Public Policy Theses and Dissertations

Permanent URI for this collectionhttp://hdl.handle.net/1903/2803

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Subject: search.filters.subject.Economics, Theory

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    On Being the Right Size: A Framework for the Analytical Study of Scale, Economy, and Ecosystem
    (2006-04-12) Malghan, Deepak Vaman; Daly, Herman E; Public Affairs; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
    If the economy is conceived as an open subsystem of the larger ecosystem, the physical size of the economy relative to the ecosystem that contains and sustains it becomes a salient feature of economic analysis. This key question of scale is therefore one of the central organizing principles of ecological economics. However, scale has mostly been used as a pedagogical device or a heuristic rather than as an empirical tool for environmental policy. The primary bottleneck has been the lack of well-dened theoretical frameworks to empirically measure scale, and to interpret measured values of scale. Our overarching research question is: how can scale be measured at dierent levels of economic-geographic aggregations? The seemingly simple question of `how large is the economy relative to the ecosystem' is fraught with several theoretical diculties. We develop a novel theoretical framework for empirical measurement of scale based on a simple analytical representation of the economy-ecosystem interaction in terms of stock, ows, funds, and uxes. We also develop theoretical frameworks to determine benchmark scale measures" that address the questions: how large can the economy be relative to the ecosystem, and how large should the economy be relative to the ecosystem? For scale measures to be useful as tools for environmental policy, a critical requirement, besides being able to empirically measure scale, is a consistent and objective ordinal ranking of two or more measured values of scale. Given two empirical measurements we need to be able to consistently rank the states of the world represented by the scale metric. We develop an axiomatic framework for consistent ordinal raking of scale measures. The framework developed here helps identify theoretical problems with extant empirical assessments of the biophysical size of economic activity. The biophysical assessments that we review in detail include the Material Flow Analysis methodology, Human Appropriation of the Products of Photosynthesis, and the Ecological Footprint.
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    Towards Adequate Analysis and Modeling of Structural Adjustment Programs: An Analytical Framework with Application to Ghana
    (2004-11-22) Kraev, Egor; Daly, Herman; Public Affairs; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
    When a country experiences a balance of payments problem, the typical remedy mix proposed by the International Monetary Fund consists of fiscal austerity, tight monetary policies, devaluation, privatization, elimination of subsidies and trade liberalization, combined with low interest rate loans. Throughout the late 1980s, Ghana has been hailed as a success story for that policy mix. However, Ghana's performance has been increasingly disappointing during the 1990s. This thesis explores the reasons for that slowdown, its distributional implications, and the extent to which the behavior of the Ghanaian economy validates commonly used assumptions in economic models of developing countries. We compile a complete consistent yearly dataset of financial stocks, nominal money flows (arranged in Social Accounting Matrices) and real product flows for Ghana in 1990-2001. The real-side data, available yearly, are then examined using fit optimization with alternative functional forms, while nominal time series (Consumer Price Index, the broad money supply and the exchange rate), available on a monthly basis, are analyzed using ARIMA-X regressions. We find that industrial production, as well as investment, has been demand-constrained during our period, while agriculture has hit an aggregate supply constraint around year 1995. The relative price elasticity of substitution between imports and non-traded goods (in volume terms) is around minus one. The government was the only net source of demand during the period. Inflation could be predicted extremely well using only broad money supply, wholesale price of food crops and price of fuel, and formed a weak positive feedback loop with money supply growth. The main channel through which exchange rate depreciation impacted the price level was revaluation of the foreign currency-denominated money supply component. The response of broad money supply to interest rate increases was significant but small. We also formulate a novel matrix formalism for a more compact description and analysis of financial stock dynamics, cleanly separating structural and accounting constraints from behavioral descriptions. We conclude that the major reasons for the economic slowdown of the 1990s were excessive liberalization of commodity imports and strangulation of industry through lack of demand and volatile real interest rates, and of agriculture through withdrawal of government support programs.