Structural Reforms and Elections: Evidence from a World-Wide New Dataset, with Alberto F. Alesina, Davide Furceri, Jonathan D. Ostry and Dennis P. Quinn, January 2020. Download NBER WP 26720; PDF file.


We assemble two unique databases. One is on reforms in domestic finance, external finance, trade, product markets and labor markets, which covers 90 advanced and developing economies from 1973 to 2014. The other is on electoral results and timing of elections. In the 66 democracies considered in the paper, we show that liberalizing reforms engender benefits for the economy, but they materialize only gradually over time. Partly because of this delayed effect, and possibly because voters are impatient or do not anticipate future benefits, liberalizing reforms are costly to incumbents when implemented close to elections. We also find that the electoral effects depend on the state of the economy at the time of reform: reforms are penalized during contractions; liberalizing reforms undertaken in expansions are often rewarded. Voters seem to attribute current economic conditions to the reforms without fully internalizing the delay that it takes for reforms to bear fruit.

Macroeconomic Outcomes in Disaster-Prone Countries, with Alessandro Cantelmo and Giovanni Melina, June 2019. Download PDF file.


Using a dynamic stochastic general equilibrium model, we study the channels through which weather shocks affect macroeconomic outcomes and welfare in disaster-prone countries. We solve the model using Taylor projection, which deals effectively with high-impact weather shocks calibrated in accordance to empirical evidence. We find large and persistent effects of weather shocks that significantly impact the income convergence path of disaster-prone countries. For these countries, on average, weather shocks cause a welfare loss equivalent to a permanent fall in consumption of 1.24 percent, relative to non-disaster-prone countries. Finally, we examine policies that mitigate the adverse welfare effects. Welfare gains from investing in resilience infrastructure are tiny, if disaster-prone countries have to fully bear its extra cost. International aid yields significant welfare gains. However, to achieve a given welfare gain, it is more cost-effective for donors to contribute to the financing of resilience before the realization of disasters, rather than disbursing aid ex post.

The Armistice of the Sexes: Gender Complementarities in the Production Function, with Raphael Espinoza and Jonathan D. Ostry, June 2019. Download CEPR DP 13792.


Macroeconomic models have largely ignored the importance of gender diversity by assuming that male and female workers are perfectly substitutable in the aggregate production function. Whether this assumption is valid is an empirical question that this paper aims to answer by estimating the elasticity of substitution (ES) between the two types of labor. We apply linear and non-linear techniques to cross-country data at the aggregate level, to cross-country data at the sectoral level, and to firm-level data for the manufacturing sector in China. We find that male and female labor are far from being perfect substitutes: the ES is below 1 for the aggregate sample, between 1-2 for the sectoral sample, and between 2-3 at firm-level. We discuss why the ES may vary at different levels of aggregation and conclude on the implications of these results for growth accounting.

Populism and Civil Society, with Tito Boeri, Prachi Mishra and Antonio Spilimbergo, May 2019. Download CEPR DP 13306.


Populists claim to be the only legitimate representative of the people. Does it mean that there is no space for civil society? Since Tocqueville (1835), associations and civil society have been recognized as a key factor in a healthy liberal democracy. We look at the experiences of Europe and Latin America. We find that individuals belonging to associations are less likely by 2.4 to 4.2 percent to vote for populist parties, which is large considering that the average vote share for populist parties is between 10 and 15 percent. The effect is stronger after the global financial crisis.

Upgrading and Export Performance in the Asian Growth Miracle, with Fidel Perez-Sebastian and Nikola Spatafora, May 2019. Download PDF file.


This paper explores the contribution of product quality upgrading to the export performance of six fast-growing Asian economies, namely, China, India, Indonesia, Malaysia, South Korea and Thailand. We focus on measuring the effect of quality upgrading on the changes experienced by the sectoral export shares in these countries from 1970 to 2010 at the 2-digit-SITC level. To do this, the paper first builds a multisector model of Ricardian trade following Eaton and Kortum (2002) in which product quality is incorporated as a key feature. The model is then calibrated to generate predictions about the volume of exports. Our approach differs from previous literature because it allows estimation without employing domestic production data. Our main results point to quality upgrading as being a main determinant of the export shares. We also find larger returns as the economys commitment to increasing quality becomes longer.

On the Resilience of Trade in Services: Evidence from a new cross-country dataset, with Prakash Loungani, Saurabh Mishra and Ke Wang, April 2019. Download PDF file | Data.


Using a newly constructed dataset on trade in services for 192 countries from 1970 to 2014, this paper shows that exports of services are not only gaining strong momentum and catching up with exports of goods in many countries, but they could also trigger a new wave of trade globalization. More importantly the paper shows that traded services are much more resilient compared to traded goods during bad economic times.


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