Essays on Macroeconomics and International Finance
Open Access DepositedThis dissertation makes three independent contributions to the fields of macroeconomics and international finance. By addressing diverse topics—from the long-term impacts of distance learning to the interplay between U.S. monetary policy and foreign investment flows, and finally to the competitive effects of foreign direct investment (FDI) in developing economies—this work highlights the author’s broad research interests and offers novel insights into pressing economic issues. Chapter 1 examines the enduring macroeconomic consequences of distance learning precipitated by the COVID-19 pandemic through a general equilibrium life-cycle model incorporating heterogeneous productivity shocks. Productivity, a proxy for human capital accrued during schooling, is calibrated based on empirical data capturing student performance during distance learning. The analysis indicates substantial long-term negative impacts on overall economic output and heightened inequality. The results further imply that current policies aimed at mitigating educational disruptions fall significantly short of offsetting the pandemic-induced macroeconomic costs. Chapter 2 investigates the influence of U.S. dollar strength on bilateral FDI flows between non-dollar economies, addressing a notable gap in international macroeconomic literature. Utilizing the broad dollar index as a measure of dollar strength, the findings demonstrate a pronounced negative relationship
specifically, a one-percent appreciation of the dollar is associated with approximately a three-percent reduction in FDI outflows. This result highlights an underappreciated spillover channel through which U.S. monetary policy can influence global investment flows, emphasizing the dollar's central role in international economic interactions. Chapter 3 analyzes how foreign direct investment influences market power and consumer welfare in Vietnam, employing firm-level markup calculations derived from a comprehensive survey dataset of manufacturing firms. The study reveals that increased foreign firm presence is linked to lower industry-wide markups, despite foreign-owned firms individually maintaining higher markups than their domestic counterparts. Importantly, while markups decrease for private domestic and foreign firms in response to rising FDI presence, state-owned enterprises exhibit relative immunity to these competitive pressures. The results robustly suggest that pro-FDI reforms generally enhance competition and consumer welfare, supporting policies aimed at opening sectors further to foreign investors.
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