a rich set of policy implications, including the effect of minimum wage policy on the wage distribution and the effect of competition policy on the labor market equilibrium. Specifically, we show that the increase in wages upon the entry of a new firm is more amplified in the presence of granular search protocol since the new firm’s entry reduces the incumbent firm’s effective bargaining power as well as their employment size.

• "Sovereign Partial Default in Continuous Time"

  (with Gabriel Mihalache) Paper

  Abstract: We formulate and solve a tractable, continuous time version of the sovereign partial default model of Arellano, Mateos-Planas and Ríos-Rull (2023). We compute our model using both traditional continuous time methods and, with an eye towards larger state space applications, on a deep neural network. We show that our formulation allows for a tight characterization of debt and default dynamics, as well as the length and severity of crisis events.

• "Strategic Demand for Inventors"

  Slides | Presented at: Midwest Macro Spring 2023 (Clemson)

  Abstract: This paper develops a simple Schumpeterian growth model where firm-level strategic demand for inventors can be described. All firms should produce the latest invention to be the monopolist in output market, and inventor is the only input of innovation. In the model, innovating firms can determine their demands for inventors to strategically deter their competitors’ innovation. Using a tractable model with Stackelberg competition in inventor market, I study the effect frontier firm’s strategic demands on the aggregate growth. Compared to the non-strategic model, frontier firms’ strategic hiring decisions can worse off the aggregate growth and the top income inequality. The mechanism is intensified when fixed cost of R&D is high.

Pre-doctoral Work

• "The impact of international patenting on corporate patenting activities: Evidence from Korea"

  (with Jihong Lee )

  Abstract: This paper studies the impact of international patenting on corporate patenting activities, using a novel firm-level dataset from Korea. After making an overseas patent application for the first time, firms increase their overall patenting activity, both domestically and internationally, relative to similar firms that operate only in the domestic market for ideas. The improvement occurs in both cited and uncited patents, and these effects are persistent and grow over the 5-year period following international entry. Furthermore, young firms benefit more than mature firms from global engagement. Our findings suggest a role for policy.

  Published in: Technovation, 130, 2024

• "Korea Patent Data Project (KoPDP): Contents and Methods"

  (with Jihong Lee , Hyunkeyong Lim, Keunsang Song and Jae Yu Jung)

  Abstract: In this paper, we describe the contents and methods of “Korea Patent DataProject (KoPDP)”. The project collects all utility patents granted from the Korea Intellectual Property Office (KIPO) for the period 1948-2016 and the US Patent and Trademark Office (USPTO) for the period 1976-2017. The project also matches their assignees to firms in DataGuide 5.0, a Korean financial database.The resulting dataset includes total 14,803 listed and non-listed Korean firms matched with their Korean and US patents, in addition to a host of accounting and financial information. Over 45% of all sample KIPO patents and 87% of USpatents assigned to Korean assignees are matched. We explain the detail of our matching procedures and also provide a coherent industry classification system for both sets of patents.

  Published in: The Korean Economic Forum, 12(4), 2020
  Replication Data: Harvard Dataverse