Essays in Empirical Macroeconomics


In this dissertation, I explore how quasi experiments can be used to estimate the causal impact of financial variables on agents’ behavior. Specifically, I analyze three different events that allow me to shed light on the role that financial markets play in decisions made by households, firms, and the government, as well as their aggregate implications. In the first chapter, a joint work with Gosia Ryduchowska, we show that access to local financing supports economic development. Firms with easier access to financing respond to a future improvement in investment opportunities at the time the improvement is announced. Other firms catch up only after the improvement and associated cash flows are realized. We exploit variation caused by infrastructure development in the oil industry that exogenously affects firms in only one region and use nearby regions as control. The event creates a gap between announcement and realization dates, which eliminates the problem of reverse causality and highlights the role of financial constraints. In the second chapter, a joint work with Michał Myck, we document the behavioral response of consumption to unanticipated changes in wealth at household level. To estimate the effect, we use the removal of the Swiss Franc cap by exploiting heterogeneity in currency denomination of mortgages. Representative panel dataset comes from the Polish Household Budget Survey and contains individual level information about the currency denomination of mortgages as well as detailed consumption records. We estimate that due to the nominal exchange rate shock the monthly payment increases by 6%. However, the shock to the wealth (the value of mortgage) amounts to 0.8%-1.3% of present value of future income of the household. Affected families decreased overall consumption by reducing spending on both durables and non-durables. Conversely, we find no evidence of reduction in expenditure on services and food. In the last chapter I show that the German-Polish customs war happened during the second dip of the ongoing recession. I argue that the impact of the customs war was not disastrous, as some sources claim, and that it was largely mitigated by the gradual depreciation of the currency, which in result meant that the war failed to achieve its goal. This leads me to question the decision of the prime minister to defend Polish zloty. Finally, I show that some well-established truths that one can find in the press, economic history textbooks, and the then documents are not supported by the data. Most importantly, it seems that the importance of the tariff war is overstated, which might be influenced by the fact that trade wars are not only of economic, but also of political interest.

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