Research

Leading and Lagging Relationship in International Business Cycles (Job Market Paper), 2009

I use a two-country two-good model with different labor adjustment costs to answer

the following question: why US tends to be the leader in international business cycles.

The cross-country output and employment correlations at different time lags between

the main developed countries (EU15, Australia, Canada and Japan) and US show

strong asymmetric structures: the correlations with past US movements are much

higher than those with future US movements. And employment correlation structure

is the most asymmetric among macroeconomic series. I find that the asymmetry

level is positively related with the labor protection level across countries. The model

predicts that the country with higher labor protection absorbs the productivity shocks

much slower than the country with lower labor protection. Due to the sluggish

responses to shocks, series in high labor protection country will be more correlated

with lagged series in low labor cost country.

Foreign Direct Investment and Home Bias ( in progress) with Lin Lu, 2008

In this paper we introduce foreign direct investment to explain the home bias puzzle.

Using the model in Helpman et al. (2004), we find that in a two-country symmetric

model, the trade-output ratio predicted by a model of heterogenous firms with Foreign

Direct Investment is much lower than a model without FDI, therefore more consistent

with data. If we extend the countries to be asymmetric, the model predicts much

better results for the trade between U.S.-Canada and U.S.-E.U compared with the

model without FDI.

Other paper

Economic Growth and Consumer Behavior in a General Equilibrium Model with Yingxue Cao,

Operation Research and Management Science, vol 17, 2008