About

Trotsky and I in Howard Park, South Bend, IN. November 28th, 2020.

My name is Agustín Gutiérrez.

I'm a PhD Candidate in Economics at the University of Chicago interested in international trade, production networks and economic growth.

Click here to download my CV.




Email: agusting@uchicago.edu

Twitter: @AgusGutierrez92


Working Papers

  • Labor Market Power and the Pro-competitive Gains from Trade

Abstract: We study the gains from trade liberalization in a quantitative model with strategic complementarities in price and wage setting, and endogenously variable levels of firm market power. Market power in product and labor markets causes large firms to be too small relative to the efficient allocation. Exposing product markets to trade has two opposing effects: It reallocates resources towards the largest firms, which can reduce misallocation; but also increases the market power these firms exert in local labor markets where there is no foreign competition. The strength of these two forces depends on the amount of market overlap in the economy, i.e. the extent to which competing firms in a product market also compete against each other for workers in the same local labor market. We use Australian firm-level data to measure the extent of market overlap and recover the structural parameters of the model. We estimate the pro-competitive gains within a counterfactual where the economy goes from the observed levels of trade to the autarky equilibrium. In our preliminary calibration of the model, we find that closing the economy to trade worsen the distribution of resources reducing aggregate productivity by 4%.

  • Trade Policy and Global Sourcing: An Efficiency Rationale for Tariff Escalation

with Pol Antràs, Teresa C. Fort, and Felix Tintelnot

Link to paper and Online Appendix.

Abstract: Import tariffs tend to be higher for final goods than for inputs, a phenomenon commonly referred to as tariff escalation. Yet neoclassical trade theory – and modern Ricardian trade models, in particular – predict that welfare-maximizing tariffs are uniform across sectors. We show that tariff escalation can be rationalized on efficiency grounds in the presence of scale economies. When both downstream and upstream sectors produce under increasing returns to scale, a unilateral tariff in either sector boosts the size and productivity of that sector, raising welfare. While these forces are reinforced up the chain for final-good tariffs, input tariffs may drive final-good producers to relocate abroad, mitigating their potential productivity benefits. The welfare benefits of final-good tariffs thus tend to be larger, with the optimal degree of tariff escalation increasing in the extent of downstream returns to scale. A quantitative evaluation of the US-China trade war demonstrates that any welfare gains from the increase in US tariffs are overwhelmingly driven by final-good tariffs.


  • From Increasing Returns to External Economies of Scale: A Folk Theorem in Krugman-type models

Link to paper (coming soon).

Abstract: That Krugman-type models are isomorphic to models with external economies of scale is widely believed among trade economists. However, a proof of this equivalence only exists in standard Krugman models with restricted input-output links across sectors for both production and the entry technology. This paper shows that the isomorphism persists once we allow for arbitrary links across sectors, or the use of intermediates in the entry technology, and provides the exact mapping between these two models. We apply our analysis to the environment study in Baqaee and Farhi (2019) and Baqaee and Farhi (2021). The isomorphism implies that the latter is a micro-foundation for the exogenous wedges and productivity functions of the former, and therefore the results in Baqaee and Farhi (2019) extend to Baqaee and Farhi (2021) once the correct mapping is applied.


Publications

  • Bond Risk Premia and the Return Forecasting Factor

with Constantino Hevia, and Martín Solá, Studies in Nonlinear Dynamics & Econometrics, February 2020.

Link to paper and Replication Files.

Abstract: The return forecasting factor is a linear combination of forward rates that seems to predict 1-year excess bond returns of bond of all maturities better than traditional measures obtained from the yield curve. If this single factor actually captures all the relevant fluctuations in bond risk premia, then it should also summarize all the economically relevant variations in excess returns considering different holding periods. We find that it does not. We conclude that including the return forecasting factor as the main driver of risk premia in a term structure model, as has been suggested, is not supported by the data.