Essays in macroeconomics: worker and firm dynamics

Abstract

This thesis comprises three independent essays in applied macroeconomics. The three papers examine unemployment insurance policy, monetary policy transmission to real economic activity, and how government spending passes through production networks. Job Search and the Threat of Unemployment Benefit Sanctions examines the impact of the threat to cut jobseekers’ unemployment benefits in order to spur search effort and accelerate the return to work. Faster exit from unemployment is often associated with worse reentry characteristics associated with a substitution of social insurance transfer payments towards “market insurance". Sectoral Volatility and the Investment Channel of Monetary Policy investigates how the dispersion of individual-level fluctuations in firms’ productivity affects their investment responsiveness to monetary policy operations, with consequences for when monetary policy is more or less powerful over the business cycle. Goverment Spending in Production Networks: Size versus Centrality examines how government spending propagates through the production network. We ask what are the consequences for fiscal spending multipliers when we account for both the networked structure of production and the heterogeneity of firms which occupy important nodes simultaneously. Specifically, we examine whether there is a race between centrality (implying large network effects) and firm size (dampening responsiveness due to slacker constraints).