Essays in Macroeconomics and Public Finance

Abstract

This dissertation is comprised of three essays in macroeconomics and public finance. Chapter 1 focuses on measuring strategic complementarity in the wages posted by firms in online job advertisements. I find a modest degree of complementarity in the wages posted by firms in online job advertisements: a 1\% increase in the average posted wages of competing firms induces a 0.1\% increase in the posted wage of a given firm, on average. I interpret my findings through the lens of a monopsonistic New Keynesian model, in which strategic complementarity in wage-setting can arise through (for instance) log-convex firm-specific labor supply. My empirical findings are consistent with a substantially more modest degree of complementarity than has often been assumed in prior work, and suggests that the empirical relevance of these channels is modest. Chapter 2 (joint with Walker Ray and Yuriy Gorodnichenko) empirically and theoretically studies whether preferred habitat and market segmentation are relevant in mediating the financial and real effects of the Federal Reserve's quantitative easing programs. We find strong evidence of localized impacts on Treasury yields. We develop a model that embeds preferred habitat in an otherwise-standard New Keynesian model, and calibrate the model to empirical moments. In our model, quantitative easing is modestly stimulative during ``crisis times'' when financial markets are disrupted. Chapter 3 (joint with Drew Burd, Owen Zidar, and Eric Zwick) studies the incidence of state business tax reforms by focusing on a particularly large and salient reform (and subsequent repeal) of pass-through business income taxes in the state of Kansas in 2013. We use U.S. treasury data to trace out the impact of the reform on exposed businesses, their owners, and their employees. We find that the Kansas 2013 tax reform and its subsequent repeal led to virtually no behavioral responses by businesses or business owners, either on the intensive margin (e.g. employment, investment) or the extensive margin (entry, exit, migration). Generalizing our design to a larger set of state-level business tax reforms, we find evidence consistent with our analysis of the Kansas tax reform.