Essays on firms and networks in the economy
Abstract/Contents
- Abstract
- In today's highly interconnected world, business networks play a critical role in promoting prosperity and innovation across the world economy. This thesis examines the role of these networks, arising either between-firms or within-firms, to explore important questions spanning climate change, natural disasters, and the prevalence of large informal sectors in developing countries. The first chapter quantifies the indirect effects of hurricanes by studying spatial linkages within multi-plant firms, between their disrupted and undisrupted establishments. Using confidential establishment-level data from the U.S. Census Bureau, I show that the effects of hurricanes spatially propagate via firm internal networks. For a typical county hit by a hurricane, for every job lost in the disaster county, an additional 19% to 25% of those direct losses also occur across non-disaster counties in the economy. These results indicate that we potentially underestimate the adverse consequences of hurricanes by focusing only on the direct impact and overlooking such inter-regional linkages emerging via firms' internal networks. The second chapter studies between-firm supply chain linkages in the context of the Value Added Tax (VAT) system in Karnataka, India; and illustrates that such networks incentivize small informal sector firms to join the formal VAT regime. These incentives arise because downstream firms inside the formal VAT supply chain have incentives to buy inputs only from formal upstream suppliers to collect input tax rebates. Therefore, informal upstream businesses in the supply chain may want to formalize in order to sell to the downstream firms in the VAT. Using administrative records from the state of Karnataka, India, the empirical exercise documents that small firms are willing to pay 1% to 4% higher taxes to join the VAT regime. Consistent with the mechanism explored in this chapter, only firms operating in upstream sectors, such as manufacturing and wholesale, are paying this "VAT Premium". Overall, the findings highlight the vast potential of between-firm VAT networks to help developing countries increase their tax base by reducing the size of the informal sector. The third chapter analyzes stock market responses to natural disasters. The extent to which markets respond to disaster onsets depends on the extent to which stock prices incorporate key information on the firms' adaptive capacity, in the midst of increasingly calamitous and uncertain disaster patterns and reduced insurability. Employing daily stock data of publicly listed firms in the United States and their responses to the top US natural disasters between 1980-2014, I find that exposed companies are associated with lower stock market valuations relative to the returns of non-exposed companies. The estimated impact translates into US$9 million to US$22 million lost in the market valuation of exposed firms, but with smaller losses occurring for multi-subsidiary firms. These results indicate that markets may not necessarily capitalize key information about the firms' adaptive capacity into the stock price because of the challenges of climate change, and that the internal structure of the firm has some role in mitigating these adverse impacts. Any opinions and conclusions expressed herein are those of the author(s) and do not necessarily represent the views of the U.S. Census Bureau or the Government of Karnataka, India. All results have been reviewed to ensure that no confidential information is disclosed.
Description
| Type of resource | text |
|---|---|
| Form | electronic resource; remote; computer; online resource |
| Extent | 1 online resource. |
| Place | California |
| Place | [Stanford, California] |
| Publisher | [Stanford University] |
| Copyright date | 2018; ©2018 |
| Publication date | 2018; 2018 |
| Issuance | monographic |
| Language | English |
Creators/Contributors
| Author | Seetharam, Ishuwar |
|---|---|
| Degree supervisor | Bloom, Nick, 1973- |
| Thesis advisor | Bloom, Nick, 1973- |
| Thesis advisor | Bernstein, Shai |
| Thesis advisor | Klenow, Peter J |
| Degree committee member | Bernstein, Shai |
| Degree committee member | Klenow, Peter J |
| Associated with | Stanford University, Department of Economics. |
Subjects
| Genre | Theses |
|---|---|
| Genre | Text |
Bibliographic information
| Statement of responsibility | Ishuwar Seetharam. |
|---|---|
| Note | Submitted to the Department of Economics. |
| Thesis | Thesis Ph.D. Stanford University 2018. |
| Location | electronic resource |
Access conditions
- Copyright
- © 2018 by Ishuwar Seetharam
- License
- This work is licensed under a Creative Commons Attribution Non Commercial 3.0 Unported license (CC BY-NC).
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