Sarah Oliver
I am a PhD candidate at American University, and International Economist in the Services Division of the U.S. International Trade Commission. My primary research interests include international trade, specifically related to development, technology, and services, as well as industrial organization and micro theory. I earned my B.A. from Calvin College in Grand Rapids, Michigan, and my Masters in International Affairs from University of California, San Diego.
Contact: so3840a@american.edu
Published Papers
Herman, Peter R, and Sarah Oliver. (2023). "Trade, Policy, and Economic Development in the Digital Economy." Journal of Development Economics, 164 (103135). https://doi.org/10.1016/j.jdeveco.2023.103135
Abstract: This paper assess the impact of internet connectivity and digital trade policies on trade and welfare. Using new measures of internet connectivity, we find a significant positive relationship between internet use and bandwidth capacity, and trade. The positive relationship between internet use and trade is present for international and domestic trade, goods and services, high- and low-income exporters, and at the intensive and extensive margin. We also find that digital trade facilitation provisions in trade agreements have significantly increased trade for high-income exporters, especially for services trade. Informed by these findings, we use a general equilibrium model of trade to assess the trade and welfare impacts of increased internet connectivity and digital trade policies for developing countries. Increasing internet connectivity can have large positive welfare impacts on poorly connected countries, but these results also highlight the dangers of developing countries falling behind if they are not able to improve internet infrastructure. Introducing digital trade provisions into an existing trade agreement between high- and low-income countries can facilitate growth in trade in services for both members.
Ahmad, Saad, Nuno Limão, Sarah Oliver, and Serge Shikher. (2023). "Brexit Uncertainty and its (Dis)Service Effects." American Economic Journal: Economic Policy, 15(4). https://www.aeaweb.org/articles?id=10.1257/pol.20200808&&from=f
Online Appendix. https://www.aeaweb.org/content/file?id=18003
Abstract: We estimate the impact of increased policy uncertainty from Brexit on UK trade in services. We apply an uncertainty-augmented gravity equation to UK services trade with the European Union at the industry level from 2016Q1 to 2018Q4. By exploiting the variation in the probability of Brexit from prediction markets interacted with a new trade policy risk measure across service industries we identify a significant negative impact of the threat of Brexit on trade values and participation. The increased probability of Brexit in this period lowered services exports by at least 20 log points.
Khachaturian, Tamar, and Sarah Oliver. (2023). "Intangible Trade: Understanding the Relationship Between Trade Barriers and Mode of Supply in Services Sectors." The World Economy, 45(5). https://doi.org/10.1111/twec.13346
Abstract: In recent years, increased availability of services trade data and measures of non-tariff barriers has enabled more detailed analysis of trade patterns, including the relationship between different modes of service delivery across international borders. This paper uses a detailed, sector-level structural gravity model to shed light on the question of whether services trade via foreign affiliate sales (also known as mode 3 trade) is a complement or substitute for cross-border services trade (modes 1, 2, and 4) in 13 services sectors. In 9 of the 13 sectors considered, there is a negative and significant relationship between trade policies that limit foreign affiliate sales and cross-border trade, indicating a complementary relationship between the two types of trade flows. This suggests that when services firms export, they rely on multiple modes of supply to deliver their products, considering factors such as the degree of service tradability over the internet, levels of customer interaction, and complexity of particular tasks.
Working Papers
"Can Trade Barriers Explain Productivity Differences Between Foreign and Domestic Services Firms?" (2020). USITC Office of Economics Working Paper 2020-05-B (with Saad Ahmad and Caroline Peters).
Abstract: Modern trade theory posits that foreign firms are more productive than those that only serve the domestic market. By combining a rich firm-level dataset with measures of trade barriers in services sectors at the country and sector level, we examine if productivity differences between domestic and foreign services firms are related to the regulatory barriers foreign firms face to enter the domestic market. Overall, at both the firm- and sector-level, we find a significant and positive relationship between services trade barriers and observed differences in productivity between domestic and foreign firms. Our findings support the view that only the most productive foreign firms incur the significant costs associated with regulatory barriers to serve the domestic markets through their foreign affiliates.
"Building Vehicle Autonomy: Sensors, Semiconductors, Software, and U.S. Competitiveness." (2019). USITC Office of Industries Working Paper ID-063 (with David Coffin and John VerWey).
Abstract: This paper describes the current state of driving automation, the components that go into autonomous vehicles, and U.S. firm participation in the sector. There are three main components that enable autonomous driving: sensors, semiconductors, and software. Sensors, including cameras, Light Detection and Ranging (LiDAR), and radar are used together to help vehicles see road conditions at various distances, and in different weather and lighting conditions. Semiconductors facilitate the processing of data gathered by sensors in order to make real time driving decisions. Machine learning and mapping software provide the tools to improve the operation and decision making of vehicles. U.S. firms, including vehicle manufacturers, parts suppliers, and tech companies are competing across all of the components of driving automation. As a new area of competition, there are opportunities for startups and for firms to move into new areas (e.g., vehicle manufacturers developing chips, and technology companies supplying automotive parts).
Abstract: Using data on service occupations in U.S. manufacturing sectors in 2016, this paper seeks to highlight the value of in-house services in U.S. manufacturing output, by assessing the relationship between the share of services occupations in a particular sector (services occupation intensity) and typical education and compensation in service occupations. Overall, this paper finds a positive and significant relationship between services intensity and the typical education level of service workers within sectors, and a positive and significant relationship between service intensity and the average compensation of service occupations across sectors. For U.S. manufacturing sectors, these in-house services represented between $8.7 and $17.5 billion in additional services value added in 2016 compared to $56.8 billion for intermediate services inputs in the same year.
"Using Firm-Level Data to Compare Productivities across Countries and Sectors: Possibilities and Challenges." (2018). USITC Office of Economics Working Paper 2018-07-A. (with Saad Ahmad and Caroline Peters)
Abstract: A five-year panel of cross-country data for 2012-2016 drawn from the Orbis database is used to evaluate the advantages and shortcomings of this data source in calculating firm level productivity. We find that conditional on the productivity measure employed, country and sector coverage can vary widely in the Orbis database due to different national reporting requirements across countries. This paper also compares the average productivity of the same sector across countries and the average productivity of domestic and foreign owned firms in the same sector. In every type of productivity calculation employed in this analysis, foreign firms are significantly more productive than their domestic counterparts.
Abstract: Using firm level data for a sample of 78 country markets in 2012, this paper analyzes the relationship between the severity of non-tariff measures related to the entry and operation of foreign firms and firm profitability in the commercial banking sector, and differentiates the impact of these non-tariff measures on foreign-owned and domestic firms. Overall, there is a non-linear relationship between the level of restrictions and the profitability of firms. Banks in countries with low levels of restriction are significantly more profitable than banks in countries with no restrictions, while banks in countries with moderate levels of restriction are less profitable than banks in countries with no restrictions. Additionally, foreign owned firms are significantly more profitable than domestic firms when there are no restrictions on the entry and operation of foreign firms, but less profitable than domestically owned firms at both low and moderate levels of restriction.
"Firm Level Analysis of Services Trade Restrictions in the Life Insurance Industry." (2016). USITC Office of Industries Working Paper ID-045. (with Tamar Khachaturian)
Abstract: This paper presents a simple econometric framework to assess the impact of barriers on the profitability and the number of firms (participation) that supply life insurance services across countries. The average impact of restrictions on participation is negative and statistically significant in some specifications, lending modest support for the hypothesis that restrictions limit firm participation across countries. However, we do not find a statistically significant relationship between restrictions and average life insurance profitability, which may be due to the unique business models of life insurance firms. Depending on data availability, avenues for future research include examining profitability over a longer time horizon and differentiating the impact of restrictions on foreign versus domestic firms.
"An Anatomy of Billionaire Wealth." (2016). PIIE Working Paper 16.1. (with Caroline Freund)
Abstract: This working paper presents a new dataset on the sources of billionaire wealth and uses it to describe changes in extreme wealth in the United States, Europe, and other advanced countries. The data classify wealth as either self-made or inherited and identify the company and industry from which it comes. Among self-made billionaires, individuals are further classified as company founders, executives, politically-connected, or in finance. Data analysis shows that the superrich in the United States are more dynamic than in Europe. Just over half of European billionaires inherited their fortunes, as compared with one-third in the United States. The median age of a company of an European billionaire is nearly 20 years older than that of an American billionaire. Traditional sectors explain more than half of the rise in wealth in Europe; the financial sector and technology-related sectors together are largely responsible for the rise in US wealth. There is some evidence that rents are higher in the United States than Europe, as not only is the number of US billionaires expanding rapidly, but US billionaires are also getting richer on average over time, especially when wealth is connected to resources, nontradables, or finance.
"Gains from Harmonizing US and EU Auto Regulations under the Transatlantic Trade and Investment Partnership." (2015) PIIE Policy Brief 15-10. (with Caroline Freund)
Abstract: Regulatory standards protect consumers from defective products, but they impede trade when they differ across countries. The Transatlantic Trade and Investment Partnership (TTIP) seeks to reduce distortions in the automobile and other industries. This paper evaluates the equivalence of automobile regulations in the United States and the European Union in terms of catastrophe avoidance and estimate the trade gains from harmonization. The UN 1958 Agreement on automobiles, which harmonizes regulations among signatories, is used to quantify the trade effect of regulatory convergence. The removal of regulatory differences in autos is estimated to increase trade by 20 percent or more. The effect on trade from harmonizing standards is only slightly smaller than the effect of EU accession on auto trade. The large economic gains from regulatory harmonization imply that TTIP has the potential to improve productivity while lowering prices and enhancing variety for consumers.
Works In Progress
Services Trade, Distance, and the Internet
Abstract: While gravity models of trade perform well in empirical tests of both goods and services, efforts to tailor gravity models to the unique features of services trade have been limited. In particular, since trade in services can be conducted via travel or directly over the internet, trade costs vary both across trade partners and within products. This paper proposes that interacting the level of internet connectivity with a measure of physical distance can help shed light on the unique role of the internet as a direct means of trading services. On aggregate and for 7 of the 10 services sectors considered, increases in the level of internet connectivity across country-pairs significantly decrease distance costs for services trade. The decrease in distance costs ranges from 3–32 percent, depending on the sector and level of internet connectivity. However, this result does not hold for aggregate goods trade using the same sample of countries.
Services trade Composition and COVID-19 Response
Abstract: Travel bans related to the COVID-19 pandemic cut off the travel channel for delivering services. Where services traders were able to shift online, the pandemic could potentially have a minimally disruptive event. However, for countries that rely on travel services (particularly tourism) heavily in their service export mix, the pandemic could lead to considerable trade losses. The potential economic impact of a government's choice to impose a travel ban or re-open their borders to travel during the pandemic are not constant across countries. In particular, when policy makers consider travel bans, their choice likely depends on potential economic losses, the risk level of the population, and effectiveness of treatment/prevention policies. Thus, where the economic costs of travel bans are more severe, governments may have the incentive to choose economically beneficial policies over those that are aimed at minimizing health risks. The primary research question of this paper is whether travel-service intensive markets re-opened (or never closed) borders to travel more quickly than markets that were less travel-service intensive.