PUBLICATIONS
JME (x2), JIE (x2), JoEG, IMF ER, JEDC (x2)
2026
- Multinational Investment Activity under Policy Uncertainty in Host and Competing CountriesDaisoon Kim and Sunhyung LeeJournal of International Economics, 2026
This paper examines how economic policy uncertainty (EPU) in host and competing countries reshapes U.S. multinationals’ greenfield foreign direct investment (FDI). Using firm–destination level data from 2003 to 2021, we show that while host-country EPU deters investment, EPU in competing destinations attracts it through a spillover effect. We document a structural shift around 2015: as global EPU rose unevenly, the spillover effect from competitors became the dominant driver of investment decisions, supplanting the direct effect of host-country policy instability. Our findings indicate that in an era of heightened global uncertainty and risk, FDI allocation is governed by relative, not just absolute, policy stability.
@article{KimLee2026, wppdf = {https://drive.google.com/file/d/17ez3UL9sCRMz30X8c75EkUpOfH-xXiWf/view?usp=drive_link}, title = {Multinational Investment Activity under Policy Uncertainty in Host and Competing Countries}, journal = {Journal of International Economics}, volume = {161}, pages = {104252}, year = {2026}, issn = {0022-1996}, doi = {https://doi.org/10.1016/j.jinteco.2026.104252}, url = {https://www.sciencedirect.com/science/article/pii/S0022199626000425}, author = {Kim, Daisoon and Lee, Sunhyung}, keywords = {Economic policy uncertainty, Greenfield foreign direct investment, Global value chains, Multinational firms, Offshoring} }
2025
- International Trade and Macroeconomic Dynamics with SanctionsFabio Ghironi, Daisoon Kim, and Galip Kemal OzhanJournal of Monetary Economics, 2025
We develop a framework combining dynamic, intertemporal choices of general-equilibrium macro models with microfoundations of modern trade theory to study sanctions. In a two-country, two-sector setup, Home holds a comparative advantage in producing differentiated consumption goods via heterogeneous firms with endogenous entry, while Foreign in homogeneous intermediate goods from a fixed number of firms. Sanctions include trade bans and financial restrictions excluding particular Foreign agents from markets. In our model, sanctions reallocate resources across and within countries, affecting production, exchange rates, and welfare, with larger welfare losses when targeting sectors of comparative disadvantage. Focusing only on long-run outcomes, overlooking initial dynamics, inaccurately assesses welfare impacts. Sanctions weaken international comovement and fragment markets but leave business cycles intact.
@article{Ghironi_et_al2025JME, wppdf = {https://www.nber.org/papers/w32188}, title = {International Trade and Macroeconomic Dynamics with Sanctions}, journal = {Journal of Monetary Economics}, volume = {154}, pages = {103810}, year = {2025}, issn = {0304-3932}, doi = {https://doi.org/10.1016/j.jmoneco.2025.103810}, url = {https://www.sciencedirect.com/science/article/pii/S0304393225000819}, author = {Ghironi, Fabio and Kim, Daisoon and Ozhan, Galip Kemal}, keywords = {Business cycles, Exchange rate, Macroeconomic dynamics, Sanctions, Trade, Welfare} }
2024
- International Economic Sanctions and Third-Country EffectsFabio Ghironi, Daisoon Kim, and Galip Kemal OzhanIMF Economic Review, 2024
This paper studies international trade and macroeconomic dynamics triggered by economic sanctions, and the associated welfare losses, in a calibrated, asymmetric, three-country model of the world economy. We assume that there are two production sectors in each country, and the sanctioned country has a comparative advantage in production of a commodity (for convenience, gas) needed to produce final, differentiated consumption goods. We consider three types of sanctions: sanctions on trade in final goods, financial sanctions, and gas trade sanctions. We calibrate the model to an aggregate of countries that are currently imposing sanctions on Russia (the European Union, the UK, and the USA), Russia, and an aggregate of third countries (China, India, and Turkey). We show that, instead of reflecting the success of sanctions, exchange rate movements reflect the type of sanctions and the direction of the resulting within-country sectoral reallocations. Our welfare analysis demonstrates that the sanctioned country’s welfare losses are significantly mitigated, and the sanctioning country’s losses are amplified, if the third country does not join the sanctions, but the third country benefits from not joining. These findings highlight the necessity, but also the challenge, of coordinating sanctions internationally.
@article{Ghironi_et_al2024IMFER, wppdf = {https://drive.google.com/file/d/1PcVlWAuTodU03D7GwkW0BqRu2_IOeYBn/view?usp=drive_link}, title = {International Economic Sanctions and Third-Country Effects}, journal = {IMF Economic Review}, volume = {72}, pages = {611-652}, year = {2024}, doi = {https://doi.org/10.1057/s41308-023-00232-9}, url = {https://doi.org/10.1057/s41308-023-00232-9}, author = {Ghironi, Fabio and Kim, Daisoon and Ozhan, Galip Kemal}, keywords = {Exchange rate, International coordination,Reallocation, Sanctions, Welfare} } - Home Market Effects and Increasing Returns with Non-constant Marginal CostsNahyeon Bak, Daisoon Kim, and Mishita MehraJournal of Economic Geography, 2024
We reexamine the role of increasing returns in production, central to trade and economic geography theories, focusing on the home market effect. We extend the conventional multi-industry new trade model to introduce (1) nonconstant marginal costs and (2) nonhomothetic production in factors. If factors that are more (less) intensively used in fixed costs than variable costs also have higher relative prices in large countries compared to small countries, then large countries exhibit larger (smaller) firm sizes and specialize in industries with decreasing (increasing) marginal costs. Notably, different levels of fixed costs have a limited impact on these patterns.
@article{Bak_et_al2024JoEG, wppdf = {https://drive.google.com/file/d/1YwMcYQc7VdS5yeKF5cy_VBjBEi60m8Qi/view?usp=sharing}, author = {Bak, Nahyeon and Kim, Daisoon and Mehra, Mishita}, title = {Home Market Effects and Increasing Returns with Non-constant Marginal Costs}, journal = {Journal of Economic Geography}, volume = {24}, number = {6}, pages = {871-885}, year = {2024}, issn = {1468-2702}, doi = {https://doi.org/10.1093/jeg/lbae030}, url = {https://doi.org/10.1093/jeg/lbae030}, }
2023
- Firm Revenue Elasticity and Business Cycle SensitivityDaisoon Kim and Anthony SavagarJournal of Economic Dynamics and Control, 2023
We show that it is not necessary to have price and quantity data separately in order to study firm responses to business cycle shocks. We explain that revenue elasticities, which measure the response of firm revenue to input changes and combine price and quantity data, are sufficient to understand business cycle amplification. We present theory to show that higher revenue elasticity firms generate greater business cycle amplification. We use US data to measure revenue elasticities at the firm level, and we show that higher revenue elasticity firms respond more to business cycle shocks, consistent with our theory. We conclude that trends towards lower revenue elasticity firms implies weaker business cycle amplification over time.
@article{KimSavagar2023JEDC, wppdf = {https://drive.google.com/file/d/1-2EwBfSXL5ePpX3uSk1-9OXXLTmuuULm/view?usp=sharing}, title = {Firm Revenue Elasticity and Business Cycle Sensitivity}, journal = {Journal of Economic Dynamics and Control}, volume = {154}, pages = {104722}, year = {2023}, issn = {0165-1889}, doi = {https://doi.org/10.1016/j.jedc.2023.104722}, url = {https://www.sciencedirect.com/science/article/pii/S0165188923001288}, author = {Kim, Daisoon and Savagar, Anthony}, keywords = {Amplification, Business cycles, Markups, Revenue elasticity, Output elasticity} } - Skilled Immigration, Offshoring, and TradeMishita Mehra and Daisoon KimJournal of Economic Dynamics and Control, 2023
We develop a dynamic general equilibrium model with skilled immigration, offshore labor hiring, and intermediate input trade to study the impact of skilled immigration policy changes in the US. Consistent with the data, the model accounts for a small subset of large firms that adjust offshore labor hiring in response to skilled immigration policy changes. Our calibrated model that matches the US economy shows that if we ignore the offshoring channel, we would overstate welfare gains to skilled domestic wage earners by approximately 20 percent following a 10 percent immigration cap reduction. The paper highlights the importance of considering the interactions between immigration, offshoring, and trade when studying the impacts of skilled immigration policy on domestic labor markets and trade.
@article{MehraKim2023JEDC, wppdf = {https://www.mishitamehra.com/_files/ugd/e85105_ac489549dc9b4b948b6121821d2621b9.pdf}, title = {Skilled Immigration, Offshoring, and Trade}, journal = {Journal of Economic Dynamics and Control}, volume = {146}, pages = {104579}, year = {2023}, issn = {0165-1889}, doi = {https://doi.org/10.1016/j.jedc.2022.104579}, url = {https://www.sciencedirect.com/science/article/pii/S0165188922002822}, author = {Mehra, Mishita and Kim, Daisoon}, keywords = {Immigration policy, Intermediate input trade, Offshoring, Skilled immigration} }
2022
- Central Bank Policy and the Concentration of Risk: Empirical EstimatesNuno Coimbra, Daisoon Kim, and Hélène ReyJournal of Monetary Economics, 2022
Before the 2008 crisis, the cross-sectional skewness of banks’ leverage went up and macro risk concentrated in the balance sheets of large banks. Using a model of profit-maximizing banks with heterogeneous Value-at-Risk constraints, we extract the distribution of banks’ risk-taking parameters from balance sheet data. The time series of these estimates allow us to understand systemic risk and its concentration in the banking sector over time. Counterfactual exercises show that (1) monetary policymakers confront the trade-off between stimulating the economy and financial stability, and (2) macroprudential policies can be effective tools to increase financial stability.
@article{Coimbra_et_al2022JME, wppdf = {https://www.nber.org/papers/w28907}, title = {Central Bank Policy and the Concentration of Risk: Empirical Estimates}, journal = {Journal of Monetary Economics}, volume = {125}, pages = {182-198}, year = {2022}, issn = {0304-3932}, doi = {https://doi.org/10.1016/j.jmoneco.2021.08.002}, url = {https://www.sciencedirect.com/science/article/pii/S0304393221000878}, author = {Coimbra, Nuno and Kim, Daisoon and Rey, Hélène}, keywords = {Bank regulation, Financial cycle, Leverage, Monetary policy, Risk-taking, Systemic risk} }
2021
- Economies of Scale and International Business CyclesDaisoon KimJournal of International Economics, 2021
This paper incorporates sloping marginal cost curves and their variations across industries into an open macro model, motivated by the fact that industries’ output, imports, and exports are more procyclical when their economies of scale arise from sloping marginal cost curves rather than fixed costs. The model, consistent with the data, delivers endogenous within-firm interdependence across markets and export gains/losses, which reproduce observed industrial business cycle patterns as well as more correlated aggregate business cycles across countries. The findings highlight the importance of marginal cost structures in international business cycle research.
@article{Kim2021JIE, wppdf = {https://drive.google.com/file/d/1iMw9OWjh9flY9F0ykxSbi22nUEG4Q4zt/view?usp=sharing}, title = {Economies of Scale and International Business Cycles}, journal = {Journal of International Economics}, volume = {131}, pages = {103459}, year = {2021}, issn = {0022-1996}, doi = {https://doi.org/10.1016/j.jinteco.2021.103459}, url = {https://www.sciencedirect.com/science/article/pii/S0022199621000362}, author = {Kim, Daisoon}, keywords = {Economies of scale, International business cycle, Sloping marginal cost curve, Within-firm market interdependence} }