“Government Spending Multipliers and Distribution of Commodity Booms
in the Spatial Economy” Latest Version
(November, 2024) | RSIE
Discussion Paper 690Abstract
This paper uses the regional redistribution of Peru’s government
revenue—increased due to the mineral commodity price boom in the
2000s—to estimate the effects of government spending. I begin by
calculating local effects on households, workers, and firms, and a local
open economy relative multiplier. Motivated by a general equilibrium
framework, I then incorporate a Spatial Auto-Regressive (SAR) model to
measure trade-related spatial spillovers. I find that increases in
government spending stimulate larger relative output growth and
positively impact relative wages, expenditures, and income. However,
there is no corresponding relative rise in labor or value added. The
spatial analysis helps interpret these results and measures the
trade-related indirect effects of local spending on output.
Selected Work in Progress
“Teenage Labor, Trade, and Market Access” Working Paper Coming Soon - Draft
Available by RequestAbstract
This paper exploits drastic tariff reductions and increased export
possibilities to study their effects on teenage labor, its interaction
with adult labor, and the role that market access plays in that
interaction. In the context of Peru’s last liberalization episode that
took place in the 2000s and the growth of China as the main Peruvian
trade partner, I find that both episodes are associated with higher
teenage labor participation in districts more exposed to them. These
effects seem to be sharper in districts with lower market access, which
is consistent with complementarities between adult labor and teenage
labor in household production activities and contributes to explaining
why child and teenage labor didn’t decrease despite the severe
reductions in poverty rates.