| In chapter 1, I analyze how the pricing behavior of firms systematically differs across domestic and export markets. First, I establish four new facts regarding the frequency and size of domestic and export price changes, the probability of synchronization, and seasonality effects. Second, I show that economic fundamentals can only partially explain adjustment decisions. Third, I present a dynamic menu cost model of price-setting, and attribute the unexplained part in adjustment decisions to differences in menu costs across countries. I calculate the implied export and domestic market menu costs from the data and estimate that export (domestic) menu costs are 1.5% (0.4%) of period steady state revenues.;Chapter 2, co-authored with Saroj Bhattarai, investigates price-setting behavior of multi-product firms. First, we show that firms selling more goods adjust prices more frequently but by smaller amounts. Moreover, the higher the number of goods, the lower is the fraction of positive price changes and the more dispersed the distribution of price changes. Second, we find substantial synchronization of price changes within firms, which plays a dominant role in explaining pricing dynamics. Third, within-firm synchronization increases with the number of goods. We present a state-dependent pricing model where multi-product firms face aggregate and idiosyncratic shocks. Allowing for firm-specific menu costs and trend inflation, the model matches the empirical findings.;Chapter 3, co-authored with Markus Mobius, examines the division of labor. We develop a model where machines require standardization to exploit economies of scale and customized products are subject to fashions which make production tasks less predictable and a strict division of labor impractical. Over time, technological progress allows the economy to transition from mass-production and a strict division of labor to customized production and a weak division of labor, as observed in the data. We use the introduction of bar-coding as a proxy for changes in the organization of work and show that not only increases in computer investments but also bar-coding have led to skill-upgrading. However, consistent with our model, bar-coding has affected mainly the center of the skill distribution by shifting demand away from the high-school educated to the less-than-college educated. |
