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<p>This dissertation consists of three essays. In the first essay, ``The Asymmetric
Cyclical Behavior of the U.S. Labor Market,'' I develop a search-and-matching model
with endogenous job destruction and heterogeneous workers (in skill/productivity)
that accounts for the asymmetry exhibited by cyclical fluctuations in the U.S. labor
market and output while also generating (i) realistic volatility in unemployment and
job-finding rates and (ii) preserving a downward-sloping Beveridge curve. The model
delivers stark predictions for the time series of skill-specific unemployment rates
that hold in the Current Population Survey (CPS) micro data once I sort workers by
age and education. A general implication of the analysis is that the responsiveness
of unemployment to stimulus policies increases substantially during recessions.</p><p>In
the second essay, ``Volatility and Slow Technology Diffusion: The Case of Information
Technologies,'' I address the following question: does business cycle volatility affect
the rate at which new technologies are adopted? The answer to this question provides
new insights on the link between volatility, total factor productivity (TFP), long-run
economic</p><p>growth, and cross-country differences in incomes per capita. The paper
presents novel cross-country evidence on the link between volatility and time adoption
lags. I find a highly statistically and economically significant negative relationship
between volatility and the diffusion of three major information and communication
technologies (ICT's)---personal computers, internet and cell phones. Countries with
more volatile growth rates of real GDP per capita have higher time adoption lags.
This negative relationship is rather robust and persists after controlling for cross-country
differences in average growth rates of real GDP per capita. I also offer a simple
stochastic model of technology adoption in which I derive in closed form the theoretical
mapping between time adoption lags, growth, and volatility. In the model as in the
data, there is a positive link between volatility and time adoption lags: the interaction
of uncertainty with sunk costs of adoption generates a real option value of inaction
which delays the adoption of new technologies with the consequent adverse effect on
long-run economic growth.</p><p>In the third essay, ``Commodity Prices, Long-Run Growth
and Fiscal Vulnerability'' (coauthored with Pietro Peretto), we study the short- and
long-run effects of commodity price changes and how fiscal policy interacts with the
amplification and propagation of external shocks to these prices. To this aim, we
develop a Schumpeterian small open economy (SOE) model of endogenous growth that does
not exhibit the scale effect. Because of the sterilization of the scale effect, commodity
prices have level effects on economic activity but no steady-state growth effects.
A general implication of our analysis is that the economy dynamic response to commodity
price changes depends both on the structure of the tax code in place and on the policy
response necessary to balance the government budget. We show that asset income taxation
has negative steady-state growth effects. Furthermore, a positive tax rate on asset
income acts as an automatic amplifier of external shocks to commodity prices and makes
the effects of these shocks more persistent. Ultimately, our analysis provides insights
on how to design welfare-enhancing tax policies for commodity-exporting countries.</p>
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