Abstract

This thesis comprises two papers, each organized as a separate chapter. The overarching theme is to understand the macroeconomic impact of policies and various frictions present in developing economies. The first chapter analyzes the feasibility of financing Universal Basic Income (UBI) under alternative financing schemes and studies the long-term aggregate and distributional effects of UBI in developing countries. I find that a UBI equal to half the international poverty line cannot be financed through labor income taxes. On the other hand, financing UBI via consumption taxes is feasible but results in lower output, capital, and aggregate labor, as well as an increase in income and wealth inequality. The second chapter (with Paco Buera, Jeremy Majerovitz, Yongseok Shin) studies the role of risk in the presence of financial frictions. We show that risk is an important factor affecting investment decisions and productive entrepreneurs accumulate capital substantially more slowly than in the first-best scenario. This leads to a reduction in aggregate output, capital, productivity, and welfare. Furthermore, we find that credit can play a role in mitigating these frictions if firms have the option to default.

Committee Chair

Yongseok Shin

Degree

Doctor of Philosophy (PhD)

Author's Department

Economics

Author's School

Graduate School of Arts and Sciences

Document Type

Dissertation

Date of Award

4-30-2024

Language

English (en)

Author's ORCID

0009-0001-7672-6137

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Available for download on Friday, May 10, 2030

Included in

Economics Commons

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