Yudan Ying

This paper studies how integration into global capital markets affects aggregate productivity through risk sharing and the allocation of capital. We develop a small open economy model where heterogeneous capitalists choose between producing and investing. Foreign participation in domestic equity markets shifts the country’s aggregate risk abroad and lowers the hurdle rate for production. This raises investment and output but lowers aggregate TFP by drawing less productive capitalists into production. Greater domestic financing capacity instead raises TFP by allowing productive firms to expand and displace marginal producers. We validate these predictions using emerging-market equity liberalizations in the late 1980s and 1990s, which were followed by equity price booms, more listings, and slower TFP growth where booms were larger. The calibrated model shows that liberalization alone lowers TFP and raises output only temporarily, while liberalization with deeper domestic financing raises both.

This paper studies the composition of cross-border capital flows by distinguishing between debt and equity assets. We show that equity inflows are positively associated with total factor productivity (TFP) growth, consistent with neoclassical theory, whereas debt inflows are negatively associated with TFP growth. The same divergence appears in the cross-section of net external positions, with fiscal capacity serving as the key country fundamental associated with these patterns. Motivated by this evidence, we develop a multi-country model with heterogeneous entrepreneurs, financial constraints, and international portfolio choice to explain the joint determination of TFP and the composition of global capital flows. Differences in fiscal capacity alter both the supply of government bonds and the risk-adjusted return on domestic risky assets, producing the opposing flows of debt and equity observed in the data.

This paper provides evidence that workers with broader experience play a key role in firms’ response to changing investment opportunities. Using patent records on 68,000 inventors at U.S. manufacturing firms (1992–2021) and a reduced-form shift-share design, we find that broader inventors increase green patenting more than narrower inventors following energy-cost shocks that raise firms’ returns to green innovation. The induced green patents are more likely to involve new collaborators and are less scientifically important than these inventors’ usual green patents. Team characteristics do not predict the quality decline, which is also not explained by inventors’ prior green experience, observed ability, cross-firm mobility, or technological distance from prior work. These findings suggest that firms assign versatile inventors to newly viable projects of lower scientific value.