Economics

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    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.
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    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.
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    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.
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    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)
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    A Monetary Base Analysis and Control Model for Turkey
    (1976) Gursel, Haluk Ferden; Bennett, Robert L.; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md)
    A monetary base analysis and control model is the focus of the paper. In the first chapter, the monetary base approach is presented and the links between monetary base, money supply and money income are shown. Further, the monetary policy problems of the developing countries are reviewed. The second chapter describes the institutional framework for Turkey. Here, as background information, the Central Bank, the Treasury and the State Economic Enterprises are examined from a monetary policy viewpoint. Also the stability of prices, the credit system, interest rates, money and security markets and foreign sector developments in recent decades are summarized. In the third chapter, the model which highlights the essentials of monetary base control is constituted. Here, the "direct" control of reserve money sources is suggested, and given the exogenously determined components of reserve money sources, the limits on the range of deliberate Central Bank-Treasury asset changes, through exchange rate, rediscount rate, open market interventions, etc., are estimated. The recommended use of the policy variable defined is explained in the last chapter.
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    The State of Education in Afghanistan and the Application of a Linear Programming Model
    (1969) Ulfat, Abderrahman; Bennett, Robert L.; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md)
    In this study the role of education in economic development is briefly discussed; the state of education in Afghanistan is assessed and compared with a group of Asian countries. Through the application of a constrained maximization model the rate of return to primary education in Afghanistan is obtained. Discounted streams of income and cost, associated with different levels of education, were used as the coefficients of the equation which was set to maximize the return to education; the different categories of students and the needed teachers constrained the maximization of the afore-mentioned equation. The model thus described was also dynamic-given a group of youngsters it advanced them to higher levels of education and also generated the required number of teachers from those students. Education in the elementary level is found to be a profitable investment for Afghanistan to undertake. The rate of return to six years of education in this model is more than five percent and for the first three years it is more than ten percent.
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    Fiscal Illusion in Public Finance: A Theoretical and Empirical Study
    (1989) Marshall, Frances Louise Lightsey; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md)
    This study of fiscal illusion begins by surveying existing studies of its nature and consequences: finding no consensus upon its definition proposes a comprehensive one: "the misperception by one or more individuals of the value of one or more fiscal parameters." No specifications of source, locus, nature, duration, variables affected, or direction of bias are presumed, and none are precluded. The issue of aggregation of individual perceptions, often preempted as definitional, is found to be crucial in interpreting the existing literature. The theoretical portion of the study uses the standard consumer choice model and the median voter model, again finding that the method of aggregating individual choices is crucial. It demonstrates that high average and total levels of fiscal illusion can be consistent with efficient social outcomes and that survey evidence is inappropriate for assessing the importance of fiscal illusion. It further finds that the impact of fiscal illusion on individual welfare provides a source of potential gain for agents who can dispel that illusion in individuals who may be decisive for the outcome of the collective choice process. An examination of the incentives of various agents to dispel illusion concludes that, though the existing literature evinces a recurrent concern that fiscal illusion results in misallocation of resources to and within the public sector, especially through the public officials' manipulation of citizens' perceptions, there exists a considerable array of forces that have significant power to limit the ability of such illusion to impose important burdens upon the electorate. The work concludes with an empirical study of the fiscal illusion hypothesis, in which estimates of the dollar magnitudes of the state tax "windfalls" resulting from the federal Tax Reform Act of 1986 are calculated and, in the estimated model, are found to exert no significant impact upon either the levels of state expenditures or changes in those levels. Because the windfalls are exogenous, this finding is free from the simultaneity issues that have compromised existing empirical studies of fiscal illusion. The results are consistent with the proposition that existing forces effectively limit the sway of fiscal illusion.
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    Path Curves and Plant Buds: an Introduction to the Work of Lawrence Edwards
    (International Institute for Applied Systems Analysis, 1979-07) Almon, Clopper
    Lawrence Edwards has shown that many flowering plants have buds with an outline in the form of a path curve, the curve that a point follows under repeated projective transformation of the plane into itself. Edwards, however, did not give a formula for these curves nor did he fit the curves by the standard method of least squares. This paper gives an elementary exposition of the method used by Edwards, shows its relation to projective geometry, and then uses homogeneous coordinates, linear differential equations and characteristic values and vectors of a matrix to derive the formula for path curves. This formula is then used to fit path curves by least squares to data provided by Edwards for the buds of 150 plants. Most buds are fit very closely.
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    Financial Market Access and International Risk Sharing
    (2009) Araujo, Juliana; Végh, Carlos; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
    In the past three decades the stock of assets and liabilities of developing countries measured as a ratio of GDP has tripled. It is commonly believed that an increase in opportunities for diversifying risk allows more consumption smoothing. However, the data show that volatility of consumption in developing countries has persisted at high levels, showing only an average 11 percent decrease from the 60's to the 90's. This paper aims to explain this phenomenon by investigating to what extent domestic financial frictions related to heterogeneous home financial market access can help resolve the quantitative discrepancy between the change in volatility of consumption in the data and that predicted by a model economy that allows for higher degrees of financial integration. We show that in an endowment economy, if only 40 percent of the population has access to financial markets, full access to insuring country risk in international markets would reduce consumption volatility by 24 percent. In a world in which all agents have equal access to financial markets, the predicted impact of integration with world markets would be a much higher drop of 49 percent. The absence of a forward international market for the nontradable good and the inability of some agents to access a forward market for the tradable good opens a new role for the spot market of tradable and nontradable goods: individuals excluded from financial markets use the goods market to attenuate tradable risk, which is reflected in higher consumption volatility for these agents following international financial integration. In an extended version of the model allowing for production, opening the economy brings even less change in consumption volatility. Later, we investigate whether limited domestic financial market participation can break the theoretical result found by Backus and Smith (1993) that consumption ratios and the real exchange rate are perfectly correlated for pairs of countries. We consider a two-country world inhabited by individuals with heterogeneous access to financial markets in one country and full access in the other. Both countries are endowed with tradable and nontradable goods. We find that consumption ratios for individuals with access to financial markets are perfectly correlated with the real exchange rate across countries but the aggregate consumption ratio and the real exchange rate might not be perfectly correlated across countries.
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    ESSAYS ON HOUSING INVESTMENTS IN EMERGING MARKETS
    (2009) Qi, Zhikun; Vegh, Carlos; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)
    New residential construction is significantly more procyclical in emerging markets than in developed countries, although the correlation between aggregate investment and output is similar across emerging and developed countries. This paper shows that a multi-sector stochastic growth model with a housing production sector can explain this fact. The key feature of the model is that housing demand depends on the cyclical behavior of consumption of tradable goods, which is much more volatile in emerging markets. Therefore, when a positive productivity shock hits the economy, the larger response of consumption of tradable goods implies that it is more attractive for consumers in emerging markets to purchase housing than it is for consumers in developed countries. This paper considers various factors that contribute to the large variability of consumption in emerging markets, and finds that larger trend growth rate shocks in emerging markets than in developed countries are quantitatively important. The reason is that a positive productivity shock signals even higher productivity in the future with large growth rate shocks, so the current consumption response is large and the return to housing investment is high. While qualitatively the model matches the differences in the cyclicality of new residential construction across emerging markets and developed countries, quantitatively the model underestimates this comovement and the volatilities in housing investment in emerging markets. Furthermore, international interest rate shocks highly correlated with productivity shocks are very important in explaining the large swings in housing investment in emerging markets. Interest rate shocks work through three channels to affect housing investment: the direct `mortgage rate' effect, the indirect effect through increasing non-housing consumption and the supply effect due to the working capital constraint. Quantitatively, the direct `mortgage rate' effect is the most important channel. When the housing asset acts as collateral to reduce household's financing costs, it provides an empirically important mechanism to amplify and propagate interest rate shocks over the business cycle. The reason is that housing prices and interest rates reinforce with each other to generate more procyclical housing investment and more volatile consumption and output.