Essays on Macroeconomic Theory

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The book is divided in three chapters. Chapter one examines the role that labor market features and institutions have in explaining barriers to technology adoption. It concludes that the unemployment rate together with the welfare losses that workers experiment after displacement are key factors in explaining the existence of barriers to technology adoption. Chapter two studies the extent to which one can account for international disparities on income and on the size of the informal sector with differences in policies that either increase the entry cost in the formal sector or distort the efficiency of the investment sector. When entry costs are combined with distortions to the efficiency of the investment sector, they have the potential to explain a larger part of the observed international income differences. The last chapter analyzes the effects that monetary policy might have on informal sector activity. It estimates a time series of the informal sector in UK and finds that informal sector activity reacts very differently to monetary policy than that in the formal sector. A monetary business cycle model consistent with the estimation is presented.