Harvard University Job Market Candidate Papers

• Improving "National Brands": Reputation for Quality and Export Promotion Policies, with Julia Cagé (Job Market Paper)
  
  We study the effect of firm and country reputation on exports when buyers cannot observe quality prior to purchase. Firm-level demand is determined by expected quality, which depends on both past experience with the good and the country of origin's reputation for quality. Asymmetric information acts as a barrier to entry for high-quality firms, but facilitates sales by “fly-by-night” low-quality firms. When national reputation is endogenously set by the quality of past exports, we derive two types of steady-state equilibria. In a high-quality, high-reputation equilibrium, imperfect information does not hinder entry into export markets, but there is a distortion in profits and in the quality composition of exports. In a low-quality equilibrium, a range of relatively high-quality firms are permanently kept out of the market by the informational friction, so that countries with bad quality reputation can be locked into exporting low-quality, low-cost goods. Export subsidies then have a positive welfare effect on the exporting country, by enabling it to improve the average quality of its exports, its reputation for quality and exporter profits. However, a subsidy has the opposite long-run effects in a country that initially exports relatively high-quality products. Furthermore, in the presence of multiple reputation equilibria, the impact of small reputation shocks is short-lived but large reputation shocks can have self-fulfilling long-run effects. The model is consistent with empirical patterns of export prices. Measuring national reputations by analyzing the content of US newspaper articles about foreign countries over 1988-2006, we find that more positive news coverage of foreign countries and companies is associated with higher unit values of their exports to the US, particularly in sectors with a larger scope for vertical differentiation.


• Education and Military Rivalry, with Philippe Aghion and Torsten Persson
  
  Using data from the last 150 years in a small set of countries, and from the postwar period in a large set of countries, we show that large investments in state primary education systems tend to occur when countries face military rivals or threats from their neighbors. By contrast, we find that democratic transitions are negatively associated with education investments, while the presence of democratic political institutions magnifies the positive effect of military rivalries. These empirical results are robust to a number of statistical concerns and continue to hold when we instrument military rivalries with commodity prices or rivalries in a certain country's immediate neighborhood. We also present historical case studies, as well as a simple model, that are consistent with the econometric evidence.