Joseph P. Kaboski

University of Notre Dame, South Bend, Indiana, United States

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Publications (38)38.2 Total impact

  • Francisco J. Buera · Joseph P. Kaboski · Yongseok Shin
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    ABSTRACT: We review both the theoretical and empirical literature on entrepreneurship and financial frictions, with an emphasis on the heterogeneous and dynamic microlevel implications of financial frictions for macrodevelopment.Expected final online publication date for the Annual Review of Economics Volume 7 is August 02, 2015. Please see http://www.annualreviews.org/catalog/pubdates.aspx for revised estimates.
    Annual Review of Economics 09/2015; 7(1):150504160918000. DOI:10.1146/annurev-economics-080614-115348 · 2.63 Impact Factor
  • George Alessandria · Horag Choi · Joseph P. Kaboski · Virgiliu Midrigan
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    ABSTRACT: The extent and direction of causation between micro volatility and business cycles are debated. We examine, empirically and theoretically, the source and effects of fluctuations in the dispersion of producer-level sales and production over the business cycle. On the theoretical side, we study the effect of exogenous first- and second-moment shocks to producer-level productivity in a two-country DSGE model with heterogeneous producers and an endogenous dynamic export participation decision. First-moment shocks cause endogenous fluctuations in producer-level dispersion by reallocating production internationally, while second-moment shocks lead to increases in trade relative to GDP in recessions. Empirically, using detailed product-level data in the motor vehicle industry and industry-level data of U.S. manufacturers, we find evidence that international reallocation is indeed important for understanding cross-industry variation in cyclical patterns of measured dispersion.
    Journal of Monetary Economics 12/2014; 69. DOI:10.1016/j.jmoneco.2014.11.007 · 1.89 Impact Factor
  • Joseph P. Kaboski · Molly Lipscomb · Virgiliu Midrigan
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    ABSTRACT: We develop a model of households with multiple needs (smoothing shocks, financing investment) and constraints (limited credit, self-control issues) in order to examine the nature of household's financing constraints in a developing country, and the impact of relaxing them. We show that increased access to credit has very different implications for the aggregate model economy depending on its form: asset-financed or cash. We then illustrate how a short-term increase in access to loans leads to very distinct behavior in the short run. The relevance of the model can be evaluated using a field experiment, which we are currently implementing in Uganda.
    American Economic Review 05/2014; 104(5). DOI:10.1257/aer.104.5.171 · 2.69 Impact Factor
  • Francisco J. Buera · Joseph P. Kaboski · Yongseok
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    ABSTRACT: We provide a simple quantitative general equilibrium model of occupational choice with credit market frictions to analyze the aggregate and distributional effects of asset transfer programs. Asset transfer programs have a positive but transient effect on aggregate productivity, and a negative impact on the aggregate capital stock. On net they have a negative but small effect on per capita income. The effects are very heterogeneous across treated individuals. We compare the results in our model to those from recent randomized control trials and historical natural experiments.
    American Economic Review 05/2014; 104(5). DOI:10.1257/aer.104.5.159 · 2.69 Impact Factor
  • Brian Greaney · Joseph P. Kaboski · Eva Van Leemput
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    ABSTRACT: This paper examines a cost-reducing innovation to the delivery of Self-Help Group microfinance services. These groups typically rely on outside agents to found and administer the groups although funds are raised by the group members. The innovation is to have the agents earn their payment by charging membership fees rather than following the status quo in which the agents are paid by an outside organization and instead offer free services to clients. The theory we develop shows that such membership fees could actually improve performance without sacrificing membership, simply by mitigating an adverse selection problem. Empirically, we evaluate this innovation in East Africa using a randomized control trial. We find that privatized entrepreneurs providing the self-help group services indeed outperform their NGO-compensated counterparts along several dimensions. Over time, they cost the NGO less and lead more profitable groups; also, households with access to privately-delivered groups borrow and save more, invest more in businesses, and may have higher consumption. Consistent with the theory, these privatized groups attract wealthier, more business-oriented members, although they attract no fewer members.
    SSRN Electronic Journal 04/2013; DOI:10.2139/ssrn.2248182
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    George A. Alessandria · Joseph P. Kaboski · Virgiliu Midrigan
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    ABSTRACT: The large, persistent fluctuations in international trade that can not be explained in standard models by changes in expenditures and relative prices are often attributed to trade wedges. We show that these trade wedges can reflect the decisions of importers to change their inventory holdings. We find that a two-country model of international business cycles with an inventory management decision can generate trade flows and wedges consistent with the data. Moreover, matching trade flows alters the international transmission of business cycles. Specifically, real net exports become countercyclical and consumption is less correlated across countries than in standard models. We also show that ignoring inventories as a source of trade wedges substantially overstates the role of trade wedges in business cycle fluctuations.Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.
    Journal of Monetary Economics 05/2012; 60(1). DOI:10.2139/ssrn.2089015 · 1.89 Impact Factor
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    Joseph Paul Kaboski · Robert M Townsend
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    ABSTRACT: This paper evaluates the short-term impact of Thailand's 'Million Baht Village Fund'program, among the largest scale government microfinance iniative in the world, using pre- and post-program panel data and quasi-experimental cross-village variation in credit-per-household. We find that the village funds have increased total short-term credit, consumption, agricultural investment, income growth (from business and labor), but decreased overall asset growth. We also find a positive impact on wages, an important general equilibrium effect. The findings are broadly consistent qualitatively with models of credit-constrained household behavior and models of intermediation and growth.
    American Economic Journal Applied Economics 04/2012; 4(2):98-133. DOI:10.1257/app.4.2.98 · 2.76 Impact Factor
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    Francisco J. Buera · Joseph P. Kaboski
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    ABSTRACT: We consider broad patterns of structural change: (i) sectoral reallocations, (ii) rich movements of productive activities between home and market, and (iii) an increase in establishment size, especially in manufacturing. We extend these facts and develop a unified model explaining them. The crucial distinction across manufacturing, services and home production is the scale of the productive unit. In manufacturing, scale technologies lead to industrialization and marketization. In services, they lead to marketization and later demarketization of services. A later increase in the scale of services could yield a decline in industry and a rise in services, consistent with the data.
    Journal of Economic Theory 03/2012; 147(2). DOI:10.1016/j.jet.2010.11.007 · 1.24 Impact Factor
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    Joseph Paul Kaboski · Robert M Townsend
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    ABSTRACT: This paper uses a structural model to understand, predict, and evaluate the impact of an exogenous microcredit intervention program, the ThaiMillion Baht Village Fund program. We model household decisions in the face of borrowing constraints, income uncertainty, and high-yield indivisible investment opportunities. After estimation of parameters using pre-program data, we evaluate the model’s ability to predict and interpret the impact of the village fund intervention. Simulations from the model mirror the data in yielding a greater increase in consumption than credit, which is interpreted as evidence of credit constraints. A cost-benefit analysis using the model indicates that some households value the program much more than its per household cost, but overall the program costs 20 percent more than the sum of these benefits.
    Econometrica 09/2011; 79(5):1357-1406. DOI:10.3982/ECTA7079 · 3.50 Impact Factor
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    Francisco J Buera · Joseph P Kaboski · Yongseok Shin
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    ABSTRACT: This paper provides a quantitative evaluation of the aggregate and distributional impacts of economy-wide microfinance or credit programs targeted toward small-scale businesses. In our analysis, we find that the redistributive impacts of microfinance are stronger in general equilibrium than in partial equilibrium, but the aggregate impacts are smaller. Making the typical microfinance program more widely available has only a small impact on per-capita income, since an increase in aggregate total factor productivity (TFP) is offset by lower capital accumulation that stems from the redistribution of income from high-saving individuals to low-saving ones. However, the vast majority of the population are positively impacted by microfinance, but only through the equilibrium increase in wages.
    SSRN Electronic Journal 04/2011; DOI:10.2139/ssrn.2350287
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    George A. Alessandria · Joseph P. Kaboski · Virgiliu Midrigan
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    ABSTRACT: We examine the source of the large fall and rebound in US trade in the recent recession. While trade fell and rebounded more than expenditures or production of traded goods, we find that relative to the magnitude of the downturn, these trade fluctuations were in line with those in previous business cycle fluctuations. We argue that the high volatility of trade is attributed to more severe inventory management considerations of firms involved in international trade. We present empirical evidence for autos as well as at the aggregate level that the adjustment of inventory holdings help explain these fluctuations in trade.
    American Economic Review 01/2011; 101(3):303-07. DOI:10.2139/ssrn.1746965 · 2.69 Impact Factor
  • Joseph Kaboski · George Alessandria
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    ABSTRACT: Virgiliu Midrigan provided excellent research assistance. All remaining errors are our own. † The views expressed here are those of the authors and not necessarily those of the Federal Reserve This paper demonstrates that deviations from the law of one price are an important source of violations of absolute PPP across countries. Using highly disaggregated U.S. export data, we document evidence of systematic international price discrimination based on the local wage of consumers in the destination market. We show that most violations from absolute PPP can also be explained by international differences in wages. We find very little additional explanation is due to differences in income per capita. Developing and calibrating a model of pricing-to-market based on search frictions and international productivity differences, we show that pricing-to-market accounts for 62 percent of the relationship between national price levels and income and 100 percent of the deviation from the law of one price. In contrast, the textbook Harrod-Balassa-Samuelson effect accounts for the remaining 38 percent of the relationship between national price levels and income.
  • Article: Notre Dame
    George Alessandria · Joseph P. Kaboski · Virgiliu Midrigan
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    ABSTRACT: This paper examines the role of inventories in the decline of production, trade, and expenditures in the US in the economic crisis of late 2008 and 2009. Empirically, we show that international trade declined more drastically than trade-weighted production or absorption and there was a sizeable inventory adjustment. This is most clearly evident for autos, the industry with the largest drop in trade. However, relative to the magnitude of the US downturn, these movements in trade are quite typical. We develop a two-country general equilibrium model with endogenous inventory holdings in response to frictions in domestic and foreign transactions costs. With more severe frictions on international transactions, in a downturn, the calibrated model shows a larger decline in output and an even larger decline in international trade, relative to a more standard model without inventories. The magnitudes of production, trade, and inventory responses are quantitatively similar to those observed in the current and previous US recessions.
  • Source
    George Alessandria · Joseph P Kaboski · Virgiliu Midrigan
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    ABSTRACT: This paper examines the role of inventories in the decline of production, trade, and expenditures in the United States in the economic crisis of late 2008 and 2009. Empirically, the paper shows that international trade declined more drastically than trade-weighted production or absorption and there was a sizable inventory adjustment. This is most clearly evident for automobile, the industry with the largest drop in trade. However, relative to the magnitude of the U.S. downturn, these movements in trade are quite typical. The paper develops a two-country general equilibrium model with endogenous inventory holdings in response to frictions in domestic and foreign transactions costs. With more severe frictions on international transactions, in a downturn, the calibrated model shows a larger decline in output and an even larger decline in international trade, relative to a more standard model without inventories. The magnitudes of production, trade, and inventory responses are quantitatively similar to those observed in the current and previous U.S. recessions.
    IMF Economic Review 09/2010; 58(2). DOI:10.1057/imfer.2010.10 · 2.10 Impact Factor
  • Article: TZA
    George Alessandria · Joseph Kaboski
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    ABSTRACT: We show that deviations from the law of one price in tradable goods are an important source of violations of absolute PPP across countries. Using highly disaggregated export data, we document systematic international price discrimination: at the U.S. dock, U.S. exporters ship the same good to low-income countries at lower prices. This pricing-to-market is about twice as important as any local non-traded inputs, such as distribution costs, in explaining the differences in tradable prices across countries. We propose a model of consumer search that generates pricing-to-market. In this model, consumers in low-income countries have a comparative advantage in producing non-traded, non-market search activities and therefore are more price sensitive than consumers in high-income countries. We present cross-country time use evidence and evidence from U.S. export prices that are consistent with the model.
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    Francisco J. Buera · Joseph P. Kaboski · Yongseok Shin
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    ABSTRACT: In this paper, I present empirical evidence for …ve European countries (Germany, France, UK, Spain and Italy) and the Euro-zone on whether monetary policy shocks produce di¤erent e¤ects on real output growth depending on the phase of the business cycle that the economy is undergoing (the socalled ‘state’ asymmetry). To do so, I apply a multivariate extension of the Hamilton(1989)’s Markov switching methodology. I …nd evidence in favour of ‘state’ asymmetries at the aggregate level in all the countries whereby interest-rate shocks have larger e¤ects in recessions than in expansions. I also carry out the analysis at the sectorial level and observe that this asymmetric effect seems to be di¤erent in the analysed countries when I focus on a sectorial analysis.
    American Economic Review 04/2009; 101(14914). DOI:10.1257/aer.101.5.1964 · 2.69 Impact Factor
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    Francisco J. Buera · Joseph P. Kaboski
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    ABSTRACT: Two traditional explanations for structural changes are sector-biased technological progress and non-homothetic preferences. This paper integrates both into an otherwise standard growth model and quantitatively evaluates them vis-a-vis time series. The exercise identifies a set of puzzles for standard theories: (i) the model cannot account for the steep decline in manufacturing and rise in services in the later data; (ii) the standard model requires implausibly low elasticity of substitution across goods to match the consumption and output data; and (iii) the behavior of consumption and output shares differs significantly from that of employment shares. We argue that models that incorporate home production, sector-specific factor distortions, and differences across sectors in the accumulation of human capital are promising avenues to amend the standard models. (JEL: O11, O14, O41) (c) 2009 by the European Economic Association.
    Journal of the European Economic Association 04/2009; 7(2-3):469-477. DOI:10.1162/JEEA.2009.7.2-3.469 · 1.36 Impact Factor
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    Joseph P. Kaboski
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    ABSTRACT: Growth accounting exercises using standard human capital measures are limited in their ability to attribute causal effects and to explain growth. This paper develops a model of growth and schooling consistent with these decompositions but with less unexplained growth. The theory distinguishes between three different sources of education gains: (1) supply shifts, (2) skill-biased technical change increasing demand within industries/occupations, and (3) skill-biased technical change caused by the introduction of new skill-intensive industries/occupations. The third source leads to the large sectoral shifts and the largest growth effects. Quantitatively, schooling contributions account for 24 percent of wage growth, with both the direct (i.e., supply driven) causal contribution of schooling and the indirect causal (i.e., technology induced) contribution playing substantial roles. (Copyright: Elsevier)
    Review of Economic Dynamics 02/2009; 12(1):168-182. DOI:10.1016/j.red.2008.07.003 · 1.36 Impact Factor
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    George A. Alessandria · Joseph P. Kaboski · Virgiliu Midrigan
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    ABSTRACT: Fixed transaction costs and delivery lags are important costs of international trade. These costs lead firms to import infrequently and hold substantially larger inventories of imported goods than domestic goods. Using multiple sources of data, we document these facts. We then show that a parsimoniously parameterized model economy with importers facing an (S, s)-type inventory management problem successfully accounts for these features of the data. Moreover, the model can account for import and import price dynamics in the aftermath of large devaluations. In particular, desired inventory adjustment in response to a sudden, large increase in the relative price of imported goods creates a short-term trade implosion, an immediate, temporary drop in the value and number of distinct varieties imported, as well as a slow increase in the retail price of imported goods. Our study of 6 current account reversals following large devaluation episodes in the last decade provide strong support for the model’s predictions.
    SSRN Electronic Journal 02/2008; 100(5). DOI:10.2139/ssrn.1092215
  • Joseph P. Kaboski
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    ABSTRACT: Stata files to extract data from IPUM (www.ipums.umn.edu), as well as Matlab files for simulations in the paper.