Essays On Macroeconomics With Heterogeneous Regions

Essays on Macroeconomics with Heterogeneous Regions PDF
Author: Chang Liu
Publisher:
ISBN:
Size: 34.45 MB
Format: PDF, Mobi
Category :
Languages : un
Pages : 146
View: 3598

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This dissertation studies macroeconomics with regional heterogeneity in three general dimensions. First, it documents some novel empirical patterns of regional heterogeneity (in Chapter 1, 2, 3). Second, these empirical facts are used to identify key economic forces underlying theoretical models (in Chapter 1 and 3). Third, aggregate implications of regional heterogeneity are also studied (in Chapter 1). In the first chapter of this dissertation, I highlight time-varying regional risk and federal fiscal transfer policy as two competing forces driving regional risk sharing over the business cycle and in turn quantify their impacts on aggregate fluctuations. I find that during an economic downturn, increased regional risk worsens risk sharing and amplifies the impact of aggregate productivity shocks. However, state-contingent federal government transfers provide additional risk sharing and help stabilize the aggregate economy, by providing insurance to the regions that need it the most. In the second chapter (joint with Noah Williams), we first estimate a quarterly dataset for state-level aggregates by building a novel empirical framework that allows for mixed-frequency raw data with measurement errors. We then apply this dataset to study the monetary policy effects at the state levels. We find that states behave remarkably homogeneous with each other in their responses of output and price to an unanticipated monetary policy shock. In the third chapter (joint with Noah Williams), we use the state-level quarterly dataset to analyze the impact of unexpected changes in federal personal and corporate income taxes. We find substantial heterogeneity in the impact of federal fiscal policy across states, with more than half having no significant response to the tax cuts. In addition, less capital-intensive states have larger responses to corporate tax cuts. Although puzzling in standard models, a model with corporate and non-corporate sectors is consistent with this evidence. Overall, our results suggest the importance of variation and reallocation across states in evaluating federal policy.

Essays On Identification In Macroeconomics

Essays on Identification in Macroeconomics PDF
Author: Andres Pablo Sarto
Publisher:
ISBN:
Size: 78.98 MB
Format: PDF, Docs
Category :
Languages : un
Pages : 147
View: 256

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This thesis studies new methods to estimate the effects of interventions at the macroeconomic level using regional variation. Chapter 1 studies the relationship between elasticities at the regional level and elasticities at the macroeconomic level. To this end, I analyze regional versions of canonical macroeconomic models, along with different policies of interest, such as aggregate government spending. At the regional level, I show that there are two relevant elasticities for policy analyses, the micro-local elasticities and the micro-global elasticities. The former measure how a region reacts to a regional policy, the latter measure how a region reacts to an aggregate policy. I then show that the macro elasticity of interest is a function of the micro-global elasticities exclusively. Finally, I show that if we fix a policy and an outcome variable, the mapping from the micro-global elasticities to the macro elasticity is the same across models. Chapter 2 proposes a new approach (Regional Structural VAR (RSVAR)) to estimate macroeconomic elasticities using regional data that avoids the problem of model-specific estimates. I first define a class of models, which includes the most widely used models for policy analysis, that gives equilibrium regional equations that contain the micro-local and micro-global elasticities. I then specify different sets of identification assumptions, along with estimators of the macroeconomic elasticities, and show that the estimators proposed are consistent. The crucial assumption underlying all of these results is that regions are heterogeneous in the sense that they react differently to the same shocks. Chapter 3 provides a new identification strategy to estimate the fiscal multiplier in the US. Using state-level data for the period 1971-2008, I apply a RSVAR approach to recover the national fiscal multiplier. The instrument employed at the state level is the official declarations of natural disasters by the federal government. My results suggest a very precisely estimated fiscal multiplier of around 1, depending on the specification used. Thus, it is not possible to rule out the possibility that government spending crowds out/in private spending. However, the range of the estimates obtained (0.7 - 1.2) suggests that either effect should be small.

Essays On Macroeconomics And Firm Dynamics

Essays on Macroeconomics and Firm Dynamics PDF
Author: Lei Zhang
Publisher:
ISBN:
Size: 51.54 MB
Format: PDF, ePub
Category :
Languages : un
Pages : 192
View: 6214

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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.

Development Macroeconomics

Development Macroeconomics PDF
Author: Subrata Ghatak
Publisher: Routledge
ISBN: 1134061153
Size: 76.91 MB
Format: PDF, ePub, Mobi
Category : Business & Economics
Languages : en
Pages : 336
View: 5799

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This brings together relevant papers on macro-, monetary and development economics from many eminent economists from all over the world who are closely associated with the works of Late Professor Anita Ghatak of Greenwich University, UK who was an expert in the field of macroeconomics and econometrics. It comprises a variety of articles which are highly significant in the analysis of macroeconomic policies both in developed and in-transition economies. There are several main topics covered in this book such as the test of new theories of economic growth and convergence and the use of dynamic and rigorous time-series econometric methods for analysing money demand functions in transition economies. This work details the meaning of economic development and the comparative analysis of the recent growth of India and China, also the modelling of the macroeconomics of poverty reduction and the monetary policy rules in transition economies. Lastly, the research analyses the Asian Financial crisis, the impact of migration on investment and economic growth and international consumption patterns.

Essays On Human Capital Health And Development

Essays on Human Capital  Health  and Development PDF
Author: Yao Yao
Publisher:
ISBN:
Size: 43.45 MB
Format: PDF, ePub
Category : Electronic dissertations
Languages : un
Pages : 119
View: 934

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This dissertation studies rich lifecycle behavior concerning human capital and health, and its implications for economic growth and development. It examines the impact of social institutions and government policies on individuals' lifetime choices which affect public health outcomes and economy-wide labor productivity. I apply macroeconomic approach and focus on aggregate effects, but both theoretical framework and quantitative analysis are built upon solid micro foundations of household behavior. By exploring the underlying channels, I derive policy implications for economic growth and development. This dissertation consists of three chapters. Chapter 1 studies the role of fertility motives in women's HIV risk in Sub-Saharan Africa, Chapter 2 studies the impact of higher education expansion along with economic reform on Chinas labor productivity, and Chapter 3 explores patterns of Chinas regional income disparity. Chapter 1 examines the role of social and cultural norms regarding fertility in women's HIV risk in Sub-Saharan Africa. Fertility, or the ability to bear children, is highly valued in most African societies, and premarital fertility is often encouraged in order to facilitate marriage. This, however, increases women's exposure to HIV risk by increasing unprotected premarital sexual activity. I construct a lifecycle model that relates a woman's decisions concerning sex, fertility and education to HIV risk. The model is calibrated to match Kenyan womens data on fertility, marriage and HIV prevalence. Quantitative results show that fertility motives play a substantial role in women's, especially young women's, HIV risk. If premarital births did not facilitate marriage, the HIV prevalence rate of young women in Kenya would be one-third lower. Policies that subsidize income, education, and HIV treatment are evaluated. Chapter 2 studies the impact of higher education expansion, along with economic reform of the state sector, in the late 1990's in China on its labor productivity. I argue that in an economy such as China, where allocation distortions widely exist, an educational policy affects average labor productivity not only through its effect on human capital stock, but also through its effect on human capital allocation across sectors. Thus, its impact could be very limited if misallocation becomes more severe following the policy. I construct a two- sector general equilibrium model with private enterprises (PE) and state-owned enterprises (SOE), with policy distortions favoring the latter. Households, heterogeneous in ability, make educational choices and occupational choices in a three-period overlapping-generations setting. Counterintuitively, quantitative analysis shows an overall negative effect of higher education expansion on average labor productivity (by 5 percent). Though it did increase China's skilled human capital stock significantly (by nearly 50 percent), the policy had the effect of reallocating relatively more human capital toward the less-productive state sector. It is the economic reform that greatly improves the efficiency of human capital allocation and complements educational policy in enhancing labor productivity (by nearly 50 percent). Chapter 3 explores patterns of China's regional income disparity. I document the stylized fact that the regional labor income disparity varies across industries with different skill in- tensities in China. While high-skill-intensive industries have larger income dispersions across regions than low-skill-intensive ones, this pattern tends to intensify over recent decades. I construct a model that interprets this pattern using the regional productivity variation of high-skilled firms, match-specific ability, firms' screening decision and workers' migration. In particular, firms in rich regions have higher productivity than those in poor regions. Workers are heterogeneous in ability, which is match-specific and unobservable before screening. Since ability and productivity are complements for high-skilled firms, these firms in rich regions pay more screening efforts to select workers with higher ability, and pay a higher wage in equilibrium. Workers live in different regions, and migration incurs a cost. This increases la- bor market tightness in rich regions and amplifies the regional income disparity. The model is quantified to match China's data. Counterfactual analysis shows that the screening process accounts for 45 percent of China's regional income disparity of high-skill-intensive industries, and migration barrier accounts for 10 percent.