Essays on Macroeconomic Trends and Cycles

This dissertation describes two studies on macroeconomic trends and cycles. The first chapter studies the impact of Information Technology (IT) on the U.S. labor market. Over the past 30 years, employment and income shares of routine-intensive occupations have declined significantly relative to nonroutine occupations, and the overall U.S. labor income share has declined relative to capital. Furthermore, the decline of routine employment has been largely concentrated during recessions and ensuing recoveries. I build a model of unbalanced growth to assess the role of computerization and IT in driving these labor market trends and cycles. I augment a neoclassical growth model with exogenous IT progress as a form of Routine-Biased Technological Change (RBTC). I show analytically that RBTC causes the overall labor income share to follow a U-shaped time path, as the monotonic decline of routine labor share is increasingly offset by the monotonic rise of nonroutine labor share and the elasticity of substitution between the overall labor and capital declines under IT progress. Quantitatively, the model explains nearly all the divergence between routine and nonroutine labor in the period 1986-2014, as well as the mild decline of the overall labor share between 1986 and the early 2000s. However, the model with IT progress alone cannot explain the accelerated decline of labor income share after the early 2000s, suggesting that other factors, such as globalization, may have played a larger role in this period. Lastly, when nonconvex labor adjustment costs are present, the model generates a stepwise decline in routine labor hours, qualitatively consistent with the data. The timing of these trend adjustments can be significantly affected by aggregate productivity shocks and concentrated in recessions. The second chapter studies the implications of loss aversion on the business cycle dynamics of aggregate consumption and labor hours. Loss aversion refers to the fact that people are distinctively more sensitive to losses than to gains. Loss averse agents are very risk averse around the reference point and exhibit asymmetric responses to positive and negative income shocks. In an otherwise standard Real Business Cycle (RBC) model, I study loss aversion in both consumption alone and consumption-and-leisure together. My results indicate that how loss aversion affects business cycle dynamics depends critically on the nature of the reference point. If, for example, the reference point is status quo, loss aversion dramatically lowers the effective inter-temporal rate of substitution and induces excessive consumption smoothing. In contrast, if the reference point is fixed at a constant level, loss aversion generates a flat region in the decision rules and asymmetric impulse responses to technology shocks. Under a reasonable parametrization, loss aversion has the potential to generate asymmetric business cycles with deeper and more prolonged recessions.

Mesh Adaption for Tracking Vortex Structures in OVERTURNS Simulation of the S-76 Rotor in Hover

The constant need to improve helicopter performance requires the optimization of existing and future rotor designs. A crucial indicator of rotor capability is hover performance, which depends on the near-body flow as well as the structure and strength of the tip vortices formed at the trailing edge of the blades. Computational Fluid Dynamics (CFD) solvers must balance computational expenses with preservation of the flow, and to limit computational expenses the mesh is often coarsened in the outer regions of the computational domain. This can lead to degradation of the vortex structures which compose the rotor wake. The current work conducts three-dimensional simulations using OVERTURNS, a three-dimensional structured grid solver that models the flow field using the Reynolds-Averaged Navier-Stokes equations. The S-76 rotor in hover was chosen as the test case for evaluating the OVERTURNS solver, focusing on methods to better preserve the rotor wake. Using the hover condition, various computational domains, spatial schemes, and boundary conditions were tested. Furthermore, a mesh adaption routine was implemented, allowing for the increased refinement of the mesh in areas of turbulent flow without the need to add points to the mesh. The adapted mesh was employed to conduct a sweep of collective pitch angles, comparing the resolved wake and integrated forces to existing computational and experimental results. The integrated thrust values saw very close agreement across all tested pitch angles, while the power was slightly over predicted, resulting in under prediction of the Figure of Merit. Meanwhile, the tip vortices have been preserved for multiple blade passages, indicating an improvement in vortex preservation when compared with previous work. Finally, further results from a single collective pitch case were presented to provide a more complete picture of the solver results.