Research

"Fixed costs and capital flow dynamics."

Evidence from a large number of countries reveals a pattern of pro-cyclical capital inflows and outflows with high variability. During expansions foreigners tend invest more in a country and domestic agents invest more abroad. During the downturn flows reverse and foreigners invest less in the domestic economy and domestic agents invest less abroad. This is at odds with standard portfolio choice models where capital flows are relatively small and are driven by expected returns. To address this, I construct a two-country portfolio choice model with fixed costs for investing abroad. In the presence of fixed costs I find that capital inflows and outflows are positively correlated, highly variable, and are weakly pro-cyclical.

"An agent-based model of entrepreneurship: Examining the role of alertness and transaction costs." (2017). Journal of Entrepreneurship and Public Policy. With Matthew Holian.[link]

"Preventing sudden stops by using cryptocurrency." With Mikhail Dmitriev.

We propose to use a government-controlled cryptocurrency for preventing sudden stops. The government can require an importer to pay a specific quantity of cryptocurrency coins per dollar value of imports. Similarly, exporters receive a specific quantity of coins per dollar value of exports. The cryptocurrency trades on the exchange market. When the trade balance is equal or exceeds the targeted value, the dollar value of the coin is zero so that there is effectively no tariff or subsidy. However, when the trade balance falls below the target level, the exchange rate for the cryptocurrency becomes positive, which effectively taxes imports and subsidizes exports. Consequently, agents take on less leverage during the boom, which prevents the sudden stop.

"An empirical investigation into gross capital flow dynamics using macro and disaggregated data."

"The role of heterogeneity in gross capital flow dynamics with fixed costs." With Manoj Atolia.