The Review of Economics and Statistics, forthcoming; with Jeronimo Carballo, Georg Schaur, and Christian Volpe Martincus
In this paper, we estimate the trade effects of a transit system upgrading that streamlines border processing in developing countries. Our empirical approach combines transaction level export data from El Salvador with unique data that distinguishes export flows that were processed on the transit system. Our results indicate that the new transit system lowered regulatory border costs and raised exports. At the low end, our back-of-the-envelope estimate of the return to investment is US$ 3-to-1. This evidence informs a policy covered by the 2013 WTO Agreement of Trade Facilitation.
The Economic Journal, Volume 131, Issue 635, April 2021, Pages 1150-1185; with Kyle Handley and Nuno Limão (NBER version here)
We estimate the uncertainty effects of preferential trade disagreements. Increases in the probability of Britain’s exit from the European Union (Brexit) reduce bilateral export values and trade participation. These effects are increasing in trade policy risk across products. We estimate that at the average disagreement tariff of 4.5% the increase in the probability of Brexit after the referendum lowered EU-UK bilateral export values between 11-20%. Neither the EU or UK exporters believed a trade war was likely.
AEA Papers and Proceedings, 110: 552-56, 2020; with Kyle Handley and Nuno Limão
We examine if Brexit uncertainty has trade externalities beyond Europe. Using detailed data on export values and participation, tariffs, and Brexit probabilities prior to the referendum, we estimate ongoing negative trade-uncertainty elasticities between the United Kingdom (UK) and its non-European partner countries in preferential trade agreements that will require renegotiation post-Brexit. We use them to isolate the impact of the referendum on export values and net entry; we find effects similar to those identified by Graziano et al. (2018) for the UK and EU.
Journal of International Economics, 96(1), 119-137, 2015; with Jeronimo Carballo and Christian Volpe Martincus
All international trade transactions are processed by custom agencies and such processing takes time. Despite the fact that time is a key trade barrier, the time it takes for shipments to clear customs and how customs' processing times affect firms' exports remain largely unknown. In this paper, we precisely estimate the effects of custom-related delays on firms' exports. In so doing, we use a unique dataset that consists of the universe of Uruguay's export transactions over the period 2002-2011 and includes precise information on the actual time it took for each of these transactions to go through customs. We account for potential endogeneity of these processing times by exploiting the conditional random allocation of shipments to different verification channels associated with the use of risk-based control procedures. Results suggest that delays have a significant negative impact on firms' exports along several dimensions. Effects are more pronounced on sales to newer buyers.
Applied Economics Letters, 22(10), 835-842, 2015, with Juan Blyde and Christian Volpe Martincus
In this article we present evidence on the impact of economic integration agreements (EIAs) on production fragmentation based on a direct measure of offshoring: the number of vertically integrated foreign subsidiaries located in partner countries. We find that EIAs favour the formation of cross-border production networks. Further, this effect is stronger when agreements are deeper.
Economics Letters, 123(2), 149-153, 2014, with Jeronimo Carballo, Pablo Garcia and Christian Volpe Martincus
In this paper we provide estimates of the effects of international transport costs on firms' exports and disentangle the channels of these effects. In so doing, we use a unique dataset consisting of highly disaggregated transaction-level trade and transport cost data and, in order to account for endogeneity, we exploit the exogenous variation in these costs associated with the non-trade related closure of the main bridge connecting two countries.