Economics Faculty Research and Publications

Identity Problems: An Interview with John B. Davis

John Davis — Fri, 01 Mar 2013 08:38:50 PST

Using GIS to Evaluate the Effects of Flood Risk on Residential Property Values

Alena Bartosova et al. — Tue, 22 Jan 2013 13:51:32 PST

Annually, flooding causes more property damage in the United States than any other type of natural disaster. One of the consequences of continued urbanization is the tendency for floodplains to expand, increasing flood risks in the areas around urban streams and rivers. Hedonic modeling techniques can be used to estimate the relationship between residential housing prices and flood risks. One weakness of hedonic modeling has been incomplete controls for locational characteristics influencing a given property. In addition, relatively primitive assumptions have been employed in modeling flood risk exposures.

We use GIS tools to provide more accurate measures of flood risks, and a more thorough accounting of the locational features in the neighborhood. This has important policy implications. Once a complete hedonic model is developed, the reduction in property value attributed to an increase in flood risks can, under certain circumstances, be interpreted as the household’s willingness to pay for the reduction of flood risk. Willingness to pay estimates can in turn be used to guide policymakers as they assess community-wide benefits from flood control projects.

International R&D Transfer and Technical Efficiency: Evidence from Panel Study Using Stochastic Frontier Analysis

Miao Wang et al. — Wed, 16 Jan 2013 09:25:53 PST

We study the effect of foreign research and development (R&D) transferred through imports and foreign direct investment (FDI) on domestic technical efficiency using stochastic frontier analysis. Unbalanced panel results from a 77-country sample over 1986–2007 show that FDI- and imports-transferred foreign R&D have a significant impact on domestic country’s technical efficiency. Furthermore, we observe a complementarity between FDI-transferred R&D and domestic human capital. In other words, the domestic country needs to obtain a threshold level of human capital to benefit from FDI-transferred R&D. Other macro conditions such as infrastructure, political stability, and urbanization also help to improve the technical efficiency of a country.

Information Diffusion in a Cobweb World

Miao Wang et al. — Wed, 14 Nov 2012 12:55:36 PST

Based on an assumption of one-way learning, Granato and Wong (2004) consider a framework with two groups of agents, Group L and Group H, where Group L is less "attentive" and uses the expectations of the more or highly "attentive" Group H to update their forecasts. The paper shows the "boomerang effect," which is defined as a situation where the inaccurate forecasts of a less attentive group confound a more attentive group's forecasts. This extended paper relaxes the one-way learning assumption and investigates the case that both groups are learning from each other, i.e., dual learning. Simulations suggest that a boomerang effect still exists. Surprisingly, although the highly attentive group has a full set of information to make forecasts, they still learn from Group L. The reason is that Group H adjusts their forecasts because there is available information in Group L's forecast measurement error.

Public Sector Capital and Technical Efficiency in Private Sector Production

Farrokh Nourzad — Thu, 09 Aug 2012 11:49:48 PDT

The Fiscal Dimensions of Conflict and Reconstruction

Abdur Chowdhury — Thu, 26 Jul 2012 10:25:31 PDT

Substitution between Money and Near Monies in Switzerland

Subhash C. Sharma et al. — Wed, 25 Jul 2012 13:35:53 PDT

An Empirical Inquiry into the Structure of International Stock Market Interdependence

Michael Hutchinson et al. — Tue, 29 May 2012 12:23:42 PDT

Financing Reconstruction

Tony Addison et al. — Tue, 22 May 2012 14:51:42 PDT

Published Federal Funds Futures, Risk Premium, and Monetary Policy Actions

Farrokh Nourzad et al. — Wed, 16 May 2012 12:53:58 PDT

This article attempts to determine whether controlling for the time-varying risk premium would improve the ability of the federal funds futures to predict the Federal Open Market Committee's (FOMC) decision regarding the direction and magnitude of changes in the federal funds target rate at different forecast horizons. This is done using an appropriate categorical dependent variable model, which is estimated using real-time monthly data covering the period from January 1994 through September 2008. Following Piazzesi and Swanson (2008), control is made for the risk premium using a number of business-cycle indicators including nonfarm payrolls, the industrial production index, the help wanted index, and a measure of the Treasury yield spread. The results indicate that accounting for the risk premium modestly improves the predictive performance of the futures rate for the longer forecast horizons. Moreover, such a control appears to alleviate the over-prediction of changes in the target rate by the futures rate that has been documented in the literature.

External Debt, Growth and the HIPC Initiative: Is the Country Choice too Narrow?

Abdur Chowdhury — Tue, 24 Apr 2012 11:31:18 PDT

The Effects of 9/11 on the Travel Industry

David Clark et al. — Wed, 04 Apr 2012 13:15:28 PDT

The Demand for Money in a Small Open Economy: The Case of Switzerland

Abdur Chowdhury — Tue, 28 Feb 2012 09:55:36 PST

The paper uses cointegration analysis to investigate the demand for money in Switzerland in the context of an open economy. It considers the general process of financial asset substitution and tests for the relevance of an exchange rate and a foreign interest rate variable in a conventional money demand equation. The results show that the variables entering into the demand for either monetary base or narrow money equation may not form a cointegrated system unless the exchange rate or foreign interest rate variable is included. This provides support to both the currency substitution and capital mobility hypotheses.

Valuing Environmental Quality: A Space-based Strategy

John I. Carruthers et al. — Wed, 15 Feb 2012 12:38:13 PST

This paper develops and applies a space-based strategy for overcoming the general problem of deriving the implicit demand for nonmarket goods. It focuses specifically on evaluating one form of environmental quality, distance from Environmental Protection Agency designated environmental hazards, via the single-family housing market in the Puget Sound region of Washington State. A spatial two-stage hedonic price analysis is used to: (i) estimate the marginal implicit price of distance from air release sites, hazardous waste generators, hazardous waste handlers, superfund sites, and toxic release sites; and (ii) estimate a series of implicit demand functions describing the relationship between the price of distance and the quantity consumed. The analysis, which represents an important step forward in the valuation of environmental quality, reveals that the information needed to identify second-stage demand functions is hidden right in plain sight—hanging in the aether of the regional housing market.

In high school and pregnant: The importance of educational and fertility expectations for subsequent outcomes

Olga Yakusheva — Fri, 10 Feb 2012 14:14:50 PST

This study uses the High School and Beyond data (1980–1992) to examine the importance of educational and fertility expectations in explaining the achievement gap of adolescent mothers for over 5,500 young women from different socioeconomic backgrounds. Using a non-parametric local propensity score regression, the study finds that the economic disadvantage associated with having a child in high school is particularly large in poor socioeconomic environments; however, this disadvantage is a result of preexisting differences in the educational and fertility expectations and is not because of a diminished capacity of the socioeconomic environment to mediate the effect of an unplanned childbirth. The findings suggest that childcare assistance and other policies designed to alleviate the burden of child rearing for young mothers of low means may not produce the desired improvement in their subsequent educational and labor market outcomes. A much earlier policy intervention with a focus on fostering young women's outlook for the future is needed. (JEL J13)

The Invisible Gag

Lawrence Soley — Wed, 01 Feb 2012 13:06:24 PST

Corporations infringe on free speech rights.

FDI, Education, and Economic Growth: Quality Matters!

Miao Wang et al. — Thu, 08 Dec 2011 06:50:24 PST

In this paper, we revisit the results from the influential study by Borensztein et al. (Journal of International Economics 45:115–135, 1998), which argues that inward foreign direct investment (FDI) promotes the economic growth in a less developed host country only when the host country obtains a threshold level of secondary schooling. Borensztein et al. (Journal of International Economics 45:115–135, 1998) only focus on the quantity of education. We take into consideration both the quantity and the quality of education. We adjust the original schooling data in Borensztein et al. (Journal of International Economics 45:115–135, 1998) by two quality of education indices and re-estimate their model. We find that the complementarity between inward FDI and schooling still exists, but the threshold level of schooling in our study is lower than the threshold calculated in Borensztein et al. (Journal of International Economics 45:115–135, 1998). Our results support the importance of education quality and suggest that with improved quality of education, it does not take as much quantity of schooling, as established in Borensztein et al. (Journal of International Economics 45:115–135, 1998), for inward FDI to have a positive impact on economic growth in the host country.

Inward FDI, Remittances, and Out-migration

Miao Grace Wang et al. — Mon, 28 Nov 2011 10:05:17 PST

In this study, we look at the relationship between remittances received at home, inward Foreign Direct Investment (FDI) and out-migration of individuals with different levels of education. Using the bilateral international migration data in 1990 and 2000, we find that inward FDI tends to deter the out-migration of individuals with secondary and tertiary education, but has no significant impact on the out-migration of individuals with primary education. In addition, remittances received at home induce the out-migration of individuals with primary education, but not the out-migration of individuals with secondary and tertiary education. The stock of existing migrants in a foreign country encourage future out-migration regardless of migrants’ levels of education.

Student Attitudes Toward the Market System: Predicting Student Achievement

Charles Breeden et al. — Mon, 14 Nov 2011 07:52:31 PST

Information Technology and Productivity Payoff in the Banking Industry: Evidence from the Emerging Markets

Abdur Chowdhury — Wed, 09 Nov 2011 07:48:41 PST