Publications

Working Papers

3 – Impact of Tariff Rationalization on Imports: An Event Study Analysis (with Jihad Abbadi and Imtiaz Ahmad)


Abstract: The improved institutional set-up under the National Tariff Policy (NTP) 2019-24 has increased the pace at which tariff rationalization is taking place in Pakistan, particularly in the case of raw materials and intermediate products. Since the approval of NTP 2019-24, the government has reduced tariffs on 6248 tariff lines, including the introduction of a zero percent slab for 2062 tariff lines. Our estimates based on an event study model show that the decline in tariffs on raw materials and intermediate products has near complete pass-through to import prices in the short term, which only decreased slightly in the long term, and there was a delayed but considerably large increase in the number of imports. Moreover, following the tariff rationalization, there was a substantial increase in the quantum index of large-scale manufacturing and export ratio of publicly listed firms indicating that industrial output and exports were also positively affected by tariff rationalization.


2 – New Products or More of the Old? Estimating the Impact of Canadian Free Trade Agreements on Exports [PDF]


Abstract: Do Free Trade Agreements (FTAs) increase the dollar value of already exported products – the intensive export margins? Recent literature has documented an ambiguous impact on the exports of these products. I develop a framework that explains the source of ambiguous effects of FTAs on intensive export margins. I use 6-digit bilateral trade data and five FTAs to estimate the dynamic effects of the agreements on Canadian exports to its FTA partners. I first divide the pre-agreement export basket into two groups, i.e., products at positive and negative intensive margins. My difference-in-differences estimates show that (i) the export value of both groups of products increases significantly in the short- and long-term for developed FTA partners. (ii) In cases where FTA partners are emerging markets, the impact is insignificant or negative in both the short- and long-term. Regression Discontinuity Design estimates also suggest that the impact of FTA on the export value of products at intensive margins depends on whether the FTA partners are emerging or developed markets.


1 – Returns to Scale in U.S. Production, Redux [PDF](with Hashmat Khan and John Fernald)


Abstract: We estimate constant returns or slightly decreasing returns at the industry level in the private U.S. economy over the past 30 years, using two separate industry datasets. An intuitive identity linking returns to scale, the markup, and the profit rate, gives an implied markup of approximately 12 percent, smaller than the estimates in the recent literature ranging from 15 – 40 percent. Put differently, given our estimated profit rate, large markups imply strongly increasing returns, which are not evident in the aggregate data. These findings suggest that approximately constant returns to scale in the U.S. economy are consistent with a relatively small aggregate markup in the post-1990 period.

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