Democratization, Leader Education and Growth: Firm-level Evidence from Indonesia (joint with Steven Poelhekke; forthcoming at Journal of Economic Growth) Online Appendix Replication files VoxDev

Abstract: Does the economic success of democratization depend on newly elected leaders’ characteristics? We exploit the unique Indonesian democratization process, where districts exogenously democratized in different years. In a census of manufacturing plants, employment drops by 5% in districts that elect a non-college educated mayor, while employment stays constant under college graduates. Non-college educated mayors substantially raise taxation but provide less infrastructure, do not spend more on social programs, and are more often involved in corruption cases. Other leader attributes and district characteristics, as well as tests for pre-treatment trends, for selection on unobservables, and for close elections do not explain away the important role of leaders’ education in shaping local policies and growth.

Capital Regulations and the Management of Credit Commitments during Crisis Times (joint with María Teresa Valderrama; forthcoming at Review of Finance) Online Appendix

Abstract: Borrower drawdowns on credit commitments reduce a bank’s capital buffer. Using Austrian credit register data and exploiting the 2008–09 financial crisis as an exogenous shock to bank health, we provide novel evidence that capital-constrained banks manage this risk by cutting credit commitments that are not fully used. Controlling for their capital position, we find that banks also respond to liquidity problems by cutting such commitments. However, banks manage the capital and liquidity risk posed by undrawn credit in a way that limits negative macroeconomic implications: credit cuts are targeted at financially less constrained firms, and we show that borrowers of more-affected banks can substitute lost credit with credit from other banks and do not suffer real effects. Additional findings suggest that voluntary agreements between constrained banks and strong firms to reduce spare borrowing capacity can explain why strong firms experience larger credit cuts.

Good mine, bad mine: Natural resource heterogeneity and Dutch disease in Indonesia (joint with Steven Poelhekke. Journal of International Economics, Volume 131, 2021) Online Appendix Replication files Open Access Link

Abstract: We analyse the local effect of exogenous shocks to the value of mineral deposits at the district level in Indonesia using a panel of manufacturing plants. We introduce heterogeneity in natural resource extraction methods, which helps to explain the mixed evidence found in the `Dutch disease’ literature. In areas where mineral extraction is relatively capital-intensive, mining booms cause virtually no upward pressure on manufacturing wages, and both producers of traded and local goods benefit from mining booms in terms of employment. In contrast, labor-intensive mining booms drive up local manufacturing wages such that traded-goods producers reduce employment.


Natural resources and non-resource innovation (joint with Federica Coelli: first draft coming soon!)

Politics and Financial Intermediation: Evidence from Brazil (joint with Matias Ossandon Busch)

Restricting raw material exports (funded by NWO Open Competition M, €400k, 2023-2027; joint with Steven Poelhekke (Principal Investigator) and Maarten Bosker)