Converging shocks have long been a topic of interest in theoretical fluid mechanics, and are of prime importance in inertial confinement fusion. However, tracking converging shocks in numerical schemes poses several challenges. Numerical schemes based on shock capturing inherently diffuse out shocks to multiple grid cells, making it hard to track the shock. Converging shocks are significantly harder to track, as this numerical smearing is much more significant when converging shocks approach the axis of convergence. To mitigate this problem, we transform the conservation laws to a non-inertial frame of reference in which the accelerating shock is stationary. A system of equations is derived based on the transformed conservation laws coupled to the shock speed obtained from jump conditions and a characteristic-based derivation of a relation governing shock acceleration. We solve these equations using a finite volume method. Our numerical results compare favorably with the analytical value of Guderley exponent for self-similarly converging cylindrical hydrodynamic shocks. Results for fast magnetosonic shock in MHD are also presented and compared with results from geometrical shock dynamics (GSD). Results from our shock fitting method, developed without any approximation to the original ideal magnetohydrodynamics equations, provide further credibility to GSD applied to converging fast magnetosonic shocks. This sort of shock fitting is a precursor to future multidimensional stability analysis of imploding shocks.

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How important are financing constraints in explaining the cyclical behaviour of investment. How do they affect the investment responses to macroeconomic shocks. This thesis answers these questions by developing a structural model of investment with financing and irreversibility constraints and by analysing its implications both theoretically and empirically. After briefly reviewing the recent advancements of the investment literature in chapter 1, in chapter 2 we present a preliminary empirical analysis of the links between financial structure and firm dynamics. In chapter 3 we develop a basic structural model which analyses optimal investment and saving choices of entrepreneurs in the presence of uncertainty as well as of financing constraints. We show that future expected financing constraints generate a precautionary saving behaviour which affects the optimal allocation between risky investment and saving. In chapter 4 we extend the basic model to include both fixed and variable capital as well as financing constraints and irreversibility of fixed capital. We show that the interactions between financing and irreversibility constraints amplify the effects of financing constraints on the cyclical fluctuations of investment and production. This interaction together with the precautionary saving behaviour is essential in explaining a number of stylised facts about investment dynamics: i) aggregate inventory investment is very volatile and procyclical, especially in recessions; ii) it leads the business cycle, while fixed capital investment lags it; iii) fixed and especially inventory investment are sensitive to net worth; iv) output and inventories are more volatile and procyclical for small firms than for large ones. In chapter 5 we verify empirically the theoretical results derived in chapter 4. We use our panel of balance sheet data on Italian manufacturing firms to test and not reject the financing constraints hypothesis. This hypothesis is also strongly supported by the direct qualitative information about the problems faced by the entrepreneurs in financing new investment projects.

In this thesis we provide evidence about the relative importance of foreign (Russian) and domestic monetary policy shocks for Belarusian economy. We employ a ten variable structural VAR model with block exogeneity and a set of dummy variables introduced to deal with instability of the data that corresponds to the periods of crises (2008 and 2011). We find that Belarus is significantly influenced by foreign shocks that account for 20 to 60 percent of fluctuations in domestic variables in the long run. The foreign demand and oil prices for Belarus are the main determinants of the domestic output and net export, while the foreign interest rate strongly affects Belarusian interest rate, money demand and the share of loans in GDP. Regarding the domestic monetary shocks, we find that the exchange rate is the most important channel in the Belarusian monetary transmission mechanism. We conclude that deeper trade integration with Russia could be beneficial for Belarusian economy, while in case of the monetary union creation the conduct of an independent monetary policy in Belarus could be further complicated.

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The main focus of examination of this thesis can be broadly defined as the analysis of the main determinants of economic activity in Mexico. In this analysis, it is found that real and nominal exchange rates have enormous importance in the determination of economic activity in Mexico compared to other candidates. This conclusion is reached through a series of quantitative examinations of Mexican times series of aggregated macro economic variables. First, the determination of long-run real exchange rate is analyzed. Then, an inverse relationship between real exchange rate (defined as Pesos/Dollars) and real output and consumption has been established both empirically and theoretically, using explicit long-run models. Variance decomposition and impulse response analyses, carried out with the help of vector error correction models embedding long-run relations, have revealed the fact that the most important source of fluctuations either in consumption or output is the real exchange rate. The other variables considered in the analysis, such as supply, demand, or monetary shocks have been found to have less or non-robust importance. Next, the thesis examines the business cycle associated with exchange rate based programmes for the case of Mexico. The impulse responses, provided for this analysis, partly confirmed initial-boom-Iater-recession hypothesis observed in exchange-rate-basedstabilization programmes. The variance decomposition analysis, on the other hand, indicates that, the movements either in consumption or output can be largely explained by nominal exchange rate shocks rather than monetary shocks. Finally, given the importance of exchange rate variables, the thesis returns to the question of their determinants. Based on the quantitative analysis performed, the thesis concludes that real exchange rates can be solely explained by real shocks and nominal exchange rates can largely be explained by real shocks. Hence, it is the real exchange rate models that explain real exchange rate movements via the predominance of real shocks that get credit.

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Thesis advisor: Fabio Ghironi / Thesis advisor: Peter Ireland / This thesis includes three essays. The first chapter analyzes how the implications of productivity shocks in an open economy can differ depending on the size of the economy relative to the rest of the world. It employs a stylized two-country general equilibrium model with love of variety, where economies differ in size and shows that a dynamic home market effect is present: productivity shocks that lower production and entry costs lead to deterioration of home terms of trade when home is small relative to the rest of the word but to improvement of terms of trade when home is large. The second chapter analyzes the role of globalization in the lack of convergence of living standards within Europe, despite integration processes. Building on theoretical and empirical literature on trade and income inequality in the U.S. this chapter proposes a model that describes how globalization affects disparities between countries in Europe. To quantitatively assess this effect, a measure of exposure to globalization is constructed, using detailed trade, employment, and output data. The chapter shows that the relative performance of countries within Europe is correlated with their exposure to globalization. In particular, countries that experienced relative declines of living standards over the past decade have been most exposed to globalization. The third chapter explores the implications of demand side pricing complementarities and endogenous markups in open economy. It shows that endogenous markups resulting from translog preferences imply richer dynamics for international relative prices that have better chances to match the data. Further, countercyclical markups lead to endogenous procyclical movement as well as cross-country correlation of measured TPF. It also shows that in a stylized model endogenous markups may act as a transmission mechanism, leading in particular to positive GDP co-movement across borders as opposed to a benchmark CES model. / Thesis (PhD) — Boston College, 2015. / Submitted to: Boston College. Graduate School of Arts and Sciences. / Discipline: Economics.

This thesis investigates the contribution of productivity shocks at different aggregation levels to residential investment and relative house prices in ten local housing markets in Canada from 1986 to 2007. It has two major conclusions. First, while in BC, Ontario, and four Atlantic Provinces, residential investment is more likely to be affected by aggregate shocks, in Quebec and three Prairie Provinces, residential investment is less responsive to aggregate shocks, and more likely to be affected by region-specific shocks. Second, relative house prices are much more variable than residential investment, and largely depend on region-specific factors.