THREE ESSAYS IN MACROECONOMICS AND FINANCE

Abstract

There are three chapters in my thesis. Chapter 1 introduces granularity into a firm-level partial equilibrium to study the Reset Price Inflation Puzzle. It shows that granularity can improve macro-model's explaining power by 10% in matching reset price inflation data in the US. Chapter 2 is an empirical paper, which identifies shadow banking activity as an important determinant of stock market crash risk. Chapter 3 employs a Schumpeterian growth model to study the dynamic effects of taxation and subsidies on growth rate and welfare. Ignoring transition dynamics will lead to over-optimistic predictions of subsidies' effects and significant exaggeration of tax effects.