Economics
Permanent URI for this communityhttp://hdl.handle.net/1903/2232
Browse
3 results
Search Results
Item Essays on Innovation, Firm Dynamics, and Productivity Growth(2020) Zhao, Yi; Haltiwanger, John C; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)The United States has been experiencing a secular decline in the pace of business formation and young firm activity shares in recent decades. U.S. productivity growth also slowed down during the same period. This thesis studies two questions. First, what are the driving forces and long-term growth implications of the observed trends? Second, how is the creative destruction process translated into the measured cost of living?Using a longitudinal worker-firm matched dataset from the U.S. Census Bureau, I document that in the innovation intensive high-tech sector, the decline in young firm activity shares is accompanied by: 1) a decline in the growth rate of the demand for skills, and 2) a flattening of the life cycle of skilled labor accumulation of high-tech firms. By developing an innovation-based firm dynamics model that is consistent with the micro-level skilled labor accumulation over the firm life cycle, I show that rising frictions in skilled labor adjustment can explain the joint evolution of young firm employment shares and demand for skills. These frictions influence productivity growth through affecting the stock of human capital firms possess. A calibrated model shows that a rise in skilled labor adjustment costs lowers productivity growth by 75 basis points in the high-tech sector. A rise in entry costs, on the other hand, is not likely the main driver for declining young firm activities, as it implies an increase in demand for skills. Finally, productivity gain (loss) from reallocation can be offset by the general equilibrium effects of reallocation on aggregate demand for skills. The impact of innovation on welfare depends critically on taking into account the impact of innovation on the cost of living. Building upon the framework of Redding and Weinstein (2020), I estimate the exact cost of living in the U.S. consumer goods sector using the Nielsen Retail Scanner data over the period of 2006 to 2015. The estimated inflation rate considering product turnover and taste shocks is one percent lower than the tradition CPI measure. Furthermore, I show that the direction of the bias in traditional price indices is determined by the correlation between the initial period market share of products and relative taste shocks. Finally, the exact price index based on a nested CES demand structure can be used to study the contribution to the cost of living by firms of difference sizes.Item Finance and Productivity(2019) Sever, Can; Kalemli-Ozcan, Sebnem; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)Financial crises are associated with large and persistent output losses, pointing to productivity losses. A potential channel for this phenomenon is the negative impact of disruptions in financial markets on innovative activity, since innovation is the key driver of productivity and economic growth. Throughout three chapters of my dissertation, I provide evidence for this channel. Using data from advanced, emerging market and European economies, following different financial crisis episodes, I show that financial crises lead to a persistent decline, not only in the economic output, but also in innovation. The findings in this dissertation have implciations for macroeconomic policies such as monetary and fiscal policies, structrucal reforms, crisis prevention policies and policies that can shelter productive investment projects from financial frictions.Item Essays on Firm Financing, Investment, and Growth(2019) Penciakova, Veronika; Kalemli-Ozcan, Sebnem; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)This dissertation studies the relationship between firm financing, investment, and growth. Chapter 1 makes use of a unique dataset that combines ownership data, Census Bureau data, and patenting data to study whether firms held by owners with more diversified business interests engage in more growth-enhancing risky innovation. I document that higher owner diversification leads to riskier innovation, after taking into account firm life cycle characteristics, access to finance, other features of ownership structure, and inherent firm and owner characteristics. I also provide evidence that diversification matters at the sector level, with sectors characterized by higher diversification exhibiting higher risky innovation, revenue, volatility, and growth. I present a stylized model that rationalizes these empirical findings. Chapter 2 studies the financial leverage of U.S. firms over their life-cycle and the implications of leverage for firm growth and response to shocks using a new dataset that combines private firms' balance sheets with Census Bureau data. We show that firm age and size are good predictors of leverage for private firms but not for publicly-listed ones. Using the Great Recession as a shock to financial conditions, we show that during the Great Recession leverage declines for private, but not public firms. We also provide evidence that private firms' growth is positively associated with leverage, while public firms' growth is not. Chapter 3 explores the extent to which interest rate fluctuations during sudden stops contribute to resource misallocation and explain the sharp decline in productivity observed during these episodes. Using firm-level data from Chile, I show evidence of rising misallocation during the 1998 sudden stop and evidence of hiring and investment frictions that could trigger this rising dispersion and subsequent decline in productivity. I then study the contribution of interest rate level and volatility shocks to this rise in misallocation using a small open economy model featuring heterogeneous firms that are subject to non-convex capital and labor adjustment frictions and calibrated using firm-level data from Chile. The model is qualitatively consistent with the rise in dispersion of marginal products and the decline in productivity observed during the sudden stop crisis.