Rowan Shi

I am an Assistant Professor of Economics at Toronto Metropolitan University in Canada.

research interests

International trade, urban/spatial economics, computational methods

contact

Zoom
E-mail: rowanxshi@torontomu.ca
GitHub: rowanxshi
CV: web or PDF

Research

working papers

Combinatorial discrete choice, with Costas Arkolakis, Fabian Eckert
Revise and Resubmit, American Economic Review

Abstract Discrete choice problems with complementarities among options quickly grow infeasible to solve, since they generically require evaluating all combinations of choices. We develop a solution method that applies whenever choices are weakly complementary or substitutable, using the implied choice monotonicity to discard suboptimal combinations without computing their payoff. It is orders of magnitude faster than existing approaches, finds the global solution, and extends to heterogeneous-agent settings. Using our method, we calibrate a general equilibrium model of multinational firms selecting global production locations to show that complementarities among locations can amplify, dampen, or even reverse the welfare gains from multinational production.

NBER WP, Julia Package and documentation

The non-traded gains from trade: Evidence from Brazil, with Rafael Parente
Submitted

Abstract Using Brazil’s import liberalization as a quasi-natural experiment, we uncover a new margin for the gains from trade: the reallocation of labor from smaller to larger producers in the non-traded sector. Larger non-traded producers self-select into importing, expanding as they incorporate foreign inputs. We develop a parsimonious model of heterogeneous producers consistent with the empirical findings, then show that this reallocation is welfare-enhancing but disappears when all non-traded producers make the same importing decision. The quantitative welfare effect of this margin is 0.02\% for the average local labor market, reaching up to 0.2\% for the largest regions in Brazil.

IMF working paper

Solving combinatorial discrete choice problems in heterogeneous agent models: theory and an application to corporate tax harmonization in the European Union, with Kathleen Hu

Abstract This paper develops a solution method for computing optimal decisions to combinatorial discrete choice problems (CDCPs) in heterogeneous agent settings. With an arbitrary type distribution over any number of differentiated characteristics, it quickly computes the policy function mapping the entire type space to corresponding optimal actions. The binary decisions can display either supermodular or submodular interactions. Problems of this structure arise naturally ineconomic settings, especially in international trade and industrial organization. The proposed algorithm is particularly well suited for estimating or computing general equilibrium models incorporating heterogeneous agents solving CDCPs, including choices on plant locations, input sourcing partners, or export market entry. As an illustration of the algorithm in practice, the paper then turns to evaluating the effects of a counterfactual policy equalizing corporate tax rates across the European Union using a quantitative general equilibrium model where heterogeneous firms optimally select a set of countries in which to operate affiliates.

works in progress

Place-based policy for national welfare, with Paula Donaldson, Fabian Trottner

Abstract We provide a novel rationale for national place-based policies based on imperfect competition in local labor markets, and analyze its implications for the spatial welfare effects of such policies. To do so, we develop a multi-region model where heterogeneous market power among firms in both labor and product markets distorts the allocations of resources within and across regions. Industrial productivities and their elasticity to regional density differ endogenously across regions, hinging on how efficiently each region's labor market allocates workers across firms. Solving the planner's problem, we show that place-based industrial policy can improve efficiency, and assess when and how efficiency-based policy interventions change the spatial distribution of living standards. To quantify the importance of our theoretical results, we study the effects on reallocation and welfare across space of place-based policies aimed at eliminating disparities between Western and Eastern Germany.