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Assistant Professor Department of Economics University of California, Davis |
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| Research Interests International Trade and Finance, International Monetary Economics. All Banks Great, Small, and Global: Loan Pricing and Foreign Competition (with Beatriz de Blas) Forthcoming, International Review of Economics and Finance, NBER Working Paper No. 16029 Previous version: FDI in the Banking Sector A Theory of Bank versus Bond Finance and Intra-Industry Reallocation (with Diego Valderrama) Journal of Macroeconomics 34(3) 2012: 652-673, NBER Working Paper No. 15454 Economic Quarterly 98(1), 2012: 51-76 Previously circulated under the title "Entry, Multinational Firms, and Exchange Rate Volatility" Exchange Rate Volatility and First-Time Entry by Multinational Firms Review of World Economics 148(2), 2012: 269-295, NBER Working Paper No. 13659 The New Theory of Foreign Direct Investment International Finance 12(1), 2009: 107-119 Journal of International Economics 71(2), 2007: 344-372 (for Technical Appendix click here In Exchange Rates, Economic Integration and the International Economy, edited by Leo Michelis and Mark Lovewell, APF Press 2004: 169-198 Hymer's Multinationals (with Beatriz de Blas) Forthcoming, Journal of Economic Behavior and Organization Understanding Markups in the Open Economy (with Beatriz de Blas) (Under submission, AEJ Macro) FRBD Institute for Globalization and Monetary Economics Working Paper No.67, also NBER Working Paper No.16587 Previously circulated under the title "Teams of Rivals: Endogenous Markups in a Ricardian World" Financial Choice in a Non-Ricardian Model of Trade (with Diego Valderrama) NBER Working Paper No. 15528 In Search of the Armington Elasticity (with Robert C Feenstra and Maurice Obstfeld) Big Banks and Macroeconomic Fluctuations: A New Theory and Cross-Country Evidence of Granularity (with Claudia M. Buch and Monika Schnitzer)
Does the mere presence of big banks in itself affect the volatility of aggregate output? We expand Gabaix's (2010) theory of granu-
larity to encompass the Bertrand competition frequently used in models of banking and show that this can, indeed, be the case if the distribution of bank size follows a power law. Then, we present empirical evidence using a panel of 30 countries that the banking sector is granular in that (1) the right tail of the bank size distribution follows a power law distribution and (2) the presence of big banks as measured by high market concentration magnifies the effect of idiosyncratic shocks to loan growth and is associated with more volatile fluctuations in aggregate output. This effect is particularly important for countries with fewer banks per capita and smaller banking systems. Courses Websites maintained via the MyUCDavis network ECN 160A International Microeconomics ECN 160B International Macroeconomics ECN 162 International Economic Relations ECN 171 Economy of East Asia ECN 190 Financial Crises in East Asia ECN 260E Topics in International Trade: Heterogeneity in General Equilibrium Modeling |