Economics Dissertations and Theses

Permanent URI for this collection

https://hdl.handle.net/1808/14109

Browse

Three Essays on Computational Approaches to Economics
(University of Kansas, 2019-12-31) Yin, Xunzhao; Iwata, Shigeru; Jalali, Azadeh; Keating, John; Tu, Xuemin; Zhang, Jianbo
The three essays included in this dissertation are on three di?erent popular computational approaches that are widely applicable in economics. In Chapter 1, a state-space model is constructed which is linear in state variables and nonlinear in parameters. From the model, the time-varying level of natural interest rate is estimated using Kalman ?lter and Gibbs sampling algorithms. Chapter 2 proposes a new algorithm, called Implicit Particle Gibbs, to solve nonlinear state-space models. And Chapter 3 reviews recent development of deep learning and reinforcement learning algorithms and their applications in economics.
Essays on the Impact of Presidential Elections on the U.S. Stock Market
(University of Kansas, 2019-12-31) Wang, Fan; Barnett, William; Sabarwal, Tarun; Slusky, David; Tsvetanov, Tsvetan; Pasik-Duncan, Bozenna
This dissertation consists of two essays that are organized as chapters. In the first chapter, I examine the effect of presidential elections on the timing of turning points of stock market cycles in the United States. The empirical results from duration analysis show that compared to at other times, a market trough, the end of a bear market, is more likely in the period before an election when the incumbent is a Republican; meanwhile a market peak, the end of a bull market, occurs sooner following a Republican election victory. There is also evidence suggesting that bear markets are less likely to end after an election of a Republican president than in other periods. Results from further examination reveal that political control, the political alignment between the president and Congress, has a vital role in the timing of the turning points relative to the elections. In particular, political control found to reduce the probability of a market trough in the pre-election period and this reduction in the hazards for a bear market prior to an election is more significant for a Democratic president. Alternatively, political control boots the prospect of the completion of a bull market in the post-election period, especially when a Democrat was elected. Finally, political control in Congress can substantially shorten the duration of a bear market in the post-election period when the Republicans control both the White House and Capitol Hill. In the second chapter, I develop a dynamic factor model to examine the relations among presidential elections, investor sentiment, and stock market returns simultaneously. Results in the study uncover that there is a sizeable improvement of investor sentiment prior to an election, and this pre-election upsurge in sentiment can explain a substantial portion of the presidential election cycle effect in the stock returns. However, data in the study fail to provide significant evidence that Democratic presidents can install more optimism in the stock market. My result does confirm that there was a market-wide panic during the height of the recent financial crisis in iv 2007-2008. Furthermore, results from the asset pricing tests show that in addition to the conventional risk factors, the market return factor and the factor of change in investment opportunity set, the factor of investor sentiment is a critical component in asset pricing and prediction. By including the sentiment factor, the proposed Augmented Intertemporal Capital Asset Pricing Model (AICAPM) in the paper improves upon the explanatory and predictive power of other competing models such as the Intertemporal Capital Asset Pricing Model of Merton (1973) (ICAPM) and the Fama-French (1993) 3-factor model (FF3).
Divisia Monetary Aggregates and Exchange Rate Forecasting
(University of Kansas, 2019-12-31) Molinas, Luis; Keating, John; Barnett, William A; Cornet, Bernard; Birch, Melissa; Ginther, Donna
Divisia monetary aggregates have been shown to be an improvement on the simple-sum monetary aggregates used by policy makers in the great majority of central banks in the world. Since Barnett (1978, 1980) derived the User Cost Price and produced the theoretically correct from of aggregation, they have helped solve some of the diﬃcult problems in the profession. One such problem is forecasting exchange rates. SinceMeese & Rogoﬀ (1983) convincingly argued that no model could outperform a driftless random walk in predicting exchange rates, there have been many papers which have tried to ﬁnd some forecasting methodology that could beat the random walk, at least for certain forecasting periods. In particular, Wright (2008) introduced Bayesian Model Averaging as a tool to forecast exchange rates and Lam et al. (2008) compared Bayesian Model Averaging and three structural models to a benchmark model (the random walk), both studies obtaining positive results. Also, Carriero et al (2009) found positive results using a Bayesian Vector Auto-regression model. Barnett & Kwag (2005) availed themselves of the User Cost Price and Divisia monetary aggregatesandincludedthemasvariablesintheFlexiblePriceMonetarymodel, Sticky Price and Hooper Morton models to show that it has greater forecasting power than the random walk when the aforementioned variables replace the interest rate and simple sum monetary aggregates (respectively). Speciﬁcally, they worked with the US dollar/British pound exchange rate. This dissertation aims to extend three diﬀerent experiments. The ﬁrst chapter compares Purchasing Power Parity, Uncovered Interest Rate, Sticky Price, Bayesian Model Averaging, and Bayesian Vector Auto-regression models to the random walk benchmark in forecasting exchange rates between the Paraguayan Guarani and the US Dollar, the Brazilian Real and the Argentinian Peso. The second, follows Barnett and Kwag’s work, applied to the US dollar/Euro exchange rate, but also includes an Uncovered Interest-rate Parity model. I use the Root Mean Square Error, Direction of Change statistic, and the Diebold-Mariano statistic to compare the forecasting power of the models in Chapters 1 and 2. In the ﬁrst chapter, resultsindicatethatinshorterforecastinghorizonsBayesianModelAveraging,and Bayesian Vector Auto-regression models perform better than the random walk and that structural models outperform the random walk at longer horizons. In the second chapter, results indicate that Uncovered Interest-rate Parity with the User Cost Price instead of the interest rate improves on the random walk forecasts in every time horizon. In view of the results in Chapter2, Divisia monetary aggregates for the country of Paraguay are calculated in the last chapter with the aim to examine their performance against simple-sum monetary aggregates in estimating money demand. Results suggest that Divisia monetary aggregates are superior to simple-sum aggregates in money demand estimation.
Three Essays in Applied Microeconomics: Medicaid Expansion, CEMENT Coauthorship Networks, and Occupational Licensing
(University of Kansas, 2019-08-31) Na, Rina; Ginther, Donna K.; Ginther, Donna K.; Slusky, David; Sabarwal, Tarun; Tsvetanov, Tsvetan; Pleskac, Tim
ABSTRACT This dissertation includes three essays in applied microeconomics, which is a fundamental outward-looking branch of economics that applies both economics theories and methodologies to actual questions of individual behavior and societal outcomes. The three essays are focusing on real world topics of the ACA’s Medicaid expansion, female economists’ collaboration networks and occupations licensing. In the first essay, using the restricted NHANES data from 2007 to 2014, effects of the ACA’s Medicaid expansion on three public health measures are examined by comparing expansion states with non-expansion states. The results show that the Medicaid expansion in 2014 decreases the systolic blood pressure and increases the usage of cholesterol lowering medication, however, no significant effects on diabetes measures. It is also confirmed that the ACA’s Medicaid expansion increases the total health and Medicaid coverage. In the second essay, a unique randomized control trial of CEMENT workshop is examined to investigate its effect on female economists’ collaboration networks. The CEMENT workshop provides a particular opportunity to observe female economists’ career accomplishments and research productivity in the program. The results show that the participating female economics scholars publish about one more paper and have about 0.5 more numbers of unique coauthors on average, comparing to the control group. The CEMENT workshop helps the treated female economists improve their research productivity and expand the magnitude of their collaboration networks. The last essay studies the effects of occupational licensing on non-U.S. citizen’s labor market outcomes, using the monthly CPS Job Certification data from 2015 to 2019. Non-U.S. citizens are found to be less likely to have job certificates or licenses. Compared to licensed U.S. natives, non-U.S. citizens are still suffering from a wage penalty even if with job certificates or licenses.
Mathematical economics before Cournot
(University of Kansas, 1948-12-31) Robertson, Ross M.
Property taxation in Virginia
(University of Kansas, 1948-08-31) Johns, Vernon O.
Analysis of the Effects of Kansas School Funding Reform on Standardized Testing Scores
(University of Kansas, 2019-05-31) Scheetz, Paul; Cai, Zongwu; Iwata, Shigeru; Tsvetanov, Tsvetan
Kansas public school funding has been a contentious policy matter for several years. Brownback-era tax cuts reduced funding to a point where absolute funding levels were deemed unconstitutional in both adequacy and fairness. A 2014 Kansas state supreme court ruling lead to policy makers implementing a school funding redistribution policy increasing state aid to low income school districts. The purpose of this study is to determine the effects of this 2014 funding redistribution policy on public school district composite ACT Scores. Special attention is paid to school district family income levels when determining the effects of the redistribution. To measure the effects of the redistribution, a series of difference in differences regression models are employed. Results indicate changes in ACT scores decreased post-2014 at the middle-income level but did not change at the aggregate level due to redistribution.
Essays in Education and Labor Economics
(University of Kansas, 2019-05-31) Boden, Jennifer Ann; Ginther, Donna K; Slusky, David; Earnhart, Dietrich; Pasik-Duncan, Bozenna; Tvestanov, Tsvetan
This paper explores treatment effects in three different contexts: an extended school year pilot program in an urban school district, a library summer reading program serving twenty-one urban school districts, and states passing the Equal Rights Amendment during the 1970s and 1980s. Estimates generated using two years of intervention data along with difference-in-differences and nearest neighbor approaches show that a new extended school year (ESY) program in the North Kansas City School District (NKCS) improved mathematics MAP test scores in the 4th grade treatment group and mathematics as well as communication arts MAP test scores in the 3rd grade treatment group when compared to the corresponding control group by approximately .3 standard deviations. This is a large and statistically significant effect and indicates that the ESY intervention is improving achievement for these groups. Summer learning loss has been well documented in the education literature. One attempt at combating this learning loss has been through the contributions of public libraries and their associated summer programs. Assessing program impact is difficult because public libraries cross the boundaries of multiple school districts. This study highlights a case study which outlines a data-driven, research method that can be used to measure program impact by linking incongruent sources of academic data. The paper discusses the challenges associated with working with data provided by multiple school districts and finds that participation in this particular summer reading program is associated with better outcomes for elementary school students. The United States Constitution does not guarantee equal rights based on gender. The Equal Rights Amendment (ERA), passed by Congress in 1972, was intended to remedy this situation, but only thirty-five of the requisite thirty-eight states passed the law before its 1982 expiration. Making this topic relevant for today, the ratification of an unrelated amendment 203 years after its Congressional approval has given ERA supporters renewed hope of its eventual passage. In fact, in 2018 the ERA was passed by both Nevada and Illinois taking the total number of passing states to thirty-seven, just one state short of the number needed for ratification. The state by state variation in terms of ERA ratification affords the opportunity to examine the labor market effects of this legislation. Because the existence of the gender wage gap has been well-established in the literature, the findings may be helpful in constructing policy interventions that can eliminate it. In this study, we find that, relative to men and other women, white women in ERA states were more likely to enter the labor force, but non-white women were the beneficiaries of increased pay and hours of work.
Essays in Applied Microeconomics
(University of Kansas, 2019-05-31) He, Jiacheng; Ginther, Donna K; Johnson, Paul E; Keating, John W; Slusky, David; Tsvetanov, Tsvetan G
In Chapter 1, I study how asset test elimination of Medicare Savings Programs affect elderly seniors financial difficulty to access health care. In the United States, most elderly seniors are covered by Medicare. However, the original Medicare could incur non-negligible and uncapped out-of-pocket expenditure to the beneficiaries, which could make health care still unaffordable. Medicare Savings Program (MSP) is a Medicaid program that help eligible Medicare beneficiaries to pay their Medicare share cost. Asset test is often the major hurdle to block income eligible seniors to enroll in MSP. Ten states have eliminated the asset test in MSP. I use difference in difference approach to estimate that removing the asset test in MSP increased elderly seniors' Medicaid coverage rate by 19 percent and reduce their financial difficulty to access health care by 8 percent at extensive margin. Event study result shows that in average it took 3 years for the effect to take off. States should consider removing the asset test or make it less restrictive if doing so will make health care more accessible to elderly seniors and reduce states' administrative cost burden. In Chapter 2, I study how Medicare eligibility at age 65 reduced people's incentive to get Medicaid divorce. To get a divorce, split the joint assets, and allocate most of the assets to the healthy spouse is a strategy to help the sick spouse financially qualify for Medicaid coverage. The exogenous age-based increase in eligibility for Medicare and Medicaid reduces the incentive for people crossing the 65-threshold to implement Medicaid divorce. Using regression discontinuity design, I estimate a 4.1 percent discrete decrease in the prevalence of divorce at the 65-threshold. By examining how the magnitude of the divorce gap is associated with the state-level variation in Medicaid asset test, I argue that the divorce gap at age 65 measures the reduction in Medicaid divorce. In addition, the heterogeneity analysis indicates that the divorce gap is significantly larger for women, which suggests that Medicaid divorce is more prevalent when the sick spouse is the wife. In Chapter 3, I study the relationship between technological change and local labor markets. Between 2000 and 2006, the U.S. economy was expanding and the housing market exhibited prosperity. I examine the heterogeneous effect of the housing boom and the Routine Biased Technological Change (RBTC) on the occupational composition of the U.S. labor market during this period. All 3-digit occupations are classified into eight groups based on their task measures and education requirements. I find that the local housing boom boosted the overall local employment level, while the effect of RBTC was concentrated on low-skill occupations. Among the low-skill occupations intensive in routine tasks, the local housing boom increased the local employment share in office administrative support occupations, but had no significant effect on production occupations. At the same time, the RBTC was shifting the low-skill labor force away from these routine occupations to low-skill local service jobs. Moreover, the production workers were losing jobs even when the economy was good, while the employment share in local service occupations maintained strong even after the housing bubble burst.
Three Papers on Monetary Aggregation under Knightian Uncertainty, Kernel Estimation, and Dynamic Modelling
(University of Kansas, 2019-05-31) Han, Qing; Barnett, William A; Cai, Zongwu; Pasik-Duncan, Bozenna; Keating, John; Zhang, Jianbo
This dissertation considers monetary services aggregation theory in Macroeconomics, the nonparametric approaches in Econometrics with censoring data and endogenous variables, and the macroeconomic dynamic modelling. It contributes to the current literature in three ways. First, it extends the monetary aggregation theory to incorporate Knightian uncertainty by using a non-additive probability measure. Our aggregation theory under uncertainty nests the previous literature of the perfect certainty and/or risky cases. Second, we consider a nonparametric estimation of a censoring data model with endogenous variables and transform the problem into a nonparametric LAD additive model for estimation and testing. Third, in the open economy literature, the high consumption correlation among different countries is a stubborn anomaly. We establish an open economy Dynamic Stochastic General Equilibrium (DSGE) model that successfully solves this problem. The model must feature asymmetric preference, incomplete financial markets, and terms of trade shocks at the same time. The first part considers monetary aggregation under uncertainty aversion (perhaps under risk aversion as well). The presence of uncertainty and the agent's attitude towards it are represented by a nonadditive probability measure. The major findings are three-fold: first, the user cost of monetary assets under uncertainty aversion produces useful boundaries. We no longer have covariances, instead, we have inequalities, and our model nests some of the previously derived results. Second, deviating from expected utility does not exclude the existence of a user-cost solution which is analogous to the expected utility representation, but that is only a special case. Third, under Choquet expectation the user costs have an interval within which no trade of monetary assets will occur, such an effect depends solely on uncertainty aversion, not on risk aversion. The second paper deals with the problem of nonparametric estimation using censored data in a model that features endogeneity. Nonparametrics with endogenous variables is difficult to handle because of ill-posed inverse problem. Nonparametrics with censoring does not attract the attention as it deserves because people are inclined to resort to quantile estimation when data is censored. We stick to the nonparametric estimation under two mild conditions. It is the endogeneity that shapes the model to be additive, and it is because of censoring the model is reduced to a (nonparametric) LAD estimation under the assumption of conditional zero median of the error term. This paper therefore transforms the problem into a Nonparametric Additive Least Absolute Deviation estimation which is saliently more robust than L₂ norm estimation. We establish the asymptotic normality of the estimated unknown functions. The estimation and inference are easy to carry out. The third paper establishes a dynamic stochastic general equilibrium model of the Chinese open real economy and aims to give a theoretical account of the empirical stylized facts of economic volatility. Specifically, we investigate two questions: first, what are the stylized facts of the Chinese open economy fluctuation? Is there anything that makes it different from other major economies? Secondly, could theoretical models reasonably explain and fit those facts well? To answer the first question, we use four different filters to extract volatility to contribute a robust summary of the stylized facts. As for the second question, we find that asymmetric preference, incomplete financial markets and terms of trade shocks significantly improve the model’s prediction. Negative international co-movement of investment is the special feature of the Chinese economy, and our model caters for that well.
Essays in Female Labor Supply in Ecuador
(University of Kansas, 2019-05-31) Gutierrez Luna, David Esteban; Ginther, Donna; Slusky, David; Tsvetanov, Tsvetan; Earnhart, Dietrich; Dean, Bartholomew
This is a solo-authored dissertation that contains three papers that each examines a specific aspect of the labor supply in the Ecuadorian labor market between 2007 and 2017. The chapters of this dissertation all use data from the National Survey of Employment, Unemployment, and Underemployment; in Spanish Encuesta Nacional de Empleo, Desempleo y Subempleo (ENEMDU) to empirically examine labor supply in the Ecuadorian labor market, specifically female labor supply. The first chapter analyzes the impact on labor supply of the last increment of the cash transfer under the Human Development Credit (BDH) program in Ecuador. This study employs a difference-in-differences approach, comparing poor households that receive the transfer with poor households that are not part of the program. Empirical results reveal that households that are part of the program, on average, increased their labor supply by 2.5 hours at the intensive margin and by 7.23 percentage points at the extensive margin. More importantly, results reveal that women increased their labor supply at the intensive and extensive margin by 1.65 hours, and by 5.63 percentage points respectively, while results for men are not statistically significant. The second chapter explores married women’s labor supply elasticities in Ecuador between 2007 and 2017. Specifically, the focus of this chapter is to examine how married women’s hours of work respond to their income from labor, and non-labor income. Overall, empirical results suggest that between 2007 and 2017, hours wage elasticities increased, whereas hours non-labor income elasticities and participation non-labor income elasticities appear to had a minimum increment. The third chapter adds to the second by analyzing the labor supply responses of single women in Ecuador between 2007 and 2017. Like in the second chapter, this chapter examines how single women’s hours of work respond to their income from labor and non-labor income on the intensive and extensive margin. Empirical results show that during the last decade, the labor supply responsiveness of single women in Ecuador has remained relatively constant.
Essays on Regime Change and Education Policy Reform
(University of Kansas, 2018-12-31) Roberts, Michael Alvin; Slusky, David; Ginther, Donna; Earnhart, Dietrich; Pisciotta, Kevin; Saatcioglu, Argun
This dissertation consists of three chapters, each representing a self-contained research paper in health economics. The first chapter formalizes a model which generalizes several political models of collective action and regime change. It considers the impact that an extremist party can have on the choices made by the population in choosing whether or not to take part in a revolt. This third party is usually a personal interest group that benefits from a revolution, or in some cases benefits from the current regime in power, and thus will try to persuade the general population into pursuing an action that is in the extremist’s best interest. The paper presents several applications of the model with political and economic roots. These models add insight to revolutions in the present day as well as throughout history, particularly those aided by outside benefactors.(JEL codes: D5,D72,D91) In the second chapter, I study the effect that NCLB had on teacher turnover and compare it to the impact from state accountability systems that existed prior to the passage of NCLB. I find that, while state accountability systems have no significant effect on teacher turnover, teachers are 5 percentage points more likely to remain in the field following NCLB. The driving force behind this result is the year that a teacher earned his or her bachelor’s degree. Receiving a bachelor’s degree after 2002 makes an individual 27 percentage points more likely to stay in the field after NCLB was passed. I believe there is a self-selection process to explain this result, as after NCLB became law only those individuals who felt comfortable teaching under an accountability system earned their education degree and became a teacher. I find further evidence of this result by considering where the teachers earned their degrees. The state where a teacher earned their degree does not have a large effect on the likelihood of continuing to teach, regardless of whether or not that state had some kind of prior accountability system. This suggests that the self-selection process occurs before the individuals earn their degree, and not in response to a change in curriculum from the college or university at which they earned their degree. (JEL codes: I28, J08, J48) In the third chapter, I consider a teacher’s response to earning tenure as it relates to classroom performance. For elementary and secondary school teachers, earning tenure makes it very expensive and time consuming for a school to terminate them. Critics of tenure argue that this creates an incentive for teachers to expend less effort and energy into their teaching as they are able to avoid the penalty of job loss. There is a long research history of teacher characteristics and the effects they have on student achievement. Surprisingly, the impact of earning tenure remains unknown. This chapter uses student level data and pairs it with teacher and school characteristics in order to find the effect earning tenure has on test scores. By taking advantage of the staggered issuance of tenure, we can isolate the impact of earning tenure. I find that immediately after being awarded tenure, student test scores drop. However, they increase and overtake previous scores the following year. This suggests teachers earn extra benefit when their students are successful, and thereby, resist the incentive to provide lower quality teaching. (JEL codes: I20, I28, J08)
Empirical Economic Studies on Colombia
(University of Kansas, 2018-08-31) Pulido Velásquez, Manuel Alejandro; Earnhart, Dietrich; Ginther, Donna; Slusky, David; Tsvetanov, Tsvetan; Soberón, Jorge
This dissertation explores three different but related economic issues in the country of Colombia. The first chapter determines the impacts of the prolonged civil conflict suffered in Colombia on its unemployment rate compared to other similar Latin American economies. The second chapter explores the effect of the presence of illegal leftist and rightist armed groups on municipal investments into education, health, infrastructure and environment. The third chapter determines the effect of the municipal location relative to a border, on the municipal investment decisions into wastewater management. Chapter I., co-authored with Alexander Alegría Castellanos PhD., assesses the impact of the Colombian conflict on the unemployment rate for the period 1995-2014. Calderon-Mejia and Ibañez (2016) assess the effects of forced displacement on the labor market, specifically on wages. Our study relies on their findings, and additionally explores the effect of the conflict on the unemployment rate in Colombia. To estimate this effect, we use a difference-in-differences regression analysis to establish the average treatment effect relative to similar countries. Similarly, we use the Synthetic control method to estimate the effect of the conflict on the unemployment rate. Using both methods, we find a higher unemployment rate in Colombia relative to a counterfactual formed by Latin American countries, after an increase in the intensity on the conflict in 1995 due to changes in the drug war strategy. We demonstrate the significance of our results using a placebo tests. Overall, our results identify the incidence of the violent conflict on the total unemployment rate. Chapter II. This study assesses the effects of leftist guerrilla groups and rightist paramilitary groups on investments made by the municipal governments in the country of Colombia between 2000 and 2010. Specifically, how the presence of illegal armed groups affects levels of municipal investments into education, health, infrastructure, environmental protection, and other categories. Limits on political participation and institutional weaknesses were key elements propagating violence that disrupted Colombia for years. Searching for solutions to these structural problems, Colombia transferred many decision-making responsibilities from the central government to regional and local governments in [years]. Paradoxically this decentralization opened an opportunity for illegal armed groups to play meaningful roles in local political and economic life, eventually taking control over local resources in several municipalities. To assess the importance of these groups, empirical analysis exploits annual budgetary data for municipalities, information on conflict and violence, and community-level socioeconomic data (e.g., income, population). In this analysis, the dependent variables reflect municipal investment measured in three ways: total investment, levels of investment categories, and categorical proportions of total investment. The primary regressors are the presence of rightist paramilitaries and the presence of leftist guerrillas. Results suggest a differentiated impact by leftist and rightist groups. In proportional terms, municipalities affected by leftist guerrillas allocated less of their investments into environment and infrastructure, yet more into health. In contrast, municipalities affected by rightist paramilitaries allocated less of their investments in health, yet more into education. Chapter III. examines the effect of location on municipal investment into wastewater management. Specifically, it explores whether location, relative to regional and international borders, plays a role in these investment decisions. Intuitively, transboundary aspects of pollution undermine a jurisdictional government’s desire to curtail the amount of pollution generated from a source. As the distance between the source and a border falls, the transboundary aspects grow since a greater proportion of the detrimental effects of the pollution are born by neighboring downstream jurisdictions. Empirical studies consider the problem of transboundary pollution by examining various relevant outcomes. Some studies examine pollution levels on two sides of an intra-national border. Other studies assess environmental quality at intra-national or international borders. Additional studies examine the stringency of regulations imposed on and enforcement actions taken against facilities located at or near borders. Our study contributes to this literature in two ways by (1) developing a rich conceptual framework to explain governmental use of policy tools to induce better environmental management by polluters, and (2) exploring the problem of transboundary pollution in the context of a developing economy. Using data for municipalities in the country of Colombia between 2000 and 2013, we find that municipalities located further from an intra-national border invest more into wastewater management than municipalities located closer to an intra-national border, consistent with the hypothesis that regional governments employ policy tools more strongly against the former set of municipalities. However, distance to international borders does not affect municipal wastewater investment.
Transaction Costs, Convergence and Gains from Trade: Evidence from Japan
(University of Kansas, 2018-08-31) Batmaz, Oguzhan; El-Hodiri, Mohamed A; Barnett, William A; Zhang, Jianbo; Tsvetanov, Tsvetan G; Bayer, Margaret
Transaction costs are among the most important explanatory variables for institutional economics. Starting from Ronald Coase as the pioneer then North, Wallis, Williamson and many other economists have been pointing to this. Institutional quality can be measured by the rule of law index and government effectiveness; however, the impacts on the economy as spillover effects are the other crucial points which needed to be studied. Besides these, how are these transaction costs created? What kind of sources are they coming from? In order to explain these questions, understanding institutional change is vital. Yet, this may not be enough to explain where this institutional change is coming from. Are countries experiencing modernization and if so, how? Do countries affect each other so that they are becoming similar? What is the cost of this unity? How will this unity be achieved by these countries? To answer these additional questions, one should start from international trade. The neoclassical international trade theory suggests that countries converge on each other as they trade goods and services. Also, as trade volume increases, we expect to have more consumption and production and some other benefits which lead to an increase in the utility level of representative households. The rate of convergence depends on countries’ bargaining power. Therefore, countries force their trade partners to cause institutional changes. According to the Walrasian world, transaction costs are assumed to be zero since we have perfect markets. However, in the real world we have uncertainty, and information is not costless. Thus, people encounter these transaction costs as stated by Coase and many others. All in all, considering trade, institutional change and transaction costs together will provide the net benefits from trade. As evidenced by Japan, the path of institutional change is coming from Western influences. These influences started in Japan increasing the international trade volume in the Meiji Era. Consequently, the main purpose of this dissertation is to bring together all the crucial points stated above, and then find the net gains from trade. This unique idea fills the gap in the literature.
The Conﬂict in Colombia: A Political Economic Analysis.
(University of Kansas, 2018-08-31) Alegria Castellanos, Alexander; El-Hodiri, Mohamed; Ginther, Donna; Slusky, David; Tsvetanov, Tsvetan; Dean, Bartholomew
This research explores the armed conflict in Colombia. It consists of two parts: Part I attempts to provide a theoretical framework for the analysis of the Colombian conflict using a dynamic model. The second part, co-authored with Manuel Pulido Velásquez, uses both difference-in-differences and the synthetic control methods to study the effect of conflict intensity on the country's unemployment rate. The key element connecting both parts is the level of activities run by the agents involved in this conflict. In the theoretical model, the level of each agent's activity represents the control variables determining the state variables and payoff functions. In the empirical model, identification of years with the highest levels of violent activities, helps us divide our period of analysis into pretreatment and treatment periods. Additionally, this identification provides a basis for defining potential control units in constructing our difference-in-differences and synthetic counterfactual. Through the dynamic model we find that an interior solution implies that the sum of the marginal costs imposed by the agents through the activities they conduct on other agents' payoff functions is equal to the sum of marginal benefits generated by those activities. In the empirical model we find that for the difference-in-indifferences approach unemployment rate in Colombia increases 3.7 percentage points relative to the control group. Meanwhile, for the same variable, our synthetic control shows an increase of 4.9 percentage points relative to the synthetic Colombia. Both estimations represent at least one third of the average unemployment rate for the treatment period (1995-2014).
Essays in State Policy
(University of Kansas, 2018-05-31) McCloskey, Jessica A.; Earnhart, Dietrich; Slusky, David; Ginther, Donna; Gurley-Calvez, Tami; Juhl, Ted
This dissertation consists of three chapters each examining different areas of state policy. Each chapter revolves around an examination of different approaches taken by states in a particular area of policy. The questions answered arise in the contexts of income taxation, environmental regulation, and social insurance. Chapter 1 looks at impacts of a particular policy in one state by comparing that state to select other states. Chapter 2 looks at factors influencing the adoption of a policy by a group of states, and aspects of implementation. Chapter 3 looks at the relationship between variations in a policy applied in all states and differences in related outcomes. Each chapter makes distinct and novel contributions in its respective context.
Learning, Observability and Time-varying Macroeconomic Volatility
(University of Kansas, 2018-05-31) Li, Chaozheng; Iwata, Shigeru; Zhang, Jianbo; Sabarwal, Tarun; Comolli, Paul; Tu, Xuemin
Our paper provides a theoretical explanation for the time-varying macroeconomic volatility by introducing the unobservability of regime switching and learning. With the unobservability of regime switching, agents must endogenously form their expectations using best-performed forecasting models. We find that if the regime switching is observable to agents, agents do not shift their expectation frequently and so will not generate a larger macroeconomic volatility. However, with the unobservability of regime switching where no agents can know which regime is dominant, allowing endogenous expectation formation would give rise to larger macro fluctuations (first-layer amplification mechanism), which is made through agents frequently shifting their expectations. Furthermore, we consider the policy implication under the zero lower bound. Our simulations show that in the unobservable regime switching, the economy is more likely to fall into a deflationary trap. To avoid the deflation risk, the policy maker should set a higher expected inflation based threshold. If the expected inflation is under the threshold, an aggressive policy rate will be implemented; otherwise, the normal Taylor-rule monetary policy will be used. Furthermore, to reduce the deflation risk, the strategy for the policy maker is to raise the threshold, and this will generate larger macroeconomic fluctuations (second-layer amplification mechanism) due to more frequent policy strategy switching. We argue that sometimes only with unobservability, the policy maker faces a dilemma between avoiding deflation risk and maintaining macroeconomic stability, and huge macroeconomic fluctuations do not necessarily result from bad luck or bad policy but from the two-layer amplification mechanism caused by the unobservability.
Essays in Open Macroeconomic Dynamics
(University of Kansas, 2018-05-31) Hu, Jingxian; Barnett, William A.; Keating, John W.; Cai, Zongwu; Stanislavova, Milena; Johnson, Mathew A.
Will capital controls enhance macro economy stability? How will the results be influenced by the exchange rate regime and monetary policy reaction? Are the consequences of policy decisions involving capital controls easily predictable, or more complicated than may have been anticipated? The first chapter of this dissertation will answer the above questions by investigating the macroeconomic dynamics of a small open economy. In recent years, these matters have become particularly important to emerging market economies, which have often adopted capital controls. We especially investigate two dynamical characteristics: indeterminacy and bifurcation. Four cases are explored, based on different exchange rate regimes and monetary policy rules. Compared with flexible exchange rates, the fixed exchange rate regime should be a more careful policy choice due to the economic complexities. Firstly, more factors need to be considered for economic stability, such as the stickiness of prices and the elasticity of substitution between labor and consumption. Secondly, fixed exchange rate regimes with capital controls produce larger posterior probability of the indeterminate region than a flexible exchange rate regime. Thirdly, we prove the existence of Hopf bifurcation under capital controls with fixed exchange rates and current-looking monetary policy. Numerically, more types of bifurcation are detected under this policy combination. With capital controls in place, we find that indeterminacy depends upon how the interest rate feedback to inflation and to output gap coordinate with each other in the Taylor rule. When forward-looking, both passive and positive monetary policy feedback can lead to indeterminacy. We provide monetary policy suggestions on achieving macroeconomic stability through financial regulation and references for countries facing different choices on exchange rate regimes. As a complement for the first chapter, the second chapter of this dissertation examines the dynamics of exchange rate as a diffusion process under flexible exchange rate regimes. When exchange rates are free floating, they are known as highly volatile, nonstationary. They are also hard to be explained and predicted by fundamentals, such as output, price level and monetary supply. This chapter uses both nonparametric method and parametric method (MLE) to estimate exchange rate as a diffusion process. In line with previous literature’s finding, the nonparametric drift estimators show some nonlinearity. The result of parametric estimation shows that Geometric Brownian Motion process could be a quite good capture of the exchange rate dynamics.
Three Essays on Advances in Macroeconomic Theory and Modeling
(University of Kansas, 2018-05-31) Chen, Guo; Barnett, William A; Spear, Stephen; Keating, John; Slusky, David; Shenoy, Prakash
Abstract My dissertation consists of three papers on bifurcation and market game models. My research focuses on understanding bifurcation phenomena of macroeconometric models, exploring price stickiness and markup variations in market game models with production through strategic interaction, and analyzing the possibility of endogenous business cycles in the overlapping generation market game models with production. Specifically, the three chapters are: Bifurcation of Macroeconometric Models and Robustness of Dynamical Inferences is a survey paper I coauthored with Prof. Barnett (Barnett and Chen (2015)). In systems theory, it is well known that the parameter spaces of dynamical systems are stratified into bifurcation regions, with each supporting a different dynamical solution regime. Some can be stable, with different characteristics, such as monotonic stability, periodic damped stability, or multiperiodic damped stability, and some can be unstable, with different characteristics, such as periodic, multiperiodic, or chaotic unstable dynamics. But in general the existence of bifurcation boundaries is normal and should be expected from most dynamical systems, whether linear or nonlinear. Bifurcation boundaries in parameter space are not evidence of model defect. While existence of such bifurcation boundaries is well known in economic theory, econometricians using macroeconometric models rarely take bifurcation into consideration, when producing policy simulations from macroeconometric models. Such models are routinely simulated only at the point estimates of the models’ parameters. Barnett and He (1999) explored bifurcation stratification of Bergstrom and Wymer’s (1976) continuous time UK macroeconometric model. Bifurcation boundaries intersected the confidence region of the model’s parameter estimates. Since then, Barnett and his coauthors have been conducting similar studies of many other newer macroeconometric models spanning all basic categories of those models. So far, they have not found a single case in which the model’s parameter space was not subject to bifurcation stratification. In most cases, the confidence region of the parameter estimates were intersected by some of those bifurcation boundaries. The most fundamental implication of this research is that policy simulations with macroeconometric models should be conducted at multiple settings of the parameters within the confidence region. While this result would be as expected by systems theorists, the result contradicts the normal procedure in macroeconometrics of conducting policy simulations solely at the point estimates of the parameters. This survey provides an overview of the classes of macroeconometric models for which these experiments have so far been run and emphasizes the implications for lack of robustness of conventional dynamical inferences from macroeconometric policy simulations. By making this detailed survey of past bifurcation experiments available, we hope to encourage and facilitate further research on this problem with other models and to emphasize the need for simulations at various points within the confidence regions of macroeconometric models, rather than at only point estimates. Price Stickiness and Markup Variations in Market Games is a paper I coauthored with Prof. Stephen Spear and Dr. C. Gizem Korpeoglu (Chen et al. (2017)). Shapley-Shubik market game model received quite a bit of attention in the general equilibrium literature of the 1980’s and 1990’s, but never caught on as a possible alternative to models of monopolistic competition in macroeconomics. In this paper, we suggest that the market game model can provide a better micro-foundation for new Keynesian general equilibrium analysis than existing models based on monopolistic competition. We show that the market game generates equilibria that have two important features. First, we show that when firms have market power, their market-shares in both input and output markets affect the first-order conditions of their best responses, in ways that resemble the effects of price changes. From this observation, we are able to establish that firm quantity adjustments (holding input prices fixed) can maintain the Nash equilibrium of the model in versions of the model that exhibit indeterminacy of the Nash equilibrium. Hence, these versions of the model naturally admit sticky prices, regardless of the mechanism(s) that might lead firms to want to keep input prices unchanging. Second, we show that there is a close relationship between any individual firm’s markup of price over marginal cost and its market share. What the market game brings to the discussion of markups that is new, is the fact that markets populated by finite numbers of firms operating under possibly different technologies will generate data on markup movements over different equilibria that can vary positively, negatively, variably, or not at all over business-cycle-like expansions and contractions. Endogenous Business Cycles in the Overlapping Generations Market Game Model is my job market paper (Chen (2018)).  We then extend the analysis on market game models with production in chapter two to an overlapping generations (OLG) market game model, and study whether strategic interactions contribute to instabilities of the economic dynamics. Grandmont (1985) was one of the first papers to raise the possibility that endogenous complex dynamics might provide an alternative explanation for business cycle fluctuations, by showing that such dynamics could arise in conventional OLG models, although only for the case of sufficiently large risk aversion on the part of old agents in the model. Goenka et al. (1998) showed in the context of a pure exchange OLG market game model that the nonlinearities introduced by imperfect competition were such that one could obtain chaotic dynamics even for log utility, as long as markets were thin in terms of amount of endowment agents offered. Goenka et al.(1998) note that extensions of their work with this kind of model suggests that production smooths the model in the sense that complex dynamics are not as easily generated as in the pure exchange model. In this paper, analysis shows that production combined with price-taking behavior by households locks down the ratio of output and input prices, which then reduces the nonlinearity that arises in the pure exchange model. Specifically, we show in the paper that when incorporating production in the market game OLG model, the price dynamics depend on market thickness, general equilibrium price ratios, individual offers and particular choices of utility function. We find that for complex dynamics to occur, the preferences in our model must be a mix of preferences, for example, a combination of preferences with constant relative risk aversions and increasing relative risk aversions. We also show the impossibility of such price dynamics to occur for log-linear preferences. In other words, the case for complex dynamics to occur with particular production functions and utility functions is much more limited. As a result, complex dynamics are not as easily observable as in models without production. Finally, we are able to confirm the results from Goenka, et al. (1998) on the Pareto rankability of Nash equilibria in terms of market thickness, which has important welfare implications for business cycle-like activity based on the coordination equilibria that can arise in market game models.
Essays on Environmental and Labor Economics
(University of Kansas, 2018-08-31) Yaseen, Asmaa; Earnhurt, Dietrich; Ginther, Donna; Earnhurt, Dietrich; Ginther, Donna; Slusky, David; Tsvetanov, Tsvetan; Boussofara, Naima
This dissertation is the collection of three papers on environmental and labor economics. The First chapter is on environmental economics. The main objective of this chapter is to explore the effect of local community pressure on the corporate environmental management effort expended by factories regulated under the Clean Water Act. Many factors influence corporate environmental management, which I interpret to include the full spectrum of pollution control techniques from reactive end-of-pipe treatment techniques to proactive pollution prevention protocols. The analysis of this chapter empirically exploits to two survey-based measures of local community pressure. One captures the perceived need to respond to local concerns over the natural environment. The other measure captures the economic importance of the polluting facility in the local community. These two measures capture countervailing forces. While the first reflects greater local environmental pressure, the second reflects less local environmental pressure. Our results reveal that local community pressure positively influences corporate environmental management in general; however, in certain cases, the two local dimensions reveal distinctions between a community’s desire for environmental protection and economic activity. The second chapter is also on environmental economics, which serves as an extension to the first chapter. Here, I explore the effect of spatially defined local community characteristics on the wastewater management environmental choice by constricting rings of community characteristics within 1,5,10 and 15 miles of the regulated facility location. The study includes not only economic characteristics of the community, but also socioeconomic, demographic and political community characteristic that serve as proxies of local community pressure. In addition, to empirically answer the question whether local communities promote water pollution control, this study assesses whether the communities are environmentally discriminated against on demographic characteristics or social instability. Results reveal wealthier communities appear to induce facilities to increase their environmental efforts and improve wastewater management practices but this effort fades as the distance to the facility grows. The third chapter of this dissertation studies the effect of terrorist attacks on the labor market to provide empirical evidence on the economic consequences of terrorism on the labor supply. It Is a co-authoring work with William Duncan. We develop a set of hypotheses from classical labor economic theory around the consumer maximization problem and propose a threshold for endangerment costs that, when reached, causes individuals to choose not working and less consumption, rather than work and face the danger of terrorism and violence. As such, I hypothesize that increased endangerment costs lead to fewer people working, less hours worked per week, lower wages, and less job permanence. The importance of this kind of research cannot be understated, as the mechanisms through which terrorism impacts a society are still not clearly understood. Many studies of terrorism focus on more advanced countries (Eckstein and Tsiddon 2004). But in Iraq, one of the major economic consequences of the conflict and subsequent terrorist activity has been the shocks to the labor supply. In addition, understanding the impact of terrorist attacks on labor supply of countries under severe pressure from terrorism may provide future motivation for research into refugee crises and labor policies of destination countries. The main contribution of this chapter to the ongoing literature is study the effect of terrorism in Iraq on the labor supply, using several measures of the labor force: employment status, wages, hours worked per week and job permanence. Moreover, I generate a geospatial variable to incorporate potential spillover effects of terrorism. To do this, we use a nationwide household socio-economic survey conducted in 2007 by the Iraqi Organization for Statistics and Information Technology (COSIT), Kurdistan Regional Statistics Office (KRSO) and the World Bank. This data was only recently released, and thus is largely unexplored. I generate two different data sets (panel and cross-sectional) based on both the Arabic and English version of the household socio-economic survey. To the best of my knowledge, this might be the first study that empirically explores the economic consequences of terrorism on the labor market within a country that faced sequential terrorist attacks such as Iraq. Briefly, the preliminary results show strong evidence in favor of each hypothesis.

Browse

Recent Submissions