My name is Agustín Gutiérrez.
I'm a PhD Candidate in Economics at the University of Chicago interested in international trade, macroeconomics and labor.
I'm on the academic job market for 2022-2023
Click here to download my CV.
Labor Market Power and the Pro-competitive Gains from Trade
Abstract: We build into a model of trade with market power in product markets and strategic complementarities in price-setting labor market power, strategic complementarities in wage-setting, and a rich structure of product and labor markets to study the pro-competitive gains from trade. We combine our model with confidential firm-level data from Australia to quantify the welfare and efficiency gains of higher exposure to international trade. We find that closing the economy to trade has significant and negative effects on welfare and aggregate labor productivity. In a perfectly competitive economy, where there is no firm market power, welfare losses are only 40% of the total effect which indicates that imperfect competition is the main driver behind these losses. Contrary to common belief, these losses are amplified by the presence of labor market power, which accounts for almost half of the total effect. We find that, at the aggregate level, the pro-competitive effect is well approximated by models of firm market power that leave aside strategic complementarities both in price- and wage-setting. However, these models hide how the losses materialize. Our results highlight the importance of market structure, firm competition, and strategic complementarities for the quantification of the gains from trade liberalizations.
Trade Policy and Global Sourcing: An Efficiency Rationale for Tariff Escalation
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.
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.
Bond Risk Premia and the Return Forecasting Factor
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.