Working Papers
Risk Management in Border Inspection (with Bilgehan Karabay and Shawn W. Tan)
As part of their commitments under the World Trade Organization’s Agreement on Trade Facilitation, many developing countries are set to adopt risk management, a strategy for selecting import shipments for inspection. This paper formalizes key enforcement issues related to risk management. It argues that the complexities of international trade oversight mean that inspecting agencies lack certainty about the conditional probability that a given shipment will not comply with import regulations. Ambiguity of this sort is likely to be important in developing countries that lack the sophisticated information technology (IT) used in advanced risk management systems. This paper show empirically that infrequent shipments have conditionally higher inspection rates, a finding that is consistent with the ambiguity hypothesis. This paper formalizes a role for ambiguity in a theoretical model of border inspection. Finally, the paper calibrates the model and shock the ambiguity parameters to illustrate the consequences of an IT -driven improvement in risk management capabilities for search and compliance.
As part of their commitments under the World Trade Organization’s Agreement on Trade Facilitation, many developing countries are set to adopt risk management, a strategy for selecting import shipments for inspection. This paper formalizes key enforcement issues related to risk management. It argues that the complexities of international trade oversight mean that inspecting agencies lack certainty about the conditional probability that a given shipment will not comply with import regulations. Ambiguity of this sort is likely to be important in developing countries that lack the sophisticated information technology (IT) used in advanced risk management systems. This paper show empirically that infrequent shipments have conditionally higher inspection rates, a finding that is consistent with the ambiguity hypothesis. This paper formalizes a role for ambiguity in a theoretical model of border inspection. Finally, the paper calibrates the model and shock the ambiguity parameters to illustrate the consequences of an IT -driven improvement in risk management capabilities for search and compliance.
The Geography of Payment Activity on PayPal (with Kornel Mahlstein and Simon Schropp)
We use data from the electronic payments company PayPal to study the geography of online payment activity. An empirical gravity model confirms previous findings pertaining to e-commerce, namely a distance elasticity of payment value that is substantially lower than is typically observed in conventional international trade data. Our rich dataset allows us to study margins of payment activity, and we find that the firm extensive margin is considerably less sensitive to geographic frictions than is payment value. We investigate the reduced role of this extensive margin of trade using an analytical framework that predicts that the size of a firm’s exports is positively related to the average distance over which those exports are sold. We find a considerably weaker link between the scale and the geographic scope of PayPal merchants’ exports on the platform than has been observed among firms engaged in conventional international trade. In the theoretic framework, a cross-sectional relationship between export scale and geographic scope emerges over time because firms’ total export growth is partially attributed to their entry into ever more distant markets. In merchant-level regressions, we find that the age of PayPal merchants’ accounts has only marginal effects on the scale and average distance of their export sales on the platform. Overall, our findings suggest that PayPal – and perhaps e-commerce more broadly – offers disproportionate benefits to relatively small and/or new trading firms, because it facilitates their access to
geographically distant markets.
We use data from the electronic payments company PayPal to study the geography of online payment activity. An empirical gravity model confirms previous findings pertaining to e-commerce, namely a distance elasticity of payment value that is substantially lower than is typically observed in conventional international trade data. Our rich dataset allows us to study margins of payment activity, and we find that the firm extensive margin is considerably less sensitive to geographic frictions than is payment value. We investigate the reduced role of this extensive margin of trade using an analytical framework that predicts that the size of a firm’s exports is positively related to the average distance over which those exports are sold. We find a considerably weaker link between the scale and the geographic scope of PayPal merchants’ exports on the platform than has been observed among firms engaged in conventional international trade. In the theoretic framework, a cross-sectional relationship between export scale and geographic scope emerges over time because firms’ total export growth is partially attributed to their entry into ever more distant markets. In merchant-level regressions, we find that the age of PayPal merchants’ accounts has only marginal effects on the scale and average distance of their export sales on the platform. Overall, our findings suggest that PayPal – and perhaps e-commerce more broadly – offers disproportionate benefits to relatively small and/or new trading firms, because it facilitates their access to
geographically distant markets.
Expediting Trade: Impact Evaluation of an In-House Clearance Program (with Ana M. Fernandes and Claudia Berg)
Despite the importance of trade facilitation as an area of trade and development policy, there have been very few impact evaluations of specific trade facilitation reforms. This paper offers an evaluation of in-house clearance, a reform that allows qualified firms in Serbia to clear customs from within their own warehouse rather than at the customs office. The pooled synthetic control method applied here offers a novel solution to many of the empirical challenges that frustrate efforts to evaluate trade facilitation reforms. The method is used to estimate causal impacts on trade outcomes for 21 firms that adopted in-house clearance for import shipments. The program compressed the distribution of clearance times for adopting firms, but the estimated effects on median clearance times, inspection rates, and import value were not statistically significant. Tests for heterogeneous program impact do not indicate that the program affected adopting firms differently. Overall, the results suggest that the most evident benefit of the program for participating firms is reduced uncertainty about clearance times.
Despite the importance of trade facilitation as an area of trade and development policy, there have been very few impact evaluations of specific trade facilitation reforms. This paper offers an evaluation of in-house clearance, a reform that allows qualified firms in Serbia to clear customs from within their own warehouse rather than at the customs office. The pooled synthetic control method applied here offers a novel solution to many of the empirical challenges that frustrate efforts to evaluate trade facilitation reforms. The method is used to estimate causal impacts on trade outcomes for 21 firms that adopted in-house clearance for import shipments. The program compressed the distribution of clearance times for adopting firms, but the estimated effects on median clearance times, inspection rates, and import value were not statistically significant. Tests for heterogeneous program impact do not indicate that the program affected adopting firms differently. Overall, the results suggest that the most evident benefit of the program for participating firms is reduced uncertainty about clearance times.
In Progress
"Hubs in international maritime shipping" (with Manuel Jimenez)
"Renewable resource rents, taxation, and the effects of wind power on rural economies" (with Claire Nguyen)
"Implicit Utility and the Canonical Gravity Model" (with Anton Yang)
"Structural Gravity Model Estimates of Nested CES Import Demands for Soybeans" (with Guolin Yao)
"Hubs in international maritime shipping" (with Manuel Jimenez)
"Renewable resource rents, taxation, and the effects of wind power on rural economies" (with Claire Nguyen)
"Implicit Utility and the Canonical Gravity Model" (with Anton Yang)
"Structural Gravity Model Estimates of Nested CES Import Demands for Soybeans" (with Guolin Yao)
