Most Common Questions

Question 1

To what journal will you send your paper?

Answer 1

1. I have two options: Review of Economic Studies and AEJ: Economic Policy.
2. My paper would be suited for a general-interest economics journal publishing articles at the frontier of economic research such as ReStud as it’s the first paper that provides theoretical micro-foundations for waste generation and waste flows AND quantifies its welfare effects using a structural gravity setup.
3. I believe my paper would also be of interest to members of the editorial board, particularly Thomas Chaney, whose expertise is in gravity models so he might see my application of gravity models to waste trade as useful.
4. I believe my paper is also a good fit for AEJ: Policy as it contributes new findings on the effect of trade and environmental policy on welfare and the economy.
5. Mine is the first paper to quantify the economic and environmental consequences of international waste trade and its associated policies.
6. I believe the paper would also be of interest to members of the editorial board, such as Treb Allen, who has worked extensively on quantifying the welfare effects of trade.
7. Finally, I believe my paper complements studies published in AEJ: Policy in the past. Particularly, my paper adds to the studies at the intersection of trade and the environment by Shapiro (2016), which studies the effect of trade on CO2 emissions, and Davis and Kahn (2010), which studies the impact of trade in used vehicles on emissions intensity and overall emissions.

Question 2

What is your research agenda for the next 5 years?

Answer 2

1. So far I have worked on the two broad themes of waste trade and regulatory diffusion. My job market paper quantifies the welfare and economic effects of waste trade and I have a paper that tests for and quantifies heterogeneity in the diffusion of regulations across international trade networks. Both papers are nearly ready to be sent to a journal, so I would like to first push through to submit them.
2. In the near term, I would continue working on these two themes. My paper with George Deltas already has some results on how membership to the waste trade agreement, Basel Convention, creates economic incentives for its adoption by non-members. We have almost all the background results to write down a structural dynamic model of ratification of the Convention in the style of Wagner (2016). This work would help us better understand factors that influence countries to adopt international environmental agreements.
3. My colleague Sergio and I are in the process of expanding our work on regulatory diffusion to incorporate several commodities. We are in the process of collecting data on the adoption of regulations on several commodities along with commodity characteristics such as hazardousness, end-use, and product complexity. We believe this more detailed dataset would help us isolate more channels of diffusion of regulations through international trade (cross-commodity) and test for heterogeneity in diffusion along the commodity dimension.
4. Recently, I also came across the Exiobase 3 dataset that comprises multi-region input-output tables. This is a more granular dataset on waste trade. It provides information on the generation of different types of waste by several industries, how the re-processing of waste divides into recycling, incineration, land-filling, and open-dumping (residuals) within a country, and which and how much of the different types of waste is exported by industries to other countries. I believe the dataset opens up avenues for more research on the topic of waste trade.

Question 3

What can you teach?

Answer 3

1. I can teach anything at the undergraduate level.
2. At the masters level, I have taught Statistics and Econometrics at UIUC. What was your role? My students have ranked me excellent in every semester that I’ve taught with outstanding ratings in several semesters. I also received the Graduate teaching award from our department this past May for my contributions to teaching.
3. At the PhD level, I would be most comfortable teaching a course on international trade.
4. Course on environmental economics–will ask Amy Ando who teaches several courses on this in the Agricultural and Consumer Economics Dept. for advice.

Question 4

If you could teach any course, what would it be?

Answer 4

1. I would like to teach a course on international trade at both undergraduate and graduate levels.
2. At the undergraduate level, I would teach a foundational course covering classical models in international trade such as Ricardian and Heckscher-Ohlin models. Krugman, Obstfeld, and Melitz textbook would be an excellent reference for this course.
3. At the graduate level, I would cover the newer trade theory including the host of microfoundations leading to gravity equations. In addition to the papers, I believe the book by Gopinath, Helpman, and Rogoff would be a great background reading. As I specialize in the intersection of trade and the environment, we would also cover the literature on the impact of trade liberalization on the environment by Copeland, Taylor, and Shapiro.
4. I believe that the graduate-level course would prepare students wishing to pursue research in trade, as it did for me. It also holds value for those wishing a career in the industry by teaching how to analyze complex economic issues.

Question 5

Why is this economics?

Answer 5

1. Lionel Robbins’ definition is that economics is the study of the allocation of scarce resources.
2. My paper studies the causes and consequences of the waste trade, which is harmful to the local environment. Tradeoffs involved.
3. First, I show whether the waste trade itself is efficient or not i.e. welfare improving or do its benefits exceed the costs.
4. Then, I show what policies can facilitate equitable distribution of the burden of waste.
5. The impact of trade on the environment has been a major subject of research in economics in the past and we are now seeing renewed interest in this area. I have in mind individuals like Brian Copeland, Scott Taylor, Sam Kortum, David Weisbach, and Esteban Rossi-Hansberg, and Joseph Shapiro.

Question 6

Who would be your ideal referee?

Answer 6

1. Sam Kortum, Joseph Shapiro, Copeland, and Taylor would all make my ideal referees as my work is thematically and methodologically close to theirs. They have all worked on the impact of trade on carbon dioxide emissions and associated trade policies and I believe that they would find my paper interesting as it brings a different perspective on the impact of trade on the environment through the lens of waste trade.

Question 7

How do you contribute to the paper with George/Sergio?

Answer 7

1. He had the idea originally and I bring my knowledge on waste trade and my expertise in structural models of international trade. He laid down the question and I suggested ways on how to formulate the setup to study this.
2. I had the idea and identified the data originally while Sergio brings his knowledge of estimating network effects and suggested spatial econometrics to capture those effects. He does research on how financial constraints propagate in a production chain. I also worked on the text analysis of the measure descriptions for this project to identify the most salient features of each measure. We have been consulting with each other throughout in taking this project forward, so I would have to say that this paper is joint work. We went back and forth with the coding. I did the writing, and then we went back and forth with the editing.

Question 8

Why is this an interesting question? Why should we care about your results?

Answer 8

1. This paper is interesting because it tackles an unanswered question, speaks to theory, and is relevant for policy.
2. While international trade in waste creates benefits similar to trade in regular commodities, it also poses health and environmental externalities locally in importing countries. I study how big are the benefits against the costs.
3. My finding that lower-income countries disproportionately incur the burden of waste trade, and particularly, from low-value waste trade, speaks to the policies that can facilitate equitable distribution of the burden.
4. I also show that as waste trade policies create scale and compositional changes in the generation of waste, it can serve as a second-best policy to tackle the issue of waste in the absence of first-best instruments.

Question 9

Why static model?

Answer 9

1. Most of the trade papers that quantify welfare effects using structural gravity models employ a static framework.
2. These models have been designed to capture the source of comparative advantage (utilizing the trade movement) rather than how the economic variables (capital, population, technique of production, and tastes) evolve.
3. In structural gravity models there’s no accumulation equation or state variable because the purpose is to capture the sources of trade movement at a given point in time.
4. I believe that given the scope of the research question in this paper, which is to quantify the benefits against the costs, the static model suffices.
5. I use the static model as a shortcut to the steady-state of the dynamic model.
6. You can think of a setup where waste by-product in period t which is used in recycling in t+1 and that is an input to manufacturing in t+2 to study the evolution of waste itself and how that would change with policies. Estimating this model is now possible with the Exiobase3 database that has multi-region input-output tables with waste flows within and across economies.

Question 10

How do the differences in elasticities determine the specializing commodity of a country?

Answer 10

The rich are technologically better while the poor have cheaper labour. For a commodity that is more sensitive to trade costs, the cost considerations swamp the technological considerations during production. As lower-income countries have lower costs of production (due to cheap labour), they tend to specialize in the generation of low-value waste. Conversely, the rich tend to specialize in the production of manufactured goods.

Question 11

Elaborate more on how Exiobase 3 can be used?

Answer 11

1. Expand on my job market paper to study how waste trade policies differentially affect industries.
2. Because this dataset provides information on every step of the waste flow (multi-region input-output tables), you can imagine estimating a dynamic model of waste and waste trade. Consequences of the circular economy on welfare and production.
3. Factors associated with increases in recycling.

Question 12

What journals do you see yourself publishing in? In general, what journals do you consider to be the appropriate outlets for your work?

Answer 12

1. My first goal would be to publish in Top 5 journals- Journal of Political Economy, Review of Economic Studies (both of which cater to General-interest audiences)
2. I also think my job market paper would be a good fit for other journals such as AEJ: Policy, Economic Journal, as it speaks to economic policy.
3. As an economist working with models of international trade, Journal of International Economics (Field) would also be a great fit. Many members of its editorial board, such as Treb Allen, Costas Arkolakis, and Arnaud Costinot, are working on gravity models.
4. In fact, the paper by SW (2014) that I cite was published here.

Question 13

What NBER group would you see yourself in?

Answer 13

1. I believe International Trade and Investment Program: would be a good fit as some of its members work with both the gravity models of trade and look at the effect of environmental policy on trade.
2. I particularly have in mind the paper by Eric Verhoogen and coauthors where they study how tighter air quality standards in the US led to the relocation of battery recycling to Mexico-an example of pollution haven effect.
3. I believe Environment and Energy Economics Program would also be a great fit. Economists like Joseph Shapiro who works at the intersection of trade and environment are associated with it.

Question 14

Why didn’t anybody write this paper before?

Answer 14

1. Because we need a framework where you can capture the source of comparative advantage for a commodity (waste) which is both a byproduct of manufacturing and input to recycling. There’s no standard way in the literature to model this link. In my initial formulation of the framework, I had this issue that if I directly link the flow from manufacturing to recycling I cannot separately identify prices. To deal with this, I came up with a way to break the link from manufacturing production to recycling into two parts thus allowing me to separately model the source of comparative advantage for trade in waste.
2. Not enough data to quantify the externality costs of waste disposal. What I’ve done is use existing estimates of social marginal costs (though limited) and model predictions to quantify changes in the volume of waste disposal (with a change in policy) and thereby, the externality costs.
3. We also need a structural model to quantify the welfare gains from waste trade, and that only became easier with the advent of gravity models. The data requirements are not as severe as computable general equilibrium models, and the welfare calculations from these models rely only on a few sufficient statistics–changes in the share of expenditure on domestic goods and trade elasticities.

Question 15

Are your trade elasticity estimates credible? They seem large.

Answer 15

1. 2SLS procedure to tackle classical measurement error.
2. However, SW (2014) show that the trade barrier measure is underestimated, which means that the trade elasticities are overestimated.
3. They propose a simulated method of moments approach, which would be hard in my framework because I’m solving for the parameters in 3 sectors simultaneously.
4. I use the Robson and Whitlock (1964) modified measure of trade barriers—less biased but as efficient.
5. My estimate for manufactured goods is close to EK’s median estimate.
6. However, the lack of estimates for waste flows, prevents me from making a similar comparison.

Question 16

Is the size of welfare gains from waste trade reasonable?

Answer 16

1. The size of welfare gains is partially an artefact of the modelling assumptions: one sector, multiple sectors, market structure, etc.
2. Fally and Sayre (2018): Accounting for features of primary commodities such as low elasticities of demand and supply and concentration of resources in select countries create large welfare gains (three times larger for the median country).
3. Etkes and Zimring (2015) use a natural experiment—Ghaza blockade 2007-10—to study the welfare effects of trade. They find much larger estimates (15-27%).
4. What’s important is to compare waste trade gains to overall gains.

Question 17

Are the environmental cost estimates reasonable?

Answer 17

1. I’m using existing estimates of SMCs combined with model predictions on how waste disposal changes with a change in policy.
2. The assumptions governing changes in real incomes are the same ones governing changes in waste volumes. So these estimates are partially an artefact of the assumptions and studies have shown could be much larger.
3. However, what matters more is the size of environmental costs relative to the welfare gains. And I show that though the environmental costs are smaller compared to welfare gains, in the case of low-quality waste trade the costs swamp the benefits for lower-income countries.

Question 18

If you had to reject your paper at a journal, what grounds would you use for rejection?

Answer 18

1. The biggest concern in my paper is that it’s hard to find credible estimates on the cost of pollution externalities.
2. The way I tackle this is by using the Ban amendment as a revealed preference to back-calculate the cost of pollution externalities or using existing estimates in the literature to quantify the environmental costs. But even with existing estimates, the information is limited. However, the size of my environmental costs hinge on these figures, so if they’re meaningfully off from the true values, the results from my paper could be questioned.
3. However, I do several robustness checks to provide wide bands on these estimates and even with that, the main qualitative conclusions continue to hold.
4. So, I believe that I did the best that anyone with this data could do.
5. One way to capture the social marginal cost of waste is by quantifying the value to a country from entering an international waste trade agreement. In my paper with George Deltas, this is what we intend to do. The data on adoption of the Basel Convention provides variation at both time and country-level and so facilitates stronger identification of the value to a country from entering the agreement. The estimates from this work can be fed back into my job market paper.

Question 19

Why don’t you use a game-theoretic model where two countries with a bilateral agreement negotiate prices for waste trade?

Answer 19

1. First of all, even though information on several multilateral/bilateral agreements among countries is available, it is incomplete and lacks data on prices of different types of waste, so it would be hard to estimate a game-theoretic model.
2. Given the goal in this paper, which is to quantify the welfare effects across countries, a gravity model is suitable because the welfare estimates depend only on a couple of sufficient statistics–trade elasticities and share of expenditure on domestic goods–which can easily be computed with existing trade data. This is an advantage of using a gravity setup in that data requirements are not severe and much less compared to also a computable general equilibrium model.
3. However, if the ideal data were available, I believe that we could exploit the natural experiment to get at more credible estimates.

Question 20

Do your findings hold for waste other than industrial waste?

Answer 20

1. Industrial waste accounts for 94-97% of waste generation and the data I have is mainly industrial in nature.
2. Municipal (mixed) waste is part of the low-value waste in my sample.

Question 21

Does waste trade only happen from rich to poor?

Answer 21

It happens even from the poor to the rich countries. However, I find that there’s heterogeneity in the type of waste going from the rich to poor and from poor to rich. Rich countries (technologically better) mainly import high-value waste like metals while lower-income countries with cheaper labour import low-value (mixed) waste that requires manual sorting.

Question 22

What is the identification strategy in diffusion paper?

Answer 22

1. We use the information on trade networks combined with regulation adoption data to study whether the increased share of exports that comply with the regulation is associated with a greater likelihood of adoption of the regulation domestically.
2. Endogeneity is still a concern because if a country adopts the regulation, it can easily export to the regulation imposing country. (Reverse Causality)
3. We can address this in a few different ways. Use Kelejian and Piras approach for instrumental variables estimation (gravity regressions to get predicted trade flows to use as instruments–however some covariates in gravity regressions are themselves associated with regulation adoption through channels other than affecting trade, for example, colonial relationship), use initial year matrix (arguably exogenous), survival model (a country drops out of sample once it’s adopted the regulation), all of which only partially alleviate the concern. We do some of these as robustness checks and some we haven’t gotten to so far.
4. However, the more important question is whether there’s heterogeneity in the propagation of different types of regulations and even with the robustness checks we find our results continue to hold.

Question 23

Are you looking at vertical standards (stringency of same regulation) or horizontal standards?

Answer 23

Horizontal standards–different types of regulations, not stringency.

Question 24

Can a unilateral regulation on top of the China Ban make things better?

Answer 24

1. Rich stop exporting–lower-income countries should become worse-off because waste exports are like a transfer from rich to poor.
2. My results show that the poor disproportionately gain from the waste trade because they care more about the inputs to manufacturing than the environmental externality. The rich, in contrast, care about the environment are more sophisticated exporters and in a way, their decision to trade is endogenizing the SMC from waste. So if there’s any unilateral policy from the rich, it would make the poor worse off.
3. Ban amendment makes countries worse-off.

Question 25

Why Norway/UK/France?

Answer 25

1. Environmental economics–greater footprint in Europe.
2. Lifestyle.
3. Friends.
4. Immigration policies in the US.
5. Geographically closer to India.

Question 26

Why does waste trade create relatively larger welfare gains than regular trade?

Answer 26

1. Because it’s also creating externalities, so for trade to happen waste trade has to create much higher gains.
2. Only one recycled good while manufacturing substitutes are available.

Question 27

How do teaching and research go together for you?

Answer 27

1. Teaching and research are complementary.
2. Thinking about how to explain a concept better makes you think more deeply and brings clarity in your own thought process which helps in your research.
3. Doing research and pushing the boundaries of knowledge also involves communicating those ideas to an audience.
4. Jorge class presentation.

Question 28

One contribution of my entire work that’s a highlight I would want to tell anyone?

Answer 28

1. Lots of questions that study the effect of trade on the environment through air pollution. My contribution is asking how waste trade affects the environment.
2. No standard way in the literature to model the flow of a commodity that’s a byproduct of manufacturing and input to recycling. On top of that, you need to capture the source of its comparative advantage.

Question 29

What will you bring that makes our department stronger?

Answer 29

1. Lots of faculty working on environmental topics. I would add to the research capacity by doing research at the intersection of trade and environment and environmental policy. For example, work with Sergio who works in Finance, or George who works in Political Economy.
2. We are seeing renewed interest in this topic at this point in time. Individuals like Sam Kortum, Copeland, Taylor, and Shapiro are all doing research on the effect of trade on carbon dioxide emissions. I would add to that by studying the impact of trade through the lens of waste trade. Use data on trade flows at the country and industry level.