College of Behavioral & Social Sciences
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The collections in this community comprise faculty research works, as well as graduate theses and dissertations..
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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.Item Essays on International Finance(2012) Im, Fernando Gabriel; Vegh, Carlos; Reinhart, Carmen; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)In the first paper, I use industry-level data to investigate the impact of exchange rate arrangements on the productive structure of the economy. The identification strategy has similarities with the methodology followed in the literature on heterogeneous effects of financial development. A de facto exchange rate regime classification is used to sort pegs and floats. My findings suggest that industries that have higher working capital needs grow faster under exchange rate stability. A fixed exchange rate regime could lower currency or country risk, leading to greater availability of funds and a reduction in the cost of financing. Since loans are often denominated in foreign currency or indexed to the exchange rate in developing countries, firms with higher working capital needs would prefer exchange rate stability, which may lower interest rates in foreign currency and provide easier access to credit. The second paper investigates the behavior of output across large devaluations and depreciations. First, I define a currency crisis as an episode in which the nominal exchange rate increases by 15%. Then I proceed to classify them into devaluations and depreciations using Reinhart and Rogoff (2004) exchange rate classification. Once these episodes are sorted out, I analyze the behavior of output across them. As in previous studies, I find that the majority of the currency crisis episodes have been contractionary for 1970-2007. When I separate currency crisis episodes between devaluations and depreciations, I find that the former have been associated with larger output losses for middle income economies. These findings are consistent with the fact that middle income countries are often subject to currency mismatches. As a result, they may opt for an exchange rate regime that exhibits relatively more stability. This is well documented in Calvo and Reinhart (2002), a behavior they termed "fear of floating". However, in the case of a currency crisis, the negative impact on output growth is likely to be larger for countries that have adopted a fixed exchange rate regime. This result is also supported by the larger magnitude of the estimated output losses when we use a higher threshold to define currency crisis episodes.Item Essays in Trade and Development(2004-08-09) Roy, Devesh; Panagariya, Arvind; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)This dissertation involves two set of papers. The first chapter contains a brief introduction of the issues covered in this thesis. In the first set of papers (chapters 2 and 3) I investigate the use of product standards in international trade. Product standards relate to restrictions on the attributes of a product that must be satisfied before the product becomes eligible to be sold in a particular market. The World Trade Organization ruling on product standards requires member countries to apply equal standards on the home produced good and the imported good. This is called the national treatment rule. In the first part of the dissertation (Chapters 2 and 3) I analyze the role of national treatment rule in the case of product standards. Chapter 4 evaluates the growth experience of Mauritius in the light of the explanations put forward in the empirical growth literature. As an African country Mauritius stands out as an exception, not only having a much higher growth rate than an average African country but also maintaining growth as a sustained phenomenon. I demonstrate that this exceptional growth performance of Mauritius has occurred because of some unique institutional features of Mauritius, making it different from the rest of Africa.