Three essays in dynamic macroeconomics

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Liu, Pan
Major Professor
Joydeep Bhattacharya
Helle Bunzel
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The Department of Economic Science was founded in 1898 to teach economic theory as a truth of industrial life, and was very much concerned with applying economics to business and industry, particularly agriculture. Between 1910 and 1967 it showed the growing influence of other social studies, such as sociology, history, and political science. Today it encompasses the majors of Agricultural Business (preparing for agricultural finance and management), Business Economics, and Economics (for advanced studies in business or economics or for careers in financing, management, insurance, etc).

The Department of Economic Science was founded in 1898 under the Division of Industrial Science (later College of Liberal Arts and Sciences); it became co-directed by the Division of Agriculture in 1919. In 1910 it became the Department of Economics and Political Science. In 1913 it became the Department of Applied Economics and Social Science; in 1924 it became the Department of Economics, History, and Sociology; in 1931 it became the Department of Economics and Sociology. In 1967 it became the Department of Economics, and in 2007 it became co-directed by the Colleges of Agriculture and Life Sciences, Liberal Arts and Sciences, and Business.

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  • Department of Economic Science (1898–1910)
  • Department of Economics and Political Science (1910-1913)
  • Department of Applied Economics and Social Science (1913–1924)
  • Department of Economics, History and Sociology (1924–1931)
  • Department of Economics and Sociology (1931–1967)

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This dissertation investigates the dynamic impacts of governmental policy interventions on the economy.

In chapter 1, we present an overlapping-generations model with endogenous retirement to study the effects of PAYG pensions on the capital-labor ratio and welfare in a dynamically efficient economy. In such an environment, we show that it is possible for the PAYG pension system to be neutral. It may even be desirable in a long-run welfare sense. These results are in sharp contrast with existing, well-known results.

In chapter 2, we describe a business as usual (BAU) overlapping-generations economy in which pollution is the fallout of productive activity. Over time, conditions in the BAU economy get worse: it gets increasingly polluted, consumption falls and generational welfare levels decline. A government introduces costly pollution abatement in the BAU world and finances it via labor taxes and borrowing on perfect international markets. Pollution levels start to decline and this generates downstream welfare gains which the government can tax away to help pay off the debt, that too, in finite time. A new world emerges; it has lower pollution and higher consumption than in the BAU. More importantly, every generation is happier than they would be had life continued in the BAU world.

In chapter 3, using monthly data from Jan 1996 to Dec 2014, we analyze and compare the long-run equilibrium relationship and short-run dynamics in a system of Shanghai Stock Exchange Composite Index, industrial production growth rate, international crude oil price, real exchange rates growth rate and real interest rate before and after the exchange rate regime shift in July 2005 in China.

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Fri Jan 01 00:00:00 UTC 2016