Ezequiel Garcia-Lembergman

I study whether and how retail chains and their geographic distribution of stores contribute to the propagation of shocks across regions in the United States. Linking detailed store scanner micro-data to a county-level house price dataset for the period of the Great Recession, I investigate the spread of house-price induced local shocks through the networks of retail chains. My main empirical finding is that county-level prices are sensitive to shocks in distant counties that happen to be served by the same retail chains. A 10% drop in house prices in other counties that are served by the same retailers leads, on average, to a 1.4% decline in the local consumer retail price index. My results hold after conditioning on trade relationships due to geographic proximity. In fact, I document that once the retail chains' networks are controlled for, there is no additional role for propagation of shocks across nearby regions. Finally, while the network of retail chains is an important determinant of the effect local shocks have on consumer prices, it does not affect wages in distant regions, which suggests that the network of retail chains affects consumers' real income. I rationalize the reduced-form estimates in a model in which retail chains vary prices uniformly across their stores as a function of changes in market demand that they face at the (aggregate) chain level. I find that the calibrated model with uniform pricing can fully account for the reduced-form effects. Counterfactual analysis shows that uniform pricing and the geographic distribution of retail chains reduced cross-county dispersion in inflation by 40% during the Great Recession, benefiting consumers from low-income counties that were less exposed to drops in local house prices.

How does multinational production affect climate change? Global climate negotiations have set the goal of enormous transfers per year from rich to poor countries, including through private investment, to address climate changeThe $100 billion is supposed to address climate mitigation and adaptation. Although most funds so far are for mitigation (emitting less GHGs), I am leaving the “address climate change” phrase rather than “decrease GHGs” here since some of the $100 billion can be for adaptation too (e.g., sea walls). Two stylized facts motivate the analysis of multinational production as a mechanism for such transfers. First, carbon emissions per dollar of value added or output differ substantially across countries, even conditional on industrial composition. Second, the emissions rate of a foreign-owned plant increases with the emission rate of its home country, suggesting that firms bring green technology with them when operating abroad. We develop and quantify a multi-country general equilibrium model of multinational production, trade, and energy to assess how policies encouraging multinational production would affect global carbon emissions and welfare.

We uncover a novel fact about the relationship between exporting and importing. Using a comprehensive database of Argentine firms, we find that exporting to a new destination increases the probability of a firm beginning to import from that market within the lapse of one year. We develop a model of import and export decisions to study the effect of productivity and import costs on the intensive and extensive margins of importing. We show that "importing after exporting" implies that export entry reduces the cost of importing from that market. This effect is more likely to occur in distant markets, and in situations where importing involves non-homogeneous and rarely imported goods. Furthermore, new import activities from a new export destination continue regardless of whether the firm remains as an exporter in that market. This evidence emphasizes the influence of export experience on firms' sourcing decisions. The effect of export entry on sourcing costs has implications that go beyond qualitative insights: according to our quantitative exercise, import costs fall 53% in a given destination after export entry, and the estimated import-cost savings increase for distant markets outside the Americas.

We study the consequences of non-tariff barriers to imports on firms' behavior in export markets. We exploit the timing in which several inputs entered a system of non-automatic import licenses (NAILs) that was implemented in Argentina to study the consequences of the policy on the behavior of multi-destination exporters. We develop a trade model with variable markups and propose a methodology that lets us identify the differential price responses of a given firm across its destinations and how this response depends on the firm's market power in the destination. On the empirical side, we use a comprehensive dataset of Argentinian firms and exploit variability in the timing in which different inputs were added to the NAILs system. Not surprisingly, NAILs reduce imports for those firms that are more exposed to the policy. This, in turn, yields to a considerable decline in their exports. We then focus on the responses of multi-destination exporters across their destinations to uncover a novel fact: for a given firm, in a given year, the negative effect of rising import costs on exports is more prominent in markets where the firm is smaller relative to other firms in the same sector. In light of our theoretical model, this implies that the elasticity of markup for a multi-destination exporter is increasing on its market power in the destination market. Intuitively, a multi-destination exporter decides to adjust its markups relatively more (and less their prices and export revenues) in those markets where it has higher market power.

Based on a framework of memory and recall that accounts for social networks, we provide conditions under which social connectedness amplifies or mitigates expectations. We provide evidence for these predictions using a newly constructed large dataset that merges a uniquely dense survey of US consumers' inflation expectations with information on individuals' social network connections across counties. A 1 percentage point increase in the social network-weighted inflation expectations in other counties is associated with a 0.29 percentage point increase in individual inflation expectations. This link is stronger for groups that share common demographic characteristics, such as gender, income or political affiliation: a 1 percentage point increase of network-weighted inflation expectations of individuals sharing the same gender in other counties is associated with a 0.754 percentage point rise in individual inflation expectations.

We study the efficiency and distributional effects of an unusual price controls policy implemented in Argentina. There are two interesting features from the program that makes it different from standard price control programs. First, the participation of firms was voluntary. Second, participant products were advertised by the government in stores, which provided incentives for the firms to enter the program. We exploit scanner data and variation from price regulations introduced in the Argentine retail sector. We first present descriptive evidence on the effect of price controls on the supply of targeted products, spillovers on similar products, and explore how it differs by the level of concentration in the product's industry. Firms that entered the program reduced their prices, increased their sales volume, and there is no evidence of shortages. We then develop a model to study the general equilibrium effects of the policy. In the model, access to cheap advertisement works as an incentive for the firms to endogenously enter to the program. This incentive is larger for smaller firms. We use the model to quantify the distributional and welfare effects of this policy, under alternative scenarios.

In spite of the generalized use of quantitative restrictions on exports, there is little empirical research on their effectiveness to achieve the intended effects of reducing exports, increasing production for domestic markets, and reducing domestic prices. This paper aims at filling this gap by estimating the impact of quantitative restrictions on cattle beef exports in Bolivia, applying a synthetic controls approach. Our main finding is that export restrictions have a negative impact not only on total production, but also on production for the domestic market. This fact, together with an increase in the domestic price, is consistent with a supply shift. The fact that export controls can shift supply and actually harm production for domestic markets bears important implications for the design of policies in the future.