The Economic Effects of Immigration Restriction Policies: Evidence from the Italian Emigration to the US, 1890-1930
joint with Lorenzo Spadavecchia (2021)
This paper studies how immigration restriction policies influence the development of emigration countries in the context of the early XX-century Italian mass emigration to the US. We assemble a unique dataset spanning the 1890-1930 period to link Italian emigrants to their district of origin and complement it with newly digitized historical Italian census data. To identify the effects of the 1921-1924 Immigration Acts we compare districts with similar emigration rates but different destinations. Districts that were more exposed to the policy shock display a sizable increase in population. We provide evidence that "missing migrants" whose migration was inhibited by the Acts drive this result. We find that investment in capital goods by manufacturing firms in exposed districts sharply decreases. Moreover, industrial employment in those districts increases. We interpret this as evidence of directed technical adoption: more abundant labor dampened the incentive for firms to adopt productivity-enhancing technologies thereby potentially hampering long-run growth.
Durable Goods and Monetary Policy in a Menu-Cost Economy
This paper studies the distinctive pricing dynamics of durable goods and analyzes their implications for the conduct of monetary policy in a menu-cost economy. Using price microdata, I document the following new facts: (i) the dispersion of price changes in durables is higher than in nondurables; (ii) the frequency of price adjustment is countercyclical, however durable prices get relatively rigid in recessions; (iii) the dispersion of price changes is countercyclical for durables, and procyclical for nondurables. I develop a menu-cost model embedding durable consumption and calibrate it to match new and consolidated empirical evidence. I use the model to challenge the prevailing view holding that durable goods dampen the real effectiveness of monetary policy. I find that even though durable goods prices are relatively flexible, the model generates substantial monetary non-neutrality. Moreover, this paper puts forward a new channel whereby durable consumption can amplify the real effects of monetary policy. This result is driven by heterogeneous demand pass-through of aggregate shocks across sectors. Higher durable consumption enhances the sensitivity of nondurable output to interest rate shocks thus amplifying monetary non-neutrality.
Selected Work in Progress
Religiosity and Science: An Oxymoron? Evidence from the Great Influenza Pandemic
We study the relationship between religiosity and science in the United States in the period 1900 to 1930. To measure religiosity, we develop a novel measure of revealed religiosity looking at naming patterns of newborn babies. To measure science, we use a new dataset covering all patents granted in the US since the 19th century (Berkes, 2018). First, we document that the relationship between religiosity and science changes over time, being negative in the pre-1918 period and becoming positive afterwards. This coincides with the years when the Spanish Influenza pandemic hit the US. Second, we leverage county-level variation in the intensity of the pandemic to provide causal evidence that both religiosity and innovation increase in areas more hit by this shock. We find that Catholics drive the increase in religiosity, while innovative activity in chemical and drugs accounts for the boost in overall innovation. Finally, we investigate the underlying mechanisms. We use individual-level data to test whether the shock widened pre-existing differences in attitudes towards religiosity and science, furthering the within-county polarization between the two.
Back to Basics: analyzing the determinants of feedback and amplification in an Agent-Based financial market
We develop a financial market in which investors trade in corporate equity, whose issuers' balance sheets are governed by exogenous processes. Upon modeling the pricing mechanism of equity stemming from the expectations formation rules and the market design in such a simple endowment economy, we consider the impact on the pricing dynamics and aggregate welfare of imperfect information, heterogeneity across investors and corporate leverage. In order to disentangle the direct consequences that are entailed by these factors we include them in the environment incrementally. We are thus able to show that equity is traded if and only if information is imperfect and investors are heterogeneous. Furthermore, the pricing mechanism is shown to be coherent with standard non-arbitrage arguments despite lack of perfect rationality. Amplification dynamics emerge once corporate leverage is introduced, resulting in both welfare losses and pricing overshooting. Although no liability cross-holding is allowed, contagion dynamics stem from the common equity-pricing market, their criticality being amplified in the presence of corporate debt.