Essays in applied macroeconomics

Abstract

In this thesis, I use rich firm-level data to examine the impact of sectoral shocks on aggregate fluctuations and economic growth through the lens of corporate investment and entry and exit decisions. The decisions made in response to different firm-level frictions and specific features of sectors can induce different types of market failures. Understanding the macroeconomic consequences of corporate decisions is a key component of creating sound policies that facilitate stable and sustainable economic growth. I employ a unique combination of reduced-form, theoretical, and structural tools in my thesis. Each chapter typically starts with new empirical patterns relevant for macro, established using large-scale firm-level data and state-of- the-art reduced-form econometric methods. I attempt to formulate new microeconomic and macroeconomic models inspired by these patterns. I then develop a multi-pronged approach using additional rigorous reduced-form estimation to rule out alternative hypotheses, structural estimation to verify the economic content of my approach and to identify parameters, and quantitative evaluation to understand the macroeconomic importance of these mechanisms.