Working Papers
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Financial Frictions, Tax Shield, and the Macroeconomy – Job Market Paper
This paper evaluates the aggregate effects of financial frictions in the presence of debt tax shields. Previous studies indicate that removing financial frictions will stimulate investment and reduce misallocation. However, with the tax bias of debt over equity, I show that the macroeconomic implications of financial frictions can be different.
Through the lens of a dynamic stochastic general equilibrium model of investment with heterogeneous firms, I show that while a small tax shield may mitigate misallocation, a large tax shield with loose financial constraints can exacerbate the aggregate cost of financial frictions and the misallocation of capital.
My counterfactual experiments demonstrate that by removing financial frictions, aggregate capital increases by 10%, output increases by 3%, and welfare grows by 2%. Aggregate gains can be 10 times larger when accounting for the tax shield. My results speak to recent tax policy reforms and concerns about high levels of corporate debt in advanced economies.
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The Survival of Zombie Firms: Evidence from the European Sovereign Debt Crisis
Draft coming soon!
It is generally agreed that an efficient economy should feature a productivity-enhancing reallocation where resources are shifted to high-productivity firms and inefficient firms are scrapped. However, recent studies document an increasing number of economically-unviable firms (“zombie firms”).
Research Report
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Gaps and opportunities: supporting Boston’s BIPOC small businesses: A Survey of Service Providers (with David Glick, Katharine Lusk, Stacy Fox, and Madeline Webster)
Boston University Initiative on Cities Research Reports, 2022
Based on in-depth, structured, qualitative interviews with leaders across 30 nonprofits, community-based organizations, city agencies, and others, this report seeks to 1) reveal the strengths and weaknesses of Boston’s ecosystem of small business advocates, funders, and technical assistance providers, 2) capture their views on the challenges confronting our region’s Black, Indigenous, and people of color (BIPOC) small business owners and entrepreneurs, and 3) collect their ideas for changes in the future.
Work in Progress
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Firm Indebtedness and Increased M&A
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Foreign Competition, Innovation, and Supply Chain