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Title: Three essays in macroeconomics
Author: Kim, Chanwoo
ISNI:       0000 0004 9359 568X
Awarding Body: UCL (University College London)
Current Institution: University College London (University of London)
Date of Award: 2020
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This thesis consists of three independent papers on macroeconomics. Chapter one provides the introduction of the papers. \\ Chapter two investigates the response of firm-level markup to aggregate shocks and the role of intangible capital in markup determination. A markup is a key object in understanding a firm’s pricing behavior. Using a panel version of local projection, I document noble evidence that firm-level markup is countercyclical to aggregate productivity and monetary policy shock. To explain the empirical evidence, I combine Hopenhayn (1992) firm dynamics model with habit accumulation at a good level (Ravn et al., 2006). After calibrating the model to US data, I find that the model can quantitatively match the empirical evidence. Furthermore, the model endogenously matches the age-dependent growth rate and the exit rate, which the profession had difficulty with. \\ Chapter three asks, “how a firm responds to tax shock in the short run?”. Differently from the existing literature, I exploit narratively identified shock and study the firm-level response over the business cycle using local projection instrumental variable approach. I find that intangible and tangible investment and labor use increase, while leverage goes down. Firm revenue productivity and markup increase, but firm churn is stable in the short run. Extrapolating the estimates, I project that the effect of the 2017 tax cut is significant. \\ Chapter four studies the effect of forward guidance under an incomplete market. In standard New Keynesian models, there is a peculiar property called “forward guidance puzzle”: if a central bank promises to cut its policy rate from a farther future, the effect of promise strengthens. There exists debate that the introduction of an incomplete market can solve the puzzle, or it additionally requires procyclical income risk. Building on Ravn and Sterk (2020), my paper analytically proves that income risk cyclicality matters.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available