Essays in macroeconomics
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2023-05-26
Orientador(res)
Teles, Vladimir Kuhl
Pereira, Luciene Torres de Mello
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This thesis is composed of three independent chapters. In the first chapter, we study the macroeconomic consequences of talent misallocation in Brazil. The country’s labor market underwent a remarkable reallocation process during the last decades. For example, in 1960, roughly 85% of engineers and architects were white men; in 2010, this number slipped to 32%, giving room to women and black men to pursue their comparative advantages. Similar changes occurred in several other occupations amid a considerable increase in female labor force participation. This chapter measures the macroeconomic consequences of talent misallocation in Brazil and unveils the forces underlying this reallocation process. To this aim, we employ a Roy model and extend it to include worker heterogeneity and three forces that distort occupational choices: labor market discrimination, human capital accumulation barriers, and social norms. To discipline the model, we use Brazilian census data to build a synthetic panel of workers and track variations in labor market outcomes. We find that the GDP per capita in Brazil could be 20% higher if all barriers were removed. We also find that 25% of the GDP per capita growth between 1960 and 2010 can be attributed to declining barriers, which allowed a better allocation of women and blacks in the labor market. In the second chapter, we study the optimal monetary policy of a New Keynesian economy on the brink of fiscal dominance. The model features a Markov switching structure to incorporate regime uncertainty. Switching probabilities can be either exogenous or endogenous. We find that a fiscal risk entails a welfare loss and breaks the “divine coincidence” because perfect price stabilization becomes counterproductive when monetary policy affects debt dynamics and agents anticipate regime changes. In this environment, the optimal inflation coefficient in the Taylor rule is decreasing on the fiscal risk, and the optimal regime choice ultimately depends on government credibility. In the third chapter, we study the Brazilian experience in lowering its inflation target, focusing on the behavior of inflation expectations. Starting in 2017, Brazil reduced the inflation target by six consecutive years by 25bps, bringing the target from 4.5% to 3.0%. These reductions provide a rich source of variation in central bank communication, allowing us to compare the response of market-implied and professional forecasters’ inflation expectations. We document that professional forecasters’ inflation expectations declined after announcements while market-implied inflation was unaffected. We interpret these results as akin to a sycophant behavior of professional forecasters in medium-term horizons and advocate for caution when using surveys to assess the anchoring of inflation expectations.