Macroeconomics & International Finance Seminars

Tuesday 1:40–3:00 p.m.
Online via Zoom

Fall 2021

October 12
Tom Schmitz, Bocconi University, Milan (visiting UCSC)
"The Aggregate Effects of Acquisitions on Innovation and Economic Growth"
Host: Hikaru Saijo
Large incumbent firms routinely acquire startups. This may stimulate aggregate growth, as acquisitions provide an incentive for startup creation and could transfer ideas to more efficient users. However, large firms do not always implement the ideas of their acquisition targets. Moreover, frequent acquisitions lower competition, which has an ambiguous effect on the innovation incentives of incumbents. To assess the net effect of these forces, we build a new endogenous growth model with heterogeneous firms and acquisitions. We discipline the model by matching aggregate moments and evidence from a rich micro dataset on acquisitions and patenting. Our findings indicate that stricter antitrust policy would trigger somewhat higher growth.

October 19
Anusha Chari, University of North Carolina at Chapel Hill
"Capital Flows in Risky Times: Risk-on/Risk-off and Emerging Market Tail Risk"
Host: Galina Hale
This paper characterizes the implications of risk-on/risk-off shocks for emerging market capital flows and returns. We document that these shocks have important implications not only for the median of emerging markets flows and returns but also for the tails of the distribution. Further, while there are some differences in the effects across bond vs. equity markets and flows vs. asset returns, the effects associated with the worst realizations are generally larger than that on the median realization. We apply our methodology to the COVID-19 shock to examine the pattern of flow and return realizations: the sizable risk-off nature of this shock engenders reactions that reside deep in the left tail of most relevant emerging market quantities.

October 26
Michael Devereux, University of British Columbia
"Trade Wars, Currency Wars"
Host: Chenyue Hu
Countries distort trade patterns (‘trade wars’) to gain strategic advantage relative to one another. At the same time, monetary policies are set independently and have spillover effects on partner countries (‘currency wars’). We combine these two scenarios, and show that they interact in deep and interesting ways. The stance of monetary policy has substantial effects on the equilibrium degree of protection in a Nash equilibrium of the monetary and trade policy game. Trade wars lead to higher equilibrium inflation rates. Cooperation in monetary policy leads to both higher inflation and greater degree of trade protection. By contrast, when monetary policy is constrained by pegged exchange rates or the zero lower bound on interest rates, equilibrium tariffs are lower. Finally, when one country has the dominant currency in trade, it gains a large advantage in a trade war.

November 2
Laura Alfaro, Harvard
Host: Grace Gu

November 9
Enghin Atalay, Federal Reserve Board, Philadelphia
Host: Gueyon Kim

November 16
William Diamond, Wharton
Host: Alonso Villacorta

November 23
Ioana Marinescu, UPenn
Host: Brenda Samaneigo