Essays on Firm Heterogeneity with Empirical Applications in Economic History and Agricultural Economics

This thesis uses models of firm-heterogeneity to complete empirical analyses in economic history and agricultural economics. In Chapter 2, a theoretical model of firm heterogeneity is used to derive a statistic that summarizes the welfare gains from the introduction of a new technology. The empirical application considers the use of mechanical steam power in the Canadian manufacturing sector during the late nineteenth century. I exploit exogenous variation in geography to estimate several parameters of the model. My results indicate that the use of steam power resulted in a 15.1 percent increase in firm-level productivity and a 3.0-5.2 percent increase in aggregate welfare. Chapter 3 considers various policy alternatives to price ceiling legislation in the market for production quotas in the dairy farming sector in Quebec. I develop a dynamic model of the demand for quotas with farmers that are heterogeneous in their marginal cost of milk production. The econometric analysis uses farm-level data and estimates a parameter of the theoretical model that is required for the counterfactual experiments. The results indicate that the price of quotas could be reduced to the ceiling price through a 4.16 percent expansion of the aggregate supply of quotas, or through moderate trade liberalization of Canadian dairy products. In Chapter 4, I study the relationship between farm-level productivity and participation in the Commercial Export Milk (CEM) program. I use a difference-in-difference research design with inverse propensity weights to test for causality between participation in the CEM program and total factor productivity (TFP). I find a positive correlation between participation in the CEM program and TFP, however I find no statistically significant evidence that the CEM program affected TFP.

International Capital Flows and Monetary Policy Spillovers

This dissertation examines the drivers and implications of international capital flows. The overarching motivation is the observation that countries not at the centre of global financial markets are subject to considerable spillovers from centre countries, notably from their monetary policy. I present new empirical evidence on the determinants of the observed patterns of international capital flows and monetary policy spillovers, and study their effect on both financial markets and the real economy. In Chapter 2 I provide evidence on the determinants of a puzzling negative correlation observed between productivity growth and net capital inflows to developing and emerging market economies (EMEs) since 1980. By disaggregating net capital inflows into their gross components, I show that this negative correlation is explained by capital outflows related to purchases of very liquid assets from the fastest growing countries. My results suggest a desire for international portfolio diversification in liquid assets by fast growing countries is driving much of the original puzzle. In the reminder of my dissertation I pivot to study the foreign characteristics that drive international capital flows and monetary policy spillovers, with a particular focus on the role of unconventional monetary policy in the United States (U.S.). In Chapter 3 I show that a significant portion of the heterogeneity in EMEs' asset price adjustment following the quantitative easing operations by the Federal Reserve (the Fed) during 2008-2014 can be explained by the degree of bilateral capital market frictions between these countries and the U.S. This is true even after accounting for capital controls, exchange rate regimes, and domestic monetary policies. Chapter 4, co-authored with Michal Ksawery Popiel, studies unconventional monetary policy in a small open economy, looking specifically at the case of Canada since the global financial crisis. We quantify the effect Canadian unconventional monetary policy shocks had on the real economy, while carefully controlling for and quantifying spillovers from U.S. unconventional monetary policy. Our results indicate that the Bank of Canada's unconventional monetary policy increased Canadian output significantly from 2009-2010, but that spillovers from the Fed's policy were even more important for increasing Canadian output after 2008.

AUSTRALIA’S STRATEGIC CULTURE: An investigation of the concept of strategic culture and its application to the Australian case

The notion that each state in the international system approaches matters of war and peace somewhat differently because they each possess a unique strategic culture is not a new or obscure one – but it nevertheless remains controversial. While some scholars dismiss the utility or practicality of examining states’ cultures when seeking to explain or predict those states’ patterns of strategic decision-making, even amongst those who accept that we should pay attention to cultural differences between states when carrying out strategic analysis there remains a frustratingly eclectic range of offerings from scholars regarding how best to do so. In short, significant uncertainty remains regarding both whether strategic culture should be used as an analytical tool and, if it is so utilized, how one should go about doing so. This thesis therefore explores the concept of strategic culture in great detail, both theoretical and empirical. The opening three chapters examine why the more traditional rationalist/materialistic theories should not exclusively dominate strategic analysis, then the various existing strategic cultural offerings are considered and critiqued and, finally, a new conceptual model for strategic cultural analysis is proposed which draws from the hitherto largely neglected psychological and sociological literature. Both of these fields, it is submitted in Chapter 3, have spent more time and effort developing ways of understanding and analyzing culture than the field of IR has to date, and therefore the models and methods debated and developed in these fields should, it is argued, be ‘imported’ into IR to drive further strategic cultural research. The thesis then moves in the following six chapters to consider Australia’s strategic culture. The purpose of this part of the thesis is two-fold: first, it illustrates how the model offered in Chapter 3 works and, by implication, suggests how scholars may go about applying it to other cases. Second, and perhaps more importantly, the latter six chapters explore the twists and turns of Australia’s substantive strategic decision-making over the course of the last century or more, thereby explaining how Australia’s strategic history can be understood from a cultural perspective.