Investment and Saving: The Role of Firm and Household Factors

Abstract

In this dissertation, I explore various topics in macroeconomic development and microeconomic development. Chapters 1 and 2 focus on firm R&D spending in the Chinese economy, while Chapter 3 investigates commitment savings devices in northern Ghana. In Chapter 1, I estimate misallocation in R&D spending across firms. An extensive literature has demonstrated that misallocation can cause large decreases in aggregate TFP. I extend this literature by considering the effect of distortions on the cost of R&D. I present a model in which firms choose R&D spending but face heterogeneous distortions that change the implicit cost of R&D. I discipline this model with firm-level data from China's Annual Survey of Industries, and I find evidence of significant distortions on R&D that reduce aggregate TFP by 10 percent. However, in a country with large output distortions, R&D distortions can mitigate the negative effect of output distortions. In Chapter 2, I compare the R&D efficiency of private and state-owned firms in China, as measured by the relationship between patent output and R&D input. I find that the efficiency of state-owned firms is significantly below that of private firms. However, when these results are disaggregated by industry, I find that the difference between state-owned and private firms is small for most sectors. Chapter 3 investigates the degree to which private information mediates the relationship between intra-household transfer requests and usage of commitment savings accounts. The World Bank Africa Gender Innovation Lab, in partnership with Ghana's North Volta Rural Bank, offered a new mobile-phone based savings product to married men and women in Ghana's Volta region. We randomly varied spousal information regarding whether a liquidity restriction on the account is binding. We find that in private, individuals who face transfer requests from the spouse are more likely to use an account with a liquidity restriction. However, when the spouse has information about the account, this is no longer the case. This is evidence that for those who face household pressure to transfer money, spousal information erodes the benefit of commitment.