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Essays on Firms and the MacroeconomyLei, Chenyue 29 January 2025 (has links)
2023 / This dissertation consists of three essays on firms and the macroeconomy.Chapter 1 of my dissertation revisits a classical question in macroeconomics: what are the aggregate consequences of financial frictions? I answer the question through the lens of a dynamic quantitative general equilibrium model. Heterogeneous firms finance their investment with equity and debt and their financing decisions are distorted by two types of financial frictions: a collateral constraint and costly external equity issuance. Crucially, my model features a debt tax shield. I structurally estimate the model parameters in a simulated method of moments procedure using firm-level balance sheet data from COMPUSTAT between 1981 and 2017. I target a range of financial covariances. In particular, to identify the scope of the borrowing constraint, I use the negative association between the current investment and previous leverage. My estimation results indicate a sizable degree of financial frictions in the economy. I’m able to reproduce these empirical moments quite successfully.
In Chapter 2, I evaluate my quantified model to investigate two questions. First, what are the aggregate implications of financial frictions in the presence of the debt tax shield? Second, is there an interaction between the magnitude of tax shields and the impact of financial frictions? Previous studies indicate that removing financial frictions will stimulate investment and reduce misallocation. However, with the tax bias towards debt over equity, I show that the macroeconomic implications of financial frictions can be different. My results demonstrate that a large tax shield with loose
credit constraints can exacerbate the misallocation of capital. Using the U.S. firm-level data, my counterfactual experiments demonstrate that by removing financial frictions, aggregate capital increases by 10%, output by 3%, and welfare by 2%.
Aggregate gains can be 10 times larger when accounting for the tax shield.
Chapter 3 examines the increasing number of low-productivity firms ( “zombie firms”) by investigating the nexus of firms, banks, and the government. It is generally agreed that an efficient economy should feature a productivity-enhancing reallocation where resources are shifted to high-productivity firms and inefficient firms are scrapped. However, recent studies document opposite empirical evidence of the survival of zombie firms. The paper constructs a bank lending model with government policies on banks’ capital adequacy requirements. It demonstrates that poorly-designed policies can induce under-capitalized banks to roll over loans to otherwise inviable firms. The model generates implications that firms of different productivity would respond to a shock differently at the exit margin. This can motivate future empirical work to examine whether there are zombie firms in the economy structurally.
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Firm heterogeneity and its effects on Firm performance: : A study of Pakistani importing firm’s performanceButt, NABEEL JAVEED, Ahmad, Nayyab January 2020 (has links)
Research on the firm's heterogeneity is a well-developed concept in the export context; literature can found in the export context. Previous research can found on firm heterogeneity and firm performance, but they are in export context. On the other hand, importing firms' heterogeneity is less sought in the literature, which we believe as a clear gap in the export-import research stream. Limited research has done in the context of importing firms. The purpose of our thesis is to explore the different forms of heterogeneities that Pakistani importing firms' practices are gaining a competitive advantage. Furthermore, our goal is to examine the extent of heterogeneity dimensions to what contributes to their performances. There is a significant gap in the research field of import. As there is less research in the import context, this will be a fundamental goal of research towards firms' heterogeneity and the importance of a country.
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Essays on Inflation: Expectations, Forecasting and MarkupsCapolongo, Angela 15 September 2020 (has links) (PDF)
This manuscript is composed of three chapters.In the first chapter, I analyze the impact of key European Central Bank’s unconventional monetary policy announcements on inflation expectations, measured by Euro Area five-year Inflation Linked Swap rates five years ahead, since the aftermath of the crisis. I control for market liquidity and uncertainty measures, change in oil price shock and macroeconomic news. The results show that the impact of the European Central Bank’s announcements has been positive during the period under observation. Along the line of the expansionary monetary policy measures implemented, the agents have been revising upwards their long term inflation expectations. This means that the unconventional monetary policy measures were effective. In the second chapter, co-authored with Claudia Pacella, we construct a Bayesian vector autoregressive model with three layers of information: the key drivers of inflation, cross-country dynamic interactions, and country-specific variables. The model provides good forecasting accuracy with respect to the popular benchmarks used in the literature. We perform a step-by-step analysis to shed light on which layer of information is more crucial for accurately forecasting euro area inflation. Our empirical analysis reveals the importance of including the key drivers of inflation and taking into account the multi-country dimension of the euro area. The results show that the complete model performs better overall in forecasting inflation excluding energy and unprocessed food over the medium-term. We use the model to establish stylized facts on the euro area and cross-country heterogeneity over the business cycle. In the third chapter, using confidential firm-level data from the National Bank of Belgium, I document the heterogeneous response of firms’ markups to the 2008 financial crisis. Overall, markups increased in the aftermath of the crisis and the effect was larger for highly financially constrained firms. I show that standard heterogeneous-firm models, featuring monopolistic competition and variable markups, are unable to replicate these patterns. I then introduce endogenous demand shifters which respond to firm investment in market share (e.g. quality). I show that the interaction of an increase in the cost of procuring inputs combined with an endogenous quality downgrading can rationalize the observed changes in firm-level markups. / Doctorat en Sciences économiques et de gestion / info:eu-repo/semantics/nonPublished
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