College of Behavioral & Social Sciences
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The collections in this community comprise faculty research works, as well as graduate theses and dissertations..
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Item Civil Liberties, Mobility, and Economic Development(2009) BenYishay, Ariel; Betancourt, Roger R.; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)To what extent do civil liberties affect economic development? This dissertation addresses this question in two essays. The first chapter (joint with Roger Betancourt) provides a new economic interpretation of civil liberties as rights over a person's most basic human asset: her own self. The importance of these rights to economic development is based on the principle that property rights-defined over a broad set of "property''-are crucial for economic growth. The empirical literature to date shows little support for such claims related to civil liberties, however, with ambiguous evidence on the role of these rights in driving long-run growth. Using newly available data from Freedom House, we find that one of the recently disaggregated categories of civil liberties explains income differences across countries more powerfully and robustly than any other measure of property rights or the rule of law considered. This component, entitled "Personal Autonomy and Individual Rights,'' evaluates the extent of personal choice over issues such as where to work, study, and live, as well as a broader set of property rights and other choices. While the first chapter finds that greater civil liberties can substantially improve long-run economic development, the second chapter identifies a key friction in this relationship. In countries that lack complementary institutions, civil liberties governing individual mobility can complicate credit transactions. By allowing individuals to move to locations where less is known about their prior defaults, mobility freedoms induce opaqueness and can result in credit rationing. I develop an instrumental variable estimation to study these effects, which would otherwise be complicated by omitted variable bias and endogeneity. Using household survey data from Guatemala, I instrument for individual migration with the interaction of violence patterns and individual sensitivities toward that violence. Using this approach, I find that the act of migration within a country actually causes individuals to have significantly less access to credit, primarily because lenders are concerned about these borrowers' opportunistic default.Item Empirical Puzzles of Chilean Stabilization Policy(The World Bank Publications, 1998-03-05) Calvo, Guillermo A.; Mendoza, Enrique G.This paper reviews Chilean stabilization policy during the 1990s and argues that, while the merits of Chilean policy should be praised, there are four puzzles in conventional interpretations of the Chilean experience worth studying. First, the policy of targeting indexed interest rates does not coincide with a policy of targeting real interest rates. Second, there is no systematic link between the decline in inflation and the upward adjustments in indexed interest rates. Third, changes in the exchange rate and in the performance of the external sector help explain the decline in inflation. Fourth, the strong cyclical growth of the real economy was influenced in part by the large and persistent increase in the world price of Copper. We provide statistical evidence favoring these arguments using recursively-identified vector-autoregression models, and sketch a model of staggered pricing under indexation that sheds some light on the Chilean case.Item Essays on Multiple Exchange Rate Systems(2005-09-21) Avellan, Leopoldo Martin; Reinhart, Carmen M; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)This dissertation measures the impact of multiple exchange rate systems on economic performance and on net capital flows in developing countries. The literature on the effectiveness of capital controls has some problems. Two of them are that it often ignores the endogeneity of capital controls, and that most of the evidence is dominated by some country specific studies. This dissertation fills this gap. It uses a multicountry panel to quantify the effects of parallel rates in the economy, but in doing so it explicitly models the endogeneity of multiple exchange rates. The dissertation is structured as follows. Chapter 1 evaluates the relationship between parallel exchange rates and economic performance in the post Bretton Woods period (1974-2001). The main findings are not only that parallel exchange rates are more likely to be adopted when economic performance is bad, but also that they hurt economic performance, indicating the existence of a negative feedback mechanism linking economic performance and parallel markets. It also finds that liability dollarization and high debt service are possible determinants of the likelihood to segment the foreign exchange market. Chapter 2 evaluates the effectiveness of multiple exchange rates systems as a policy tool to stop capital outflows. Controlling for push and pull factors that drive capital flows, and using data from 46 developing countries for the 1980-2001 period, it cannot find empirical support for the claim that segmenting the foreign exchange market stops capital outflows. The evidence suggests that multiple exchange rates systems do not have any effect on capital outflows, at best. At worst, the evidence suggests that parallel exchange rate systems increase capital outflows rather than discouraging them. This last result can be rationalized with a policy signaling model for capital controls.