Essays on Firm Dynamics and Macroeconomics

This dissertation includes three essays on firm dynamics and macroeconomics. The first chapter focuses on the interplay between financial regulation and the sovereign default crisis. Empirical evidence suggests that the government may pressure the domestic agents to purchase their sovereign debt during turbulent times. A quantitative model is developed to capture the cyclical behavior of the domestic share during the European debt crisis. We find that a moderate counter-cyclical financial repression rule helps the government ``earn'' reputation and brings welfare improvements.

The next two chapters connect brand capital and firm dynamics. The second chapter starts with an empirical analysis based on large-scale scanner data. Contrary to conventional wisdom, data suggest a declining trend of industrial concentration for the consumer goods industry since 2006. I attribute this trend to the rise of digital advertising, which distinguishes itself by granular targeting. Digital marketing has been replacing traditional advertising. A calibrated model shows that the adoption of targeted advertising endogenously lowers market concentration and improves welfare. The third chapter gives a succinct analysis of trademark as a form of protection. Trademarks safeguard brand marketing and facilitate new product introductions.