Economics Theses and Dissertations
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Item An Empirical Analysis of the Determinants of Initial Occupational Choice by Male High School Graduates(1986) Cox, Donald Francis; Brechling, Frank; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, MD)This dissertation consisted of an empirical analysis of the determinants or initial occupational choice by male high school graduates. The approach used was based on the theory of random utility. According to this approach, the individual selects a particular outcome from a set of possible outcomes based on both observed and unobserved characteristics of the individual and the particular possible outcome. In this analysis, the occupational choice set contained three possible outcomes. These possibilities were civilian sector employment, military service and college enrollment. For empirical analysis, a sample of 1,748 male high school graduates was drawn from the National Longitudinal Survey of Youths (1979-1981). The empirical model consisted of a mixed discrete/continuous simultaneous 4 equation system. Three estimation strategies were used. The first was a sample two stage logit/ordinary least squares procedure. The second was a modified two stage logit/ordinary least squares procedure that corrected for self-selectivity bias. the third strategy consisted of a modified two stage logit/ordinary least squares procedure that corrected for both self-selectivity and choice-based sampling bias. The estimation results indicate that the decision to enlist is most sensitive to the net income of the individual's family and the predicted civilian sector wage. The military experience of the individual's father and the desire to acquire additional training are also important in this decision. In addition, the differences in the estimates across the three estimation procedures illustrate the importance of correcting for sample biases.Item Economic Development in Southern Italy Since the Establishment of La Cassa per il Mezzogiorno(1965) De Bone, Anthony Louis; Bennett, Robert L.; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md)The study begins with a survey of the social and economic structure of the area. Attention is then focused on the nature of economic dualism in Italy by pointing out that the Northern economy yields to those employed in it a reasonably high income per capita, while the Southern economy provides for those working in it a low income per capita. In 1950 the Italian Government undertook to increase the level of public investments under a ten-year development plan for the South. It entrusted the execution of this plan to a new agency, La Cassa per il Mezzogiorno . Its life was soon extended to 1965 and more recently to 1980. The ultimate goal of the program was to reduce the differences in the consumption and income levels between the North and the South and to integrate the South into the national economy. Southern developments since 1950 and their effects on the economy are discussed, with emphasis on the Cassa programs and investments. It is discovered that many serious obstacles must be overcome in order to change the economic structure of a region such as Southern Italy. Despite the large transfer of resources to this area, The economic structure has changed little since 1950. However, whatever judgment may be passed on the Cassa at a later date, it is apparent that until now production has been concentrated in those sectors that offer relatively little possibility of rapid growth.Item The Economic Development of Iran(1948) Abbas, Ordoobadi; Ratzlaff, C.J.; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md)In the machine age, with the advance of mass production, a new problem has occupied the minds of economists. This new problem is not the Malthusian doctrine of inadequate supplies but rather that of a rate of production too high to be sold continually at profitable prices. With periodic insufficiency of demand industrial countries have faced depressions of varying duration and intensity, which have continued until the rate of production and demand once more were in equilibrium. Despite increased industrial productivity a large part of the world subsists at a standard of living which provides insufficient food values and which does not yield a minimum amount of housing, medical care and education. In industrial countries from ten to fifty per cent of the working population is unemployed during depression periods although workers are willing and able to work in order to obtain goods. In the non-industrial countries, on the other hand, millions of workers are victims of what has been termed "disguised unemployment." They find themselves at tasks which are much below their potential productivity and consequently yield a standard of living substantially under that which they are capable of achieving. The solution to this problem in the undeveloped areas lies partly in spreading the gains of science, both pure and practical; in combining adequate doses of capital and management with the supplies of labor; and in using the excess of resources originating from technical advances in industrial countries . A program on this line would at the same time eliminate inadequate demand in the high-standard countries and depressing poverty in the low-standard countries. As far as Iran is concerned, it is necessary to know her economic background before the necessary measures for economic development can be discussed intelligently. In this respect, in spite of a few works by Iranian and foreign scholars, the materials on the economy of Iran, in English literature, are limited. The result of insufficient and first-hand information or "little knowledge" of some writers has been a distorted picture in which certain points are overemphasized, while the significance of others are under-estimated. Statistics, censuses and data in many aspects are lacking. The absence of statistics makes the study very difficult . Due to the scarcity of published data on many of the topics discussed in the present study, it has been necessary to secure the desired information and data directly from the Ministries of Iranian Government and/or offices concerned. The present economic situation of Iran is the product of an evolution, and can only be under stood by a study of its economic background. Therefore, the application of August Comte's adage that "no conception can be understood except through its history" seemed a logical approach in this study.Item THE VOLUNTARY CREDIT RESTRAINT PROGRAM - A NEW EXPERIMENT WITH AN OLD PROBLEM(1954) Singleton, Roy L.; Gurley, John G.; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md)Item EMPIRICAL ESSAYS ON FINANCIAL ECONOMICS(2019) Wang, Jun; Kyle, Albert; Shea, John; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)Using institutional investors’ holdings data from Thomson Reuters’ 13F filings, the first chapter studies and tests the market microstructure invariance hypothesis proposed by Kyle and Obizhaeva (2016a), and in particular its implied −2/3 law on the relationship between investors’ bets and stock trading activity, defined by the product of price, volume, and volatility. With the identifying assumption that institutional asset managers’ holdings are proportional to their bets, our empirical results support the −2/3 law implied by the invariance hypothesis. The −2/3 law is robust to a variety of estimation strategies and robustness checks. Then we study whether distributions of bets are invariant and log-normal. Data strongly support the hypothesis before March 1998, and the weak version of the invariance hypothesis (the mean of distributions of bets is invariant) continues to hold in the remaining periods. The strong version failing to hold after March 1998 may be due to adjustment costs and very tiny positions. The second chapter studies the role of convertible debt on investment. Convertible debt in the capital structure facilitates investment for a firm (especially for a firm with high leverage) since it reduces the firm's interest payments and leverage upon conversion, making it easier for the firm to issue new financial instruments. However, the same property may bring an agency issue: The potential of conversion into equity dilutes existing shareholders' profits, decreasing the firm's motivation to do investment. We hypothesize that the agency issue brought by convertible debt is minimal in very competitive markets since the external pressure is high, so that the facilitation role may outweigh the dilution role, suggesting a positive effect on investment, and that the agency issue brought by convertible debt may outweigh or just offset the facilitation role in less competitive markets since the external pressure is not high, suggesting a negative or insignificant effect on investment. Using data from Compustat, we find that convertible debt has a positive and quadratic effect on investment rates in competitive industries (industries with very low HHI), a negative and quadratic effect on investment rates in oligopoly industries (intermediate HHI), and an insignificant effect on investment rates in highly monopolistic industries (high HHI). These effects are robust to including different control variables. We also suspect the interaction of warrants and competition has similar effects. These results may have implications on the announcement effects or long term effects of convertible debt issuance under different industry structures.Item Essays on Econometrics and Macro-Finance(2019) Mao, Zi-Ying; Heston, Steven; Kuersteiner, Guido; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)This dissertation consists of three chapters on empirical macro-finance and the associated econometric methods. In the first chapter, I develop a semiparametric single-index method for estimating multivariate jump-diffusion processes to model federal funds futures. I find that high-frequency changes in federal funds futures around FOMC announcements, which are the predominant measure of monetary policy shocks in the asset pricing and macroeconomic literature, are strongly forecastable by the estimated models, suggesting that they are not truly exogeneous. In contrast, the unexpected changes in federal funds futures on FOMC announcement days constructed from the semiparametric method are unforecastable by construction, and are strongly correlated with, but not the same as such high-frequency changes around FOMC announcements, suggesting that they are a better measure of monetary shocks. In the second chapter, I study the predictability of bond yields. I find that federal funds futures, a proxy of monetary shocks, exhibit strong forecasting power on bond yields conditional on information contained in the cross section of the yield curve. Such additional return-forecasting information is effectively summarized by a single factor, and is not captured by unspanned macro factors. By focusing on the return-forecastability of trading strategies that take opposite positions at two different tenors by equal amount and unwind these positions one-day later, I bypass common econometric issues arising from the overlapping nature of bond excess returns. In the third chapter, I study macro factors in the risk premia of G10 currencies. Motivated by the finding from a structural model with minimalistic assumptions that the predictability of currency risk premium arises from the differences in the market prices of risks between the home and foreign countries, I tackle this problem by identifying return-forecasting macro factors for the G10 currencies. Based on dynamic factor analysis on a large panel of macro variables, it is found that common macro factors possess strong forecasting power on the risk premia of G10 currencies, especially at longer maturities. The single most important factor loads heavily on activities in the US housing market and bond yields, which exhibits uniform and nonlinear forecasting power across all currencies and at a variety of maturities. The strong in-sample forecasting power preserves out-of-sample.Item Finance and Productivity(2019) Sever, Can; Kalemli-Ozcan, Sebnem; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)Financial crises are associated with large and persistent output losses, pointing to productivity losses. A potential channel for this phenomenon is the negative impact of disruptions in financial markets on innovative activity, since innovation is the key driver of productivity and economic growth. Throughout three chapters of my dissertation, I provide evidence for this channel. Using data from advanced, emerging market and European economies, following different financial crisis episodes, I show that financial crises lead to a persistent decline, not only in the economic output, but also in innovation. The findings in this dissertation have implciations for macroeconomic policies such as monetary and fiscal policies, structrucal reforms, crisis prevention policies and policies that can shelter productive investment projects from financial frictions.Item ESSAYS ON TARGETED PROGRAMS IN EDUCATION(2019) Witzen, Brian Heath; Turner, Lesley J; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)This dissertation examines three examples of education policy that affect students' decision-making at three different stages of the academic career. In the first chapter, I examine how grant aid can affect the re-enrollment and graduation rates of bachelor's degree-seeking students. I use administrative data from the State of Maryland to study the state's largest need-based grant aid program using a regression discontinuity design. I find positive effects of grant receipt on re-enrollment beginning in the second year and a 10\% increase in the rate of persistence to the fourth year, with similar-sized, but more imprecise effects on graduation within 5 years of entry. In the second chapter, I study State Loan Repayment Programs which pay down a physician's medical school debt in exchange for a period of service in a health care provider shortage area. I gather data from individual states on the amounts that their programs offer over time and use changes in designations of health care provider shortage areas to implement a generalized differences-in-differences strategy. I find no overall effect of the programs on the physician-to-population ratio of an area eligible for the program, though I do find evidence of a positive effect on the physician-to-population ratio when I focus on the age group where physicians are most likely to be recent medical school graduates. In the third chapter, I examine the effect of high school Career and Technical Education coursework completion on postsecondary enrollment, degree completion, and early career earnings. I utilize two estimation strategies. The first is a propensity score matching approach and the second is an instrumental variables approach based on the distance between a student's high school and a CTE Center that offers the coursework. The two strategies generally find that CTE is associated with a substitution from four-year programs to two-year programs, and positive effects on early career earnings.Item Essays on Information Manipulation and Optimal Decision Making(2019) Saraiva, Gustavo Quindere; Ausubel, Lawrence; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)This dissertation studies a variety of topics related to information manipulation, such as the manipulation of reviews in online rating platforms, or the act of misreporting one's preferences in matching mechanisms; and how those manipulations affect the overall allocation in the economy. Chapter 1 analyses the incentives that drive some sellers to fake reviews in online rating platforms, such as Amazon and Yelp. Among other things, I find that sellers' optimal investment in fake reviews is not a monotone function of their reputation. More precisely, sellers that currently possess a very good or very bad history of past reviews have less incentives to solicit fake reviews praising their own products, the intuition being that, for sellers with very bad reputation, it is too costly to pretend that they are high quality sellers; while sellers that have already accumulated a very good reputation do not need to spend much effort in convincing buyers that they are high quality sellers. Moreover, in order to maximize the impact from each fake review, sellers tend to concentrate review manipulation at the initial stages after they have entered the market. Chapter 2 develops a theoretical model aimed at explaining the observed polarization on agents' beliefs regarding topics that have objective truths (e.g., such as whether or not global warming is a hoax). The main premises surrounding the model are that rational agents seek to learn the truth about a certain state of the world, but the acquisition of information is costly, and the available information channels are biased and imprecise. The paper vies to understand how the level of bias from those channels affect opinion polarization overall. Chapter 3 analyses agents' incentives to misreport their preferences or vacancies in large stable matches. I find that, under certain assumptions, those incentives vanish for sufficiently large markets, suggesting that stable matching mechanisms are effectively strategy-proof for sufficiently thick markets.Item THE ROLE OF INFORMATION IN PRIVATE VALUE AUCTIONS(2019) Pivovarova, Svetlana; Sweting, Andrew; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)This dissertation studies the role that the information available to the participants of private value procurement auctions prior to the auction has on the equilibrium auction outcomes. Chapters 1 and 2 present two different models in which the private type of one of the participants is persistent over time and can be informative to her competitors. Chapter 3 looks at the effects of a policy change making the information about upcoming procurement auctions more easily available has on the entry of different types of firms in the auctions. In Chapter 1 I build and estimate a model of repeated asymmetric first price auction in which one of the bidders has a persistent private type, all bidders are backward looking, and all bids are made public after the auction. In particular, I show that the standard model without a binding reserve price misestimates expected procurement costs by 2-14% compared to my model, and withholding past bid information from auction participants can reduce expected procurement costs by up to 11%. These results are relevant for the estimation of both US highway procurement auctions since all of the states' Departments of Transportation publish full auction results online. In Chapter 2 I look at a theoretical model of repeated asymmetric first price auction in which all bids are made public between the auctions, one of the bidders has a persistent private type and is forward-looking. I show that a strictly monotonic equilibrium would not exist in this game, and provide an example of a partially pooling equilibrium in which the bidder with persistent type forgoes profits in the earlier period to withhold the information from her competitors in future periods. Chapter 3 studies the effect that the changes in public procurement rules in Russia had on participation and bidding in regional gasoline procurement auctions. In particular, I look at the difference in changes of entry and bidding patterns for large and small firms after the information about upcoming auctions became more easily available in Jan 2011. I show that the larger firms who have stations both outside and inside of the studied region enter more auctions and bid more aggressively, while local firms who only have stations inside the region do not change entry patterns and bid less aggressively. I associate these changes to the differential changes in entry costs for the different types of firms and confirm this intuition by comparing the structural estimates of entry costs between firm types and time periods.