Date of Award
Doctor of Philosophy (PhD)
Nurturing Young Public Firms over Real Business Cycles. In this paper, I develop a theory of financial intermediation in a general equilibrium environment, to study the interactions between households, financial intermediation, and entrepreneurs over real business cycles. In the model, the financial intermediary, who resembles real-life private equity (PE) groups and investment bankers, works as a nurturer of young public firms. It performs screening and sorting on entrepreneurs, then allocates resources to them, borrowed from the households. However, the effort intensity in screening decreases when the financial intermediary is flooded by resources, so do the average quality of financial services and the commission rate, which predict the countercyclicality of those variables. This countercyclicality of efficiency in the financial sector promises a dampening effect on economic volatility. I use the U. S. initial public offering (IPO) data, as well as selected PE data to document that the commission rate is indeed countercyclical. Its correlation with the cyclical component of total output is around -0. 21. I calibrate the model to the U. S. financial market and conduct several counterfactual exercises. I find that a 20\% drop in the financial intermediary's cost of effort dampens the total output volatility by 0. 24\% and the household consumption volatility by 0. 53\%. While a binding commission rate cap amplifies the volatility by 0. 36\% and 0. 54\% respectively. Antitrust Policy in a Globalized Economy. Antitrust policies have been relaxed and the number of mergers and acquisitions (M\&A) has risen rapidly since the 1980s in the United States. This paper provides a framework to evaluate the cost and benefits of antitrust policy in a global context. M\&A reallocate resources from small to large and typically more productive firms, while also increasing their monopoly power. An optimal antitrust policy seeks a balance between the positive productivity effect and the negative markup effect. In a globalized economy, increasing productivity fully accrues to domestic firms/workers while a higher markup only partially hurts domestic consumers. The weakening antitrust policy since the 1980s is thus an optimal response to the increasing globalization in the same period. We present a dynamic general equilibrium model of M\&A and show that welfare, measured as aggregate consumption/production in stationary equilibrium, is a hump-shaped function of the antitrust policy parameter in the model. We are extending the model to an open economy, and aim to formalize the intuition that openness to trade demands a more lenient antitrust policy and to explore its quantitative implications for aggregate markup and welfare. A Model of Technology Diffusion. Many new technologies, instead of being adopted simultaneously by all producers in the same area or industry, display a long and lagged diffusion process, with an S-shaped adoption curve. This even applies to technologies that were later proven to improve productivity significantly. We construct and test a model for explaining this observation. In the model, agents who are heterogeneous in beliefs choose their optimal stopping/adopting time, while they are learning from the output of others. As the population of agents who are experimenting with the new technology grows up, the learning process accelerates. Part of the incentives for them to wait is to free-ride on a larger experimenting group in the future. Our model can explain various technology diffusion data, such as the hybrid corn adoption in the U. S. , or the adoption of the 12 industrial innovations.
Chair and Committee
Yongseok Shin, Gaetano Antinolfi, Francisco Buera, Guillaume Vandenbroucke,
Cao, Linyi, "Essays on Macro and Financial Economics" (2020). Arts & Sciences Electronic Theses and Dissertations. 2171.