Browsing by Subject "Economic Geography"
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Item Open Access Essays on Technology, Fiscal Policy, and Firm Behavior(2022) Jiang, XianMy dissertation seeks to enhance our understanding of how technology and fiscal policies shape firm behavior and implications for the aggregate economy and policy designs. In the first two chapters, I show empirically and quantitatively that information and communication technology (ICT) can widen firms’ geographic span of control by reducing internal communication costs. Combining comprehensive establishment-level datasets with ownership linkages, geographic locations, and ICT adoption, I document that firms with more advanced technology have both higher within-firm communication and larger geographic coverage. Exploiting natural experimental variation from the Internet privatization in the early 1990s, I show that better access to ICT helped firms expand geographically. Using a model where firms endogenously adopt ICT, choose multiple production locations, and trade domestically, I estimate that the Internet privatization increased overall efficiency by 1.1%. Compared to a trade-only model, a model with multi-unit firms predicts that efficiency gains are larger and more geographically dispersed. Policy counterfactuals show that to improve local welfare, a policy coordinated across locations that improves ICT access can be more effective than uncoordinated local policies.
The third chapter is joint work with Zhao Chen, Zhikuo Liu, Juan Carlos Suárez Serrato, and Daniel Xu. We study one of the largest tax reforms in China---the 2009 value-added tax reform that allowed firms to deduct input value-added tax from output tax and thus reduced user cost of capital for equipment investment. Using reduced-form analysis and a quantitatively firm investment model, we find that investment stimuli that shrink firms' inaction regions, such as value-added tax reduction and investment tax credits, are more effective: Given the same tax revenue loss, those policies lead to larger investment response.
Item Open Access The Political Economy of Decline(2014) Barber IV, Benjamin ScholesDeclining industries are privileged at the expense of new innovative ones in some cities but not others. In order to understand why, I develop an argument about how politics aggregates the demand for industrial rents across space. Geographically concentrated industries produce electorates with homogenous preferences in favor of supporting established local firms. In electoral systems where politicians are beholden to voters in a narrow geographic constituency, politicians will support efforts to prop up these industries even as these measures stymie innovation. Conversely, in electoral systems where politicians are beholden to broad party interests, politicians will support nationally important and geographically dispersed industries. Concentrated industries, by contrast, are more likely to die a rapid death and leave public resources available for new pioneering firms. Thus, the intersection between electoral and political geography provides insight into the Schumpeterian creative destruction needed to transform a city into a post-industrial economy. I formalize my argument in two models: one analyzing the demand of subsidies over public goods by voters and another exploring the tradeoff between rent-seeking and innovation by firms. I test the resulting hypotheses through cross-country statistical regressions and two in-depth case studies. Using firm-level data across many countries I show that political geography conditions the provision of subsidies to declining firms, and that electorally important firms are less likely to innovate. Then, using original field data I investigate the causal impact of political institutions and economic geography on the provision of subsidies by utilizing exogenous shocks in Thailand and India.