Three Essays in Macroeconomics

In chapters 1 and 2, I study the quantitative effects of a wealth tax on aggregate productivity by constructing a heterogeneous-agent general equilibrium model that explicitly allows for the wealthy to be of two types: credit-constrained entrepreneurs who crucially need their wealth to grow their firms, and the inactive wealthy who manage their wealth but play no direct role in production. I motivate this model by the observation that empirically, the burden of a wealth tax is mainly borne by a very specific and small subgroup of households, the wealthy, among which there are many entrepreneurs. Two mechanisms are potentially at play. (1) If the wealthy are mainly entrepreneurs who rely on their personal wealth to create and grow their firms, then taxing wealth diminishes entrepreneurial investment and firm-creation. Since entrepreneurial firms contribute directly to the overall productivity level of the economy, the negative effects of a wealth tax would then go much further than the well-known effect on the capital level. (2) If the wealthy are mainly retired entrepreneurs who sold their firm, a wealth tax has very little distortive effects, since it is borne by agents whose wealth is not vital to the growth of credit-constrained entrepreneurial firms.;When calibrating the model, I provide empirical discipline by exploiting a new panel dataset of household wealth that I have constructed from high-quality Dutch administrative tax data covering the years 2005--2007. This allows me to construct a period-to-period wealth transition matrix showing the frequency of households transferring from one wealth-quantile to another. I show that the possibility for entrepreneurs to sell their firm allows me to account for a so-far overlooked dimension of the data, wealth mobility, that simpler models built solely on the patient accumulation of wealth by entrepreneurs cannot explain.;I compare the steady state output of my model economy with and without a wasteful wealth tax. The conclusion is that a 1.2% wealth tax diminishes output by 1.5%, which puts the cost of 1[euro] of wealth tax income at 0.45[euro] of lost output. Furthermore, entrepreneurial output is reduced by more than total output through the negative effect of the wealth tax on the capacity of entrepreneurs to raise capital for their firms: the number of entrepreneurs is reduced by 1.9% and their output by 6.7%. I then conduct the same policy experiment in several versions of my model by loosening or restricting the firm-selling mechanism. The results confirm the effects just described: the more entrepreneurs can sell their firm, the lower the negative effects of the wealth tax. In model economies with better financial markets output is higher and less affected by a wealth tax. In the context of my model, this leads to the policy conclusion that improved financial markets both increase output, by allowing more firms to be run at their efficient scale, and decrease the distortive effects of capital taxation by making aggregate investment less reliant on the personal wealth of entrepreneurs.;In chapter 3, I apply the Business Cycle Accounting (BCA) procedure to French 1978--2007 data to identify the sources of recent business cycle fluctuations in France. The purpose of the BCA procedure is to make explicit the reduced-form properties that any structural model aiming to explain the data has to satisfy. It assumes that the observed aggregate fluctuations are generated by a real business cycle model with time-varying distortions in the first order conditions. These distortions (wedges) are backed out from the data through a maximum likelihood estimation procedure. The economic interpretation is that the wedges are stand-ins for real-world distortions such as taxes, unions, adjustment costs or financial constraints on firms. Using data from 1978--2007, I find that the main reduced-form source of business cycle fluctuations in France is technology shocks, not changes in the labor wedge, i.e. distortions to the first order condition equaling the marginal product of labor for firms and the labor/leisure trade-off of agents. This is in contrast to recent work with US data, which shows that the labor wedge plays an important role in the US business cycle.;More fundamentally, I show that the French business cycle is the mere residual of two counterbalancing long-run effects over the last 30 years: a worsening labor wedge and TFP improving faster than GDP trend. These effects (almost) cancel each other out. Hence future theoretical work concentrating on France should explain these last two phenomena. I conclude by suggesting an RBC model based on increasing union power and increasing competition on the goods market that is consistent with empirical and anecdotal evidence, and I show theoretically that these distortions map into a time-varying labor wedge and TFP increasing above trend, in accordance with my empirical result.