Economics Theses and Dissertations
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Item Essays on the Macroeconomic and Measurement Consequences of Government Systems(2024) Navarrete, Michael Alexander; Hellerstein, Judith; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)In Chapter 2, I study the macroeconomic consequences to delaying a fiscal stabilizer. Specifically, I study how delays to unemployment insurance benefits during the pandemic recession (fiscal stabilizer) affected consumption (macroeconomic consequence). The United States experienced an unprecedented increase in unemployment insurance (UI) claims starting in March 2020. State UI-benefit systems were inadequately prepared to process these claims. In states that used an antiquated programming language, COBOL, to process claims, potential claimants experienced a larger increase in administrative difficulties, which led to longer delays in benefit disbursement. Using daily debit and credit card consumption data from Affinity Solutions, I employ a two-way fixed-effects estimator to measure the causal impact of having an antiquated UI benefit system on aggregate consumption. Such systems led to a 2.8-percentage-point decline in total credit and debit card consumption relative to card consumption in states with more modern systems. I estimate that the share of claims whose processing was delayed by over 70 days rose by at least 2.1 percentage points more in COBOL states relative to non-COBOL states. Based on a back-of-the-envelope calculation using 2019 data, my results suggest that the decline in consumption in COBOL states in 2020 after the pandemic-emergency declaration corresponds to a real-GDP decline of at least $105 billion (in 2019 dollars). In Chapter 3, Joonkyu Choi, Samuel Messer, Veronika Penciakova, and I study how business formation patterns in 2020 were affected by antiquated UI benefit systems. New business formation surged after the pandemic recession, but the causes of this surge are not well understood. The expansion of UI benefits under the CARES Act, coupled with the reduction of work search, provided unemployed potential entrepreneurs with the funds and time needed to develop business ideas. States that used an antiquated programming language, COBOL, to process claims experienced a lower growth rate in UI payments per unemployed than states with more modernized systems. Using business application data from the Business Formation Statistics, we employ a two-way fixed-effects estimator to measure the causal impact of having an antiquated UI benefit system on business formation. Such systems led to a 6.6 percent decline in business applications per capita in COBOL states relative to more modernized states from March 2020 to July 2020. We also find some evidence of business quality deterioration while the Federal Pandemic Unemployment Compensation program was in effect. Our findings highlight the potential role of UI policy in contributing to economic recoveries by fostering entrepreneurship. In Chapter 4, the RESET team Gabriel Ehrlich, John Haltiwanger, David Johnson, Ron Jarmin, Seula Kim, Jake Kramer, Edward Olivares, R. Rodriguez, Mathew D. Shapiro, and I use point of sales (POS) data to construct real sales and compare these POS generated statistics to official statistics. Businesses, individuals, and government policymakers rely on accurate and timely measurement of nominal sales, inflation, and real output, but current official statistics face challenges on a number of dimensions. First, these key indicators are derived from surveys conducted by multiple agencies with different time frames, yielding a complex integration process. Second, some of the source data needed for the statistics (e.g., expenditure weights) are only available with a considerable lag. Third, response rates are declining, especially for high-frequency surveys. Focusing on retail trade statistics, we document important discrepancies between official statistics and measures computed directly from item-level transactions data. The long lags in key components of the source data delay recognition of economic turning points and lead to out-of-date information on the composition of output. We provide external data sources to validate the transactions data when their nominal sales trends differ importantly from official statistics. We then conduct counterfactual exercises that replicate the methodology that official statistical agencies use with the transactions data in the construction of nominal sales indices. These counterfactual exercises produce similar results to the official statistics even when the official nominal sales and item-level transactions data exhibit different trends.Item Essays on Corporate Debt Structure and Monetary Policy Transmission(2024) Mao, Chenyu; Kalemli-Ozcan, Sebnem SK; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)The financing structure of firms has changed markedly over the last few decades as market-based finances have evolved. What's the role of corporate debt structure in monetary policy transmission? This dissertation delves into the heterogeneous impact of monetary policy on nonfinancial firms, examining the role of corporate debt structure in shaping transmission mechanisms. Chapter 1 explores the spillover effects of the Corporate Bond Purchase Programs on bank-dependent private firms. In particular, I study the Federal Reserve's Secondary Market Corporate Credit Facility (SMCCF) during the COVID-19 pandemic. Using a model that delineates the capital structure channel, the study shows that the spillover effects on non-targeted private firms are limited if the banking sector is not constrained. Moreover, using an event study approach with the loan and bond dataset, the study shows that SMCCF has a limited effect on private firms when its associated banks are not constrained in 2020. The results suggest that despite the implementation of the SMCCF, bank-dependent private firms experienced minimal impact, indicating the program's limited effectiveness in saturated credit markets. Chapter 2 introduces the concept of the zombie lending channel, uncovering a phenomenon where unviable firms are less affected by contractionary monetary policy due to lenders' inclination to prevent defaults by extending loans. This chapter emphasizes the importance of strengthening bank balance sheets and implementing policies to deter risky lending practices during tight financial conditions. The empirical findings illustrate that during periods of tightening monetary policy, unviable firms, colloquially termed "zombies," tend to receive continued lending support, thereby perpetuating inefficiencies within the financial system. In Chapter 3, the focus shifts to a particular dataset covering both public and private Spanish firms. The research reveals that firms with higher reliance on bank loans experience a lower interest rate pass-through during expansionary monetary policy shocks. Leverage and liquidity also play significant roles in determining heterogeneous responses to contractionary and expansionary monetary policy measures. Specifically, the results indicate that corporate debt structure significantly influences firms' responses to monetary policy shocks, with leverage and liquidity serving as critical determinants of transmission effectiveness. Through these three chapters, this dissertation provides insights into the nuanced dynamics between monetary policy, corporate finance, and financial stability, contributing to a deeper understanding of the mechanisms shaping the behavior of nonfinancial corporates in response to monetary policy initiatives.Item Essays on Labor Markets(2024) Nguyen, The Linh Bao; Urzua, Sergio; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)The modern work landscape is undergoing a period of significant transformation. In this dissertation, I delve into three distinct, yet interconnected, themes that shed light on the complex interplay between abilities, tasks, and well-being within this changing environment. In Chapter 1, I explore the mental health implications of a recent and dramatic shift in work arrangements: the rise of Work From Home (WFH) during the COVID-19 pandemic. Specifically, the chapter evaluates the impact of working from home (WFH) on mental health, relative to other forms of workplace arrangements during the pandemic. Leveraging the longitudinal structure of the data from the British Cohort Study, the paper explores two novel dimensions that potentially influence the mental health effects of WFH, early-age cognitive and social abilities. To account for self-selection, the identification relies on a Roy selection model with correlated factors and cost-shifters. The findings suggest that WFH has negative mental health effects compared to a workplace arrangement (WP), but positive effects compared to not working (NW). Additionally, WFH has the largest detrimental impact on the mental health of individuals with lower social abilities relative to WP, and it confers the most substantial benefits on those with higher cognitive abilities compared to NW. Finally, the model predicts that investments in cognitive and social ability mitigate the cost and amplify the benefits associated with WFH. Next, in Chapter 2, I shift the focus to a contentious education policy that has recently received much attention, affirmative action in education. In this chapter, I examine the impacts of an education affirmative action policy on not only education outcomes, but also later labor market outcomes, in the context of Vietnam. In particular, the policy in this study provides nationwide direct high school admissions to ethnic minority students, exempting them from taking a high-stakes high school entrance exam. Using the joint variation in the student's ethnicity and birth year in a difference-in-differences framework, I show that the policy improves the probability of entering high school for ethnic minorities. Further, leveraging this policy-induced variation as an instrument, I explore the policy's long-term effects on labor market outcomes. The results indicate that ethnic minority students who were encouraged to enter high school by the policy are more likely to participate in the labor force, obtain employment, and hold salaried positions. The analysis of occupation-specific skill distributions and task intensity suggests that these effects are likely attributable to the human capital channel rather than education signaling. Despite its overall benefits, the policy's impacts are not equally distributed across the gender line and wealth levels: Male and wealthy ethnic minority students benefit more from the policy. Using a random forest model to identify the compliers' characteristics confirms that future family concerns among females and financial constraints are major frictions for ethnic minorities to benefit from the policy. Overall, these results suggest that while affirmative action positively impacts education and labor outcomes for ethnic minorities, targeted policies are vital for equitable distribution, addressing gender and financial barriers. Finally, Chapter 3 closes the discussion on the topic of tasks and skills at the critical early career stages. The early stages of one's career are a dynamic period of exploration and skill development not only from formal training but also through on-the-job tasks. Therefore, the paper explores the pivotal relationship between abilities and tasks during this time. Specifically, it investigates how cognitive, social, and manual abilities are rewarded in this crucial period, while also emphasizing the role of abilities in sorting individuals across task-based occupations. The paper employs the British Cohort Study 1970 in a Roy selection model with correlated factors. In this context, the Roy model allows the analysis to focus not only on the returns to abilities, but also on the sorting process within the context of occupations categorized by their task composition. The results reveal a task-specific nature in the returns to abilities during early career stages, emphasizing the importance of aligning abilities with the specific task requirements of chosen occupations for optimal rewards. Additionally, the paper also highlights the role of abilities in early career sorting, showing that individuals with high cognitive and social abilities tend to gravitate towards knowledge-based occupations - occupations that are characterized by intensive cognitive tasks or intensive social tasks. These findings offer valuable insights for both young individuals navigating their career paths and policymakers crafting programs aimed at facilitating informed decision-making and enhancing success in the early career landscape.Item Essays on Economics of Education(2024) Morales Lema, Catalina; Urzúa, Sergio; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)In this dissertation, I use data from Chile to study the determinants of schooling trajectories. Chapters 1 and 2 focus on higher education, Chapter 3 on secondary education, and Chapter 4 on teachers. Chapter 1 explores the role of a socio-emotional ability, self-efficacy, in understanding why students with comparable qualifications transit different college paths. This study is the first of two papers dedicated to studying the role of self-efficacy in the path students follow after high school. This first paper discusses the psychology literature on self-efficacy and how it can be measured. Then, through exploratory factor analysis and rich administrative data from Chile, I show that self-efficacy is a construct different from pure cognitive ability. Finally, I estimate a discrete choice model for the decisions of taking the college admissions test, applying, enrolling, and graduating from college. I find that conditional on cognitive ability, a higher self-efficacy increases the probability of taking the college admissions test, applying, and graduating from college within eight years. Analyzing heterogeneous effects, I find a bigger effect among students from low-SES families, which are precisely the ones with lower base levels of these outcomes. In Chapter 2, I take a step further and explicitly model the role of self-efficacy on the trajectories students follow after high school using a structural approach. I estimate a multi-stage discrete choice model with unobserved heterogeneity to study the role of self-efficacy on college applications, enrollment, and graduation decisions. The results indicate that higher self-efficacy significantly increases the likelihood of taking the college admissions exam and submitting a college application, conditional on cognitive ability. For students who apply, increasing self-efficacy also increases their probability of enrolling in and graduating from college, even more than a comparable increase in cognitive ability. From the analysis of socioeconomic groups, I document that improving students' self-efficacy could reduce the socioeconomic gaps in the percentage of students who take the college admissions test, apply, and enroll in college. These findings suggest that policies oriented to boost students' self-efficacy could alleviate income-related inequalities in access to higher education. Chapter 3 is co-authored with Dr. Daniel Kraynak and Dr. Cristina Riquelme. It investigates how local economic conditions impact human capital accumulation in Chile's copper-producing zones using high-frequency data on copper prices, school attendance, and academic performance. To measure the exposure to copper price volatility, we created an index by determining the proportion of workers in the area associated with the metal mining industry. We performed a difference-in-differences analysis by comparing students in areas with low and high copper exposure during periods of varying prices. The results indicate that increasing copper prices in more exposed areas decreases the quarterly attendance of high school students in the same period. We also find that students compensate for this lower attendance by increasing their attendance in the next quarter. Analyzing test score performance, we find evidence of a positive effect of local economic conditions on students' math performance in the same period. However, this effect is completely offset in the following year. Chapter 4 is co-authored with Dr. Macarena Kutscher, Dr. Cristina Riquelme, and Dr. Sergio Urzúa. It explores the contribution of teachers to student performance in Chile's college admission test (PSU). Our analysis is based on a unique teacher-student matched dataset and decomposition methods. The findings suggest that teachers' performance on the PSU and the characteristics of their educational degrees are significant predictors of students' success. When controlling for students' and predetermined school characteristics, the gap between vouchers and public schools is reduced. Productivity differences emerge as key factors driving the disparities across school types. The analysis underscores the crucial role of teacher-student interactions in shaping student outcomes.Item Essays on Higher Education(2024) Montoya Agudelo, Alejandra; Urzúa, Sergio; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)In this dissertation, I quantify the impact of uncertainty on schooling postsecondary choices, study the returns to higher education degrees, and analyze the effects of policies that intend to reduce college education costs. In the second and third chapters, I employ structural Roy models and data from the National Longitudinal Survey of Youth 1997 to analyze postsecondary schooling decisions, focusing on four- and two-year college paths. These models have three sources of unobserved heterogeneity affecting earnings and decisions: cognitive, socioemotional, and mechanical latent abilities. The second chapter employs a dynamic Roy model to quantify the impact of uncertainty when making postsecondary schooling. While schooling choices maximize expected value, some individuals opt for alternatives that, in hindsight, do not yield the highest ex-post net value due to idiosyncratic shocks affecting earnings and schooling costs that are unknown when decisions are made. This uncertainty generates significant losses: I estimate that aggregate net value would increase by 11% if individuals had perfect foresight. Moreover, I study how decisions would change under perfect foresight and characterize individuals more likely to be affected by uncertainty. I also explore policy simulations to study the effects of an annual two-year college $16,500 subsidy, including the characterization of compliers—those more likely to attain a two-year college degree because of the subsidy. The third chapter analyzes the interplay of observed and unobserved dimensions as determinants of marginal treatment effect (MTEs) through decomposition analysis. We posit a static Roy model with unordered schooling choices. We focus on MTEs as they shape other treatment effects and capture the impact for those responding to minimal incentives. Additionally, we estimate the model separately for women and men, focusing on describing how responses and treatment effects vary between these two groups. We find different ability distributions and returns to ability for women and men. Moreover, we document how different observed characteristics and ability dimensions play different roles in determining the heterogeneity observed in MTEs across both groups. The last chapter investigates the impact of financial aid programs on high-quality private colleges' decisions, leveraging exogenous variation from a large-scale aid program in Colombia, where beneficiaries could only enroll at high-quality colleges. Using a difference-in-differences strategy and data for all private colleges in the country, we find that tuition increased by about 6.9 percent after the government launched the aid policy. We contribute to the literature by analyzing the effect of financial aid programs on tuition for high-quality universities and studying how universities might change other outcomes beyond tuition in response to the policy. We show universities hire more faculty members, keep the student-to-faculty constant, and open new undergraduate programs. Our findings support a narrative where prestigious colleges prioritize their reputation, opting for gradual expansion without compromising quality.Item Essays on Voter Behavior and Party Representation(2024) Perilla Garcia, Jorge Enrique; Kaplan, Ethan; Drazen, Allan; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)In this dissertation I study how political agents such as voters and corporations behave in a context of increasing political polarization. I investigate the role that access to power has on the electoral performance of radical parties, the effect of racial unrest in the United States on campaign contributions, and whether political giving by corporations and individuals has polarized in recent years. In the last few decades, radical parties have become increasingly important in Europe and Latin America. These parties often adopt policies that depart from the mainstream economic consensus and may threaten democratic institutions. In chapter 2 of this dissertation, I explore the role that the incumbency effect may play in the success of far-right and far-left parties in Europe and Latin America. I find that, on average, and in a sample of municipal council elections held in Colombia, Sweden, Finland, Spain, and Brazil, radical parties enjoy an incumbency advantage that is as large as that of non-radical parties. To estimate these effects, I compare elections where parties marginally win or lose an additional seat in the council. This study provides suggestive evidence that far-left parties have a larger incumbency advantage than far-right parties. The wide heterogeneity of far-right parties in Sweden and Colombia is the primary driver of this difference. I posit that the difference in question could be attributed primarily to the far-right Sweden Democrats’ nonparticipation in coalitions in municipal governments and the absence of an effect of incumbency on the probability of running again for political parties in Sweden. The findings from this chapter suggest that the normal course of the democratic process may lead to radical parties encroaching on positions of power. In chapter 3, I study the effect of racial unrest on campaign contributions and how this effect is mediated by media coverage. Using a regression discontinuity in time, I find that political donations increased after the killing of George Floyd in May 2020. Exploiting discontinuities in media market borders in the United States I find that counties that were more exposed to coverage of the protests by a TV station owned by Sinclair, a conservative media conglomerate, were less likely to support Republican candidates. I provide suggestive evidence that this non-intuitive result could be the consequence of higher coverage of protests by Sinclair-owned TV stations when compared to other TV stations. By rising salience of the issue of racial tensions where Democrats were more trusted than Republicans, this increased media coverage may have depressed donations to the Republican party. I also report suggestive evidence that in counties exposed to more TV ads about police brutality there was higher support for the Democratic party than in less exposed counties. In chapter 4, in a joint work with Ethan Kaplan, Andrew Sweeting, and Yidan Xu, we measure and decompose the partisanship of corporate campaign contributions from 1990 to 2020 using a variance index approach, and provide a comparison analysis of individual donations. Despite previously documented trends towards greater partisanship in voting and political discourse, the donations of corporate PACs have remained bipartisan both in aggregate and individually. This is true across most, but not all, sectors of the economy. Individual giving is, and always has been, partisan at the individual level (individuals usually only give to one party), although there was greater partisanship in the giving of the largest individual contributors in the 2020 election. We make suggestions for future research including suggestions on how to measure other dimensions of corporate polarization which may be more salient to the public.Item Essays on Mental Health, Education, and Parental Labor Force Participation(2024) Nesbit, Rachel; Kuersteiner, Guido; Pope, Nolan; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)This dissertation consists of three chapters in empirical microeconomics. The first chapterfocuses on mental health in the criminal justice system. I show that mandated mental health treatment during probation decreases future recidivism and further that paying for these probationers to receive treatment would be a very cost-effective program. The second chapter focuses on the labor supply of same-sex couples. My coauthors and I document the earnings patterns in same-sex couples after the entrance of their first child and contrast them with the earnings patterns in opposite-sex couples. The third chapter evaluates state-level policies to offer a college admissions exam (either the SAT or ACT) free to all high school students. I estimate precise null effects of the policies on future college attendance. The three chapters are described in further detail below. Chapter 1. Mental health disorders are particularly prevalent among those in the criminaljustice system and may be a contributing factor in recidivism. Using North Carolina court cases from 1994 to 2009, this chapter evaluates how mandated mental health treatment as a term of probation impacts the likelihood that individuals return to the criminal justice system. I use random variation in judge assignment to compare those who were required to seek weekly mental health counseling to those who were not. The main findings are that being assigned to seek mental health treatment decreases the likelihood of three-year recidivism by about 12 percentage points, or 36 percent. This effect persists over time, and is similar among various types of individuals on probation. In addition, I show that mental health treatment operates distinctly from drug addiction interventions in a multiple-treatment framework. I provide evidence that mental health treatment’s longer-term effectiveness is strongest among more financially advantaged probationers, consistent with this setting, in which the cost of mandated treatment is shouldered by offenders. Finally, conservative calculations result in a 5:1 benefit-to-cost ratio which suggests that the treatment-induced decrease in future crime would be more than sufficient to offset the costs of treatment. Chapter 2. Existing work has shown that the entry of a child into a household results in alarge and sustained increase in the earnings gap between male and female partners in oppositesex couples. Potential reasons for this include work-life preferences, comparative advantage over earnings, and gender norms. We expand this analysis of the child penalty to examine earnings of individuals in same-sex couples in the U.S. around the time their first child enters the household. Using linked survey and administrative data and event-study methodology, we confirm earlier work finding a child penalty for women in opposite-sex couples. We find this is true even when the female partner is the primary earner pre-parenthood, lending support to the importance of gender norms in opposite-sex couples. By contrast, in both female and male same-sex couples, earnings changes associated with child entry differ by the relative pre-parenthood earnings of the partners: secondary earners see an increase in earnings, while on average the earnings of primary and equal earners remain relatively constant. While this finding seems supportive of a norm related to equality within same-sex couples, transition analysis suggests a more complicated story. Chapter 3. Since 2001, more than half of US states have implemented policies that requireall public high schools to administer either the ACT or SAT to juniors during the school day free of charge, making that aspect of the college application process less costly in both time and money. I evaluate these policies using American Community Surveys (ACS) from 2000 to 2019. I augment ACS data with the Census Master Address File to precisely identify the state in which individuals took the exam. Exploiting variation in policy implementation across state and time, I find across all specifications that increased access to standardized college entrance exams has no effect on subsequent college attendance. It also does not shift students between public and private colleges or between two- and four-year programs. The results of this chapter suggest that, to the extent that these policies were introduced to encourage college-going among marginal students, they did not accomplish their goal. This provides evidence about the kinds of support necessary to influence educational outcomes for students from disadvantaged families.Item Essays on Institutions, Governance and Economic Growth(2024) Batra, Kartikeya; Galiani, Sebastian; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)Economic development and growth are impacted by several factors. Among these, existing social institutions, and quality of governance are important determinants. These factors become especially relevant in the context of low and middle-income countries. Such nations are home to a large share of the world’s population, and aspire to grow their economies at high rates. Understanding constraints to their socio-economic development and prescribing policy solutions is, therefore, an important area of research. In the three chapters of this dissertation, I explore three different issues that impact social institutions and governance, which, in turn, impact socio-economic development. I do so in the context of India, which is home to approximately 20% of the world’s total population. In the first chapter, I explore whether historical land policies impact long-run socio-economic outcomes, including the persistent institution of the caste system and stereotypes associated with it. I find that lower land concentration does lead to improved socio-economic outcomes, especially for the socially marginalized landless communities. In the second chapter, I test whether enhanced state capacity by means of better public infrastructure improves the performance ofbureaucrats in rural India. I find that better roads lead to better bureaucratic performance, possibly due to improved monitoring by higher officials whose mobility is positively impacted. Finally, in the third chapter, I examine whether the size of a political party impacts its decisions to field wealthy candidates. I find that a smaller political party is likely to field a wealthier candidate than a bigger political party, possibly due to fewer avenues to mobilize resources. This is important, for the wealth profile of a candidate, in turn, has the potential to impact governance outcomes in their area. The three chapters are aimed at understanding causal relationships pertaining to important questions in the context of India’s society, political economy and economic development. My results provide novel contributions to relevant strands literature, and also allow me to provide relevant policy prescriptions.Item ESSAYS ON CURRENCIES, CORPORATE BORROWING, AND INTERNATIONAL MACROECONOMICS(2024) Lee, Seungeun; Kalemli-Ozcan, Sebnem; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)This dissertation studies corporate real and financial decisions in responses to the global macroeconomic environment. In Chapter 1, I study the dynamic relation between dollar invoicing in exports, dollar borrowing, and the global financial cycle. I document a positive co-movement between dollar invoicing in exports and firms’ dollar borrowing, and also a positive link between dollar borrowing and the VIX. I write down a model consistent with these correlations: during global financial downturns when the VIX is high and dollar liquidity is tight, firms increase dollar invoicing to secure dollar revenues, facilitating dollar borrowing with these revenues as collateral. The model shows that an endogenous increase in dollar invoicing amplifies the responsiveness of dollar borrowing to positive global risk shocks (or safety shocks), affecting responses in variables like UIP premium, exchange rates, and foreign asset holdings. Empirical evidence from a comparison between Turkey and Thailand supports these insights. Chapter 2 presents both empirical and theoretical analyses about the effects of macroprudential policy measures (MPMs). I first examine the impacts of MPMs on the response of corporate loans to a U.S. monetary expansion, using panel data constructed from Dealscan database, IMF macroprudential policy index (MPI), and other macro variables. I find that MPMs attenuate the increase in corporate loans responding to a U.S. monetary expansion, but the effects are dampened as the country’s share of foreign loans goes up. This is because firms borrow more across borders with a decrease in the U.S. rate but MPMs cannot regulate the international borrowing. The introduction of capital flow management measures (CFMs) helps MPMs in managing corporate loans since they regulate capital inflows directly. My findings from a two- period model are consistent with the empirical evidence. I find that a special case of MPM, concentration limits, reduces the level and the growth of corporate loans when there is a decrease in the global interest rate. However, the effects of the MPM are dampened when firms are allowed to increase foreign borrowing, which can be resolved with the introduction of CFMs. An additional constraint imposed by a CFM sets a lower bound for a measure of the effectiveness of MPMs by limiting firms from borrowing overly from abroad.Item ESSAYS ON DIGITAL ECONOMICS(2024) Kim, Sueyoul; Jin, Ginger Z; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)This dissertation studies economic questions in the digital environment. Specifically, it examines whether the design of a seller reward program on a livestreaming platform is optimal from the platform's revenue perspective, and how consumers' privacy concerns affect their behavior. In the first chapter, I present an empirical framework for assessing the impact of seller rewards programs on platform revenue. The context is a Korean livestreaming platform, where sellers (called streamers) broadcast content and receive tips from viewers to generate revenue. Platform revenue comes from commission charged on this revenue, and the reward is a permanent commission discount provided through performance-based monthly tournaments. I initially collect individual streamer-time level data, including efforts (measured by streaming hours), tipping revenue, and reward program acceptance. The collected data, along with anecdotal evidence, indicate that streamers exhibit heterogeneity in profitability, measured by tipping revenue per watch time. Furthermore, they tend to compete within specific broadcasting categories (e.g., within the Game category) to attract viewers. I then estimate a dynamic model to describe the effect of program design on streamers' behavior. The key trade-off for the livestreaming platform is that offering more commission discount rewards may increase the total tipping revenue by encouraging streamers---especially more profitable ones---to stream more, but it results in the platform taking a substantially smaller share of the generated tipping revenue. Counterfactual simulations reveal that the last platform share effect quantitatively dominates. This suggests that reducing the reward program by providing the reward to a smaller number of streamers or decreasing the commission discount rate would raise platform revenue. Additionally, these simulations identify opportunities to raise platform revenue by reallocating approval slots more granularly, at different broadcasting category levels instead of the entire platform level. In the second chapter, I empirically study how consumers' privacy concerns affect their behavior. Using panel survey data from South Korea that followed 5,328 individuals for four years, I find that privacy concern has a significant negative effect on their Facebook and Twitter usage. I additionally find that such concern has heterogeneous effects on online shopping behavior, while cloud storage services remain unaffected. When privacy-related events such as the Facebook-Cambridge Analytica data scandal in 2018 increases privacy concern, it appears to harm not only Facebook but also other firms in the industry (e.g., Twitter). Because a private firm does not internalize such negative spillovers, the privacy protection level determined in a free market could be different from the social optimum.