Jeon, Kiyoung
(2015)
Essays in International Economics.
Doctoral Dissertation, University of Pittsburgh.
(Unpublished)
Abstract
This dissertation analyzes the sovereign default risk and trade of emerging countries. In the first two chapters, I investigate the default risk by laying particular emphasis on labor markets and income inequality. In Chapter 2, I propose a general equilibrium model with endogenous sovereign default. I assume that firms need to borrow from foreign lenders to finance a fraction of the cost of labor (also referred to as working capital conditions). In the model, the labor channel can amplify the effect of adverse TFP shocks on default risk. The main finding is that working capital conditions play a significant role in generating endogenous drops in output and labor in defaults. In addition, the model explains the main features of the business cycles observed in emerging markets, such as countercyclical spreads, procyclical labor, and high volatility of consumption relative to output, when calibrated to Argentine data. In Chapter 3, I analyze income inequality as another channel that influences a country's risk of default. I extend a standard endogenous sovereign default model by including inequality shocks. The main finding is that inequality shocks can amplify the effect of output shocks on sovereign default risk. Moreover, the model generates reasonable business cycle characteristics of Argentina, and the consumption volatility of poor households relative to rich households is matched well with a data set on Mexico. Lastly, as a policy extension, I extend the model by introducing progressive income taxes and find that as the progressivity of the tax increases, the default risk decreases. In Chapter 4, aside from the sovereign default risk, I examine export behavior of firms as another aspect of emerging countries. I use three empirical methods for a Chilean plant-level data set. I find evidence that firms with high productivity are more likely to become exporters and that firms enhance their productivity by participating in export markets. Furthermore, I show that the productivity growth of export firms is persistent even in a recession. Overall, my findings provide a better understanding of the effects of labor markets and income inequality on sovereign default risk and the productivity growth induced by exports.
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Details
| Item Type: |
University of Pittsburgh ETD
|
| Status: |
Unpublished |
| Creators/Authors: |
|
| ETD Committee: |
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| Date: |
26 September 2015 |
| Date Type: |
Publication |
| Defense Date: |
10 June 2015 |
| Approval Date: |
26 September 2015 |
| Submission Date: |
15 June 2015 |
| Access Restriction: |
No restriction; Release the ETD for access worldwide immediately. |
| Number of Pages: |
115 |
| Institution: |
University of Pittsburgh |
| Schools and Programs: |
Dietrich School of Arts and Sciences > Economics |
| Degree: |
PhD - Doctor of Philosophy |
| Thesis Type: |
Doctoral Dissertation |
| Refereed: |
Yes |
| Uncontrolled Keywords: |
International Finance; International Trade |
| Date Deposited: |
27 Sep 2015 00:29 |
| Last Modified: |
15 Nov 2016 14:28 |
| URI: |
http://d-scholarship.pitt.edu/id/eprint/25397 |
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