| This thesis is a collection of essays on macroeconomics and international finance. In Chapter 1 I look at the liberalization of the capital markets during the last two decades. Using a two-country RBC model, the effects of capital-market liberalization when national financial markets present limited participation. In particular, the assumption is that workers---who have limited wealth---do not smooth consumption over time as do capital owners, and this can make liberalization hurt workers. Thus, this model allows us to formalize and evaluate some claims---made in particular by the "anti-globalization" movement---that increased capital flows hurt workers, while benefiting capitalists. The main quantitative result is that for a wide range of parameters, workers do not lose in the long run from the liberalization.; In Chapter 2 we study a dynamic version of Meltzer and Richard's median-voter model where agents differ in initial wealth. Taxes are proportional to total income, and they are redistributed as equal lump-sum transfers. Voting takes place every period and each consumer votes for the tax rate that maximizes his or her welfare. We look at (time-consistent) Markov-perfect equilibria. Relative to the literature, we make several contributions. First, by restricting the class of utility functions, we show that the economy's aggregate state can be summarized by two statistics: mean and median wealth. We also derive the median voter's first-order condition and interpret it in terms of a trade-off between distortions to the labor-leisure and consumption-saving choices and net wealth transfers.; In Chapter 3 we present a model of equity trading with informed and uninformed investors where informed investors act upon firm-specific private information and marketwide private information. The model is used to structurally identify the component of order flow that is due to marketwide private information. Trades driven by marketwide private information are uncorrelated with the first principal component of order flow. This finding suggests that the previously documented co-movement in order flow not only captures common components in private information, but also common variation in liquidity trades. We find that marketwide private information forecasts foreign exchange returns. |
