Eldorado Collection:http://hdl.handle.net/2003/1902024-03-29T15:48:02Z2024-03-29T15:48:02ZEssays on international trade and economic geographyAbashishvili, Avtandilhttp://hdl.handle.net/2003/421102023-09-27T22:15:04Z2023-01-01T00:00:00ZTitle: Essays on international trade and economic geography
Authors: Abashishvili, Avtandil
Abstract: This dissertation consists of three chapters in the field of international trade and economic geography.
The first chapter introduces endogenous workplace quality choice into an international trade model with a monopsonistically competitive labour market, in which firms compete for potential
employees by offering them a combination of monetary and non-monetary benefits. To attract
the workers required to produce for the foreign market in addition to the domestic market,
exporting firms have to offer more attractive compensation to their employees than comparable
non-exporting firms, which is why they are not only paying higher wages but also offering better
workplace amenities. The gains from trade, therefore, not only materialise in terms of a higher
purchasing power but also in terms of a higher average workplace quality. Welfare metrics,
which exclusively focus on real income gains, might underestimate the gains from globalisation.
The second chapter, co-authored with Lu Wei, studies to what extent trade liberalization affects regional production fragmentation. regional input-output data from the European Union (EU) to study the effect of trade liberalization on regional production fragmentation in the EU. We calculate the regional value-added to gross exports (RVAX) ratio to measure the intensity of production sharing across the EU NUTS2 regions. We exploit a unique policy variation associated with the 2004 EU enlargement – abolishing the trade-related tariffs between the EU states and ten new countries joining the EU. Using a gravity-style specification, we quantify the impact of regional tariff reduction on the RVAX ratio. Our findings reveal that a one percentage point decrease in tariff rate between EU member states leads to a 3.2% increase in regional production fragmentation as measured by RVAX. Our results could be interpreted as follows: EU regions facing higher tariff cuts after the EU enlargement got more engaged in cross-border production sharing and increased their trade with their bilateral partners through the regional value chains.
The third chapter tests the main prediction of Christaller’s (1933) central place property (CPP), which postulates that the smaller cities can always be found between larger cities. By collecting the data on populated volcanic islands, the spatial distribution of economic activity is matched to the key assumption of CCP, which dictates that all economic activity has to take place either on a line or on a circle. The urban areas on each island are identified using the Open Street map’s building data. The findings demonstrate that, on average, 70% of the size distribution of the neighbouring urban areas follows the spatial pattern predicted by CPP. The size distribution of urban areas in the data is then compared to the counterfactual counterpart obtained by randomizing the location of the cities on each island. A simple one tailed statistical test reveals that the observed and counterfactual size distributions of the cities in the data are significantly different.2023-01-01T00:00:00ZEssays in regional and labor economicsFurbach, Ninahttp://hdl.handle.net/2003/420892023-09-05T11:46:04Z2023-01-01T00:00:00ZTitle: Essays in regional and labor economics
Authors: Furbach, Nina
Abstract: Over the past decades, skilled and unskilled households in Western economies have been
making increasingly different location choices. College graduates cluster in dense, urban
regions to a considerably larger extent than high school graduates. This thesis tries to
make progress in understanding the driving forces behind the diverging location choices
of different groups of workers and their implications for regional disparities, policies and
welfare. It consists of three self-contained essays that investigate the causes and consequences
of geographic worker sorting using highly disaggregated microdata for Germany.
Chapter 1 examines to what extent regional disparities in housing costs drive geographic
worker sorting by skill. It further analyzes how place-based policies optimally respond
to the observed trends. Chapters 2 and 3 investigate the effects of sorting by skill and
demographics on regional wage disparities.2023-01-01T00:00:00ZInheritance taxation, unemployment, and asset pricing in frictional labour marketsGlück, Kevinhttp://hdl.handle.net/2003/413192023-03-29T22:14:10Z2023-01-01T00:00:00ZTitle: Inheritance taxation, unemployment, and asset pricing in frictional labour markets
Authors: Glück, Kevin
Abstract: This thesis studies the role of labour market frictions for optimal taxation, unemployment, and asset pricing. Chapter 1 studies inheritance taxation of family-owned firms. Using administrative tax data, this chapter shows that generous deductions for family-owned businesses reduce effective inheritance tax rates in Germany. The tax code does not achieve horizontal equity. A tractable model rationalizes the deductions under incomplete capital markets. A firm that is not marketable and cannot hire an external manager needs an intra-family succession to survive. A firm liquidation causes considerable earnings losses for employees with match-specific human capital. Inheritance tax deductions for business assets, conditional on firm continuation, let firm heirs internalize these earnings losses and incentivize succession of the parents' business. The chapter analytically derives an optimal tax formula. In the baseline calibration, the optimal tax rate for small businesses is close to zero, while it is confiscatory for large firms. Chapters 2 and 3 study the co-movement of equity prices and labour market transitions. The chapters study whether extensions of the Diamond-Mortensen-Pissarides (DMP) framework can jointly generate i) a high volatility of unemployment and stock prices, ii) the striking correlation of unemployment and stock prices and iii) a large equity premium. Chapter 2 globally solves DMP models with endogenous separations and wage rigidity. Models are parametrized to post-war U.S. data. Neither a model with cyclical fluctuations nor a model driven by a small autoregressive component of productivity growth can generate a large risk premium. Chapter 3 presents a DMP model with slow-moving habits and capital adjustment costs. The framework solves both the equity premium and the Shimer puzzle and reproduces the high correlation of employment and equity prices.2023-01-01T00:00:00ZEssays on local labor markets, firm taxation and worker mobilityKorfmann, Philipphttp://hdl.handle.net/2003/399692021-01-07T02:40:53Z2020-01-01T00:00:00ZTitle: Essays on local labor markets, firm taxation and worker mobility
Authors: Korfmann, Philipp
Abstract: This thesis investigates the causes and consequences of regional disparities in Germany and consists of three self-contained essays. Each essay utilizes spatially fine-grained microdata for Germany. They differ in focus and methodology but are all inseparably related through the spatial level of analysis. Chapter one provides introductory remarks. The second chapter studies the relative impact of two distinct local business tax instruments on workers' wages. While the primary contribution is the estimation of the effect of a revenue-neutral substitution between two tax instruments, the chapter provides evidence of the amplification of cross-regional wage disparities through local taxation. The third chapter relates regional unemployment differentials to worker flows, recovers underlying structural variations across regions, and investigates the impact of optimal local labor market policies that attenuate within market inefficiencies and balance the adverse effect of unemployment insurance benefits. The fourth chapter studies the characteristics of individual inter-regional migration decisions of employed workers and examines the relationship between individual earnings gains and location characteristics. Chapter five concludes.2020-01-01T00:00:00ZEssays in macroeconomics: The role of housing for monetary and fiscal policyPolattimur, Hamzahttp://hdl.handle.net/2003/350282016-07-05T12:55:24Z2016-01-01T00:00:00ZTitle: Essays in macroeconomics: The role of housing for monetary and fiscal policy
Authors: Polattimur, Hamza
Abstract: The analysis of monetary and fiscal policy belongs to the central issues in macroeconomics. This thesis provides new insights concerning current monetary and fiscal policy issues by accounting for the role of housing. Recent studies focusing on the interplay of housing and the macroeconomy have outlined the importance of housing along several dimensions, like for business cycles or asset pricing. This thesis analyzes the implications of housing for the ot be enforced, lenders will request collateral from borrowers. This collateral is typically the house of a borrowconduct of monetary and fiscal policy. In the models used in this thesis, the importance of housing stems from its usage as collateral in the presence of financial market imperfections. When debt repayment canner. In each chapter of this thesis, we consider models, which incorporate household sectors consisting of lenders and borrowers who face a collateral constraint. Accounting for the role of housing as collateral, we study the following policy issues.
First, we analyze in chapter 2 the preferential tax treatment of housing, like the deductibility of mortgage interest payments from income that is observed in many industrialized countries. In the US, for instance, total housing subsidies added up to 220 billion dollars in 2011, corresponding to 1.5% of GDP. We find that these subsidies can be justified by means of an optimal taxation approach once one accounts for the role of housing as collateral.
Second, we quantify in chapter 3 (coauthored with Andreas Schabert) the macroeconomic effects of the Federal Reserve's purchases of mortgage-backed securities, which is one of the unconventional policy measures the Fed used for the first time in its history during the financial crisis after hitting the zero lower bound on the policy rate. We analyze the macroeconomic effects of these purchases, which added up to more than $2 trillion in both MBS purchase programs conducted in the first and third round of quantitative easing programs. We find that they had considerable expansionary effects on output, consumption and prices providing a rationale for this new type of policy measure.
Third, chapter 4 provides a theoretical framework with occasionally binding collateral constraints in which government spending is more effective in recessions compared to expansions consistent with what is found by recent empirical research. Moreover, based on this framework we quantify the differences between government spending multipliers in recessions and expansions and find that these are considerably large.
To summarize, the studies in this thesis emphasize the importance of housing for monetary and fiscal policy, especially in serving as collateral for private loans. They show how accounting for this role of housing, provides novel insights concerning current monetary and fiscal policy issues ranging from housing subsidies, over the Fed's MBS purchases to the effectiveness of government spending in recessions and expansions.2016-01-01T00:00:00ZEssays in dynamic macroeconomics: public policy, household savings, and lack of commitmentRöttger, Joosthttp://hdl.handle.net/2003/343382015-11-14T02:40:29Z2015-01-01T00:00:00ZTitle: Essays in dynamic macroeconomics: public policy, household savings, and lack of commitment
Authors: Röttger, Joost
Abstract: This dissertation consists of three chapters that study how public and private agents make decisions in the absence of commitment. Chapter 1 investigates how the option to default on debt payments affects the conduct of public policy when the government lacks commitment. It studies optimal monetary and fiscal policy without commitment for a cash-credit good economy that is extended by incorporating a discrete default choice. When the government can default on its debt, public policy is shown to change in the short and the long run relative to a scenario without default option. The risk of default increases the volatility of interest rates, impeding the government's ability to smooth tax distortions across states. It also limits public debt accumulation and reduces the government's incentive to implement high inflation in the long run. Chapter 2 is also dedicated to the interaction between monetary and fiscal policy in the absence of commitment but studies the consequences of delegating monetary policy to an inflation conservative central banker. In particular, it develops a model of a small open economy that faces incomplete financial markets, risk of default and political distortions. These frictions matter for many emerging economies and might adversely affect the effectivity and desirability of monetary policy delegation. In the model, monetary and fiscal policy is set by two different authorities. Fiscal policy is chosen by a fiscal authority that exhibits a deficit bias due to political economy frictions and cannot commit to future policies, including debt repayment. Monetary policy is set by a central bank which also lacks commitment and might place a higher value on price stability than society. Despite increasing the average debt burden, the frequency of default and the volatility of fiscal policy, inflation conservatism leads to net welfare gains by successfully implementing lower and more stable inflation. Chapter 3 develops a model of a two-person household whose individual members are altruistic towards each other and lack commitment to future actions, showing how household decision making depends on whether household members cooperate or not. Compared to a household that consists of members that cooperate and make decisions based on a joint objective, the non-cooperative interaction between household members is associated with a savings distortion. When household members are imperfectly altruistic, this distortion is shown to result in an undersaving bias. Using a model version with labor income risk and a precautionary savings motive, Chapter 3 shows that non-cooperative households might save substantially less than cooperative ones when the individual members exhibit imperfect spousal altruism, resulting in sizable welfare losses.2015-01-01T00:00:00ZEssays on Dynamic MacroeconomicsRieth, Malte H.http://hdl.handle.net/2003/275762015-08-13T00:41:53Z2011-01-20T00:00:00ZTitle: Essays on Dynamic Macroeconomics
Authors: Rieth, Malte H.
Abstract: The macroeconomic theory of optimal fiscal and monetary policy based on the
assumption of a ‘benevolent dictator’ has identified several key lessons which are
thought to substantially improve the economic conditions of a nation (see Chari and
Kehoe, 1999, Woodford, 2003): (i) Debt should be zero or negative in the long run,
(ii) taxes on capital income should be zero in the long run or on average, and (iii)
in the analysis of monetary policy, fiscal policy can largely be neglected. However,
due to either distortions in the political process or market frictions beyond reach of
policymakers, these optimal, welfare-enhancing policies are often not implemented
as recommended by economic theory. The aim of this thesis is therefore twofold:
First, to explain the gap between recommended and actually implemented policies
and, second, to find mechanisms (or alternative policies) aimed at attenuating these
deviations from optimality.
Chapter 2 studieswelfare consequences of a soft borrowing constraint on sovereign
debt which is modeled as a proportional fine per unit of debt exceeding some reference value. Debt is the result of myopic fiscal policy where the government is
assumed to have a smaller discount factor than the private sector. In the absence of
lump-sum taxation, debt reduces welfare. The chapter shows that the imposition of
the soft borrowing constraint, which resembles features of the Stability and Growth
Pact and which is taken into account by the policy maker when setting its instruments, prevents excessive borrowing. The constraint can be implemented such as
to (i) control the long run level of debt, (ii) prevent debt accumulation, and (iii) induce debt consolidation. In all three cases the constraint enhances welfare and these
gains outweigh the short run welfare losses of increasing the costs of using debt to
smooth taxes over the business cycle by two orders of magnitude.
Why do governments tax capital in face of the benchmark of standard economic
theory that capital ought to be untaxed? Chapter 3 provides a model of fiscal policy
with endogenous labour, bonds, and capital in order to account for the observation that worldwide taxes on capital remain far from zero. It introduces policy myopia into an otherwise standard framework of optimal fiscal policy where the government can tax labour and capital income and shows, analytically for the case of
quasi-linear preferences and numerically for the case of CRRA preferences, that policy myopia leads to empirically realistic tax rates on capital. Moreover, it is shown
that the tax rate on capital increases as myopia increases. Finally, the chapter analyzes the effects of policy myopia on the conduct of fiscal policy over the business
cycle.
Based on the theoretical analysis of Chapter 3, Chapter 4 presents empirical support for the hypothesis that higher political instability leads to an increase of the tax
rate on capital income. The hypothesis is tested on a panel of annual observations
for 13 OECD countries for the period 1964-1983. Themain finding is that an increase
of the index of political instability by one standard deviation leads to an increase of
the tax rate on capital by about 1.8 percentage points. This effect is statistically
and economically significant and robust against alternative sets of regressors and
measures of the dependent variable, outlier correction, and alternative estimation
strategies.
Chapter 5 (joint with Markus Kirchner) assesses the role of sovereign risk in explaining macroeconomic fluctuations in Turkey. We estimate two versions of a simple New Keynesian small open economy model on quarterly data for the period
1994Q3-2008Q2: A basic version and a version augmented by a default premium on
government debt due to a perceived risk of sovereign debt default. Model comparisons clearly support the augmented version since it leads to stronger internal propagation and hence smaller shocks are required in order to reconcile the observed
dynamics of nominal and real variables, leading to better forecasting performance.
The results suggest that the augmented model may lead to a better understanding
of macroeconomic fluctuations in emerging market economies that are subject to
sovereign risk. In terms of policy implications, counterfactual experiments show
that both more active monetary policy and stronger fiscal feedbacks from debt on
taxes can lead to less volatile inflation and debt dynamics, but higher debt feedbacks
on taxation additionally reduce expected default rates.2011-01-20T00:00:00ZLiquidity, interest rates and optimal monetary policyHörmann, Markushttp://hdl.handle.net/2003/275472015-08-13T01:49:14Z2011-01-05T00:00:00ZTitle: Liquidity, interest rates and optimal monetary policy
Authors: Hörmann, Markus2011-01-05T00:00:00ZEssays on Heterogeneous AgentsBredemeier, Christianhttp://hdl.handle.net/2003/274032015-08-13T02:35:07Z2010-09-28T00:00:00ZTitle: Essays on Heterogeneous Agents
Authors: Bredemeier, Christian2010-09-28T00:00:00ZAn asset pricing view on international financial integrationNitschka, Thomashttp://hdl.handle.net/2003/244182015-08-12T23:55:30Z2007-07-03T10:02:53ZTitle: An asset pricing view on international financial integration
Authors: Nitschka, Thomas2007-07-03T10:02:53ZEssays on empirical macroeconomicsJüßen, Falkohttp://hdl.handle.net/2003/227002015-08-12T19:54:19Z2006-08-07T13:29:11ZTitle: Essays on empirical macroeconomics
Authors: Jüßen, Falko2006-08-07T13:29:11Z