This thesis provides theoretical investigations and developments to endogenous growth models, with the purpose of contributing to growth theory with new mechanisms for endogenously generating positive per-capita long-run growth. Chapter 2 is dedicated to the analysis of the models that constitute the basis of endogenous growth theory. This analytical study is motivated by the need to identify, in the existing growth literature, the mechanisms for generating endogenous sustained positive per-capita growth. In Chapter 3 we develop a new model that integrates R&D and human capital accumulation into a single framework. This growth model has an R&D-based structure although with human capital accumulation as the engine of growth. We build on Romer's [1990] model by introducing two further functions: (1) A specification for the production of new designs that assumes no externalities from the stock of designs into researchers productivity; and (2) A specification for the accumulation of human capital technically similar to that in Lucas [1988]. Our proposed model displays two main results. The first is the elimination of the scale effects prediction. Such a prediction is rejected empirically, hence it is important to eliminate it from growth models. The second result is a new prediction that growth depends negatively on the ratio of final-good-workers to researchers. In Chapters 4 and 5 we develop two growth models with the key aspects of complementarity between capital goods in the production function, and the assumption of internal costly investment in capital. This assumption of internal costly investment in capital is new to the R&D-based growth literature. The two proposed models build on Evans, Honkapohja and Romer's [1998] model, and give microfoundations to the convex adjustment costs in Evans et al. [1998] by introducing an analytically observable internal adjustment cost function due to Hayashi [1982]. The model we introduce in Chapter 4 has a one-sector structure, with the final good, accumulation of capital and the invention of new designs provided by the same technology. In contrast, the model we introduce in Chapter 5 has a two-sector structure, as the final good and capital accumulation are produced with one technology, whereas the invention of new designs is undertaken with another. The main result of our proposed models in Chapters 4 and 5, is that, and in contrast to their inspirational multiple equilibria model by Evans et al. (1998), the combination of the assumptions of complementarities between capital goods and of internal adjustment costs generates a unique equilibrium solution. We then carry out investigations into the possibility of generating multiple equilibria in the two models through the introduction of an analytically observable alternative convex internal investment cost function. Chapter 6 is dedicated to the discussion of some limitations of the existing endogenous growth models and Chapter 7 closes the thesis with Final Remarks.

It is the purpose of the dissertation to explore the extent to which data-rich firms operating two-sided platform-ecosystem business models are able to use data to gain an innovation advantage over established one-sided companies. The dissertation begins with an analysis of business model theory and identifies two viewpoints based on the static and transformational perspectives. The transformational perspective is analysed in more depth and how data is playing a key role in creating an innovation advantage for two-sided platform ecosystem firms. A detailed explanation of how the platform ecosystem model works in provided in addition to a definition of the four platform typologies and how they compare and contrast with the one-sided business model. This is followed by a critique of the resource-based view of strategy and the relevance of dynamic capabilities, the knowledge-based view and the value chain approaches to strategy. A comprehensive innovation audit questionnaire (based on a sample of one hundred companies) is used to test whether the two-sided firms have a data-driven innovation advantage over the one-sided firms or not. The results reveal a clear innovation advantage for the two-sided firms who score consistently higher marks across all the dimensions of the innovation audit survey.

Recent data shows that more than £440 billion in cash has been piling up in the accounts of UK companies. At the same time, the investment outlays and corporate payouts have reached a 60-year low. What makes firms hold such enormous cash stocks instead of spending them on investment or returning them to shareholders? To what extent has the rising degree of uncertainty about macroeconomic conditions affected companies’ decisions? In this thesis we try to address these questions and, controlling for cyclical changes and financial factors, quantify the extent to which macroeconomic uncertainty has affected investments, cash holdings and equity payouts of UK companies. In the first substantive chapter we describe how information about macroeconomic uncertainty can be obtained from surveys of professional forecasters by applying a method initially proposed by Lucas (1972). We construct a theoretical model in which professional forecasters combine predictions based on public information with private beliefs which are defined as predictions based solely on private information sets. In the model, the combination of predictions produced on the basis of public and private information sets leads to a combined forecast which is reported by forecasters in their regular statements. We extract private beliefs from reported forecasts and then use them to construct our measure of macroeconomic uncertainty. The use of predictions based on private knowledge instead of reported forecasts makes our measure of macroeconomic uncertainty distinct from other uncertainty proxies and highlights the important role of beliefs as the driving force of uncertainty. Based on the measure constructed here we conclude that macroeconomic uncertainty increases either when the overall volatility of the underlying economic processes increases or when economic conditions are perceived as more changeable. We then take the model to the data using outcomes of surveys of economic forecasters and compute a measure of macroeconomic uncertainty for the UK and the US. The results point to an interesting phenomenon. In both countries the most variation in macroeconomic uncertainty comes from changes in the perceived volatility, and not from changes in the volatility of underlying economic processes. Moreover, a comparison of our measure of macroeconomic uncertainty with other uncertainty proxies reveals that in the US our uncertainty measure is most similar to an uncertainty proxy based on disagreement among forecasters, while in the UK it is most similar to an uncertainty proxy based on average variance reported by professional forecasters. Furthermore, it appears that the period of elevated uncertainty in the UK was more prolonged than it has been believed so far. In the second substantive chapter we examine the effects of uncertainty on corporate investments of a large panel of UK companies between 1998–2012 using the measure described earlier. Our regression equation is based on an extended version of a Tobin’s Q model and is estimated by the system GMM estimator. Apart from including the value of Tobin’s Q, which captures the ratio of the market value of capital to its book value, we also control for cash flow ratios, sales dynamic, individual uncertainty, business cycle and macroeconomic uncertainty. Our hypothesis is that macroeconomic uncertainty, defined as the expected volatility of the purely unforecastable component of the GDP growth rate conditional on information available at time t, negatively affects corporate investment ratios. We find indeed that a surge in macroeconomic uncertainty measured in this way is linked to a significant fall in investment ratios even after controlling for cyclical changes and a range of other factors. We also show that the effect of macroeconomic uncertainty on corporate investment is mainly driven by companies that are averagely financially constrained. These results are consistent with theories suggesting that the asymmetry of information is an important channel in the investment-uncertainty relationship and validate our measure of uncertainty. In the third substantive chapter we analyse the effects of changes in the degree of macroeconomic uncertainty on corporate cash management practices. Our analysis indicates that an increase in the degree of uncertainty about macroeconomic conditions leads to an increase in corporate cash holdings even after controlling for a range of factors. We also find that the effects of macroeconomic uncertainty are particularly strong among the most financially constrained companies. Such companies increase cash holdings significantly more than the less financially constrained companies. To complete the analysis of cash management practices we show that in uncertain times firms pay out lower dividends and reduce share buybacks. These results suggest that when uncertainty is rising firms adjust payout policy to obtain additional cash which they use to hedge unpredictable future cash flows. Our empirical results are consistent with the theoretical findings made by Almeida et al. (2004) and Han and Qiu (2007). Two important policy implications can be drawn from these results. First, if policy makers want to encourage companies to reduce their excessive cash holdings, which are sometimes referred to as “dead money”, they need to address sources of uncertainty which induces companies to accumulate cash in order to hedge unpredictable future cash flows. Second, smaller, less mature companies tend to be particularly affected by uncertain economic conditions. Well-designed policy needs to be developed that would address the problem of credit tightness and asymmetry of information between lenders and borrowers which may lead to suboptimal level of investment and excessive cash stocks in years when macroeconomic uncertainty is particularly high.

This thesis consists of three essays in financial economics. The first chapter analyses the fundraising process in the hedge fund industry and the role financial intermediaries play in this process. Using the SEC form D filings, I document that broker-sold funds underperform directly-sold funds by 2% (1.6%) per year on a risk-adjusted basis before (after) fees. Also directly-sold funds, on average, have larger average investor’s size, larger minimum investment size, and charge higher performance fees comparing to broker-sold ones. Empirical results are consistent with a stylized model of fundraising. I estimate the model implied average broker’s compensation to be $1.5 million per year. The second chapter (co-authored with Albert S. Kyle and Anna A. Obizhaeva) introduces a new structural model of stock returns generating process. The model assumes that stock prices change in response to buy and sell bets arriving to the market place as predicted by market microstructure invariance. These bets are shredded by traders into sequences of transactions according to some bet-shredding algorithms. Arbitrageurs take advantage of any noticeable returns predictability, and market makers clear the market. This structural model is calibrated to match empirical time-series and cross-sectional patterns of higher moments of returns. We calibrate hard-to-observe parameters of bet-shredding using the method of simulated moments, analyse its properties, and show how much shredding has increased over time. The third chapter studies cross-sectional and time series variation in the size of repurchase programs. I find that this variation is explained by the variables motivated by market microstructure invariance theory. My results suggest that when determining the size of repurchase programs, managers may target percentage impact costs of these programs or target inventory levels sufficient to allocate their future bets about their companies.

This thesis contains three chapters that examine various facets of how the market and technological environment shapes firms – and how firms shape their environments. The first chapter studies how multinational manufacturing firms organise production in parallel processing supply chains. Using confidential data on international sourcing of French manufacturing firms and an instrumental variables strategy based on selfconstructed input-output tables, the chapter shows that inputs that account for a high cost share – i.e. that are more important for technological reasons – are more likely to be produced by a multinational for itself, while unimportant ones are outsourced to third parties. It provides additional empirical evidence that this main finding is consistent with a property rights model of the boundary of the firm. The second chapter produces empirical facts on how exogenous changes in tariffs on intermediate goods have affected vertical integration patterns in France over the period 1996-2006 and evaluates them in light of the current literature. Using a long differences approach and detailed information on supply relationships, it shows that more protectionist policies by other countries and by the EU discouraged integrated relationships from shifting towards outsourcing and that initial market structure mattered for the impact of trade policy. The third chapter provides rare causal evidence for the relevance of endowment driven comparative advantage. It uses the fracking boom in the US following 2006 as a source of exogenous variation in the endowment of natural gas – and therefore in energy: fracking made energy considerably cheaper in the US compared to the rest of the world. The chapter studies factor, output, and international trade responses across sectors. It finds that energy intensive sectors expand along all dimensions and, most importantly, export more, which validates one of the most important neo-classical theories of why countries trade with each other.

This thesis consists of three chapters, examining the interrelation between human capital and country-level outcomes from different perspectives. Chapter 1, co-authored with Marta De Philippis, studies the contribution of parental influence to cross-country gaps in human capital performance. We compare the school performance of second-generation immigrants from different nationalities but educated in the same school, and find that those whose parents come from high-scoring countries in international standardized tests do better than their peers. The gap is larger when parents have little education and have recently emigrated, suggesting the importance of country-specific cultural traits that parents progressively lose as they integrate in the new host countries. Parental influence accounts for between 14% and 20% of the cross-country variance in test scores. Chapter 2 studies the macroeconomic consequences of the inequality of educational opportunities. I discuss how family income shapes college opportunities for US students, even when its correlation with academic ability is taken into account. I propose a general equilibrium model to estimate the productivity losses deriving from the fact that human capital investment is not always allocated where its marginal product would be highest. Using the equilibrium conditions of the model, I back out the value of barriers to college investment for disadvantaged students from data on family income, ability, schooling and wages. Counterfactual experiments suggest that a more meritocratic access to college education could boost output by approximately 11%, and wages by between 9% and 12%. I conclude that returns from policies aimed to expand college opportunities are potentially very large. Chapter 3 studies how the relative productivity of skilled and unskilled labor varies across countries. I use both micro-data for countries at different stages of development and other sources to document that the skill premium varies little between rich and poor countries, in spite of large differences in the relative skill supply. This pattern is consistent with the view that the relative productivity of skilled workers is higher in rich countries. I propose a methodology based on the comparison of labor market outcomes of immigrants with different levels of educational attainment to discriminate between technology and unobserved human capital as drivers of these patterns. I find that human capital quality plays a minor role in explaining cross-country differences in relative skill efficiency.

I present a thesis in three chapters in the broad field of Applied Macroeconomics. The first chapter is an empirical investigation into the “granular hypothesis” - the hypothesis that shocks to extremely large firms can have aggregate economic consequences. Identifying this channel is nontrivial as it may be the case that large firms respond more to aggregate shocks than most firms. I present a new way to identify true firm-level shocks by looking at stock price movements around the times that firms release financial information. I argue such movements reflect firm-specific, rather than aggregate information. Using a measure of firm shocks recovered using this information suggests that the importance of such shocks for aggregate economic outcomes has been overestimated by previous work in the literature. A good univariate representation of US GDP is a random walk with drift. The second chapter shows that nonetheless US recessions have been associated with predictable short-term recoveries with relatively small changes in long-term GDP forecasts. To detect these predictable changes, it is important to use a multivariate time series model. We discuss reasons why univariate representations can miss key characteristics of the underlying variable such as predictability, especially during recessions. The third chapter develops a general equilibrium model to investigate the macroeconomic consequences of liquidity regulation, a form of regulation which was strengthened substantially after the 2008 financial crisis. The model is used to identify two separate channels through which liquidity regulation can affect the cost of capital: the “crowding out” and “financial repression” channels. In the absence of these, I establish a neutrality result in which liquidity regulation does not affect the wider economy. The principal policy implication of this chapter is that regulators should not count safe assets which they require banks to hold for liquidity purposes against bank capital requirements.

The main argument of the thesis is that the dominant form of economics and correlative form of economy - despite its apparently secular character - contains an inherently cryptotheological dimension. A theological analysis exposes the dominant economics/economy as an instance of ‘law’ understood (after saint Paul Franz Kafka and Walter Benjamin) as a process engaging the subject into an infinite endeavour of justifying oneself by one’s own works. Within the framework of the dominant economics/economy, all labour is formalised as steaming from lack and unrest and the final end of action is formalised as non-action. Therefore peace can only be conceptualised as a perfect lack of action (viz. death). As a consequence death itself becomes the final end, that cannot be achieved as long as the subject lives. The analysis is based on a close-reading of the works prominent economists, focusing on the exponents of the Austrian School - Mises and Hayek - who as I try to prove, express the theological prejudgements of the dominant economics/economy in the most radical and philosophically stimulating manner. The thesis is also a polemic with these critics of the dominant economics/economy who state that it could be effectively criticised for being simply anti-natural, atemporal and value-free science/practice. My point is that a viable critique of the dominant mode of economic acting and thinking cannot be constructed, unless the fact that the hegemonic economic model actually makes use of the concepts of time, judgement and nature is taken into consideration. Only when the way the dominant economics/economy uses the concepts of economy as natural environment, economics as an art of allocation of time and as a value-saturated theory - elaboration of alternatives (including an alternative formalisation of productive labour) might become possible.

This dissertation presents three projects within the fields of behavioural and experimental economics. The first consists of a meta-analysis of lab experiments measuring economic discrimination. Most importantly, I find that the strength of discrimination in economics experiments varies depending on the dimension of identity across which discrimination is measured, and depending on the type of game used to measure it. The second project investigates the relationship between discriminatory behaviour and social norms. A lab experiments finds that discrimination is stronger when it is perceived to be more socially appropriate. In the third project, a field experiment investigates the effect of different nudges on voter registration rates. In particular, emphasising the possibility of being fined for failing to register is successful in raising registration rates, but offering the possibility of financial gain for registering is not. An online experiment in the same project suggests the conflicting normative effects of the two nudges may help explain these differences.

This dissertation explores how to conceptualise the production, reproduction and transmission of economic ideas. I highlight that a first step in such an exploration needs to consist in the recognition that theory and ideas not only describe reality but also help to constitute it. Language inherently frames our understanding in particular ways. We learn language, as well as other practices, by being socialised into particular communities. As a result, there is an inherent connection between our ideas and our identity. The task for this dissertation is to showcase different ways of understanding how we become socialised into particular economic ideas and what some of the consequences of this might be for how we think about economic theory in general. I examine two particular sites of knowledge production and two particular concepts. The two chosen sites are undergraduate economics textbooks and contemporary novels. I highlight that both partake in the production and transmission of economic ideas but that the strategies they employ to do so are markedly different. Economics teaching could benefit from using a greater variety of materials and I suggest that works of fiction are a very useful resource in this regard. The two concepts I examine are the concept of the market and the concept of violence. I argue that the concept of the market is not merely used to describe a place of exchange but that it is also used to express subjective and social notions. Last, I argue that much can be gained from following Johan Galtung's approach to violence. His conceptualisation of violence allows one to understand the price of socialisation. Socialisation processes are inherently burdensome for individuals and the concept of violence can help one to appreciate the burden which particular conceptions of human agency have for those who are asked to internalise these.