WORKING PAPERS
R&R in JME and JMCB
2026
- Aggregate Fluctuations from Firm ComovementNahyeon Bak and Daisoon KimR&R, Journal of Monetary Economics, 2026
This paper shows that correlated idiosyncratic fluctuations within industries are an important source of macroeconomic volatility. Standard methods, such as cross-sectional demeaning, obscure this channel by mechanically driving average pairwise correlations toward zero asymptotically. We develop a non-parametric bounds approach that quantifies the contribution of such clustered comovement directly from firm-level data. Applied to U.S. firms, we find that within-industry comovement explains 10–15% of GDP volatility in normal times, 15–30% in downturns, and up to 45% during the Great Recession, helping account for the Great Moderation. These findings highlight the importance of cross-firm interdependencies in business cycle fluctuations.
@article{BakKim2026, title = {Aggregate Fluctuations from Firm Comovement}, journal = {R\&R, Journal of Monetary Economics}, year = {2026}, author = {Bak, Nahyeon and Kim, Daisoon}, keywords = {Business cycles, idiosyncratic comovements, pairwise correlation.} } - Parental Leave Policies, Fertility, and Labor SupplyDaisoon Kim and Minchul Yum2026
South Korea faces persistently low fertility rates and large gender gaps in labor supply. Under traditional gender roles, more generous parental leave makes it difficult to narrow gender gaps while increasing fertility. To examine how recent reforms operate beyond these static channels, we develop a dynamic, heterogeneous-household life-cycle model in which couples jointly choose careers, labor supply, savings, childcare, and fertility. The model is calibrated to recent Korean cohorts and incorporates Korea’s segmented labor market, where career-oriented jobs are inflexible and involve high entry costs. Our quantitative results show that generous parental leave benefits can raise fertility and reduce gender gaps in labor supply and wages over the life cycle. These dynamic effects arise because parental leave job protection allows more women to remain in career-oriented jobs during childrearing years, enabling long-term career progression. Without job protection or segmented markets, this career-retention channel weakens and policy effects diminish or reverse.
@techreport{KimYum2026PL, title = {Parental Leave Policies, Fertility, and Labor Supply}, type = {Working Paper}, series = {Working Paper}, year = {2026}, author = {Kim, Daisoon and Yum, Minchul}, keywords = {Parental Leave, Birth Rates, Labor Supply, Gender Gaps, Segmented Labor Market, Job Protection, Inflexible Jobs.} } - Investment Giants in Emerging MarketsDaisoon Kim, Jee Won Park, and Inhwan So2026
Cross-border equity flows to emerging markets are highly concentrated among a few large institutional investors ("investment giants"). We study their strategic behavior and market impact through a model of incomplete information with strategic complementarity. In equilibrium, concentration generates directional leadership: a first-mover advantage induces a dominant investor to act first, revealing information that steers the subsequent decisions of a continuum of smaller investors. Compared to a simultaneous-move benchmark, this sequential structure raises the giant’s ex-ante payoff, amplifies market influence, and generates predictability. Empirically, we isolate idiosyncratic influence using "contrarian investment" (excess investment growth relative to peers or the market) to filter out shared macroeconomic factors. Using fund-level data across emerging economies, we find that shocks to giants’ contrarian flows trigger persistent increases in investor flows, aggregate capital inflows, stock returns, and currency values. Our findings illustrate how concentration shapes strategic timing and global portfolio allocation dynamics.
@techreport{Kim_et_al2026Giants, title = {Investment Giants in Emerging Markets}, type = {Working Paper}, series = {BOK Working Paper}, year = {2026}, author = {Kim, Daisoon and Park, Jee Won and So, Inhwan}, keywords = {Emerging market, Fund-level data, Global equity flows, Large player, Portfolio management.} } - Brand Experience and Package Size in Dynamic Consumer ChoiceNahyeon Bak, Daisoon Kim, and Chanheung Cho2026
Consumers choose which brand and how much to buy. Using cough-drop market data, where infrequent purchases allow clean observation of consumption spells, we document that purchase size increases with within-spell brand experience and decreases following brand switching. We explain these patterns with a model of brand and quantity choice under learning about quality. As experience accumulates, declining uncertainty and selection into preferred brands increase purchase size, while brand switching renews uncertainty and induces smaller trial purchases. These patterns are consistent with learning rather than switching costs alone. Purchase quantities provide a novel behavior margin for understanding consumer behavior.
@techreport{Bak_et_al2026BrandChoice, title = {Brand Experience and Package Size in Dynamic Consumer Choice}, type = {Working Paper}, series = {Working Paper}, year = {2026}, author = {Bak, Nahyeon and Kim, Daisoon and Cho, Chanheung}, keywords = {Size choice; Brand experience; Learning; Consumer packaged good.} } - Public Information on Overseas Buyers for Export PromotionChan Kim and Daisoon Kim2026
Governments widely operate trade promotion organizations (TPOs) to overcome non-tariff barriers in trade, yet their specific mechanisms often remain opaque. This paper evaluates one key intervention: the public dissemination of foreign buyer information. Guided by a search-and-matching model, we use historical data from South Korea’s KOTRA magazine to exploit plausibly exogenous variation in information provision. We find that this policy significantly and persistently boosts exports to targeted destination-industries. As predicted by the model, the effect is substantially larger in less concentrated industries, demonstrating that public information is particularly effective at alleviating search frictions that disproportionately hinder smaller firms.
@techreport{KimKim2026TPO, title = {Public Information on Overseas Buyers for Export Promotion}, type = {Working Paper}, series = {Working Paper}, year = {2026}, author = {Kim, Chan and Kim, Daisoon}, keywords = {Buyer search, Export promotion, Non-tariff barrier, Public information.} } - Local Factors and Return Chasing: A New Phase in Emerging Equity MarketsJongrim Ha, Daisoon Kim, and Inhwan So2026
Does the global financial cycle still dominate capital flows to emerging markets? Leveraging granular investor-level data, we document a structural shift in the drivers of global equity flows. Using a dynamic factor model to decompose flows into global (push) and country-specific (pull) components, we show that while global factors historically dominated, local factors have emerged as the primary driver of capital allocation post-COVID. Local projections reveal the mechanism behind this shift as a resurgence of active return chasing: investors have become increasingly sensitive to local excess returns, re-coupling flows to domestic price discovery. We trace this shift to greater portfolio concentration among emerging markets within investors and improved macroeconomic resilience in emerging market economies. Our findings imply that the dominance of global push factors is waning, suggesting a renewed capacity for domestic policies to influence cross-border capital flows.
@techreport{HaKimSo2026CaptialFlow, title = {Local Factors and Return Chasing: A New Phase in Emerging Equity Markets}, type = {Working Paper}, series = {Working Paper}, year = {2026}, author = {Ha, Jongrim and Kim, Daisoon and So, Inhwan}, keywords = {Global equity flows, Emerging market, Excess returns, Fund-level data, Portfolio management, Return-chasing.} }
2025
- Global Connectedness and Diversification: Firm-level Evidence from the COVID-19 PandemicJay Hyun, Daisoon Kim, and Seung-Ryong ShinR&R, Journal of Money, Credit, and Banking, 2025
We study how a firm’s global connectedness through supply chains and exports affects its stock market performance during crises, using the COVID-19 pandemic as a natural experiment. While global connectedness can transmit negative foreign shocks, it can also reduce susceptibility to domestic shocks by enabling international diversification. Combining weekly global stock market data with firm-level supply chain, export, and balance sheet information, we document a dual role of global connectedness. While firms’ global supply chain and export networks expose firms to the negative impact of foreign COVID-19 outbreaks, firms with higher global connectedness are also more resilient to domestic exposures. Consistent with a diversification mechanism, the buffering effect arises only when connected foreign economies faced smaller outbreaks than the domestic economy. We further show that this diversification motive led firms to reorganize their supply chains and export networks, reallocating toward less-affected regions to mitigate the negative impact of pandemic shocks.
@article{Jay_et_al2025, title = {Global Connectedness and Diversification: Firm-level Evidence from the COVID-19 Pandemic}, journal = {R\&R, Journal of Money, Credit, and Banking}, year = {2025}, author = {Hyun, Jay and Kim, Daisoon and Shin, Seung-Ryong}, keywords = {COVID-19, Export, Firm Resilience, International Diversification, Global Supply Chain.} }
2024
- Industry Characteristics and the Home Market Effect: Evidence from Manufacturing TradeNahyeon Bak, Daisoon Kim, and Mishita Mehra2024
This paper examines how supply-side industry characteristics—particularly returns to scale from non-constant marginal costs—shape home market effects. Using data on narrowly defined industries, we find that industries with stronger returns to scale are more concentrated in larger countries only when non-production activities rely more on non-tradable inputs (labor) than production activities. In such cases, higher labor costs in larger countries deter firm entry, resulting in larger average firm sizes that better exploit scale economies. Consistent with prior research, we also find that industries with higher markups and trade costs tend to concentrate in larger countries.
@techreport{Bak_et_al2024HME, title = {Industry Characteristics and the Home Market Effect: Evidence from Manufacturing Trade}, type = {Working Paper}, series = {Working Paper}, year = {2024}, author = {Bak, Nahyeon and Kim, Daisoon and Mehra, Mishita}, keywords = {Home market effect, Markups, New trade theory, Non-constant marginal costs, Returns to scale, Trade costs.} } - A Model of Entry, Exit, and Endogenous Productivity DispersionDaisoon Kim and Yoonsoo Lee2024
We explore the variability and dynamics of firm behavior over the business cycle, focusing on both the first and second-moment properties of firm heterogeneity. Our static model reveals that when entry costs increase less than fixed operating costs during economic booms, procyclical entry and intensified factor market competition lead to a procyclical productivity cutoff. This effect forces less productive firms out of the market, thereby contributing to the observed countercyclical dispersion of firm productivity. However, this model’s prediction—that low- productivity firms exit during booms and enter during recessions—is contradicted by US data. To resolve this discrepancy, our dynamic model incorporates firm uncertainty and productivity learning mechanisms. This enhancement enables the model to replicate observed empirical patterns across both the first and second-moments: countercyclical firm dispersion, more procyclical entry rates than exit rates, and a countercyclical pattern in the relative productivity of entering versus exiting firms. Our calibrated model successfully explains approximately 19% of the observed countercylical dispersion in firm productivity endogenously, without relying on external shocks to second moments.
@techreport{KimLee2024dispersion, title = {A Model of Entry, Exit, and Endogenous Productivity Dispersion}, type = {Working Paper}, series = {Working Paper}, year = {2024}, author = {Kim, Daisoon and Lee, Yoonsoo}, keywords = {Business cycles, Dispersion, Entry/exit, Firm heterogeneity, Firm learning.} }