Working Papers
Renewable resource rents, taxation and the effects of wind power on rural economies (with Nhu "Claire" Nguyen)
The rapid growth of utility-scale wind energy generation is a potentially important boon to rural economies in the United States. Yet econometric estimates suggest that the local economic benefits of wind energy generation have been modest, perhaps because the sector is capital-intensive and financed almost exclusively by external capital. In this paper we argue that a) both the presence of a critical - but unpaid - factor of production (the wind) and generous federal subsidies are quantitatively important sources of economic rent, and b) a large portion of these rents accrue to providers of capital who reside outside the local economy. We build a partial equilibrium model that illustrates the mechanisms that generate economic rent, and integrate it into a small open economy general equilibrium model of a county’s economy. We calibrate the partial and general equilibrium models to data from two rural counties in Indiana, quantify the economic rents, and consider the consequences of a resource rent tax. Resource rent taxes generate significantly larger economic benefits for communities that host wind power, and offer an opportunity to spread the sector’s economic benefits more broadly within them. Broadly distributed revenues from resource rent taxes might facilitate greater acceptance of utility scale wind power in communities where the sector would otherwise be unwelcome. State public utility commissions provide an analytical infrastructure that could support local taxation of the kind that we consider.
The rapid growth of utility-scale wind energy generation is a potentially important boon to rural economies in the United States. Yet econometric estimates suggest that the local economic benefits of wind energy generation have been modest, perhaps because the sector is capital-intensive and financed almost exclusively by external capital. In this paper we argue that a) both the presence of a critical - but unpaid - factor of production (the wind) and generous federal subsidies are quantitatively important sources of economic rent, and b) a large portion of these rents accrue to providers of capital who reside outside the local economy. We build a partial equilibrium model that illustrates the mechanisms that generate economic rent, and integrate it into a small open economy general equilibrium model of a county’s economy. We calibrate the partial and general equilibrium models to data from two rural counties in Indiana, quantify the economic rents, and consider the consequences of a resource rent tax. Resource rent taxes generate significantly larger economic benefits for communities that host wind power, and offer an opportunity to spread the sector’s economic benefits more broadly within them. Broadly distributed revenues from resource rent taxes might facilitate greater acceptance of utility scale wind power in communities where the sector would otherwise be unwelcome. State public utility commissions provide an analytical infrastructure that could support local taxation of the kind that we consider.
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)
"Implicit Utility and the Canonical Gravity Model" (with Anton Yang)
"Hubs in international maritime shipping" (with Manuel Jimenez)
"Implicit Utility and the Canonical Gravity Model" (with Anton Yang)
