Research

2026

1. work in progress

   Uncertainty or Bad News? Contamination, Bias, and Correction in News-Based Uncertainty Measures

   Nahyeon Bak, Daisoon Kim, and Hanbat Jeong

   2026

2025

1. R&R

   Aggregate Fluctuations from Firm Comovement

   Nahyeon Bak and Daisoon Kim

   R&R, Journal of Monetary Economics, 2025

   Abs PDF

   This paper shows that correlated idiosyncratic fluctuations within industries are an important source of macroeconomic volatility. Standard methods, such as cross-sectional demeaning, obscure this channel by mechanically driving average pairwise correlations toward zero asymptotically. We develop a non-parametric bounds approach that quantifies the contribution of such clustered comovement directly from firm-level data. Applied to U.S. firms, we find that within-industry comovement explains 10–15% of GDP volatility in normal times, 15–30% in downturns, and up to 45% during the Great Recession, helping account for the Great Moderation. These findings highlight the importance of cross-firm interdependencies in business cycle fluctuations.

2. working paper

   Consumer Learning and Package Size in Dynamic Brand Choice

   Nahyeon Bak, Daisoon Kim, and Chanheung Cho

   2025

   Abs PDF

   Why consumers repeatedly purchase the same brand is a central question in consumer choice research. We develop and test a novel identification strategy that uses purchase size dynamics to disentangle consumer learning from other drivers of state dependence, such as switching costs, in brand choice. Our dynamic model predicts that as consumers learn about a brand’s quality, reduced uncertainty and self-selection generate larger purchase sizes within a spell, whereas switching to an untried brand renews uncertainty and results in smaller trial sizes. By contrast, switching cost models predict no systematic or reversed relationships between experience, switching, and size. Using Nielsen scanner data on the U.S. cough drop market—where infrequent, need-based purchase patterns facilitate clean observation of new learning spells—we empirically demonstrate that within-spell experience positively correlates with purchase size, while brand switching negatively correlates. These findings identify consumer learning as a key mechanism underlying state dependence in consumer choice.

2024

1. publication

   Home Market Effects and Increasing Returns with Non-constant Marginal Costs

   Nahyeon Bak, Daisoon Kim, and Mishita Mehra

   Journal of Economic Geography, 2024

   Abs DOI

   We reexamine the role of increasing returns in production, central to trade and economic geography theories, focusing on the home market effect. We extend the conventional multi-industry new trade model to introduce (1) nonconstant marginal costs and (2) nonhomothetic production in factors. If factors that are more (less) intensively used in fixed costs than variable costs also have higher relative prices in large countries compared to small countries, then large countries exhibit larger (smaller) firm sizes and specialize in industries with decreasing (increasing) marginal costs. Notably, different levels of fixed costs have a limited impact on these patterns.

2. working paper

   Industry Characteristics and the Home Market Effect: Evidence from Manufacturing Trade

   Nahyeon Bak, Daisoon Kim, and Mishita Mehra

   2024

   Abs PDF

   This paper examines how supply-side industry characteristics—particularly returns to scale from non-constant marginal costs—shape home market effects. Using data on narrowly defined industries, we find that industries with stronger returns to scale are more concentrated in larger countries only when non-production activities rely more on non-tradable inputs (labor) than production activities. In such cases, higher labor costs in larger countries deter firm entry, resulting in larger average firm sizes that better exploit scale economies. Consistent with prior research, we also find that industries with higher markups and trade costs tend to concentrate in larger countries.

2019

1. working paper

   Structural Estimation of a Dynamic Brand Choice Model

   Nahyeon Bak

   2019

   Abs

   This paper tests competing theories of consumer behavior using a structural demand model that incorporates variety-seeking. Existing studies struggle to jointly explain two key features of purchase behavior: persistent brand choice and frequent brand switching among variety-seeking consumers. To address this, I develop a dynamic panel demand model with discrete choices that allows for heterogeneity in switching behavior, capturing both persistent and frequent switchers within a unified framework. The estimates yield two main findings. First, consumers learn rapidly about product attributes, challenging standard slow-learning models such as Bayesian updating. Second, state dependence in brand choice declines with the time elapsed since the last purchase, indicating that habit persistence is short-lived. These results are robust to alternative specifications with and without explicit controls for variety-seeking behavior.