A Market Based Solution for Fire Sales and Other Pecuniary Externalities
Weerachart T. Kilenthong and Robert M. Townsend, August 2020
Online Appendix for more detials
(This is an updated version of NBER Working Paper, March 2016)


We show how bundling, exclusivity and additional markets internalize fire sale and other pecuniary externalities. Ex ante competition can achieve a constrained efficient allocation. The solution can be put rather simply: create segregated market exchanges which specify prices in advance and price the right to trade in these markets so that participant types pay, or are compensated, consistent with the market exchange they choose and that type’s excess demand contribution to the price in that exchange. We do not need to identify and quantify some policy intervention. With the appropriate ex ante design we can let markets solve the problem.

Short-term Impact of an Early Childhood Curriculum Intervention in Rural Thailand
Weerachart T. Kilenthong and Wisuwat Chujan,
HCEO Working Paper No.2019-077, (This is an updated version of “An Early Evaluation of a HighScope-Based Curriculum Intervention in Rural Thailand”, PIER Discussion Paper, December 2018.)


This paper evaluates the short-term impact of an early childhood curriculum intervention on child development. Teachers in rural childcare centers in northeastern Thailand were encouraged to employ the new curriculum, which is based primarily on the HighScope approach. We overcome the endogenous decision of teachers to adopt the new curriculum by using the randomization of additional teachers as an instrument. We find that the new curriculum significantly improved child development in several dimensions, including gross motor, fine motor, expressive language, and personal and social skills, with an effect size of roughly 0.54 standard deviations for the benchmark case. The results are robust with regards to various estimation methods, child development measures, and sample selections. We also find that the impact of the new curriculum is quite homogeneous across sub-groups except in some dimensions, notably parental absence and teacher’s job status.

Parental Time and Material Investments in Rural Thailand
Weerachart T. Kilenthong and Dinh Thi Ngoc Tu,
PIER Discussion Paper, September 2017, Online Appendix,
(This is an older version of “Do Parental Absence and Children’s Gender Affect Early Childhood Investment? Evidence from Rural Thailand”, accepted for publication at the Singapore Economic Review.)


This paper studies the roles of family structure, wage and child’s gender on parental time and material investments in rural Thailand. Our findings consistently show that female children received more time, but less material investments. The material investment was significantly lower for children in households with no parents, while the difference in time investment was not significant. Based on an economic model of parental investment, these results suggest the factor share of time relative to material input is larger for girls and households with no parents. We also identified the elasticity of substitution between time and material investments, which suggests that both of the inputs are surprisingly complementary. We cannot reject that the skill formation is a Cobb-Douglas production function.

The Impact of Family Business Apprenticeship on Entrepreneurship and Survival of Small Businesses: Evidence from Thailand
Weerachart T. Kilenthong and Kittipong Rueanthip. PIER Discussion Paper, June 2016,
(This is an older version of “Entrepreneurship and Family Businesses in Thailand”, accepted for publication at Asian-Pacific Economic Literature.)


This paper investigates the impact of exposure to a family business and participating in a family business on individuals decision to start a business (self-employed and small business) and their likelihood of survival. We find that individuals who have a family member doing business are more likely to start their own business. However, only individuals who have actually worked in the family-owned business are more likely to survive longer. This paper demonstrates that the higher the number of hours they worked in a family business, the higher the probability of survival. The impact remains significant even if the sample includes only individuals who are the spouses of business owners. The impact of prior experience from helping a family business depreciates over a short period of time. This result suggests that entrepreneurial skills can be learned from an apprenticeship in small businesses.

Segregated Security Exchanges with Ex Ante Rights to Trade: A Market-Based Solution to Collateral-Constrained Externalities
Weerachart T. Kilenthong and Robert M. Townsend, NBER Working Paper, May 2014.


This paper studies a competitive general equilibrium model with default and endogenous collateralized contracts. The possibility of trade in spot markets creates externalities, as spot prices and the bindingness of collateral constraints interact. We propose a market based solution which overcomes the externalities problem and obviates the needs for any government policy intervention. If agents are allowed to contract ex ante on market fundamentals determining the state-contingent spot prices used to unwind collateral, over and above contracting on true underlying states of the world, then standard existence and welfare theorems apply, that is, competitive equilibria are equivalent with Pareto optima.

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