Publications“The Effects of Quantitative Easing on Bank Lending Behavior,” Review of Financial Studies, Nov (2017), 30(11): 3858–3887. (with O. Darmouni)
Banks’ exposure to large-scale asset purchases, as measured by the relative prevalence of mortgage-backed securities on their books, affects lending following unconventional monetary policy shocks. Using a difference-in-differences identification strategy, this paper finds strong effects of the first and third round of quantitative easing (QE1 and QE3) on credit. Highly affected commercial banks increase lending by 3% relative to their counterparts. QE2 had no significant impact, consistent with its exclusive focus on Treasuries sparsely held by banks. Overall, banks respond heterogeneously and the type of asset being targeted is central to QE.“Persistent Anti-Market Culture: A Legacy of the Pale of Settlement after the Holocaust,” American Economic Journal: Economic Policy, Aug (2013), 5(3): 189–226. (with I. Grosfeld and E. Zhuravskaya)
We estimate the long-term effects of Jewish presence in Europe before World War II, using discontinuity at the border of the “Pale of Settlement” area where Jews were allowed to live in the Russian Empire. Current residents of the Pale have lower support for the market, and are less entrepreneurial but more trusting compared to those outside the Pale. We suggest a mechanism and test for it: anti-Semitism generated persistent anti-market culture and trust among non-Jews. Consistent with this mechanism, anti-market attitudes and trust decrease with distance to pogroms controlling for historical Jewish presence. Self-identification and cohesion of a majority depends on the presence of a minority.
Working Papers(Un)Competitive Devaluations and Firm Dynamics
This paper studies monetary and exchange rate policy in a world of global value chains. Using recent microdata from Japan and Russia, devaluations are shown to negatively affect exporters in terms of employment, domestic revenue and profitability relative to nonexporting firms. Given their substantial dependence on imported intermediate inputs, exporting firms are more exposed to marginal cost shocks following exchange rate movements. Standard macro models are too simplistic in their microstructure to capture these transmission channels. I propose a New Keynesian general equilibrium model with firm heterogeneity, varying intermediate import intensities, and international dollar pricing to explain the findings. Strategic complementarities improve the quantitative performance of the model without changing its qualitative properties. The new paradigm is successful in matching key firm-level moments as well as the evolution of inflation and net exports.Exchange Rate Shocks and Quality Adjustments (with D. Goetz)
How do firms change the quality composition of their traded goods in response to an exchange rate shock? Using unique data from a large Russian retailer that varies its offerings across seasons, we document that ruble devaluations are associated with a reduction in the observed material and fabric quality of goods the retailer imports for resale. Our results indicate that an increase in the retailer's costs, as opposed to a reduction in demand due to shrinking real incomes, is the driving force. We estimate a simple multi-product sourcing model to quantify the welfare impact of quality adjustments and find that preventing firms from downgrading overstates the welfare loss from the 2014 ruble devaluation by 33%, while incorporating cost heterogeneity but ignoring quality has ambiguous effects on welfare changes in general.
Work in ProgressFirm Debt and Monetary Policy in Europe (with O. Darmouni and O. Giesecke) Tenure Effects in Firm-to-Firm Bargaining (with D. Goetz) Prices and Inventories After a Large Devaluation (with M. Golosov and V. Midrigan)
(draft coming soon) Financial Innovation and Trade: Evidence from Cotton Futures Trading (with C. Steinwender) The Effects of Propaganda on Consumer Behavior
This paper studies the impact of state propaganda on consumer purchasing behavior by analyzing online spending patterns in Kazakhstan, Russia and Ukraine around the annexation of Crimea in March 2014. A significant relative demand shift towards local brands is observed in regions and cities of Russia where anti-western online search requests, a proxy for exposure towards state-sponsored media, become particularly high. Consumption in the northern regions of Kazakhstan, home to a substantial fraction of ethnic Russians, reacts in a similar manner compared to other parts of the country. Relative spending on Russian brands in Ukraine stays largely unresponsive throughout the whole period.