Universität Bonn

Department of Economics

MEF-Seminare Wintersemester 22/23

Francesco Lippi (EIEF), 12.10.2022
Oct 12, 2022 from 12:15 to 01:30

This paper develops a dynamic model of technology adoption featuring a network effect, in which the benefits for users increase with the number of adopters. We argue that such an effect is an inherent feature of several technologies, such as means of payments. We show that network effects give rise to multiple equilibrium paths, multiple steady states, and suboptimal allocations. The model generates slow adoption, as individuals optimally wait for others to adopt before doing so. We apply the theory to the adoption of SINPE, an electronic means of payment developed by the Central Bank of Costa Rica. Transaction-level data on the use of SINPE and a battery of administrative data sets on the network structure allow us to document sizable network effects exploiting plausible exogenous variation. A calibrated version of the model shows that the optimal subsidy pushes the economy to universal adoption.

Alessandro Ferrari (University of Zuerich), 19.10.2022
Oct 19, 2022 from 12:15 to 01:30

We study how firm heterogeneity and market power affect macroeconomic fragility, defined as the probability of long-lasting recessions. We propose a theory in which the positive interaction between firm entry, competition and factor supply can give rise to multiple steady states. We show that when firm heterogeneity is large, even small temporary shocks can trigger firm exit and make the economy spiral in a competition-driven poverty trap. Calibrating our model to incorporate the well-documented trends in increasing firm heterogeneity in the US economy, we find that, relative to 2007, an economy with the 1990 level of firm heterogeneity is 1.5 to 2 times less likely to experience a deep recession.

Vincent Sterk (ULC), 02.11.2022
Nov 02, 2022 from 12:15 to 01:30

This paper studies the effects of monetary policy during times when sectoral supply shocks raise the cost of living, in particular for low-income households. We present a multi-sector Heterogeneous-Agents New-Keynesian model with a generalized, non-homothetic preferences, giving rise to heterogeneous consumption baskets and demand elasticities across the income and wealth distribution. In this setting, household inequality directly affects the New Keynesian Phillips Curve, in which an endogenous “markup wedge” emerges. The presence of this wedge creates a trade-off in managing the aggregate output gap versus inflation, which can be particularly strong following sector-specific shocks. In addition, such shocks can create strong distributional effects, which monetary policy may help to address. We evaluate the policy trade-offs in a quantitative analysis, applied to the United Kingdom. Coauthors: Alan Olivi and Dajana Xhani

Pavel Doligalski (Bristol), 09.11.2022
Nov 09, 2022 from 12:15 to 01:30

Half of the jobs in the U.S. feature pay-for-performance. We derive novel incidence and optimum formulas for the overall rate of tax progressivity and the top tax rates when such labor contracts arise from moral hazard frictions within firms. Optimal taxes account for the fiscal externalities and welfare consequences of two distinct forces: a direct crowding-out of private insurance and a countervailing crowding-in due to endogenous labor effort responses. These imply that the amount of pre-tax earnings risk to which the worker is exposed is roughly invariant to tax progressivity, whereas the (adverse) welfare consequences of the crowd-out outweigh those of the crowd-in, leading to lower optimal tax progressivity. Coauthors: A. Ndiaye and N. Werquin

Diego Comin (Dartmouth), 16.11.2022
Nov 16, 2022 from 12:15 to 01:30

We collect data on the technologies used across business functions of establishments in Vietnam, Senegal, and Cear ́a (Brazil), and construct technology sophistication mea- sures at the business function level. The variance of technology sophistication across the business functions of an establishment is 2.8 times larger than the cross-firm variance in sophistication. We develop a model of technology adoption with non-homothetic production that predicts a stable cross-firm relationship between sophistication in the business function and firm-level technology that we call the technology curve. The slopes of technology curves differ greatly across business functions and account for 33% of within-firm variance in sophistication. with Xavier Cirera, Marcio Cruz, Kyung Min Lee

David Domeij (Stockholm), 23.11.2022
Nov 23, 2022 from 12:15 to 01:30

We introduce price posting and information frictions into a canonical monetary macro model. Despite costless price adjustment, insufficient search incentives prevent market clearing. The model has an interval of steady-state price levels. Under successful inflation-targeting, the equilibrium price level is selected by past shocks and policies. If a negative supply shock makes the current price level unsustainable, both prices and mark-ups immediately rise. Absent expansionary monetary or fiscal policy, the higher mark-up persists even if the shock subsides.

Gulio Fella (London), 14.12.2022
Dec 14, 2022 from 12:15 to 01:30

The nature of productivity shocks is a central feature of models of heterogeneous-firm dynamics. Using firm-level data from Spain, we show that the observed productivity dynamics differ from those implied by the canonical, linear AR(1) representation with normally-distributed shocks. We document that the productivity process features non-linear persistence and non-normality. Motivated by this, we estimate a flexible stochastic process for productivity which allows for these features and compare its implications with the canonical one. We find that the flexible model fits the productivity data much better. We also estimate non-parametric, semi-reduced form empirical investment functions and find that the two processes imply very different responses to productivity shocks. Those estimated under the linear process imply, counterintuitively, that investment responds substantially more to transitory than persistent productivity shocks.(...)for more informations please visit our RTG website

Gueorgui Kambourov (Toronto), 21.12.2022
Dec 21, 2022 from 12:15 to 01:30

This paper studies entrepreneurship and the creation of new firms through the lens of serial entrepreneurs, i.e., entrepreneurs who establish more than one firm. Drawing on data on the universe of all firms in China, we document key facts about serial entrepreneurs and how they differ from non-serial entrepreneurs. We develop a theoretical framework rationalizing how their behavior is shaped by endowments, ability, and capital market frictions. We also examine the key determinants of the sectoral choice for serial entrepreneurs’ second firms. We find that (1) persistent ability is a major driver of serial entrepreneurship; (2) financial frictions influence decisions to run firms concurrently versus sequentially; and (3) sector choice is influenced by risk diversification, input-output linkages, and learning. Coauthors: Loren Brandt, Ruochen Dai, Kjetil Storesletten, Xiaobo Zhang

Simon Mongey (Chicago) 01.12.2022
Nov 30, 2022 from 12:15 to 01:30


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