Research

Job Market Paper

• Aggregate Implications of Corporate Taxation over the Business Cycle - Paper, Slide, Short Slide

  Present at: CES North America Annual Conference 2024, Canadian Economics Association Annual Conference 2024, Taiwan Economics Research 2024, Midwest Macro Meeting 2024 (Purdue), Northeast Ohio Economics Workshop 2024 (Cleveland Fed), Society of Government Economists 2025 Annual Conference

  Abstract

  Corporate tax deductions are widely employed as countercyclical policies, yet their impact on the business cycle and interactions with other policies remain largely understudied. I examine the cyclical implications of such deductions by developing a novel dynamic stochastic general equilibrium model in which firms face credit market imperfections and idiosyncratic productivity shocks. In my model, firms' investment decisions are distorted by collateralized borrowing and corporate taxation, and investment expenditures can be deducted from taxable income through targeted or untargeted accelerated depreciation policies. My model quantitatively replicates empirical estimates of the distribution of short-run elasticities of investment across firm size to changes in deduction policies. I show that raising deductions can reduce the severity and persistence of recessions by alleviating capital misallocation for productive firms. Applying my model to the policies in the US 2017 Tax Cuts and Jobs Act, I find that the targeted policy is 30 percent more effective than the untargeted policy in stimulating aggregate output. Furthermore, combining both policies reduces the overall effectiveness by 17 percent, revealing potential inefficiencies in current US tax policy implementation.

Working Papers

• Debt Financing, Used Capital Markets and Capital Reallocation - Paper, Slide

  Present at: Midwest Economics Association Annual Meetings 2023, Midwest Macro Meeting 2023 (Clemson), Taiwan Economic Research 2023, 18th Economics Graduate Students’ Conference (WUSTL) 2023

  Abstract

  This paper studies the business cycle implications of the interaction between secondary capital markets and credit market imperfections in a general equilibrium model with heterogeneous firms. In the model, prices in secondary capital markets affect the economy through two key channels: changes in the cost of investment and fluctuations in the resale value of collateral. The results show that price adjustments in secondary markets amplify the severity and duration of recessions triggered by financial shocks. The rise in investment costs driven by financial shocks deepens the recessionary trough by a factor of three compared to the effect of collateral value fluctuations.

• The Effects of Loan-to-value Ratio Ceilings on House Prices - Paper, Slide

  with Sungmin Park

  Present at: Northeast Ohio Economics Workshop 2022 (Cleveland Fed), Midwest Economics Association Annual Meetings 2022

  Abstract

  Loan-to-value ratio (LTV) ceiling is a government policy that puts a cap on households' mortgages relative to their house value, often intended to reduce booms in house prices. This paper studies the effects of this policy on house prices, using a simple two-period overlapping-generations model featuring within-generation inequality. In contrast to popular belief, we find that a strict (low) loan-to-value ratio ceiling raises long-run house prices, as lenders respond to the policy by substituting from mortgage lending to purchasing more houses. The policy's positive effect on house prices is more severe with greater inequality. A strict ceiling is especially harmful to the poor. Taxes can only intensify the positive effect on house prices, although they can mitigate the adverse effects on welfare.

Discussion

• Did Program Support for the Poorest Areas Work? Evidence from Rural Viet Nam by Hai-Anh H. Dang, Klaus Deininger, and Cuong Viet Nguyen

  Society of Government Economists 2025 Annual Conference

• Media Focus, Sentiments and Capital Allocation in Space by Yu Wang and Zebang Xu

  Midwest Economics Association Annual Meeting 2023

• The Impact of FinTech on Discrimination in Mortgage Lending by Daniel Shoag

  Northeast Ohio Economics Workshop 2022