Resumen de Essay in macroeconomics and firm dynamics
- English
This dissertation consists of three essays that investigate the role played by changes in firm-level heterogeneity to aggregate transformations. I employ micro-level datasets in conjunction with cutting-edge econometric techniques to document stylized facts and examine underlying mechanisms using quantitative models of producer heterogeneity and firm dynamics.
This first chapter studies the macroeconomic implications of the rise in firm-level scale economies. My empirical finding is that the average firm-level returns to scale increased within all US sectors, going from 1 to 1.05 between 1980 and 2014. Simultaneously, business dynamism declined, markups rose, and firms devoted increasing resources to customer acquisition, suggesting their active involvement in building and exploiting scales. To jointly account for these facts, I propose a novel theory of firm dynamics grounded in directed search in the product market. Search frictions microfound the customer accumulation process and the presence of heterogeneous markups. The rise in returns to scale explains 62-70% of the decline in business dynamism; 29% of the increase in markups; and 14-45% of the growth in expenditures devoted to customer acquisition.
Additionally, the model rationalizes further facts: the aging of US firms, the reallocation of sales toward high markup firms, and firms’ declining responsiveness to productivity shocks.
This second chapter, co-authored with Sampreet Goraya, studies the macroeconomic implications of the rise of intangible capital in firm-level production processes. Intangible capital has risen dramatically in the last decades, accounting for more than 30% of aggregate investment by 2015.
However, we still know little about its importance in the production process and its associated properties. We estimate the firm-level production function, finding that intangible capital is an important factor for production: its share increased from 0.03 to 0.12 at the expense of labor between 1980 and 2015. We label this phenomenon intangible capital biased technological change (IBTC). Further, we provide novel empirical evidence showing that the investment process of intangible capital is associated with higher sunk costs, meaning that it entails higher investment adjustment costs relative to tangible capital. Finally, using a model of firms and investment dynamics, we show that IBTC can explain many of the trends witnessed in the US economy since the 1980s. Specifically, it quantitatively explains the rise in the average firm size and concentration, the changes in aggregate factor shares, the increase in the profit rate, the decline in the tangible capital investment rate, and the decrease in allocative efficiency. Our findings suggest that a significant fraction of these transformations can be an outcome of the efficient response of the economy to changes in firm-level production technology.
The third chapter, co-authored with Marta Morazzoni and Danila Smirnov, studies the cyclicality of firm-level markups and their aggregate implications for the business cycle. Firms’ markup cyclicality is at the heart of monetary policy transmission in the New Keynesian model. Using US Compustat data and employing local projection techniques, we uncover a novel empirical fact: dominant firms have a more countercyclical markup response after an unexpected contractionary monetary policy shock. Using a heterogeneous firms New Keynesian model with demand accumulation and endogenous markups that evolve over the life-cycle of producers, we show that this is due to the different demand elasticities faced by the firms. Dominant firms face a more inelastic demand, which implies a lower pass-through rate from costs to prices. Therefore, after a contractionary monetary policy shock, dominant firms pass less the reduction in marginal costs to prices compared to competitors, and increase their markups by more, as documented empirically. After calibrating the model to US micro-level data, we find that considering firms’ heterogeneous demand elasticities has important implications for monetary policy amplification.
- català
Aquesta tesi documenta fets nous a nivell d’empresa i mostra la seva implicació per als fenòmens agregats. El primer capítol documenta un augment dels rendiments a escala en la producció. Proposa un nou model de din`amica quantitativa de l’empresa amb friccions de cerca al mercat de productes, on les empreses competeixen per construir la seva demanda, la qual cosa demostra que aquesta transformació en els processos de producció a nivell d’empresa té implicacions importants per a l’economia agregada. El segon capítol mostra que els processos de producció de l’empresa són cada cop més intensius intangibles i que aquest capital és costós d’acumular. L’ús d’un model quantitatiu de din`amica de l’empresa mostra que aquest canvi cap al capital intangible pot explicar una part important de la disminució de la quota de treball i de l’eficiència de l’assignació. El tercer capítol mostra que, condicionada a un augment dels tipus d’interès, les empreses dominants tenen més marges contracíclics. Utilitzant un model neokeynesià d’empreses heterogènies, demostrem que la transmissió incompleta pot racionalitzar aquest fet i produeix una amplificació.
