The present thesis is divided in three chapters. The first focuses on Education Economics. The second and the third on Household Finance. The following paragraphs describe the contents of each chapter in more detail. The first essay compares and contrasts aggregate and individual level analyses to investigate the relationship between economic fluctuations and tertiary education enrollments in Italy. It shows that aggregate enrollments follow a procyclical pattern. Consistently, it finds that Italian young individuals living with their parents implement a procyclical enrollment decision. The paper tries to reconcile the empirical evidence with theoretical predictions, and investigates a number of different channels. It proposes a rather novel, nevertheless theory consistent interpretation for the evidence found. The paper argues that Italian individuals living with their parents implement a procyclical behaviour because they can't access credit to finance their education. It supports this statement with consistent empirical evidence. The second essay studies whether labour income volatility crowds out investment in risky assets in Italian households. Justified by the literature on limited participation, the paper makes use of reduced form estimations to show that Italian households hedge their labour income risk on the risky assets market. It contributes by proposing a novel measure of labour income volatility, ground on the literature on labour income dynamics. On a methodological perspective, the paper adds to the literature by estimating reduced form models using a recent estimation technique, never implemented before in this branch of research. It shows that the new methodology overcomes some of the limitations of the techniques previously applied in the literature. The third essay, co-authored with Professors Sule Alan and Eric Smith, focuses on the subprime credit market in the United Kingdom. Making use of a unique database centered on a randomized trial experiment, the paper identifies the causal effect of an increase in the cost of credit on individual credit demand and default probability.

In this thesis, I examine the impact of energy price shocks in the United Kingdom using a New-Keynsian Dynamic Stochastic General Equilibrium (DSGE) model and a classic Real Business Cycle (RBC) model. The models are augmented with real rigidities and driven by exogenous shocks. Chapter 1 examines a DSGE model with New-Keynesian Philips Curve with three outputs of energy (petrol and utility), and non-energy output, using filtered data (1981:Q1-2014:Q4) of the UK. Chapter 2 examines a two-sector (RBC) model of energy intensive output and non-energy intensive output, using unfiltered data (1990:Q1-2014:Q4) of the UK. The models are econometrically estimated using indirect inference test that includes Monte Carlo simulation. I show how the study can be quantitatively applied by evaluating the effects of different shocks on output, relative prices and interest rate. I also show how energy price shocks affect output, asset prices and aggregate consumption in a classic RBC model. By decomposition, the changes in these variables caused by each of the structural shocks showed that a fall in output during the financial crisis period 2008:Q2 to 2009:Q4 was driven by energy price shocks and sector-specific productivity shocks. Conversely, in the DSGE model with NKPC, the changes in these variables caused by each of the structural shocks showed that a fall in output during the financial crisis period 2008:Q2 to 2009:Q4 was driven by domestic demand shocks (consumption preference, government spending and capital adjustment cost), oil prices shock and world demand shock. I found why the energy price shock reduces GDP in the models: In NKPC model with stationary shocks this is only a temporary terms of trade shock and so GDP only falls briefly, such that, the UK can borrow against such a temporary fall. In the RBC two-sector model, I found, it must be that the terms of trade rise permanently when world energy price increase as it is non-stationary and there is no other way to balance the current account than to reduce absorption due to lack of substitute for energy inputs. Finally, I found that the RBC two-sector model with non-stationary shocks performs better than NKPC model with stationary shocks. The performance can be credited to using unfiltered-data on the RBC model. This thesis show how estimated models can create additional input to the policymaker’s choice of models through the economic shocks’ effects of the macroeconomic variables.

This thesis represents largely the two sides to both theory and econometrics of dynamic macroeconomics, namely stationary and non-stationary models and data. The stationary part concludes with Chapter 3 and in Chapter 4, I look at the non-stationary side. More speci�cally, I preview the thesis in Chapter 1 highlighting the modelling and econometric approaches commonly found in the economics literature; also I report some key results. In Chapter 2, I provide a comprehensive, but certainly far from being exhaus- tive, review of the literature dating back to the publication of Stanley Jevon�s (1866) The Coal Question, but with the main discussion beginning with Harold Hotelling�s (1931) The Economics of Exhaustible Resources. I develop a two-sector open economy extension to the Kydland and Prescott (1982), Long and Plosser (1983) and Kim and Loungani (1992) models in Chapter 3 and estimate it on H-P �ltered annual U.S. data covering 64 years, with the main purpose of discovering how energy price along with other supply-side and demand-side shocks (imported and domestic) impacts on the U.S. economy. The model presented only contains the current account and I restrict trade to balance in every pe- riod. I �nd that model �ts the data for my benchmark variables of interest in the auxiliary model: output, real exchange rate, energy use, and consumption. When more variables and in particular sectoral variables are added, meanwhile, to the auxiliary model, I �nd that the model�s performance especially as it relates to this estimated model parameters did not �t. What I take from this is that the estimated structural parameters are not globally applicable within this economic environment. This model is then further extended by including the capital account in Chapter 4 before re-estimation, but now also on non-stationary data, which I suppose is more repre- sentative of reality. I focus on the �t of the model to output and the economy�s measure i of competitiveness: the real exchange rate. I �nd that the energy price and technology shocks have major e¤ects on the U.S. output and relative competitiveness. The mecha- nisms by which these e¤ects are transmitted are two-fold. First is via the terms of trade occurring as a resource drain on the economy as the U.S. would need to �nd extra resource to commit to the import of crude oil. The second is via household�s reduced investment activity. Both channels can be explained by the fact that the substitution away from oil is happening at too slow a pace because of low estimated elasticities parameters. This agrees with Hamilton who argued that oil shock works via demand contraction. I have in this thesis veri�ed his conjecture via a well-motivated and detailed microfounded dynamic stochastic general equilibrium (DSGE) model. Finally, I review the thesis speculating on possible future extensions in Chapter 5.

This dissertation sets out to introduce a new calibration procedure building on Jermann (1998) and the iterative shock identification scheme of Benk et al. (2005) in Chapter 1. It incorporates the use of Simulated Annealing, a global optimization algorithm, into the Jermann (1998) calibration methodology that is applied to search for the combination of structural parameters within a bounded parameter space that yields the lowest distance between a vector of US data moments and its simulated moments counterpart in the frequency domain. It also extends the methodology of Jermann (1998) with the identification scheme of Benk et al. (2005) to obtain convergent estimates for shock parameters. After illustrating the workings of this new calibration methodology on the two sector business cycle model of Dang et al. (2011) with endogenous growth and human capital in Chapter 2 this dissertation sets out in Chapter 3 to introduce an extended version of the model of Dang et al. (2011) and to explain a number of real business cycle (RBC) problems that include the Gali (1999) labor response, the basic consumption-output and labor-output relationship, and the lack of an internal propagation mechanism as pointed out by Cogley and Nason (1995) and Rotemberg and Woodford (1996). This extension follows the suggestions of King and Rebelo (2000) to incorporate an external labor margin through a human capital investment sector and a physical capital utilization margin in the form of physical capital utilization rate to improve the performance of the standard RBC model. In the model introduced in Chapter 3 the physical capital utilization rate is further amended by the introduction of entrepreneurial capacity as in Friedman (1976) and Lucas (1988). The added margin of physical capital utilization is intra-temporal in nature, which enables the new calibration scheme to improve on the ability of the model significantly to explain the underlying real business cycle problems and US data moments in the frequency domain. Lastly, in Chapter 4 a simple monetary extension of the model in Chapter 3 is presented. In this chapter it is shown that the added physical capital utilization in a monetary model combined with the proposed calibration scheme is successful in explaining the empirical negative long term relationship between in ation and output.

The thesis examines both pecuniary and non-pecuniary benefits to higher education in the UK and empirically tests the model of demand for higher education. The leading theme in this research is the interest in the microeconomic aspect of higher education at empirical level. It sets out to investigate the expectations of individuals in terms of what they can gain from education. It considers various aspects of higher education, including casual effect on pecuniary and non pecuniary returns and demand of higher education participation. This thesis is based on 1958 British National Child Development Survey in the UK. It is composed by three empirical chapters, each on corresponding to a self-contained paper, applying different methodologies and making a unique contribution of these overall objectives. The first empirical chapter focus on the returns to education justified by the importance accorded as an explanation of wage differentials. The second empirical chapter deals with the returns to higher education on health. The third empirical chapter explores the relationship between higher education decision and expected wage income and personal and family characteristics. The main powerful findings of this thesis are: First, the economic return of education rises with the greater disparity of the educational groups as age increases. Females attending higher education usually enjoy higher returns than males, and the gap constantly increases over the years. Second, attending higher education may be an effective way to improve population health and reduce the likelihood of health damaging behaviours. Third, the hypothesis that individuals’ higher education decision only depends on their expectation on future wage income is highly rejected.

The thesis investigates how firm entry and exit into industry influences macroeconomic productivity. The first contribution is to show that firm entry and exit dynamics cause endogenous productivity movements over the business cycle due to the slow response of incumbent firms to macroeconomic conditions. The second contribution is to show that these productivity effects persist into the long run because of firm dynamics’ effect on industry competition. Therefore the thesis argues that slow firm responses cause amplified productivity effects in the short run and that these effects can persist into the long run. A key distinction of the research is to develop an analytically tractable dynamic general equilibrium model. This provides a precise explanation of productivity movements, without using numerical simulation. A crucial feature of the modelling is that firm dynamics have a time-to-build lag, so entry and exit are noninstantaneous. This causes a short-run period during which shocks to the economy are borne by inert incumbent firms and this is responsible for amplified short-run productivity effects. However, over time firms are able to enter and exit which ameliorates the amplification effect. Thus this process alone does not explain persistent effects on productivity. In order to understand persistent effects, the thesis explains that one must consider the effect of entry and exit on the competitive pressure of incumbents. When this is taken into account it shows that firms change their pricing behaviour in response to entry and exit, and the result is that long-run pricing markups change which in turn affect long-run productivity. Chapter 1 demonstrates the empirical relevance of the relationship between productivity, firm entry and output in US data. Chapter 2 develops a structural model to explain shortrun movements in productivity and firm dynamics. Developing chapter 2, chapter 3 explains the long-run effect of firm dynamics on productivity through entry’s effect on competition.

This dissertation focuses on testing and identifying individual ambiguity preference under the framework of "smooth ambiguity preference" developed by Klibanoff, Marinacci, and Mukerji (2005). Following the seminal contributions of Allais (1953) and Ellsberg (1961), experimental data have consistently demonstrated that individuals do not behave in accordance with predictions of the expected utility model when they face uncertainty. As one important class of ambiguity utility, the smooth ambiguity model distinguishes ambiguity aversion from risk aversion, which makes the comparative statics possible. However, currently there is little work on testing and recovering such preferences based on observable choices. The dissertation contains four parts. Chapter 2 uses two approaches to derive the necessary and sufficient conditions for observed individual portfolio choice to be compatible with the smooth ambiguity preference. The first approach is the revealed preference method, and is based on finite observations. The second approach is demand function testing, and is based on infinite observations. Chapter 3 establishes the conditions under which the smooth ambiguity preference can be uniquely identified from individual demand functions. In Chapter 4, I extend the argument of Varian (1988) to multiple observations and incomplete market case to non-parametrically test different shapes of risk aversion, and then to test hypotheses on shapes of ambiguity aversion. In Chapter 5, to use household survey data to identify household risk and ambiguity aversion, I build a simple parametric model to identify household risk and ambiguity aversion from their saving and portfolio choice. The data from the Bank of Italy Survey on Household Income and Wealth 2008 and 2010 support the constant relative risk aversion and constant relative ambiguity aversion hypothesis, and give evidence of the magnitude of household risk and ambiguity aversion.

The aim of the study was to determine the extent to which the narrative or storytelling approach shapes a brand with a focus on Oldham. The objectives of the study were to ascertain the nature of stories; understand the way stories are told; identify ways places shape their identity; determine the extent to which stories are mirrored in the unfolding re-branding or re-storying of Oldham; compare Oldham’s experience to Bradford; profile perceptions of the Oldham stakeholders; develop an identity matrix for Oldham; formulate a framework for conceptualising the Oldham brand; make recommendations on the way forward; and suggest an approach to story based branding (story-branding). The conceptual framework states that, This study is a research of the storytelling approach or the narrative in the development of a place brand focusing on Oldham. The four core elements of the theoretical framework of the study include branding, place branding, the case study approach, Oldham and the storytelling or narrative approach. The researcher’s epistemological perspective is that of a phenomenological interpretivist engaged ethnographically in the study, i.e., grounded in the dynamics of Oldham as a social constructioninst. The methodology employed storytelling, using the narrative by thirty people familiar with Oldham, the Oldham historian’s perspective, eighty questionnaires and a focus group discussion rendering the methodology to a mixed method (triangulation). The literature review showed that the storytelling approach is central to human understanding. The Oldham brand is diverse given its heritage and its multiple stakeholders. The Oldham story projects hard work leading to global industrial excellence “king cotton”, peaking in 1866 and then deteriorating into dilapidation in the 1970’s and chaos, culminating in the race riots of 2001. Rebranding Oldham is complex as various elements are considered. The researcher recommends consolidation of the story and the utilisation of the great sub-stories of Oldham. The study proposes the Adaptive Story branding Conceptual Framework where the main story is adapted for different stakeholder groups.

This study investigates the sensitivity of the relationship between oil industrial inventories and oil supply at national, international and global levels to developments in monetary policy in the UK. More specifically, it provides evidence for the UK about the two-way relationship between monetary policy and commodity markets in an environment of inflation targeting. The importance of this research can be found in the provision of information which may be beneficial when projecting the economic outlook in general and inflation forecasts in particular. Although the UK operates under an inflation targeting framework, where supply shocks are considered as short-term, but recent movements in commodity markets are found to be more persistent, this study also investigates whether the sensitivity of the UK economy and policy makers to unanticipated movements in commodity prices has changed since the peak in commodity prices in 2008 which is coincident with the start of the financial crisis. The estimation of VEC models adjusted for the UK, and plotting impulse response functions is used to investigate the dynamic reaction of oil inventories and oil supply at national, international and global levels to the shock in monetary policy. Estimated SVAR models investigate the size of the persistent and transitory effects of different types of oil and food commodity shocks on the UK economy and the reaction of policy makers. Afterwards, the Chow test is used for the identification of potential structural breaks and the investigation of whether the sensitivity of the UK economy to shocks in commodity prices has changed. The results reveal that an expansionary UK monetary policy leads to a statistically significant decline in the OPEC oil supply while there is a less statistically significant effect on EU oil supply movements. Tight monetary policy is found to have the most significant effect on the UK’s industrial oil stocks and EU industrial oil stocks. The results also reveal that the world oil supply, as well as the OPEC oil supply, became less responsive to money supply and more responsive to interest rates after the Bank of England was given an operational independency. The responsiveness of the OECD oil stocks has also become slightly more responsive since the financial crisis. Following an investigation of the transitory and persistent effect of oil and food commodities shocks in relation to the nature of the shocks, the results reveal that shocks in oil prices pass through into the UK’s core inflation. It is also found that policy decisions in the UK are more sensitive to the actual shock in food prices than to the primary shock in food demand. The response of headline inflation to oil price shocks is found to be stronger before the oil price peak in 2008 and becomes less responsive afterwards while the response of core inflation to the shock in food prices is stronger after the price peak in 2008.

Disequilibrium analysis, particularly in the context of explicit dynamic economic models, is an area of considerable interest. Disequilibrium is important when markets fail to clear and dynamic adjustments are required. Three essential strands of the literature seem the most important: non market-clearing temporary equilibria; long term growth theory which allows for the possibility of unemployment of labour and underutilisation of capital stock; medium term dynamics where aggregate demand fails to match up to potential output. This thesis presents a number of theoretical and analytical models which analyse various aspects of the last two issues. Even though we use some concepts from short-run rationing models of temporary equilibria, the central focus is exclusively on long run growth and more shorter-term dynamic systems, where capital stock is exogenous. The work is also emphatically macroeconomic in nature, emphasising aggregative structures which conform to stylised facts and have interesting policy conclusions. The first part of the thesis discusses growth models. Given the lack of a unified theoretical structure in the area itself, we concentrate on specific issues: income-expenditure models with independent investment functions leading on to capital formation and (possible) movement towards steady states; unemployment of labour, and capital; monetary growth and asset structure; open economy considerations when markets may fail to clear. The second part analyses macrodynamics, assuming fixed capital, and is concerned with medium term adjustments of variables such as output, price and exchange rate under disequilibrium and rigidities. The purpose of the research is to present a diversity of concepts and conclusions. The objective is not to present a comprehensive 'general' or 'meta' theory; it is not clear whether encompassing concepts will necessarily be more insightful; in any case the current state of the arts preclude such a schema. The chapters that follow deal with a wide range of possible topics; model specifications are adapted to tackle the specific problem at hand. The conclusions clearly demonstrate that specification of regime, Keynesian or Classical, is vital to the understanding of how the economy will behave under disequilibrium. Even if the steady state depends on exogenous parameters (such as the natural rate or potential output) the paths that approach it are essentially different in characteristics, depending on what sort of disequilibrium regime the economy is in. This, of course, has important policy relevance. Discretionary policies, as well as policy rules, must carefully study the underlying structural features of the economy if they are to have significance.