Essays on Trade, Employment, and Macroeconomic Dynamics

This dissertation consists of three lines of research, one being theoretical and the other two being applied, in the tradition of political economy. The first line of research demonstrates, using a firm-level agent-based model of the circuit of capital, that capitalist economies with heterogeneous firms can generate endogenous chaotic cycles. By conducting stability and bifurcation analyses, I show that the cycles are caused by some sort of unbalance between real production and financial investments within each individual firm. Furthermore, model simulations suggest that the chaotic characteristic of the cycles is caused by some sort of mis-coordination - the incapability for each individual firm to have its supply matched by the effective demand from others - amongst heterogeneous firms in a network of supply and demand. And finally, simulations also illustrate that chaotic cycles and fluctuations are bounded within certain neighborhood - global stability. This is explained by the implied steady-states of the system, which are essentially the "long-period positions" in classical political economy. The second line of research finds that the change of trade structure has been responsible for the creation of more than 70 million jobs in China over the period between 2002 and 2007. However, I also find that using trade expansion to absorb excess labor in China is not only infeasible but also inefficient. The research concludes with a proposal of a more balanced growth path for China. The third line of research applies the multi-regional input-output model to a new global dataset and estimates the employments generated by countries' participations in global production networks. Using the results of my estimation, this research explains the phenomenon of "value-added erosion" - the reduction of domestic value-added share in exports - by the expansion of foreign high value-adding activities embodied in a country's exports.