AcAdemic archive
Dr. Keyu Jin is an associate professor of Economics at the London school of Economics. She is from Beijing, China, and holds a B.A., M.A. and Phd from Harvard University.
Her research is on international economics - such as why capital flows from poor to rich countries, how the global implications of U.S. monetary and fiscal policies have changed; as well as on how the rise of China impacts the global economy, from several perspectives - trade, capital flows, global interest rates and saving, demographics, productivity and technology.
Dr. Keyu’s book, The New China Playbook, is available now.
Misallocation Under Trade Liberalization
This paper formalizes a classic idea that in second-best environments trade can induce welfare losses. In a framework that incorporates distortion wedges into a Melitz model, we analyze a channel in which trade can reduce allocative efficiency arising from the reallocation of resources. A key aggregate statistics that captures this negative selection is the gap between input and output shares. We derive sufficient conditions for reallocation loss due to trade under important distributions. Using Chinese manufacturing data, we show that this reallocation term is significantly negative, largely offsetting conventional gains to trade.
Yan Bai University of Rochester NBER
Keyu Jin LSE CEPR
Dan Lu * The Chinese University of Hong Kong
Abstract
This paper formalizes a classic idea that in second-best environments trade can induce welfare losses. In a framework that incorporates distortion wedges into a Melitz model, we analyze a channel in which trade can reduce allocative efficiency arising from the reallocation of resources. A key aggregate statistics that captures this negative selection is the gap between input and output shares. We derive sufficient conditions for reallocation loss due to trade under important distributions. Using Chinese manufacturing data, we show that this reallocation term is significantly negative, largely offsetting conventional gains to trade.
Keywords: wedges and distortions, misallocation, trade liberalization, gains from trade JEL classification: E23 F12 F14 F63 L25 O47
The One-Child Policy and Household Saving
We investigate whether the ‘one-child policy’ has contributed to the rise in China’s household saving rate and human capital in recent decades. In a life-cycle model with intergenerational transfers and human capital accumulation, fertility restrictions lower expected old-age support coming from children—inducing parents to raise saving and education investment in their offspring. Quantitatively, the policy can account for at least 30% of the rise in aggregate saving. Using the birth of twins under the policy as an empirical out-of-sample check to the theory, we find that quantitative estimates on saving and education decisions line up well with micro-data.
Taha Choukhmane - Yale
Nicolas Coeurdacier
SciencesPo and CEPR
Keyu Jin - London School of Economics
Journal of European Economic Association, 2023
Abstract
We investigate whether the ‘one-child policy’ has contributed to the rise in China’s household saving rate and human capital in recent decades. In a life-cycle model with intergenerational transfers and human capital accumulation, fertility restrictions lower expected old-age support coming from children—inducing parents to raise saving and education investment in their offspring. Quantitatively, the policy can account for at least 30% of the rise in aggregate saving. Using the birth of twins under the policy as an empirical out-of-sample check to the theory, we find that quantitative estimates on saving and education decisions line up well with micro-data.
THE PUZZLING CHANGE IN THE INTERNATIONAL TRANSMISSION OF U.S. MACROECONOMIC POLICY SHOCKS
Abstract
Using five separate identification methods, we demonstrate a dramatic change over time in the international transmission of US macroeconomic shocks. International spillovers from US monetary policy, government spending, and tax policy shocks take on a different nature the 21st century than they did in post-Bretton Woods period.
Ethan Ilzetzki and Keyu Jin, London School of Economics
Journal of International Economics, Accepted.
Abstract
Using five separate identification methods, we demonstrate a dramatic change over time in the international transmission of US macroeconomic shocks. International spillovers from US monetary policy, government spending, and tax policy shocks take on a different nature the 21st century than they did in post-Bretton Woods period. Our analysis is based on the a panel of 17 high income and emerging market economies. Prior to the 1990s, the US dollar appreciated, and ex-US industrial production declined, in response to increases in the US Federal Funds rate, as predicted by textbook open economy models. Similarly, fiscal policies leading to interest rate increases appreciated the dollar and lead to output contractions. The past three decades have seen a shift, whereby increases in US interest rates depreciate the US dollar but stimulate the rest of the world economy. We sketch a simple theory of exchange rate determination in face of interest-elastic risk aversion that rationalizes these findings.
International Transmission with Heterogeneous Sectors
This paper documents new facts about the behavior of capitaland labor-intensive goods over the business cycle and also identifies a mechanism that generates international investment comovement through shifting compositional changes of production and trade across sectors. Our model’s quantitative predictions not only match aggregate and sectoral statistics but also generate empirically plausible sectoral composition effects. Finally, we show that essential segments of the transmission process receive empirical support.
Keyu Jin and Nan Li
American Economic Journal: Macroeconomics 10 (4): 36-76
Abstract
This paper documents new facts about the behavior of capitaland labor-intensive goods over the business cycle and also identifies a mechanism that generates international investment comovement through shifting compositional changes of production and trade across sectors. Our model’s quantitative predictions not only match aggregate and sectoral statistics but also generate empirically plausible sectoral composition effects. Finally, we show that essential segments of the transmission process receive empirical support.
Credit Constraints and Growth in a Global Economy
We show that in an open-economy OLG model, the interaction between growth differentials and household credit constraints, more severe in fast-growing countries, can explain three prominent global trends: a divergence in private saving rates between advanced and emerging economies, large net capital outflows from the latter, and a sustained decline in the world interest rate. Micro-level evidence on the evolution of age-saving profiles in the U.S. and China corroborates our mechanism. Quantitatively, our model explains about 40 percent of the divergence in aggregate saving rates, and a significant portion of the variations in age-saving profiles across countries and over time.
Nicolas Coeurdacier Sciences, Po Paris and CEPR
Stephane Guibaud London School of Economics
Keyu Jin London School of Economics
American Economic Review 105 (9): 2838-81
Abstract
We show that in an open-economy OLG model, the interaction between growth differentials and household credit constraints, more severe in fast-growing countries, can explain three prominent global trends: a divergence in private saving rates between advanced and emerging economies, large net capital outflows from the latter, and a sustained decline in the world interest rate. Micro-level evidence on the evolution of age-saving profiles in the U.S. and China corroborates our mechanism. Quantitatively, our model explains about 40 percent of the divergence in aggregate saving rates, and a significant portion of the variations in age-saving profiles across countries and over time.
Industrial Structure and Capital Flows
This paper provides a new theory of international capital flows. In a framework that integrates factor-proportions-based trade and financial capital flows, a novel force emerges: capital tends to flow toward countries that become more specialized in capital-intensive industries. This "composition" effect competes with the standard force that channels capital toward the location where it is scarcer. If the composition effect dominates, capital flows away from the country hit by a positive labor force/productivity shock—a flow "reversal." Extended to a quantitative framework, the model generates sizable current account imbalances between developing and developed countries broadly consistent with the data. (JEL F14, F21, F32, F41, L16, O19)
Keyu Jin
American Economic Review 2012, 102(5): 2111-2146.
Abstract
This paper provides a new theory of international capital flows. In a framework that integrates factor-proportions-based trade and financial capital flows, a novel force emerges: capital tends to flow toward countries that become more specialized in capital-intensive industries. This “composition” effect competes with the standard force that channels capital toward the location where it is scarcer. If the composition effect dominates, capital flows away from the country hit by a positive labor force/productivity shock—a flow “reversal.’’ Extended to a quantitative framework, the model generates sizable current account imbalances between developing and developed countries broadly consistent with the data. (JEL F14, F21, F32, F41, L16, O19)