• “COVID and the Economic Importance of In-Person K-12 Schooling” with D. Green,Simard-Duplain  and H. Siu,  Canadian Public Policy, 2020.
• “Business cycle accounting of trade barriers in a small open economy” with M. Rahmati and A. Madanizadeh, The Quarterly Review of Economics and Finance, 2018.
• “How Recession Affects the Industrial Firms in Iran” with A. Madanizadeh and A Mahmoudzadeh,   The Journal of Planning and Budgeting, 2018.
• “Subsidy and Natural Resource Curse: Evidence from Plant Level Observations in Iran”, with M. Rahmati, Resources Policy Journal, 2017.

Firms buy a significant portion of their intermediate inputs on credit from one another. Firms (borrowers) face limited liability, and debt repayment cannot be perfectly enforced. The limited liability increases the credit demand, and higher supplier prices due to the risk premium reduce the credit demand. This study focuses on which force prevails, how it leads to resource misallocation in an input-output economy, and how the economic structure plays a role here. In a theoretical framework, the limited liability always leads to over-ordering intermediate inputs and lower production of consumption goods in a multi-sectoral general equilibrium model with endogenous default decisions. The result holds even if we exclude factors of production and default deadweight loss. The economic structure also has a significant impact on the magnitude of misallocation. To gauge how much limited liability affects each sector by considering its ripple effects throughout the input-output economy, I introduce a new metric to sort sectors based on their susceptibility to this financial friction and estimate it for the U.S.A. economy. In light of these findings, the study concludes by proposing potential tax policies to mitigate the effects of resource misallocation.

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This study focuses on the bond market as a significant source of external funding for U.S. firms. It examines the observed increase in credit risk premiums since the mid-1990s, despite individual risk factors suggesting a declining trend. The research investigates the dynamics of firms' behavior toward their suppliers and customers, considering how firms' interactions may contribute to the rise in credit risk. Using comprehensive data sets, including Compustat and FactSet, which focus on consumer segments, I find that U.S. firms have changed their interactions over time, leading to a less diversified customer and supplier portfolio.

To delve deeper into this phenomenon, I develop an exogenous multi-sector model where firms engage in trading intermediate inputs, borrow funds from representative households, and make endogenous decisions about default. The model demonstrates how individual risk factors of suppliers influence a firm's default decision, with the probability of default depending on the supplier's performance. Additionally, I explore the impact of firms' connection structures on the probability of default in the presence of sectoral shocks. It becomes apparent that firms not only trade goods and services but also share risks, potentially leading to customers defaulting in certain circumstances. Firm decisions to default create externalities in the economy and increase customer input costs.

Empirical analysis linking the model to real-world data reveals that firms' connections with others can account for part of the cross-sectional variation in sectoral credit spreads and most of the overall credit spread trend.

Presentation: Seventeenth CIREQ symposium, 2022. The Finance Symposium, Greece, 2021.Transatlantic Doctoral Conference, London Business School, 2021.

We offer the first non-linear analysis of how microeconomic disruptions in an inefficient production network economy impact aggregate TFP. Our decompositions, applicable to any general equilibrium economy, provide non-parametric insights. We identify essential general equilibrium metrics for capturing the non-linear repercussions of microeconomic fluctuations through network connections. Our findings encompass firm-level productivity shocks, wasted distortions, and rebated distortions. We reveal that substantial shocks or high production process complementarity/substitution introduce substantial bias in the linear approximation of distortions and productivity shocks found in the literature. Our non-linear second-order effects substantially mitigate this bias.

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