This dissertation is composed of three essays in international economics and finance, which share a common focus on understanding the micro-foundation of capital flows and the subsequent global economic cycle. The first essay shows US equity mutual funds respond significantly to a measure of expected excess return we predict. However, costly deviations from two benchmark portfolios lead to a weaker and more gradual response of portfolio to changes in expected excess returns. Building upon these findings, the second essay documents country shares of zero in international portfolio choice. Here I show the portfolio impulse response of equity mutual funds to an expected excess return shock is higher and more persistent than estimated when ignoring the zeros. The third essay shows that following a downturn of the global financial cycle, the US Treasury premium increases and the US real exchange rate appreciates. Moreover, the more the US Treasury premium increases following the downturn of the global financial cycle, the more the US real exchange rate appreciates.
This thesis explores two crucial elements of the promotion of sustainable development: the provision of access to health and the reduction of gender disparities. The first contribution of this work is the exploration of cultural norms that may reduce gender inequalities. In particular, how religious beliefs can lead to more gender equality and a lower gender gap. This thesis investigates then the impact of major health interventions on socioeconomic outcomes in the context of the HIV/AIDS epidemic. Firstly, this research investigates the role of major health interventions on social violence and conflicts. Adverse health shocks can generate social instability and violence when governments are not able to respond to them. This work shows how health policies, such as the introduction and provision of treatment for HIV, have led to a reduction in social unrest. As a final point, this thesis investigates whether health policies can be used as an effective tool to empower women. Women and men are affected unequally by adverse health events, such as the HIV/AIDS pandemic, which can lead to a rise in the gender gap. This work shows how the availability of HIV medications reversed this trend contributing to women empowerment.
This thesis consists of three independent essays focusing on the fields of labor economics and the economics of education. These essays study the factors and policies that impact how people make education and labor supply decisions. The findings inform public policy related to family policies and social insurance to ensure more equitable outcomes for vulnerable and disadvantaged groups.
Chapter One finds that income risk has a large and negative ex-ante impact on educational attainments among poor, rural households in India dependent on income from rainfed agriculture. It decreases the number of completed years of schooling, increases the share of people with only primary level education, and decreases the share of people with secondary or higher education. In addition, it increases the likelihood that girls’ education gets interrupted leading them to fall behind, and decreases the amount that households spend on girls’ education.
The second and third chapters relate to family policies, female labor supply, fertility, and gender gaps. The second chapter reveals that introducing a new national mandate providing paid maternity leave only had small and temporary effects on the labor market outcomes of first-time mothers but did raise the share of women having a second child by three percentage points. The third and final chapter shows that the same mandate had an overall negative impact on first-time mothers, decreasing employment and earnings. In addition, it increased slightly the gender gap in total employment but decreased substantially the gap in earnings and wages among those with an older child.
This thesis is composed of three essays that employ theoretical approaches to model certain market situations in the field of behavioral economics and industrial organization. Chapter 1 studies the role of overconfidence in tournaments where players choose effort provision as well as risk exposure, and shows that, against the common idea, overconfidence can raise effort provision and leads to lower risk-taking. Chapter 2 explores the speed of copycat entry in vertically differentiated markets in which consumers differ in their willingness to pay. This paper identifies welfare-reducing incentives to enter the market which lead to an extended monopoly situation despite costless entry. Chapter 3 analyses the welfare implications of switching from a commission-based to a fee-based remuneration model in markets where consumers rely on expert advice. This study identifies a mechanism through which the number of consumers buying in equilibrium decreases and provokes the question of whether a paradigm shift away from compensation through commissions towards transactional fees is worth the drawbacks.
This thesis examines some of the economic consequences of public service and taxation decentralization, both on sub-central governments' policies and on citizens' decisions. More specifically, interest lies in understanding how inter-jurisdictional redistribution policies affect local taxes, to which extent delegation of fiscal authority is effectively implemented, and how jurisdictional fiscal fragmentation affects residential location choices within urban areas. The different chapters overall seek to contribute to the body of research studying how taxes affect the spatial allocation of fiscal resources and to the literature investigating how the mobility of tax bases influences governments' tax-setting behavior. The thesis provides theoretical and empirical insights on questions that help understand how taxes, decentralization and tax-base mobility interact in modern fiscal federations.
This doctoral thesis examines the effects of both conventional and unconventional monetary policies on the macroeconomy and inequality. Interest rate adjustments, forward guidance, and quantitative easing are common tools used by central banks to control inflation and stabilize economic growth. Policymakers and researchers are therefore increasingly interested in understanding the economic and distributional implications of these policies.
Chapter 1 of the dissertation investigates the interaction of heterogeneity and information rigidities on the part of households and its impact on the transmission of interest rate policy to aggregate demand. Chapter 2 compares the distributional effects of conventional monetary policy and forward guidance, highlighting the importance of fiscal adjustments for addressing inequality. Chapter 3 studies how central bank asset market operations and their interaction with household heterogeneity affect macroeconomic outcomes in the context of a liquidity trap. Overall, the thesis aims to contribute to the ongoing discussion on the role of monetary policy in promoting macroeconomic stability and reducing economic inequality.
My thesis focuses on the relationship between monetary policy and heterogeneity. The main objective of the central banks is to stabilize prices. To do so, they have several tools potentially available. These tools can be optimally adopted only by fully understanding the impact they can have on the different agents in the economy like households and firms. Therefore, in my research, I evaluate how the ability of the central bank to achieve its mandate is affected by the heterogeneity in the economy, e.g., demographic trends that change the share of retired people, as well as how the decisions of the monetary authority influence inequality, e.g., consumption or inflation inequality.
The allocation of scarce resources has attracted significant attention in economic design, with many theoretical and empirical studies focusing on indivisible resources. Most existing literature has investigated unit-demand allocation problems, where each agent consumes only one object. However, in many real-world scenarios, agents may wish to receive more than one object, making the unit-demand assumption inappropriate. Multiple-type housing markets, an extension of Shapley-Scarf housing markets, allow for multi-unit demands and are applicable to various problems such as student enrollments, surgery schedules, and cloud computing. Despite their importance, little research has been done on multiple-type housing markets, and existing results have mainly been negative. In this thesis, we revisit multiple-type housing markets and aim to uncover positive results. We find that not all strict core allocations are implementable and provide a full characterization of the coordinatewise top trading cycles mechanism, which respects individual rationality, achieves unanimity, and maintains strategy-proofness. Additionally, we explore weaker efficiency properties and identify two mechanisms that are compatible with individual rationality and strategy-proofness. Our findings contribute to a better understanding of the multiple-type housing market model, have implications for other areas of research, and can be applied to other fields. The methodology we use to obtain our results is new and could be useful for analyzing higher-dimensional models more efficiently.
This thesis contributes to the comprehension of how certain strategies carried out by those in power- such as fiscal policies or the implementation of public spending- usually have side effects, not a priori contemplated in the approval of those policies, and finally affect individuals’ voting decisions or their propensity to get involved in riots. Chapter one analyzes the construction of infrastructure during the military dictatorship in Spain. It shows that places with dams built by the regime exhibit a lower political support for right-wing parties during bad times, i.e. when municipalities are hit by unemployment shocks. The expected positive impact of infrastructure construction on political parties has vanished due to the use of forced labor to build them. The second chapter investigates the effect of fiscal duties on revolts by exploiting a unique policy experiment in 19th century Sicily. After examining different potential mechanisms, we find that it is mostly the threat of taxation that may distort economic investment and ultimately result in greater political turmoil. The last chapter analyzes how different dimensions of democracy might impact the propensity to engage in violent conflict or protests. We start off from a simple game-theoretic model of proportional versus majoritarian representation and then test the key implications of the model, exploiting a unique natural experiment in Cameroon. We find that moving to proportional representation dampens the risk of violence (armed conflict) and promotes instead voice (peaceful protests).
This doctoral thesis aims to better understand the macro-financial effects of different economic risks, with a particular focus on financial volatility and the green transition. Chapter 1 delves into the concept of financial volatility and use creative econometric techniques to distinguish uncertainty from risk aversion shocks. The results highlight the differing nature of the two types of shocks, and can be used to quantify the benefits of policies aimed at stabilizing risk aversion during periods of heightened uncertainty. Chapter 2 and 3 highlight the macro-financial relevance of risks associated with the implementation of climate policies, and provide both theoretical and empirical evidence of the related economic channels. Chapter 4 investigates the opportunity cost of foreign exchange interventions for safe-haven currencies. The results provide a new perspective on the safe-haven properties of the Swiss franc by relying on insights from the literature on intermediary asset pricing.
In this thesis, I use recent advances in the availability of spatial data to revisit longstanding questions in empirical microeconomics. My main focus is housing costs, on which most households spend more than on any other expenditure item. I estimate differences in housing costs with respect to a property’s distance to the city center and document different regularities. Moreover, I estimate how much more expensive housing is in larger cities compared to smaller cities. I tackle these questions using novel data on Airbnb rental prices, which allows me to base my research on 734 cities worldwide, a substantially larger sample than what the literature has worked with so far. In a separate analysis, I also use new geographic data, amongst others on mining licenses, but ask a different question: Do exports of natural resources foster or reduce violent conflicts? I provide evidence that natural resource exports can increase local conflict, using the example of Myanmar and its trade in mining goods with neighboring China.
This doctoral thesis aims to deepen the understanding of financial and informational frictions in macroeconomics, with a particular focus on the evaluation of policies introduced after the financial crisis and expectation formation. Chapter 1 analyses the effects of macroprudential policies on homeownership. It provides novel evidence on the tightening of borrowing constraints after the introduction of this policy and its potential distributional consequences. Chapter 2 tackles the question of informational asymmetries between local and foreign forecasters. Newly developed tests based on a theoretical expectation formation model show that foreign forecasters are less precise than local forecasters when forecasting macroeconomic fundamentals. These results provide a basis for disciplining international finance and trade models with heterogeneous information. Chapter 3 investigates the link of news media and inflation expectations. Based on newspaper articles, it develops a count measure of inflation articles and an innovative inflation sentiment measure using a state-of-the-art natural language processing model. The empirical framework exploits the language barrier in Switzerland and its results provide new insights on the effects of news on households’ inflation expectations.
Macroeconomics of climate change seeks to provide economic insights into how we can address the challenges posed by climate change while promoting sustainable economic growth and equity. It involves modeling the complex interactions between the environment, the economy, and public policies to inform decision-making at the global, national, and local levels. Macroeconomic models of climate change are usually difficult to solve. To overcome this general problem all three chapters of the thesis, while addressing different issues, rely on the computational approach that is based on deep neural net algorithms for economy-climate models.
The first chapter proposes a transparent calibration and evaluation strategy for a climate emulator, a necessary ingredient of any economy-climate model. We demonstrate the importance of the climate emulator for economic analysis and highlight the consequences of its miscalibration. In the second chapter, we address the problem of parametric uncertainty in the climate-economy models. We investigate the impact of the uncertainty around the model parameters on the model outcomes, such as the social cost of carbon. In the third chapter, I explore the role of technological spillovers in developing countries in achieving global decarbonization. The results of the study emphasize the importance of considering both spillovers and carbon taxation when designing effective strategies to achieve environmental goals.