Author: Benjamin CaswellPublisher:
ISBN:
Category :
Languages : en
Pages :
Book Description
Three Essays in the Role of Firms in Macroeconomics
Author: Benjamin CaswellThree Essays in Macroeconomics
Author: Raphael Anton Maximilian Peter Gabriel AuerPublisher:
ISBN:
Category :
Languages : en
Pages : 146
Book Description
(Cont.) Countries that tend to be close to international supply of skilled labor have lower levels of advanced education, while the reverse is true for countries that are close to labor abundant nations. A one standard deviation difference in geographic proximity to skilled labor is associated with a difference' of about 2/3 of a year of average higher education. Chapter 2 examines why movements of relative costs brought about by exchange rate fluctuations are passed on to customers only slowly, and never to a full extent. We first develop a perfectly competitive economy featuring heterogeneity of both good qualities and of consumer valuations. In equilibrium, high valuation consumers and high quality firms are matched. The relative scarcity of different qualities leads to pricing-to-market and markups that are determined by the local toughness of competition. Our production setup features trade in intermediate goods, local assembly that is subject to decreasing returns and fixed costs of market entry. In every export market, firm entry and size decisions are determined by how local prices compare to the cost of production at home. We next analyze how changes in the real exchange rate are transmitted internationally.
Three Essays in Macroeconomics
Author: Chacko GeorgePublisher:
ISBN:
Category :
Languages : en
Pages : 276
Book Description
This dissertation consists of three essays on topics in macroeconomics. In the first chapter, I construct a macroeconomic model with a heterogeneous banking sector and an interbank lending market. Banks differ in their ability to transform deposits from households into loans to firms. Bank size differences emerge endogenously in the model, and in steady state, the induced bank size distribution matches two stylized facts in the data: bigger banks borrow more on the interbank lending market than smaller banks, and bigger banks are more leveraged than smaller banks. I use the model to evaluate the impact of increasing concentration in US banking on the severity of potential downturns. I find that if the banking sector in 2007 was only as concentrated as it was in 1992, GDP during the Great Recession would have declined by 40% less it did, and would have recovered twice as fast. In the second chapter, my co-author and I investigate the impact of firm capacity constraints on aggregate production and productivity when the economy is driven by aggregate and idiosyncratic demand shocks. We are motivated by three observed regularities in US GDP: business cycles are asymmetric, in that large absolute changes in output are more likely to be negative than positive; capacity and capital utilization are procyclical, and increase the procyclicality of measured productivity; the dispersion of firm productivity increases in recessions. We devise a model of demand shocks and endogenous capacity constraints that is qualitatively consistent with these observations. We then calibrate the model to aggregate utilization data using standard Bayesian techniques. Quantitatively, we find that the calibrated model also exhibits significant asymmetry in output, on the order of the regularities observed in GDP. The third chapter explores the role of distance in equilibrium selection. I consider a model economy with multiple steady state equilibria where a high productivity and a low productivity technology are available for use in production. The high productivity technology requires a fixed set up cost for production. Sectors are linked by localized production complementarities. I consider selection under a learning rule in which agents imitate their most successful neighbor. As distance between neighbors decreases, the possible profits from industrialization increase, and the likelihood that the learning rule process converges to a steady state matching the H equilibrium increases. The result suggests that, in the presence of localized technology spillovers, there may be important gains to economic growth from infrastructure development.
Three Essays in International Macroeconomics and Finance
Author: Enrique Martinez-GarciaPublisher:
ISBN:
Category :
Languages : en
Pages : 198
Book Description
Three Essays on Macroeconomics and Economics of Transition
Author: Chun-wah LiuEssays on Macroeconomics and Firm Dynamics
Author: Lei ZhangPublisher:
ISBN:
Category :
Languages : en
Pages : 192
Book Description
This dissertation contains three essays at the interaction between macroeconomics and the financial market, with an emphasis on macroeconomic implications of heterogeneous firms under financial frictions. My dissertation explores the relationships among financial market friction, firms' entry and exit behaviors, and job reallocation over the business cycle. Chapter 1 examines the macroeconomic effects of financial leverage and firms' endogenous entry and exit on job reallocation over the business cycle. Financial leverage and the extensive margin are the keys to explain job reallocation at both the firm-level and the aggregate level. I build a general equilibrium industry dynamics model with endogenous entry and exit, a frictional labor market, and borrowing constraints. The model provides a novel theory that financially constrained firms adjust employment more often. I characterize an analytical solution to the wage bargaining problem between a leveraged firm and workers. Higher financial leverage allows constrained firms to bargain for lower wages, but also induces higher default risks. In the model, firms adopt (S,s) employment decision rules. Because the entry and exit firms are more likely to be borrowing constrained, a negative shock affects the inaction regions of the entry and exit firms more than that of the incumbents. In the simulated model, the extensive margin explains 36% of the job reallocation volatility, which is very close to the data and is quantitatively significant. Chapter 2 investigates firms' financial behaviors and size distributions over the business cycle. We propose a general equilibrium industry dynamics model of firms' capital structure and entry and exit behaviors. The financial market frictions capture both the age dependence and size dependence of firms' size distributions. When we add the aggregate shocks to the model, it can account for the business cycle patterns of firm dynamics: 1) entry is more procyclical than exit; 2) debt is procyclical, and equity issuance is countercyclical; and 3) the cyclicalities of debt and equity issuance are negatively correlated with firm size and age. Chapter 3 studies the equilibrium pricing of complex securities in segmented markets by risk-averse expert investors who are subject to asset-specific risk. Investor expertise varies, and the investment technology of investors with more expertise is subject to less asset-specific risk. Expert demand lowers equilibrium required returns, reducing participation, and leading to endogenously segmented markets. Amongst participants, portfolio decisions and realized returns determine the joint distribution of financial expertise and financial wealth. This distribution, along with participation, then determines market-level risk bearing capacity. We show that more complex assets deliver higher equilibrium returns to expert participants. Moreover, we explain why complex assets can have lower overall participation despite higher market-level alphas and Sharpe ratios. Finally, we show how complexity affects the size distribution of complex asset investors in a way that is consistent with the size distribution of hedge funds.
Three Essays on Open Economy Macroeconomics with Firm Entry
Author: Masashige HamanoPublisher:
ISBN:
Category :
Languages : en
Pages : 240
Book Description
Au cours des trente dernières années, l'économie mondiale a connu une augmentation significative des flux commerciaux et financiers internationaux. Cette augmentation du commerce s'est effectuée en grande partie à la marge extensive, c'est-à-dire à travers de l'augmentation du nombre de variétés échangées. Parallèlement à cette évolution commerciale, la position extérieure brute des principaux des pays développés a dépassé la valeur de leurs PIB, donnant naissance à un mécanisme d'ajustement important appelé l'effet de réévaluation. Désormais, les variations du taux de change affectent significativement la richesse nationale via le changement de la valeur relative des actifs financiers étrangers détenus par les résidents. Cette thèse propose de reconsidérer trois questions classiques de macroéconomie internationale en tenant compte de cette évolution des mécanismes d'ajustement international. On s'intéresse plus particulièrement au comportement du taux de change réel et à l'évolution du partage du risque de consommation au niveau international. L'objectif est de proposer une présentation explicite des mécanismes concernant ces questions à l'aide des modèles récents développés par la littérature. La thèse est constituée de trois chapitres consacrés respectivement à l'explication de l'effet Harrod-Balassa-Samuelson (HBS), à l'anomalie de la relation entre les consommations relatives et le taux du change réel (le paradoxe Backus-Smith) et à l'explication de la faible diversification des portefeuilles au niveau international.
Three Essays in Macroeconomics
Author: Kyoung Jin ChoiPublisher:
ISBN:
Category : Electronic dissertations
Languages : en
Pages : 192
Book Description
The scope of the dissertation is (broadly-defined) general macroeconomics. The first essay is on optimal taxation and capital structure, the second essay is on firm dynamics, and the third essay is on financial crises. The first essay clarifies the role of the corporate income tax (as a form of double taxation) for achieving socially optimal allocations in the Mirrlees framework when the government cannot tax unrealized capital income at the individual level. Use of the corporate tax requires changes in the individual capital tax. The novelty of the paper is that the sophisticated tax system is designed to influence the individual agent's portfolio choice of debt and equity, which in turn endogenizes the leverage ratio. The optimum corporate tax is indeterminate, but a minimal level is ecessary. An immediate question is what happens to capital structure if we increase or decrease the level of the corporate tax. Surprisingly, unlike in classical capital structure theories, in this optimal tax mechanism, the firm's leverage ratio is independent of the corporate tax rate. The second essay examines firm dynamics to explain the following empirical facts: (i) The size of a firm and its growth rate are negatively correlated; (ii) but, they are often independent for firms above a certain size. Existing theories of firm dynamics can explain the first fact, but cannot explain the second. This paper studies a dynamic moral hazard problem under an AK-technology. In a first best world, the expected growth rate is strictly decreasing with capital. However, with information asymmetry our theory is consistent with both empirical facts because the optimal contract dictates under-investment in low-level capital states and over-investment in high-level capital states. The reason is that the given convex production technology becomes nonconvex in equilibrium due to the information asymmetry and the degree of the nonconvexity differs by the level of capital. We also fully characterize the agent's incentives. The capital accumulation mechanism induces incentive schemes that are different from optimal contracts in the literature on principal-agent models. Finally, in the third essay - This essay is a joint work with Costas Azariadis - we propose a model of financial crises as transitions from an efficient and unstable state to an inefficient and stable state in a simple economy with sector-specific shocks. The main driving force of this transition is the unwinding of unsecured loans. Introducing public debt increases the volatility of stock prices. We also discuss possible policy interventions.
Author: Yang Su Park
Author: Dorsey David Farr