Job Market Candidate
Department of Economics
579 Serra Mall
Stanford, CA 94305
Firm Size and Complementarity between Geography and Products (Job Market Paper)
I develop a model of heterogeneous multi-product firms operating in multiple markets that comprise consumers with heterogeneous tastes. In the model, firms choose two extensive margins: product scope (how many products to sell) and geographic scope (how many markets to sell products to). Their decisions on product and geographic scopes interact in two ways: (1) the more products firms sell and the larger profit they expect, the more likely they are to enter a market, and (2) the more markets they enter, the greater variety of products they sell to cater to heterogeneous local tastes. I estimate the model to match moments in the Japanese barcode-level transaction data using the simulated method of moments. I run counterfactual exercises and find that eliminating either product or geographic scope underestimates firmsize variations by 86% to 94% due to the interaction between the two margins. Furthermore, I analyze how missing one of the margins affects the
welfare implication of size-dependent policies, taking an actual SME
subsidy in Japan as an example. The results indicate that omitting the
product scope margin underestimates the welfare costs of the subsidy
by more than half.
Multi-tier Supply Chain Financing with Blockchain (with Volodymyr Babich) Under Review
We compare a Blockchain-based Supply Chain Finance system with traditional bank-based Supply Chain Finance solutions, using a three-tier supply chain model. Our model features financing frictions due to moral hazard with respect to product quality and dynamic updates of collateral-asset-value forecasts. The key advantage of a Blockchain-based system is its ability to create claims to collateral assets at higher supply chain tiers, while a bank-based system allows only creating claims to the immediate buyer's collateral asset. Interestingly, despite this advantage, a Blockchain-based system does not emerge as the dominant financing choice, even if the higher-tier buyer has the same profit margin and the same parameters of the collateral asset process as the immediate-tier buyer. We identify two causes of this surprising result: risk spillover from the higher-tier to the immediate-tier buyer and accumulation of more noise in the collateral asset when using the higher-tier buyer's collateral asset for financing.
We provide conditions for the Blockchain-based system to be equally attractive and conditions for the Blockchain-based system to be preferred.
Personal Guarantees and Firms' Risk-Taking Behaviors (with Takeo Hoshi) [draft coming soon]
We analyze whether bank loans without personal guarantees encourage firms' risk-taking behaviors using a bank lending model with moral hazard. Loan financing with personal guarantees prevents entrepreneurs from taking risks because the risk of losing personal assets is high. Whether removing personal guarantees is welfare improving depends on whether the risk-taking opportunities are socially optimal; when risk-taking opportunities yield net positive social returns removing personal guarantees encourages welfare-improving risk-taking behaviors of firms and vice versa. We use Japanese loan financing data from the government SME financing corporation to examine whether the removal of personal guarantees encourages socially optimal risk-taking behaviors. The analysis exploited the policy reform in 2014, Guideline for Personal Guarantees by Business Owners, asking government-owned banks not to use personal guarantees when lending to SMEs. The results suggest that removing personal guarantees induces firms with low credit ratings to take socially sub-optimal risk-taking behaviors.
Selfish Mining Attacks Exacerbated by Elastic Hash Supply (with Go Yamamoto, Fuhito Kojima, Elaine Shi, Shin'ichiro Matsuo, and Aron Laszka), Financial Cryptography and Data Security, 2021
Comprehensive Surveillance Review: Background Paper on Traction (with Ghada Fayad, Chengyu Huang, and Peng Zhao), IMF Policy Paper, 2021, No. 2021/034
How Do Member Countries Receive IMF Policy Advice: Results from a State-of-the-Art Sentiment Index (with Ghada Fayad, Chengyu Huang, and Peng Zhao), IMF Working Paper, 2020, No.20/7
International Influences on Japanese Supply Chains (with Michal Fabinger and Mina Taniguchi), RIETI Discussion Paper, 2017, 17-E-022
Teaching Assistant for Prof. Mark Tendall, Stanford University, Econ 166 (International Trade)
2020-2021, Outstanding Teaching Assistant Award [Student evaluations]