PhD Candidate Chengzi Yi will defend her thesis "Investment and Trade Dynamics of Heterogeneous Firms "
This thesis studies the dynamic decisions of heterogeneous firms in investment and trade.
Chapters 1 and 2 analyse how collateral constraints shape capital accumulation using data on Chinese manufacturing firms.
In Chapter 1, I document a strong correlation between firms’ investment rates and cash-flow ratios after conditioning on average Q for both state-owned and private firms. Estimating a Hayashi (1982) investment model with decreasing returns to scale, I show that introducing financial frictions brings the standard capital-adjustment framework closer to the observed moments across ownership types.
Chapter 2 examines how collateral constraints affect the allocation between real-estate and non-real-estate capital when assets differ in adjustment costs and pledgeability. I estimate a structural model on Chinese firm data and find that real estate has a higher pledgeability but substrantially higher fixed adjustment costs, which helps explain the high real-estate share in firms’ capital, especially among smaller firms. The model is then used for counterfactual exercises that vary financing frictions and the pledgeability of real estate to quantify their effects on investment composition and aggregate outcomes.
Chapter 3 uses data on Slovenian manufacturing firms to show that gaps in value added per worker between exporters and non-exporters are smaller in sectors producing more differentiated goods, especially among multiproduct firms. I build a model of multiproduct firms with heterogeneity in firm efficiency and product-market appeal, who determine their market participation dynamically in the presence of sunk market-access costs. The model demonstrates that greater product differentiation weakens selection on efficiency and, together with export costs shared across products, allows star products to pull marginal products into exporting, generating composition effects that can lower measured productivity for exporters. The model provides a basis for counterfactual analyses of changes in trade costs.
The event will take place in hybrid modality.
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