Research
Job Market Paper
Financial Sanctions and the Dollar Dominance
Does the weaponization of dollar finance undermine dollar dominance in global trade? Using a new panel of FX-neutral import invoicing shares from 2012 to 2023, I show that U.S. financial sanctions against Chinese entities induce a selective shift from dollar to RMB invoicing. The response is strongest among countries whose imports from China are concentrated in working-capital-intensive sectors, while countries with low working-capital exposure exhibit almost no RMB switching. This heterogeneity suggests that sanctions do not trigger broad de-dollarization uniformly; instead, they reshape invoicing choices along financially vulnerable supply-chain links. I develop a model in which dominant-currency invoicing offers normal-time liquidity and hedging benefits but exposes firms to sanctions-sensitive working-capital constraints. Exporters borrow to finance intermediate inputs, and banks provide cash-flow-based credit lines whose usable amount depends on the invoicing currency and the realized geopolitical credit state. As U.S. sanctions risk rises, dollar-linked credit lines become less reliable because of the threat of payment disruptions, asset freezes, compliance delays, and reduced dollar settlement capacity. Firms exposed to working-capital-intensive production therefore switch to RMB invoicing to stabilize borrowing capacity. In the model, working-capital exposure lowers the threshold at which a trade relationship abandons dollar invoicing. A quantitative calibration disciplines this threshold mechanism using the reduced-form RMB response. Removing working-capital heterogeneity eliminates the muted response among low-working-capital countries, showing that the working-capital channel is quantitatively central. The findings imply that sanctions can weaken dollar dominance not through universal de-dollarization, but through selective currency switching where dollar liquidity becomes a source of geopolitical funding risk.
Publications
“Purchasing Power Parity vs. Uncovered Interest Rate Parity for NAFTA Countries: The value of Incorporating Time-Varying Parameter Model”
Economic Modelling, 2020
“Empirical Test of Purchasing Power Parity Using a Time-Varying Cointegration Model for China and the UK”
Physica A: Statistical Mechanics and its Applications, 2019
“Impacts of China’s Trade on Sectoral Employment Rates”
Journal of Industrial Economics and Business, 2019
“Analysis of the Estimation of Demand Elasticity for Non-Alcoholic Beverage” (Korean)
Journal of The Korean Data Analysis Society, 2019
“Impact of Price Disclosure on Gas Market Pricing: Applying Time-varying Cointegration Models” (Korean)
Journal of Industrial Economics and Business, 2019
“China’s International Trade and Employment by Sector: Private versus Public” (Korean)
Journal of The Korean Data Analysis Society, 2018
Working Papers
Which Margin Moves? Promotional Slack and the Pass-Through of a Sugar-Sweetened Beverage Tax
with Kristin Kiesel and Yijoong Won
Evaluations of corrective excise taxes usually read incidence from the average change in price. Yet the price a consumer pays combines a regular price with temporary promotions, so the same tax can raise the regular price, cut the frequency of discounts, or both. We ask how retailers divide a permanent tax between these two margins. A simple model makes the regular price costly to change and promotions cheaper but bounded by pre-tax slack, so low-slack markets raise the regular price and high-slack markets cut promotions. We study the 2018 San Francisco sugar-sweetened beverage tax with NielsenIQ scanner data, using a difference-in-differences design with Sacramento as control and a local-projections version for the dynamics. The tax raises the effective price by about 73 percent on average, and every channel but one passes it to consumers: low-slack grocery stores and soft drinks through the regular price, high-slack discount stores through a persistent promotion cut while their regular price barely moves. Incidence can run through promotional margins that posted-price measures miss, so the welfare and distributional effects of these taxes depend on the margin through which they pass.
Work in Progress
Tariff News and Inflation Expectations
The Relationship between Crude Oil and the Stock Market in China
The Impact of Economic and Monetary Union on Adjustment Speed
Policy Papers
Analysis of the Effects of Infrastructure Investment on Economic Growth (Korean)
NATIONAL ASSEMBLY BUDGET OFFICE, 2020
The Economic Effects of Gyeongbu-Expressway (Korean)
KOREA EXPRESSWAY CORPORATION RESEARCH INSTITUTE, 2020