This thesis consists of three essays on business cycle fluctuations that are based on the market-clearing dynamic general equilibrium framework. The first two essays examine the ultimate source of economic fluctuations in Thailand and Australia, respectively. The tool of study is the Business Cycle Accounting (BCA) method developed by Chari et al. (2002; 2007a). The third essay investigates the relation between capital-labour substitution and sectoral externalities in self-fulfilling expectation equilibria. It employs a two-sector competitive model proposed by Benhabib and Farmer (1996). The BCA method examines the transmission mechanisms of shocks within an economy. These transmission mechanisms are called wedges which are responsible for the deviation of aggregate variables from a competitive equilibrium. Four categories of wedges are defined in the BCA: 1) the efficiency wedge represents the input-financing frictions in production; 2) the labour wedge is the frictions between consumption leisure trade-off and marginal product of labour; 3) the investment wedge is the frictions between the intertemporal marginal rate of substitution in consumption and the marginal product of capital; and 4) the government consumption wedge indicates the frictions in international borrowing and lending. Chapter 2 applies the BCA method with deterministic wedges to examine the output variations in Thailand between 1971-2003. The efficiency wedge is found to be the most important driving force behind the output variations during episodes of boom and bust in Thailand over the studied period. In particular for the 1997 economic downturn, the evidence shows that the cost of credit intermediation for some firms was relatively high. This altered an acquisition of working capital and labour in these firms when compared to others, which likely caused inefficient reallocation of inputs across the economy. As such, the efficiency wedge appears to fall at aggregate level during the economic downturn. Chapter 3 applies the BCA method with stochastic wedges to examine the variations in output and investment in Australia. Although the efficiency wedge alone can account for these variations, it predicts much more volatility in output than the actual data. Upon allowing for the combination of efficiency and labour wedges, the model can replicate the amplitude of output variations better. The negative cross correlation between these two wedges suggests their interference. Chapter 4 examines the effect of capital-labour substitution on the existence of indeterminacy in two-sector models and check whether the corresponding returns to scale are still empirically plausible. The main finding is that a higher requirement of sectoral externalities for indeterminacy is needed when capital and labour are less substitutable. Intuitively, the low substitutability implies that capital and labour are complementary factors of production. This retards the mobility of factors between the consumption and investment sectors. In the belief driven equilibria, the consumers’ optimistic expectation on returns is fulfilled as long as the rate of returns is sufficiently high such that current consumption is given up for investment. The rate of returns hereby indicates sectoral externalities. In such a production environment, the minimum requirement of externalities for indeterminacy therefore becomes larger so that it can successfully break the tightly coupling factors within sector, and raises the production of investment goods effectively. As a result, the current relative price of investment goods falls. In the next period, consumers enjoy more consumption goods and the relative price of investment good rises. The ascending pricing sequence yields capital gains and the consumers’ belief is finally fulfilled. Based on the logarithmic utility in consumption and the elasticity of substitution of 0.5 as suggested in Klump et al. (2007) and Chirinko (2008), the minimum requirement of returns to scale for indeterminacy is 1.1236, and it still lies within the range in most empirical studies. / Thesis (Ph.D.) -- University of Adelaide, School of Economics, 2009

<p>The question of the cultivation of cash crops in Africa south of Sahara has long been debated. We have examined the situation of cash crop cultivation for the peasant of northern Mozambique. What factors are needed for a peasant to be able to choose to cultivate cash crops and what are the effects on the peasant’s situation when cultivating cash crops? With help from James C. Scott’s theories about food security and the safety first principle see how the possibilities are for the peasant to grow cash crops.</p><p>By using the Lewis two-sector model we have examined the possibilities for a peasant of northern Mozambique abilities to make the transition from the agricultural sector to the industrial sector. We found this model insufficient to explain the transition of labour in the Mozambican society. The model needs two additional sectors to fully explain the transition in Mozambique. These sectors, cash crop and semi-industrial, are needed because the transition is too far in terms of productivity and technology. An extensive cash crop production is therefore important for the economic development. We have also found that food security is important for the peasants in order to start growing cash crops.</p>

The question of the cultivation of cash crops in Africa south of Sahara has long been debated. We have examined the situation of cash crop cultivation for the peasant of northern Mozambique. What factors are needed for a peasant to be able to choose to cultivate cash crops and what are the effects on the peasant’s situation when cultivating cash crops? With help from James C. Scott’s theories about food security and the safety first principle see how the possibilities are for the peasant to grow cash crops. By using the Lewis two-sector model we have examined the possibilities for a peasant of northern Mozambique abilities to make the transition from the agricultural sector to the industrial sector. We found this model insufficient to explain the transition of labour in the Mozambican society. The model needs two additional sectors to fully explain the transition in Mozambique. These sectors, cash crop and semi-industrial, are needed because the transition is too far in terms of productivity and technology. An extensive cash crop production is therefore important for the economic development. We have also found that food security is important for the peasants in order to start growing cash crops.

With the internationalization of financial markets, short-term capital flows to emerging market economies have become an important phenomenon in the world. The papers in this dissertation are concerned with investigating the effects of such flows in the receiving countries. The analysis is cast in a dynamic general equilibrium framework for small open economies. Two of the papers are quantitative investigations of the forces at work in small and relatively poor economies that liberalize trade and capital flows. The common approach of these papers is that of a computational experiment: calibrated simulations constitute a test of whether the models can explain certain dynamics which we observe in the data. The first paper investigates whether a calibrated two-sector neoclassical growth model can explain the magnitudes and the timing of capital flows in the Baltic countries after the fall of the Soviet Union. The results indicate that it can, and that the large and persistent trade deficits which we observe in the data need not be a reason to worry. However, the model also tells us that a reversal of capital flows and large sectoral adjustments lie ahead of the Baltic countries. In the second paper, the focus is on modelling the observed co-movement between consumption and the real exchange rate in Spain, which experienced large capital inflows following the entry into the European Community in 1986. In accordance with episodes of trade liberalization elsewhere, consumption in Spain boomed and the real exchange rate appreciated for several years after 1986. Standard two-sector models with traded and non-traded goods have problems accounting for these facts. The paper explores some mechanisms that can improve the standard modelling framework, and evaluates their quantitative importance in calibrated simulations for Spain. The third paper studies the government’s optimal bailout policy in an environment where sudden stops of capital flows cause financial crises in a small open economy. Real world events, such as the financial crises in the South East Asian countries in 1997, motivate the analysis. Compared to the previous essays, the paper is different in its nature in that it develops a highly stylized environment to analytically study the government’s optimal bailout policy. The paper shows that the government should optimally commit to a policy that only partially protects private debtors against inefficient liquidation. / Diss. Stockholm : Handelshögsk., 2004

Cette thèse étudie l'impact déstabilisateur des politiques fiscales en présence d'une règle d'équilibre budgétaire dans les modèles de macroéconomie dynamique. Elle comporte trois essais dont l'objectif est d'éclairer de nouveaux mécanismes mettant en avant cet impact déstabilisateur. Dans le premier chapitre, nous étudions le lien entre préférences des ménages et instabilité agrégée. Le second et le troisième chapitre considèrent une approche multisectorielle et étendent la question de l'émergence de l'instabilité soit lorsque la politique fiscale est soit spécifique aux secteurs ou lorsque l'économie s'ouvre à l'échange international. / This dissertation study the destabilizing impact of fiscal policies in presence of a balanced-budget rule in the model of dynamic macroeconomics. It consist of three essays aiming to highlight new mechanisms providing this destabilizing impact. In the first chapter, we study the link between households' preferences et aggregate instability. The second and third chapter consider a multisectorial approach and extend the issue of the emergence of aggregate instability either when the tax policy is sector-specific or when the economy opens to international trade.

Cette thèse se compose de quatre essais théoriques, portant sur le capital humain et la croissance. L'objectif est de proposer de nouvelles approches afin de mieux identifier l'impact des politiques éducatives. Plus précisément, dans les chapitres un à trois, nos analyses sont menées dans un cadre à deux secteurs, dans la mesure où les différents secteurs qui composent une économie ne sont pas influencés de la même façon par l'éducation. Dans le quatrième chapitre nous nous intéressons aux enjeux politiques liés à la gestion des problèmes environnementaux en considérant le lien entre éducation et environnement. / This dissertation consists of four essays on human capital and growth. It aims at proposing approaches to better understand the influence of education policy. Specifically, we take into account sectoral properties, since education does not affect each sector in the same way. We also deal with the link between education and the environment, to address environmental challenges that are one of the major political issues.