| 1. |
- Hinkelmann, Stefan, 1992-
(författare)
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On the Macroeconomics of the Energy Transition
- 2024
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Doktorsavhandling (övrigt vetenskapligt/konstnärligt)abstract
- Climate Policies and Input Substitution over TimeThis paper investigates quantitatively how the impact of climate policies such as a carbon tax differs over the short and long run in the macroeconomy. We document limited possibilities to switch from fossil fuels to green alternatives over short time horizons. Over more extended periods, however, this substitutability increases significantly. The same pattern holds for aggregate energy in production. We then build a quantitative growth model that accounts for these patterns through a technology-choice channel. We find that, in order to achieve similar long-run emission targets, carbon taxes should be increased by about 10% permanently compared to models that focus on the long run only.Electrification of U.S. Aggregate Production: Theory and EvidenceIn this paper, I scrutinize the process of electrification, defined as an increase in the share of electricity in the energy bundle. I first document trends and facts regarding the use of fossil fuels and electricity as end-use energy types in production in the U.S. I provide evidence that these two energy types are strong complements in the short- but more substitutable in the long run. In particular, I estimate the short-run elasticity of substitution between these two energy inputs to be 0.06 and argue for a Cobb-Douglas relationship and, thus, a unitary elasticity of substitution in the long run. I then build a model that can quantitatively reproduce these facts through a directed technological change mechanism. Crucially, the main driver of electrification is the relative improvement of fossil fuel use efficiency vis-à-vis electricity's.(Be-)Coming Clean: A Model of the U.S. Energy TransitionThis paper develops a quantitative framework of the energy transition and shows how the decarbonization of the economy hinges on three main mechanisms endogenous to the model: (i) developments in energy efficiency determining energy use in a growing economy; (ii) electrification of the production process driven by directed technical change; and (iii) capacity building for green electricity production. I then use the model to evaluate a net zero by 2050-policy vis-à-vis business as usual. I find that the energy transition happens in a laissez-faire scenario but has to be sped up if the policy target is to be fulfilled. In particular, I find that the required carbon tax is initially around $250 per ton CO2, and output and consumption growth are transitionally 0.2-0.3 percentage points lower under environmental policy.Green Subsidies, the Energy Transition, and Implications of the Inflation Reduction ActThis paper studies the implications of green subsidies on the economy and the energy transition. I include a technology and a learning-by-doing (LBD) externality in Chapter 3’s framework. The internalization of these inefficiencies requires green subsidies, which have important implications for the energy transition. In particular, fossil fuel use in the economy will reduce by 38% by the end of the 2060s compared to laissez-faire. Additionally, the two externalities interact. Internalizing the LBD mechanism reduces the technology externality, while internalizing the technology shift exacerbates the implications of unaccounted-for LBD. Investigating the IRA shows that it is leveraging the right externality with an imperfect instrument: ITCs do not perfectly internalize the LBD externality and lead to fossil fuel use rebounding after their expiration.
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| 2. |
- Karlman, Markus, 1989-
(författare)
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Essays on Housing : tax treatment, prices, and macroeconomic implications
- 2020
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Doktorsavhandling (övrigt vetenskapligt/konstnärligt)abstract
- Costly reversals of bad policies: the case of the mortgage interest deductionThis paper measures the welfare effects of removing the mortgage interest deduction under a variety of implementation scenarios. To this end, we build a life-cycle model with heterogeneous households calibrated to the U.S. economy, which features long-term mortgages and costly refinancing. In line with previous research we find that most households would prefer to be born into an economy without the deductibility. However, when we incorporate transitional dynamics less than forty percent of households are in favor of a reform and the average welfare effect is negative. This result holds under a number of removal designs.Mortgage lending standards: implications for consumption dynamicsIn this paper, we investigate to what extent stricter mortgage lending standards affect households' ability to smooth consumption. Using a heterogeneous-household model with incomplete markets, we find that a permanently lower loan-to-value (LTV) or payment-to-income (PTI) requirement only marginally affects the aggregate consumption response to a negative wealth shock. We show that even the distribution of marginal propensities to consume across households is remarkably insensitive to these permanent policies. In contrast, households’ consumption responses can be reduced if a temporary stricter LTV or PTI requirement is implemented prior to a negative wealth shock. However, strong assumptions need to be made for temporary policies to be welfare improving.The great house price divergence: a quantitative investigation of house price fundamentalsWhat explains the widening gap in house prices between U.S. metropolitan areas? In this paper, I build a two-region Rosen-Roback model with heterogeneous households, mortgage borrowing constraints, and housing markets to answer this question. I find that changes in regional productivity and the real interest rate explain 86% of the observed increase in dispersion of prices across metropolitan areas and 66% of the increase in the national house price index since 1995. Endogenous migration and location-varying land rents are key for these findings. When decomposing the results, both wages and the real rate contribute substantially to both the change in the level and dispersion of house prices. Turning to dynamics, prices are quick to adjust to changes in house price fundamentals, whereas migration is slow. This rapid change in prices leads to significant wealth and welfare gains among homeowners in expensive locations.
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| 3. |
- Caldara, Dario, 1982-
(författare)
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Essays on Empirical Macroeconomics
- 2011
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Doktorsavhandling (övrigt vetenskapligt/konstnärligt)abstract
- This thesis consists of four essays in empirical macroeconomics. What Are the Effects of Fiscal Policy Shocks? A VAR-Based Comparative Analysis The literature using structural vector autoregressions (SVARs) to assess the effects of fiscal policy shocks strongly disagrees on the qualitative and quantitative response of key macroeconomic variables. We find that controlling for differences in specification of the reduced-form model, all identification approaches used in the literature yield similar results regarding the effects of government spending shocks, but diverging results regarding the effects of tax shocks. The Analytics of SVARs. A Unified Framework to Measure Fiscal Multipliers Does fiscal policy stimulate output? SVARs have been used to address this question, but no stylized facts have emerged. I show that different priors about the output elasticities of tax revenue and government expenditures implied by the identification schemes generate a large dispersion in the estimates of tax and spending multipliers. I estimate fiscal multipliers consistent with prior distributions of the elasticities computed by a variety of empirical strategies. I document that in the U.S. spending multipliers are larger than the tax multipliers. Computing DSGE Models with Recursive Preferences and Stochastic Volatility This paper compares solution methods for computing the equilibrium of dynamic stochastic general equilibrium models with recursive preferences and stochastic volatility. The main finding is that a third-order perturbation is competitive in terms of accuracy with Chebyshev polynomials and value function iteration, while being an order of magnitude faster to run. Business Cycle Accounting and Misspecified DSGE Models This paper investigates how insights from the literature on business cycle accounting can be used to trace out the implications of missing channels in a baseline estimated dynamic stochastic general equilibrium model used for forecast and policy analysis.
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| 4. |
- Engström, Gustav, 1977-
(författare)
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Essays on Economic Modeling of Climate Change
- 2012
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Doktorsavhandling (övrigt vetenskapligt/konstnärligt)abstract
- Structural change in a two-sector model of the climate and the economy introduces issues concerning substitutability among goods in a two-sector economic growth model where emissions from fossil fuels give rise to a climate externality. Substitution is modeled using a CES-production function where the intermediate inputs differ only in their technologies and the way they are affected by the climate externality. I derive a simple formula for optimal taxes and resource allocation over time and highlight model sensitivity w.r.t the elasticity of substitution and distribution parameters.Energy Balance Climate Models and General Equilibrium Optimal Mitigation Policies develops a one-dimensional energy balance climate model with heat diffusion and anthropogenic forcing across latitudes driven by global fossil fuel use coupled to an economic growth model. Our results suggest that if the implementation of international transfers across latitudes are not possible or costly, then optimal taxes are in general spatially non-uniform and may be lower at poorer latitudes. Energy Balance Climate Models, Damage Reservoirs and the Time Profileof Climate Change Policy explores optimal mitigation policies through the lens of a latitude dependent energy balance climate model coupled to an economic growth model. We associate the movement of an endogenous polar ice cap with the idea of a damage reservoir being a finite source of climate related damages affecting the economy. The analysis shows that the introduction of damage reservoirs can generate multiple steady states and Skiba points.Assessing Sustainable Development in a DICE World investigates a method for assessing sustainable development under climate change in the Dynamic Integrated model of Climate and the Economy (DICE-2007 model). The analysis shows that the sustainability measure is highly sensitive to the calibration of the inter-temporal elasticity parameter and discount rate of the social welfare function.
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| 5. |
- Fausch, Jürg, 1982-
(författare)
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Essays on Financial Markets and the Macroeconomy
- 2017
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Doktorsavhandling (övrigt vetenskapligt/konstnärligt)abstract
- Asset pricing implications of a DSGE model with recursive preferences and nominal rigidities. I study jointly macroeconomic dynamics and asset prices implied by a production economy featuring nominal price rigidities and Epstein-Zin (1989) preferences. Using a reasonable calibration, the macroeconomic DSGE model is consistent with a number of stylized facts observed in financial markets like the equity premium, a negative real term spread, a positive nominal term spread and the predictability of stock returns, without compromising the model's ability to fit key macroeconomic variables. The interest rate smoothing in the monetary policy rule helps generate a low risk-free rate volatility which has been difficult to achieve for standard real business cycle models where monetary policy is neutral. In an application, I show that the model provides a framework for analyzing monetary policy interventions and the associated effects on asset prices and the real economy.Macroeconomic news and the stock market: Evidence from the eurozone. This paper is an empirical study of excess return behavior in the stock market in the euro area around days when important macroeconomic news about inflation, unemployment or interest rates are scheduled for announcement. I identify state dependence such that equity risk premia on announcement days are significantly higher when the interests rates are in the vicinity of the zero lower bound. Moreover, I provide evidence that for the whole sample period, the average excess returns in the eurozone are only higher on days when FOMC announcements are scheduled for release. However, this result vanishes in a low interest rate regime. Finally, I document that the European stock market does not command a premium for scheduled announcements by the European Central Bank (ECB).The impact of ECB monetary policy surprises on the German stock market. We examine the impact of ECB monetary policy surprises on German excess stock returns and the possible reasons for such a response. First, we conduct an event study to asses the impact of conventional and unconventional monetary policy on stock returns. Second, within the VAR framework of Campbell and Ammer (1993), we decompose excess stock returns into news regarding expected excess returns, future dividends and future real interest rates. We measure conventional monetary policy shocks using futures markets data. Our main findings are that the overall variation in German excess stock returns mainly reflects revisions in expectations about dividends and that the stock market response to monetary policy shocks is dependent on the prevailing interest rate regime. In periods of negative real interest rates, a surprise monetary tightening leads to a decrease in excess stock returns. The channels behind this response are news about higher expected excess returns and lower future dividends.
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| 6. |
- Färnstrand Damsgaard, Erika, 1978-
(författare)
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Essays on Technology Choice and Spillovers
- 2008
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Doktorsavhandling (övrigt vetenskapligt/konstnärligt)abstract
- This thesis consists of three essays on technology choice and spillovers.“Patent Scope and Technology Choice” analyzes the effect of an increase in patent scope on investments in R&D and innovation. It presents a model where a broad scope of the patent on the state-of-the-art technology can induce the entrant firm to do research on an alternative technology. The model predicts that an increase in patent scope can increase the probability of innovation if the incumbent's profit increase from innovating is large and the patented technology has a small advantage over the alternative technology. However, when the model is extended to Stackelberg competition or licensing, the benefit of a broad patent scope to a large extent disappears.“The World Distribution of Productivity: Country TFP Choice in a Nelson-Phelps Economy” builds a theory of the shape of the distribution of total-factor productivity (TFP) across countries. The distribution of productivity across countries is arguably twin-peaked in the data and the proposed theory presents conditions under which twin-peakedness is an equilibrium outcome. The theory combines technology spillovers, modeled as in the Nelson-Phelps specification, and dynamic benefits of TFP accumulation under rational government decision making.“Exhaustible Resources, Technology Choice and Industrialization of Developing Countries” studies technology choice in a dynamic model with two technologies for production; one which uses an exhaustible resource and an alternative technology which does not. The main finding is that if the capital stock is large relative to the resource stock, the alternative technology is immediately adopted and the time path of resource extraction is decreasing. If, instead, the capital stock is small, the alternative technology is adopted with a delay and the time path of extraction is inverse-U shaped.
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| 7. |
- Ge, Jinfeng, 1977-
(författare)
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Essays on Macroeconomics and Political Economy
- 2012
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Doktorsavhandling (övrigt vetenskapligt/konstnärligt)abstract
- This thesis consists of three self-contained essays dealing with different aspects of macroeconomics and political Economy.The Relative Price of Investment Goods and Sectoral Contract DependenceI develop a quantitative model to explain the relationship between TFPs at the aggregate and sector levels and contracting institutions across countries. The incomplete contract enforcement induces distortions in the production process which come from the “hold up” problem between a final goods firm and its suppliers. Because investment goods sector is more contract dependent, its productivity suffers more from the distortion. In turn, countries endowed with weaker contract enforcement institutions face higher relative prices of investment goods.A Ricardian Model of the Labor Market with Directed SearchI analyze how search friction affects the allocation in a Ricardian model of the labor market. The equilibrium shows that the matching pattern is partially mixed: Some tasks are only performed by skilled workers; some are only performed by unskilled workers; the remaining tasks are performed by both skilled and unskilled workers. The mixed matching pattern implies a mismatch in equilibrium. It turns out that the reason for the mismatch has its roots in search friction. In addition, I show labor market institutions have interesting implications for the unemployment rate and mismatch.A Dynamic Analysis of the Free-rider ProblemI argue that special interest groups overcome their free-rider problem thanks to distorted government policy. As policy confers monopoly privileges on a group, it can also preserve and promote group’s organization. The key to sustaining the organization of the group is a dynamic incentive: when distorted policy generates rents for a group, each member of the group wish to make contributions not just to raise their rents today; they want to sustain their cooperation so that they will be able to influence policy in the future.
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| 8. |
- Heinrich, Tobias, 1977-
(författare)
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Essays on Growth Econometrics and Endogenous Information
- 2009
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Doktorsavhandling (övrigt vetenskapligt/konstnärligt)abstract
- On Testing the Relationship between Human Capital and Economic Growth This paper investigates existing methodologies for testing the so-called Nelson-Phelps approach versus the Lucas approach. The paper shows that one cannot distinguish between these approaches using the existing methodologies. The paper proposes an alternative methodology based on cointegration analysis which is able to distinguish both approaches. The application to cross-country data provides evidence for the extended Neoclassical growth model, the Lucas approach and the Nelson-Phelps approach with exogenous steady state growth rate of the technology frontier and rejects the approaches with endogenous- and semi-endogenous technological progress. A General Equilibrium Framework of Information, Expectation Formation and Decision under Uncertainty This paper introduces an information framework which is combined with the recently developed similarity-based approach to decision- and expectation formation. The paper provides a closed and interrelated system where the variables of interest and information are simultaneously determined. The paper illustrates that the framework includes standard macroeconomic learning approaches such as rational expectations as well as statistical learning and naive expectations as special cases. A Behavioral Foundation of Discrimination Up until now, there has been no decision-theoretical foundation for discrimination based on acceptable primitives. The reason is that with standard assumptions about knowledge and cognitive ability of economic agents, discrimination cannot arise, as is illustrated by the paper. It relaxes the above assumptions in favor of experimental evidence and proposes a framework based on case-based decision theory combined with an information gathering process. Such a framework can provide a behavioral foundation for discriminating preferences derived from the basic assumptions of ambiguity aversion and different sizes of the population groups.
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| 9. |
- Li, Yinan, 1980-
(författare)
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Institutions, Political Cycles and Corruption : Essays on Dynamic Political Economy of Government
- 2012
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Doktorsavhandling (övrigt vetenskapligt/konstnärligt)abstract
- This thesis consists of three essays in Political Economy:“China’s Political Business Cycle” uncovers the fact that the timing of China’s business cycle correlates to the timing of the Communist Party’s Congress and constructs a theory to explain the mechanism of the political business cycle. An empirical test of the theory derives a result consistent with the predictions of the theory.“A Theory of Dynastic Cycle” provides a politico-economic theory to explain the mechanism of the dynastic cycle, a repeating pattern in China’s theory. The core of the theory is the ruler’s trade-off between the political account and the economic account in choosing a successor.“A Politico-Economic Theory of Corruption in Non-Democracy” investigates the ruler’s incentive to have corrupt agents. The key point is that a corrupt agent has a bad reputation and is less likely to replace the incumbent ruler. The major implication is that unless there is fundamental institutional change, it is hard to eradicate corruption in non-democracy.
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| 10. |
- Schmitt, Alex, 1981-
(författare)
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Beyond Pigou: Climate Change Mitigation, Policy Making and Distortions
- 2014
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Doktorsavhandling (övrigt vetenskapligt/konstnärligt)abstract
- This thesis consists of three essays.The first essay, “Optimal Carbon and Income Taxation”, analyzes carbon taxation while taking into account that taxes are set by national policy makers. I add two features, namely distortionary income taxation and lack of commitment to future policies, to a standard climate-economy model. I show that the optimal time-consistent carbon tax is in general not at the Pigouvian level, due to the presence of costs and benefits of emitting carbon that only materialize in the presence of income taxes. Quantitatively, I find a monotonic relationship between the size of this tax-interaction effect and the cost of climate change.The second essay, “Time-Consistent Unilateral Climate Policy”, studies unilateral climate change mitigation in a two-region model with distortionary income taxation and lack of commitment. I investigate how the European Union should regulate carbon emissions under the assumption that the rest of the world does not cooperate. When introducing income taxes into the model, the unilateral carbon tax rate falls by 50 percent. At the same time, the decline in economic activity leads to a considerable decrease in cumulative global emissions and thus mitigates climate change in the long run.The third essay, “Climate Change Mitigation under Political Instability”, investigates climate policy in a setting where the policy maker is subject to probabilistic political turnover. I show that an incumbent government that takes into account the possibility of losing power has an incentive to reduce emissions and invest more in clean energy relative to a corresponding myopic policy maker, independent of whether she derives more or less disutility from emitting carbon than a possible successor. Calibrating a model of the US, I find that having a strategic government results in a reduction of cumulative carbon emissions until 2100 that is equivalent to emissions being permanently 10 percent lower than in a business-as-usual scenario.
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