POID research seminars take place the first Tuesday of each month from 11:00-12:00 in SAL 2.04. In each session, our researchers and academics present and discuss work in progress in an informal setting.
Please note that these seminars are open to staff and research students from LSE and non-LSE (and by invitation) only.
Autumn Term 2024
5 September - The Gains from Foreign Multinationals in an Economy with Distortions
Speaker: Isabela Manelici, LSE (joint work with Jose P. Vasquez and Roman David Zarate)
Location: LSE (hybrid)
We study the local and aggregate welfare effects of the expansion of foreign multinational enterprises (MNEs) in an economy with distortions. To that end, we propose a guiding general equilibrium (GE) framework that we combine with rich administrative and survey data from Mexico. We highlight the role distortions can play in GE, their ex-ante ambiguous welfare effect, and the elasticities needed to take the theory to the data. These elasticities govern the reallocation effects from foreign MNE expansions within and across commuting zones (CZs). In the data, we track domestically-owned establishments (split into formal or informal) and foreign MNEs (split into maquila and non-maquila) and measures of distortions such as crime, labor taxes, subsidies, and credit constraints (which vary across establishment types and CZs). We show that Mexico faces substantial distortions that can generate resource misallocation within and across CZs. Then, using an instrumental variable strategy, we find that increases in foreign MNE employment lead to expansions of the local domestic economy. This effect is mainly driven by the growth of the formal domestic sector. We also find that foreign MNEs in the maquila program have more muted positive effects on the domestic economy than non-maquila MNEs. Finally, we use the reduced-form estimates and the microdata to calibrate the model and quantify the GE effects. We simulate a 10% productivity shock and find that the expansion of MNEs in Mexico between 1994 and 2019 led to an aggregate 6% welfare gain. A quarter of this gain comes from reallocation effects in the presence of distortions and a fifth comes from the productivity spillovers that MNEs generate to the local economy.
3 October - TBC
Speaker: Marta Morando, LSE
Location: LSE (hybrid)
7 November - TBC
Speaker: Rocco Macchiavello, LSE
Location: LSE (hybrid)
5 December - The Machinery of Progress: Measuring Innovation and Diffusion of Capital Equipment, 1998-2023
Speaker: Peter Lambert, LSE (joint work with Yannick Schindler, LSE, CfM)
Location: LSE (hybrid)
In this paper we chart technological progress embodied in capital equipment used in production. To do this, we digitize archival statutory filings of 85 million transactions of capital equipment, across five large US States. These data begin in the 1990s and are updated in real time. We link these transactions to firms' establishments and augment each transaction with a rich textual description of equipment-capabilities, using a generative AI / LLM trained for this purpose. These data elucidate a number of new facts about the adoption and diffusion of capital equipment used in production. Chief among these facts is the strikingly uneven distribution of frontier capital equipment, with some industries/counties using equipment which is over 20 years behind their peers. We plan to utilise these data to study a number of tax policy shocks aimed at spurring investment, including "bonus depreciation" schemes, which were differentially imposed across US States. We propose a difference-in-difference design which leverages our highly granular and novel data product, to understand how tax policy impacts business investment and capital upgrading.