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Title: Essays in Quantitative Economics
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1. Sepulveda, Facundo
Essays in Quantitative Economics
Ph.D. Dissertation, Michigan State University, 2002
Cohort(s): NLSY79
Publisher: UMI - University Microfilms, Bell and Howell Information and Learning
Keyword(s): Environment, Pollution/Urban Density; Skills; Time Preference

This dissertation contains three essays in quantitative macroeconomics. The first chapter, "Precautionary savings in general equilibrium," uses a calibrated stochastic OLG model to address three questions about US savings and wealth accumulation: first, does an equilibrium display buffer stock savings by agents? Second, is this equilibrium consistent with savings behavior of US households? And finally, what level of precautionary savings arises when general equilibrium effects are accounted for? I find that given observed earnings risk, the rates of time preference that are consistent with the equilibrium are very close to the interest rate, so no buffer stock behavior is observed. Moreover, the equilibrium reproduces important facts about savings behavior of US households. Finally, accounting for general equilibrium effects lowers the size of precautionary wealth to about 35% of aggregate wealth, or 30 to 50% less than partial equilibrium estimates. The second chapter, "Green taxes and double dividends in a dynamic economy," asks whether a tax recycling experiment would deliver a double dividend in the US economy. According to the double dividend hypothesis, environmental taxes may raise revenue that can be used to lower other (pre-existing) tax distortions apart from decreasing pollution externalities. This hypothesis is evaluated using a dynamic general equilibrium model of capital accumulation. I find that, although in the long run pollution may worsen, the green dividend-higher discounted utility from a cleaner environment-would be obtained under all tax changes, due to a better environment during most of the transition. The efficiency dividend however-higher discounted utility from consumption of traded goods-will obtain only for target levels of the green tax below a critical number. In the third chapter, "Training and business cycles," I examine the behavior of skill acquisition through training at business cycles frequencies. First, a time series of training is constructed using individual data from the NLSY79 database. After documenting the cyclical properties of the series, I discuss what features are needed for a RBC model to successfully reproduce them. I find that training is weakly countercyclical, leads the cycle, and has a standard deviation of about ten times output. A model where employment, but not weekly hours, is costly to adjust, is able to account for most of the documented regularities.
Bibliography Citation
Sepulveda, Facundo. Essays in Quantitative Economics. Ph.D. Dissertation, Michigan State University, 2002.