Recently there has been a substantial decline in the employment-to-population ratio, coinciding with a significant reduction in the unemployment rate. The ratio experienced a trend increase during the post-World War II period until 1999, primarily driven by the large influx of female workers into the labor force. Although pro-cyclical, the ratio always recovered to its previous peak and subsequently went beyond that level. Following the Dot-com recession, there was a decline followed by a mild recovery from 2003 to 2007, before a significant decrease. This thesis investigates the causes of the decline, which impacts on economic policy recommendations.

The following study is concerned with the problems posed by contemporary unemployment--especially the U.S. but also globally to some extent. The most immediate problem is the dominance of neoclassical models, which routinely neglect the deeper issues raised by contemporary mass unemployment. To go beyond these inadequacies, the study also assesses the performance of sociological interpretations. One key finding is that sociological analyses also largely fail to provide a compelling theory of unemployment and, moreover, that most perspectives implicitly adopt problematic assumptions from neoclassical economics. This highlights the dual nature of the problems posed by unemployment: on one hand, it is an urgent social issue; and, on the other hand, it exemplifies significant weakness within most sociological paradigms. In order to address the challenges posed by unemployment, the narrative centers on the resolution of three key anomalies of unemployment: 1) persistent unemployment; 2) so-called "jobless recoveries;" and 3) the rise of worker precariousness. The anomalies are taken as evidence of paradigmatic contradictions within neoclassical economics and, to some extent, sociology. The main theoretical contribution of the study is a careful reconstruction of Marx's classical theory of the reserve army of labor (part of "The General Law of Accumulation"), which has inspired all critical sociological perspectives on labor markets to date. The investigation highlights distinctive characteristics of "political-economic sociology," a term that refers to economic sociologists who draw heavily on notions of class and power reminiscent of classical political economy and classical sociology, forming an important bridge with heterodox economic approaches. The theory of the reserve army is in need of "renewal," however, because even political-economic sociologist have failed to carry the analysis forward and build upon the firm foundation provided by Marx. The study's conclusion is that the reserve army framework has enormous potential to strengthen existing work within political-economic sociology.

The goal of this thesis is to explore how household heterogeneity propagates and amplifies macroeconomic shocks within the economy using both economic theory and empirical data. The assumption of a single "representative" household has been a mainstay of macroeconomic research over the past half-century. However recent work suggests that not only is there a considerable degree of heterogeneity among households, but that these differences have a significant impact on a range of macroeconomic issues such as the e?ectiveness of fiscal stimulus (Kaplan et al., 2014; Broda and Parker, 2014), monetary policy (Auclert, 2017; Kaplan et al., 2016), the housing market (Attanasio et al., 2012; Blundell et al., 2008; Guerrieri and Iacoviello, 2017; Ngai et al., 2016; Mian et al., 2013), consumption (Ahn et al., 2017a; Blundell and Preston, 1998; Campbell and Cocco, 2007; Engelhardt, 1996) and employment (Ravn and Sterk, 2016; McKay and Reis, 2016; Abo-Zaid, 2013a) among many others. This literature has highlighted how households respond differently to aggregate shocks or changes in policy and how simply aggregating or averaging across them can obscure important truths about the economy. However, relaxing this assumption poses several challenges. The first is choosing the degree and manner in which households di?er. While in reality households can differ along many dimensions, in practice it is only feasible to include a small number of these in any given model. Thus one must choose the most salient dimensions along which households differ and the structural reasons behind such differences. For example, when examining the dynamics behind the housing market is it important to model differences in income, wealth, age, tastes or composition? No single model will be able to incorporate all these differences and so it is incumbent on researchers to proritise and justify their choices. In this thesis I will show why household heterogeneity in the housing and labour markets is both empirically relevant and an important consideration when considering the problem of optimal policy. The second challenge is a computational one. While models can be structured such that differentiated households make identical decisions, in general these differences will cause choices, and thus outcomes, across households to diverge. This produces a non-degenerate distribution of households across their specific state variables. This raises the problem of how this potentially infinite-dimension distribution is incorporated within the model. Previous literature has developed a range of options for handling this problem including approximating the distribution with a small handful of moments (Krusell and Smith, 1998) and approximating it with projection and perturbation methods (Reiter, 2009). In this thesis I will outline two different methods for dealing with this computational problem. The first, set out in Chapter 1, shows how market clearing prices can be feasibly calculated by aggregating over the distribution of households. The second approach involves simulating the model with aggregate uncertainty using numerical derivatives based on impulse response functions. The first chapter of this thesis will examine how heterogeneity in wealth and income affects households' decision to purchase housing and the implications for their consumption of non-durable goods. It constructs an Aiyagari-Bewley-Huggett model in which households are subject to an idiosyncratic income shock and thus hold different amounts of liquid wealth and illiquid housing. I then evaluate how the anticipated changes in household debt associated with the leveraged purchase of housing affect the consumption of non-durable goods. I show that the differences in income and wealth lead to significant variance in marginal propensities to consume among households. I show that households that are saving for a house deposit can have negative marginal propensities to consume as they lower their consumption in anticipation of being credit constrained as the probability that they will buy a house increases. This result has important implications for the design of fiscal policy, as it shows that payments to first time home buyers, which was a common policy response to the Global Financial Crisis, can lead to falls in aggregate consumption rather than stimulating growth. The second and third chapters examine how the combination of heterogeneity in workers' wages and downward nominal wage rigidity affects the transmission and design of different aspects of monetary policy. In Chapter 2 I show that in this environment there is a trade-off between a higher rate of inflation which gives workers more flexibility when setting real wages, at the cost of greater price dispersion in the goods market. After outlining a numerical algorithm to solve the model I use micro-data on the distribution of workers' change in wages to calibrate the nominal wage rigidity. I show that downward nominal wage rigidities bend the Phillips curve constraining the inflation rate from falling in times of low demand. This indicates that an inflation rate that is only moderately below its target can mask large falls in the output gap. Finally, I find that the monetary policy rule can be implemented by placing a higher weight on wage inflation, relative to a symmetric nominal wage rigidity. In Chapter 3 I discuss how downwardly rigid wages can amplify or mitigate the welfare loss caused by the zero lower bound on nominal interest rates and how this varies with the parameterisation of the model. I find that the optimal rate of inflation is increased by the presence of both nominal interest rate and wage rigidities, when modeled either separately or in tandem, and is 3 per cent in the baseline calibration of the model.

This study develops an economic methodology in which,behavioural laws (in the sense of necessary connections between cause and effect) play no essential role. Hayek and Menger are important sources of inspiration. Economic behaviour is explained by way of tendencies rather than laws and insight into economic phenomena is gained by laying bare their "action structure" in which behavioural explanation and behavioural laws play no role. This methodology is applied to the explanation of macroeconomic coordination. The appropriate equilibrium conditions are developed and the relevant tendencies away from or towards equilibrium are identified. The institutions responsible for these tendencies are identified and anarysed. In the light of these findings, pre-Keynesian macroeconomics, the macroeoconomics of Walrasian theory, as well as Keynes's General Theory itself are critically assessed. / Economics and Management Sciences / D. Comm. (Economics)

The thesis presents three papers in macroeconomics and monetary economics with an emphasis on financial instability and crises. The first paper, entitled "Interbank Market Crises and Financial Openness," studies the effect of financial openness on financial stability by extending a closed-economy DSGE model (Boissay, Collard and Smets, 2015) to an open economy in which banks are allowed to invest abroad. Financial internationalisation in the form of outward banking flows alters the behaviour of the economy in the run up to a typical interbank crisis, reducing the role played by domestic credit build ups. Prior to an interbank crisis, the level of assets typically builds up in an economy without access to international investment opportunities. In contrast, financial openness attenuates the build up of assets during productivity booms, which reduces the likelihood of financial overheating resulting in a banking crisis once productivity reverts to trend. Simulations of the model show that the open economy would generally experience fewer banking crises in the long run compared to an economy blocked from investing abroad. This finding may not obtain in the short run, however, should the economy be subject to large negative productivity shocks consequent upon a financial opening up to the external domain. The second paper, entitled "Unconventional Monetary Policy and Asset Allocation of International Mutual Funds," a joint work with Gino Cenedese and Menno Middeldorp (both at the Bank of England), analyses the spillovers of unconventional monetary policy from the US to the Rest of the World. Using panel regressions on a fund-level data-set of globally domiciled mutual funds, the study examines the degree to which the operations and surprises of US unconventional monetary policy prompt mutual fund managers to change their portfolio country weightings. Our study permits an analysis of the portfolio choice of mutual fund managers, as differentiated from the portfolio rebalancing behaviour of their underlying investors. It allows for a quantitative examination as to whether and to what extent fund managers undo or exacerbate the allocation decisions by their respective underlying investors. Unconventional monetary policy by the US Federal Reserve is found to induce fund managers to reduce their portfolio exposure to the US whilst increasing it to other countries in the Rest of the World. Specifically, the Fed's purchases of Treasury securities trigger portfolio rebalancing in equity funds, while its acquisition of mortgage backed securities and agency debt has a minimal effect on equity and bond fund portfolio allocations. Fed policy surprises do affect the portfolio allocations of equity funds. The main results continue to hold in a number of robustness checks. An extension of the study examines portfolio rebalancing effects of policy surprises by three other major monetary authorities, the ECB, BoJ and BoE. The main focus of the paper, however, is on the broader effects of US unconventional monetary policy on the asset allocation of international mutual funds. The third paper, entitled "Sovereign Debt Negotiations as a Macroeconomic Game with Strategic Interactions among Players," aims to show that existing methods analysing games with more than two players can be usefully applied to macroeconomic games involving strategic interactions among three or more players. This is shown in the context of sovereign refinancing negotiations which are modelled as a bargaining game between three players: a debtor country in need of finance (player 1); its creditors from the international official-sector (player 2); and its foreign private-sector creditors in the form of international banks (player 3). The presence of a third player has important effects on the distribution of the gains from trade and the stability of the game if one allows for the possibility that any two players may form a coalition against another player. After deriving these general results, the model is applied to the Greek sovereign debt crisis to provide an economic application and to show that the framework can be applied to a wide range of other macroeconomic games.

We explore certain structural elements of venture capital investment, focusing on the role of venture capital as an asset class dedicated to technology investment. The structural role of technology as contributing to the total factor productivity is captured through the use of endogenous growth mechanisms as found in Romer (1990) and Rivera-Batiz and Romer (1991). In the first chapter, we explain certain elements of the two recessions in the first decade of the 21st century by combining these endogenous growth mechanisms with a financial accelerator in the market for production capital to capture the financial elements associated with decreased leverage after a financial crisis. In the second chapter, we assess the impact of policies in the late 1970s which largely created venture capital by encouraging technology investment to occur through debt contracts rather than equity contracts. We explain a set of stylized facts by contrasting a debt mechanism and an equity mechanism for an asset that derives its value from returns to technology goods in a stochastic endogenous growth model. Our final chapter deals with the disposition of venture capitalists towards Knightian uncertainty. We show that an uncertainty-loving behavior of venture capitalists leads to a Pareto improvement in the economy. However, the magnitude of the effect of changes in disposition towards uncertainty is small, implying that bubbles in the venture capital market caused by this type of uncertainty-loving behavior should not be a great concern for investors and policy makers.

abstract: This paper studies the dynamic relationship between the pricing of Alternative Asset Management products and macroeconomic variables. It does so using an index of Alternative Asset Management products, employing a VAR framework and examining the implied impulse response functions. I find a bivariate causal relation between the expected rate of return on Alternative Asset Management products and the growth rate of industrial value added. I also find that the CPI, the yield on one-year national debt, the weighted average yield of bond repurchases in interbank bond market, and the one-year loan interest rate can influence the expected return rate of Alternative Asset Management products. An analysis of the variance decomposition suggests that macroeconomic variables have a different impacts on forecast errors variance. / Dissertation/Thesis / Doctoral Dissertation Business Administration 2016

The thesis investigates factors that contributed to Australia's record breaking economic expansion. The booming mining sector fueled by Chinese demand for raw material deserves some credit, but it is only part of the story. The thesis examines whether Australia learned from the last recession in the early 1990s and also finds that high average population growth driven by immigration policy has played a role. I attempt to extract lessons from the island nation’s experience for other advanced economies. Finally, Australia had relatively small real GDP growth during the Global Financial Crisis. If the definition of a recession is adapted to include other national accounts and economic indicators, then the country did in fact encounter a recent economic downturn.

Este trabalho retomou as análises do comportamento dos preços das commodities agrícolas após um período superior a uma década durante o qual o tema ocupou pouca atenção dos estudiosos. Os resultados encontrados mostram um papel moderado, mas não desprezível, para as variáveis macroeconômicas nas variações não-antecipadas daqueles preços. A taxa de câmbio impacta diretamente os preços dos produtos transacionados no exterior e indiretamente aqueles que com eles competem na produção e no consumo. A taxa de juros é componente do custo de armazenamento e, assim, se ela aumenta, por exemplo, eleva-se o custo de armazenamento, maior volume de commodities é lançado no mercado e seus preços tendem a cair. A taxa de juros, sabe-se, também, afeta o nível de atividade econômica e, logo, a renda dos países. Análises de auto-regressão vetorial foram empregadas para medir os impactos e a importância de choques nessas variáveis macroeconômicas sobre os preços da soja e do milho no Brasil. Verificaram-se efeitos não desprezíveis dos juros sobre esses preços e do c6ambio sobre o preço da soja. A renda - medida pelo PIB - não se mostrou relevante, talvez por este não ter capturado o efeito daquela ou pela exígua variação que o PIB tenha apresentado no período analisado. Embora os juros tenham se revelado capazes de serem utilizados para aliviar impactos inflacionários oriundos de elevações exageradas de preços de commodities, as evidências apontam para um elevado componente exógeno desses preços, o que pode ser interpretado com resultado da importância de fatores setoriais nesses mercados (como tecnologia e produtividade, clima e oscilações de demanda). Assim, caso a preocupação relacionar-se à instabilidade desses preços, caberá usar os instrumentos de armazenagem e crédito para controlá-la. / This work resumed the behavioral analysis of commodities prices in agriculture after a decade during which the topic drew little attention from researchers. The results found show a moderate role, but not indispensable, played by the macroeconomic variables in the non-anticipated variations of their prices. The exchange rate impacts directly the prices of goods traded in foreign markets and indirectly those with which they compete in production and consumption. The interest rate is a component of storage costs, and, therefore, if it is raised, for example, it increases them, so a higher volume of commodities is offered to the market and their prices tend to drop. It is also known that the interest rate affects the level of economic activity and, thus, the countries\' revenue. Analysis of vectorial auto-regression was utilized to measure the impacts and the importance of shocks in these macroeconomic variables on corn and soybean prices in Brazil. It was verified indispensable effects of interest on these prices and of the interest rate on the soybean price. The revenue - measured by the GDP - did not show relevance, it might not have captured the effect of the revenue or because of the insignificant variation of the GDP in the period analyzed. Even though the interest has proven to be useful to mitigate the inflationary impacts derived from exacerbated increases of commodities prices, the evidences point to an elevated exogenous component of these prices, which can be interpreted as a result of the importance of sectoral factors in these markets (such as technology and productivity, climate and demand oscillations). Thus, as far as price instability is concerned, the use of instruments of storage and credit is required to control it.

Esse trabalho faz um estudo sobre a hipótese de descolamento das relações de curto e longo prazo entre os PIBs das economias brasileira e norte-americana. Para isso, é realizado, inicialmente, uma análise da literatura existente sobre a possível mudança nas relações entre as economias emergentes e avançadas. Em seguida, foram apresentadas explicações teóricas para as ligações entre os PIBs de Brasil e dos Estados Unidos da América. As metodologias usadas na investigação foram a análise de cointegração e a decomposição dos produtos internos brutos dos países em questão. Os principais resultados, obtidos usando dados anuais entre 1980 e 2008, apontam para uma mudança importante nas relações de longo prazo entre as economias a partir da década de 1980 e uma intensificação das relações de curto prazo a partir da década de 1990. No entanto, ao longo dos anos e, principalmente a partir da metade da década de 2000, foram encontradas evidências em favor de um maior descolamento de curto prazo dos PIBs de Brasil e EUA. / The following dissertation tests the hypothesis of decoupling between the Brazilian and North American economies. For this purpose, the related literature is initially investigated. Afterwards, theoretical explanations on the links between the GDPs of Brazil and USA are shown. The methodologies employed were cointegration analysis and trend/cycle decomposition of the GDPs of the mentioned countries. The main findings using annual data between 1980 and 2008 point out to an important change in the long term relationship between the economies starting in the 1980s and an increase in the short-run links during the 1990s. However, there is evidence suggesting a decoupling of the short term fluctuations between Brazils and USAs GDPs starting in the second half of the 2000s.