dc.contributor.author | Gudat, Nils-Holger | |
dc.date.accessioned | 2017-09-25T12:56:48Z | |
dc.date.available | 2017-09-25T12:56:48Z | |
dc.date.issued | 2017-06-30 | |
dc.date.submitted | 2017-09-25T10:44:33.848Z | |
dc.identifier.citation | Gudat, N-H. 2017. Essays on the Economics of Heterogeneity. Queen Mary University of London | en_US |
dc.identifier.uri | http://qmro.qmul.ac.uk/xmlui/handle/123456789/25849 | |
dc.description | PhD | en_US |
dc.description.abstract | The analysis of the effects of heterogeneity on aggregate economic
outcomes has seen a resurgence in the recent macroeconomic
literature. The exponential increase in computer power over the
last decades has allowed researchers to solve ever more complex
theoretical models with meaningful heterogeneity along various
dimensions, while at the same time bringing ever more granular microlevel
data to the table when testing the model predictions.
This thesis explores two varieties of this recent vintage of models
of heterogeneity. The first part of the thesis investigates the
implications for wealth distributions of combining the standard lifecycle
incomplete markets model of household consumption with
income processes featuring heterogeneity in individual-specific growth
rates, which households can learn about over the course of their
working life. To this extent, first the recent literature on partial
insurance and models of wealth inequality is reviewed. Then,
income processes with profile heterogeneity are estimated from PSID
and BHPS data. The results confirm the findings of previous
studies that allowing for profile heterogeneity significantly lowers the
estimated persistence and innovation variance of persistent shocks
to household income, and documents substantial variation in the
estimated parameters of the income process across time periods and
measures of household income. The estimated income processes
obtained are then used in a quantitative model of household
consumption and saving in order to investigate the implications for the
model predictions on the wealth distribution. The model is calibrated
to empirical wealth distributions obtained from the SCF and the BHPS,
and it is shown that the inclusion of individual-specific growth rate
heterogeneity in income severely deteriorates the model’s ability to fit
the shape of the data. Comparative statics exercises are performed
to identify the drivers in the model’s failure to match the empirical
profile of wealth holdings, which show that it is precisely the two
key parameters which differ between the standard AR(1) model and
the heterogeneous profile model, the persistence and variance of the
permanent shock to household income, which drive model fit. The
second part of the thesis looks at heterogeneity on the production side
of the economy and its implications for international trade. Following
an existing approach in the literature, we develop testable implications
of the Melitz and Ottaviano (2008) model of trade, in which firms
differ in their productivity and have to make production and exporting
decisions in the face of costs to trade. Applying an estimation strategy
previously used in the literature, we find weak support of the model’s
predictions in data for 64 manufacturing industries in the NAFTA
member countries Canada, Mexico and USA. We then test additional
model predictions by constructing a measure of entry conditions by
industry based on firm turnover, which allows us to divide our sample
into fixed and free entry industries. Furthermore, we include the
effects of third country tariff barriers on the relative performance of
two trading partners’ industries. While the results are broadly in line
with model predictions, we find some evidence of violations of the
predictions in the data. | en_US |
dc.description.sponsorship | School of Economics and Finance, Queen Mary, University of London, | en_US |
dc.language.iso | en | en_US |
dc.publisher | Queen Mary University of London | en_US |
dc.rights | The copyright of this thesis rests with the author and no quotation from it or information derived from it may be published without the prior written consent of the author | |
dc.subject | Economics | en_US |
dc.subject | Heterogeneity | en_US |
dc.title | Essays on the Economics of Heterogeneity | en_US |
dc.type | Thesis | en_US |