Leticia Juarez

Abstract:Large foreign buyers dominate export markets and use their market power to impose markdowns on sellers---and this shapes how exchange-rate shocks transmit to export prices. Using the universe of Colombian customs transactions for 2007--2020, which link every exporter to its foreign buyers, I document three facts: (i) a few importers dominate each product--destination market and pay different prices for identical goods; (ii) a 10% peso depreciation raises seller-currency prices by only 1\% for sellers tied to the largest buyers, versus 15% for those selling to small buyers, after controlling for invoice currency and seller-time fixed effects; and (iii) markets with higher buyer concentration exhibit lower aggregate pass-through. I rationalize these facts with a structurally estimated open-economy oligopsony model in which buyers internalize their influence over an upward-sloping supply curve. The model generates a markdown channel---whereby larger buyers increase their markdowns following a depreciation, absorbing the exchange-rate gain at the seller's expense--- — and shows that aggregating the firm-level equilibrium conditions yields the Herfindahl–Hirschman Index as the sufficient statistic for market-level pass-through, providing a structural foundation for fact (iii). Using simulated method of moments, I estimate the within-product cross-buyer and across-product supply elasticities, recovering average markdowns of 16% of the marginal revenue product. In a counterfactual with no buyer market power, seller revenues rise but pass-through nearly doubles, revealing a trade-off between price levels and exchange-rate insulation that is quantitatively significant for exporters in developing countries.

Abstract: As WTO regulations rendered tariffs less viable, the trade policy landscape experienced a significant transformation: Non-tariff barriers have proliferated, becoming a central instrument of countries' trade policy. How do Non-Tariff import Barriers affect downstream firms? What role do firm market power and market concentration play in shaping the effects of these barriers? This paper investigates the effects of import licenses (NAILs) in Argentina from 2005 to 2011. We construct a novel database with yearly data on products that require import licenses to analyze the causal effects of NAILs on firms' imports, exports, and employment. Our empirical strategy leverages the staggered introduction of NAILs as a unique opportunity for causal identification. We find that NAILs significantly reduce firm imports, leading firms reliant on these imported inputs to decrease exports and employment. In a trade model with oligopolistic competition in export markets, we provide conditions under which firms' market power can shape the aggregate impact of NAILs. In markets where a firm is relatively large, it can respond to NAILs by adjusting its markups while maintaining relatively stable prices and output. This reduces the overall impact on consumer prices in more concentrated markets.

Abstract: In the past two decades, over 30 countries have implemented tax amnesty policies to encourage the declaration and repatriation of hidden assets, with the goal of increasing government tax revenues. While previous literature has primarily focused on the fiscal impact, this paper studies a new channel: the potential expansion of the financial sector resulting from these policies. We examine the macroeconomic effects of Argentina’s 2016 Tax Amnesty, one of the largest programs for disclosing hidden assets, through the financial channel. This amnesty led to an influx of savings into domestic banks, primarily in dollars, equivalent to 1.4% of GDP. We leverage the heterogeneous exposure of banks and firms to this amnesty-induced financial shock to identify bank responses and the spillovers to firms in the private sector. We find that more exposed banks significantly increased their lending compared to less exposed ones. Firms connected to banks with higher exposure experienced increased borrowing and a boost in imports, exports, and employment. Our findings reveal that tax amnesty policies can stimulate economic growth by expanding the financial sector, demonstrating effects beyond their direct fiscal impact. These results are particularly relevant for countries with underdeveloped financial systems, where the potential for growth through improved access to capital is significant.

Abstract: This paper studies how the effects of exchange rate shocks on international prices vary with trade credit. We put together a dataset that contains customs data and bank statements for the universe of Chinese exporters for the period 2001-2012. We start by documenting some stylized facts. First, we observe substantial complementarity between trade credit and bank loans. Second, the interests paid by exporters to domestic banks respond to exchange rate shocks. Third, exporters’ international prices respond significantly less for products sold by exporters issuing more trade credit (more complete exchange rate pass-through). Motivated by these stylized facts, we model an open economy with heterogeneous firms. In the model, exporters in the home country borrow from domestic banks to finance their production activities, which translates into a credit premium in their export prices. This paper introduces a trade credit premium channel: exchange rate shocks affect domestic banks’ expectations of exporters' profits, and, in this way, impact interest rates (financial costs) offered to exporters. The changes in interest rate affect the international prices charged by these exporters. With the estimates from the model, we conduct the following counterfactual: reduce financial frictions between banks and exporters.