Economics Commons^™

The Effect Of The Change In Call Loan Rates And Volatility On Stock Returns In 1929: An Empirical Study Into A Determinant Of The Great Depression, Amberish Chitre

CMC Senior Theses

I investigate the effect of the change in call loan rates on stock returns during 1929. Call loan rates are the interest rates on borrowed funds to trade equity on a given exchange. It is estimated that 40% of stocks during this period were bought on margin. After a price decline comes a margin call, followed by a forced sales of securities, which leads to additional margin calls and future price declines. I regress daily excess returns on the change in daily call loan rates during 1929. In addition, I estimate volatility using an ARCH model and observe the previously …

Fifa World Cup: Factors That Explain The Performances Of National Football Teams, Shivaan Seth

CMC Senior Theses

This paper examines the determinants of FIFA World Cup performances of nations. The study incorporates socioeconomic, cultural, demographic and football-specific factors to investigate how World Cup results can be explained. A linear regression is used to study the last five tournaments, and the model finds that being seeded for the draw, and the host country effect are statistically significant variables. Additionally, I discover two new variables – namely, having a star player and having become a member of FIFA before 1924, as being statistically significant in my analysis.

Climate And Crime: Examining The Relationship Between Extreme Weather Events And Crime Rates In The United States, Erin Tully

CMC Senior Theses

This study attempts to determine whether there is a relationship between extreme weather events and crime rates. Due to the increasing effects of climate change, it is critical we understand the societal effects of extreme weather. Here, a panel data fixed effects regression was used to analyze state and year level data. It was hypothesized that there would be a relationship between crime and extreme events, but the results did not show a statistically significant relationship. Further research with increased geographic and temporal controls is encouraged.

The Role Of Conflict In Sub-Saharan Africa, Samy Lemos

CMC Senior Theses

Sub-Saharan Africa is the provider of many critical natural resources. With such resources, one would expect these countries to have thriving economies. Why is the opposite case true? To answer such a question, this paper examines a few critical causes that may justify the current economic situation these African countries are experiencing. Specifically, the paper observes the economic impact of civil war and terrorist conflict in sub-Saharan Africa from 1971 to 2016. To explore the changes in GDP per capita for all these years, this thesis sheds light on three independent variables: year of conflict, education level, and foreign direct …

Analysis Of The Economic Impact Of Constructing A Nba Arena On The Host City, Grant Gilchrist

CMC Senior Theses

Using economic data collected from 24 different Metropolitan Statistical Areas in the US, this thesis investigates the impact of constructing a new National Basketball Association (NBA) arena on the host city’s economy. When a simplistic model is implemented, which does not control for other economic factors or individual subject heterogeneity, significantly positive economic impacts of arena construction are observed. However, when a more appropriate model specification is implemented that controls for economic activity and individual heterogeneity, these effects are no longer statistically significant. This comparative analysis ultimately highlights the importance of appropriate model specification and supports the conclusion that new …

Why Not Mexico? Policy Recommendations For A Globally-Oriented Economic Strategy, Víctor Manuel Hernández-Rodríguez

CMC Senior Theses

Mexico, one of the world’s largest economies and an increasingly relevant actor in international affairs, is at a crucial point in defining its future policy course. Given the uncertainty surrounding the global economy, as well as the political situation in Mexico, it is important to have a clear vision for policy going forward. This thesis offers a foundation for a national economic strategy with a long-term vision, upon which future administrations can build as appropriate to maximize on the country’s economic potential. The task is undertaken through a three-part approach. First, a thorough and analytical overview of the country’s economic …

Evaluating The Effects Of Nutritional Intake During Adolescence On Educational Attainment And Labor Market Earnings As An Adult, Mikaela Connell

CMC Senior Theses

In this thesis, I analyze whether nutritional intake at the time of adolescence can impact academic attainment and earnings later on in life. Millions of children in the United States are living in food insecure households and do not have access to an adequate nutritious diet. Since adolescence is a time period of intense growth and development, it is essential to meet nutritional needs at this time. Using data from the Longitudinal Study of Adolescent to Adult Health (Add Health), I measure the nutrition of a nationally representative sample of youth in the United States through their daily food intake, …

The Cultural Legacy Of Communism In Entrepreneurship: Entrepreneurial Perceptions And Activity In Central And Eastern Europe, Amy Wu

CMC Senior Theses

Using data from the Global Entrepreneurship Monitor, this paper examines differences in entrepreneurial perceptions (fear of failure, opportunity perception, self-efficacy, public opinion) between CEE and non-CEE countries, before and after the 2008 recession, as well as the effects of these perceptions on entrepreneurial motivation and overall levels of activity. The results suggest that CEE countries have systematically more pessimistic outlooks in terms of fear of failure and opportunity perception, but no difference from non-CEE countries in self-efficacy and public opinion. Additionally, most of the difference in fear of failure and opportunity perception, along with an increase in necessity-motivated entrepreneurship, comes …

The Effects Of Recreational Marijuana Legislation On The Opioid Epidemic In Washington State, Steven Dickerson

CMC Senior Theses

This paper analyzes the impact of the 2012 legalization of recreational marijuana in Washington State on opioid abuse. Using synthetic control methodology, this paper finds that the legislation prevented 638 overdose deaths and lead to over 3,600 individuals seeking treatment for opioid abuse disorders. Due to the large health, social, and economic impacts of the opioid epidemic, further research should be conducted into ways to reduce the number of opioid prescriptions, the number of opioid overdoses, and opioid abuse generally.

Is Avocado Toast The Reason I'M Still Living With My Parents?, Brendan Macdonald

CMC Senior Theses

Is avocado toast the reason that I am still living with my parents? In other words, does the consumption of avocado toast, or more specifically eating out in general, have any impact on one’s ability to be a homeowner. In May of 2017, an Australian real estate developer by the name of Tim Gurner was asked to provide advice to young people who could not afford to purchase a home. He responded by saying, “when I was trying to buy my first home, I wasn’t buying smashed avocado for $19 and four coffees at $4 each,” (Victor, 2017). While the …

Model Specification For Bank Failure: A Retrospective Look At Banks In Missouri During The Great Depression, Peter Welch

CMC Senior Theses

This paper examines banks in Missouri during the Great Depression in order to find the correct model specification for bank failure during economic downturns. The data set controls for a bank’s balance sheet, correspondent network, charters and memberships, county characteristics, and market share, and includes both Federal Reserve member and non-member banks. Using a probit model, it is concluded that the contractionary monetary policy employed by the St. Louis Federal Reserve did not help bank survival, as being a member of the Federal Reserve had no significant effect on a bank’s probability of survival. Additionally, while an increased network led …

The Effects Of The Correspondent Banking Network On The Real Economy, Jack Brown

CMC Senior Theses

There is a longstanding academic debate regarding the role of financial networks. There is a tradeoff between improving the flow of funds and acting as a channel for contagion. This paper investigates the impact of banking networks on the real economy during the Great Depression. Building permit values are used as a proxy for real economic activity as implemented in previous research. A simple linear regression model estimated by ordinary least squares is used such that locational networks are differentiated from networks links to money centers and non-money centers. The results demonstrate that financial networks have both positive and negative …

The Political Economy Of Participation In The Euro: A Case Study Of Italy And Germany, Thomas Schalke

CMC Senior Theses

This thesis analyses the political economy of the decision of Italy and Germany to participate in the euro. The emphasis is on understanding the economic rationales employed in each country in support of euro membership.

For Italy, the central argument is that Italy outsourced monetary policy management to the ECB in order to delimit deficient domestic policy making and import German monetary credibility. This transferred the costs of monetary orthodoxy to Europe, and the thesis briefly examines places where we might observe those costs.

For Germany, the argument is that, out of respect for the national humiliation and shame of …

Are Volatility Expectations In Different Countries Interdependent? A Data-Driven Solution To Structural Var Identification For Implied Equity Volatility Indices, Timothy H. De Silva

CMC Senior Theses

Over the past couple of decades, the number of volatility indices has increased rapidly. These indices seek to represent the market’s expectation of realized volatility over the coming month, based on the prices of options traded on each underlying equity index. Although the dynamics of realized volatility spillover have been studied extensively, very few studies exists that examine the spillover between these volatility indices. By using DAG-based structural vector autoregression, this paper provides evidence that implied volatility spillover differs from realized volatility spillover. Through solving the well-known VAR identification problem for these indices, this paper finds that Asia, more specifically …

Determining Factors Of Risk Tolerance: Evidence From Fantasy Football Snake Drafts, Nicholas Obrand

CMC Senior Theses

This paper utilizes fantasy football snake drafts to analyze risk tolerance of individuals who are trying to maximize their present and future utility, but are faced with unknown factors and only have limited resources. Fantasy football provides a unique perspective on risk tolerance, different than the commonly researched fields of auctions, financial portfolios, and lotteries. I examine mock draft data from Fantasy Football Calculator as well as rankings data from Fantasy Pros to gauge the amount of risk associated with each draft pick. I find that the more perceived uncertainty that is connected to an individual selection, the more likely …

College As Capability Enhancement, Cristina Lee

CMC Senior Theses

In this thesis I wanted to apply the Sen’s framework in Development as Freedom to college campuses. In my experience at Claremont McKenna College, I have seen how some students are able to take advantage of the resources better than others. Given that we were all accepted by the same admissions office, I always questioned why did some students know how to take advantage of the system. In order to explore this, I first discuss Sen’s capability approach. Then, I show how the capability approach is more comprehensive than social networking theory and William Deresiewicz’s account on elite colleges. Finally, …

The Real Estate And Stock Market During The Great Depression: Construction Permit Growth As A Leading Economic Indicator For Stock Returns, Will Cresap

CMC Senior Theses

The 1929 stock market crash on Black Thursday, followed by the subsequent four-year period of extreme economic downturn, signifies an extremely profound piece of U.S. history. During this time, global economic productivity – measured by GDP – decreased while the U.S. unemployment rate increased staggeringly. Leveraging construction permits as a forward-looking measure of economic activity, I empirically evaluate the effect of construction permits – specifically, the lagged growth rate of monthly construction permits – and lagged monthly stock returns on monthly Standard & Poor's 500 (S&P 500) stock returns. Lagged construction permit returns and lagged stock returns provide early indications …

The Political Impact Of Rising Trade Exposure: Evidence From 2000 - 2016 U.S. Presidential Elections, Xiaoyang Qian

CMC Senior Theses

In this paper we analyze the impact of global imports on regional labor markets, and how such impact translates to changes in voting patterns in the U.S. Presidential elections from 2000 to 2016. We find that imports from different U.S. trading partners influence voting patterns in different ways. In particular, we observe an anti-incumbent effect caused by import competition from OECD countries. Such an effect cannot be observed for imports from low-income countries. There is also evidence that suggests high exposure to import competition tends to drive voters toward the Democratic candidate, who typically proposes better social welfare programs and …

Nudging Towards Social Change: The Application Of Psychology And Behavioral Economics In Promoting Responsible Consumption, Larissa Chern

CMC Senior Theses

With workplace disasters in developing countries increasingly in the news, a major question is how to encourage consumers to use corporate social responsibility as a criterion in purchasing. Distinct from environmental concerns, social responsibility is defined here with respect to the humanitarian aspects of corporate practice, including fair wages and working conditions, equitable treatment of the disadvantaged, and restriction of child labor. Although the idea of socially responsible consumption (SRC) was first identified over forty years ago, most recent research on changing consumption habits focuses specifically on environmentally responsible consumption (ERC). Combining the psychological concept of social norms with economic …

Testing For Nationality Discrimination In Major League Soccer, Matthew Swift

CMC Senior Theses

Using data from the 2014-2016 Major League Soccer (MLS) seasons, this paper finds evidence for nationality discrimination in the MLS. In particular, foreign players receive a wage premium of 15.97 percent, ceteris paribus. Foreign players also receive an additional bump in their salary based on performance. Finally, using an Oaxaca (1973) decomposition, I find that 22-26% of the differences in wages between foreign and domestic players is largely due to discrimination.

Quantifying The Trenches: Machine Learning Applied To Nfl Offensive Lineman Valuation, Sean Pyne

CMC Senior Theses

There are 32 teams in the National Football League all competing to be the best by creating the strongest roster possible. The problem of evaluating talent has created extreme competition between teams in the form of a rookie draft and a fiercely competitive veteran free agent market. The difficulty with player evaluation is due to the noise associated with measuring a particular player’s value. The intent of this paper is to create an algorithm for identifying the inefficiencies in pricing in these player markets. In particular, this paper focuses on the veteran free agent market for offensive linemen in the …

What Goes Up Must Come Down: The Relationship Between The Housing Market Boom And The Subsequent Economic Downturn: Evidence From The Msa Level, Bruce Dale Service

CMC Senior Theses

Using MSA level data, the paper shows, that geographic areas which experienced the largest housing bubble generally suffered a more serious subsequent economic downturn. More specifically, the paper establishes that MSAs with larger declines in housing permits had larger increases in unemployment. There also appears to be strong evidence of a correlation between the magnitude of a housing boom and the timing of the decline in housing permits. MSAs which experienced larger real housing inflation offered early indications of the subsequent Great Recession.

The End Of The Three Percent Rule: How Structural Changes In The U.S. Economy Have Impacted Economic Growth, Maxwell J. Urman

CMC Senior Theses

Using data from government sources (FRED, BEA, BLS), the thesis explores the underlying reasons for declining U.S. economic growth. A long standing trend of annual 3% growth no longer seems to hold true for the economy. The paper summarizes current theory as to why the growth has slowed and finds new explanations by analyzing the various major industries which make up GDP. The results show that sectoral shifts in employment from high paying industries to low paying industries help to explain a significant portion of the decline in national growth rates. The decline in growth is primarily driven by about …

An Analysis Of Sports Markets: Franchise Relocation, League Expansion, And Fan Bases, Evan Opperman

CMC Senior Theses

Through sports, cities can reach fans from all different walks of life to rally together and support a competitive cause. Each city’s fan base is distinct—with their individual personalities being reflective of the culture and environment of the home city. The intent of this paper is to study the effect of multiple on and off field factors as they relate to attendance across three major professional sports in city markets. This will determine which city markets have the strongest, or weakest, overall fan bases. Ultimately, this study will end with an educated recommendation for professional sports franchise relocation or a …

Degree Matters: The Impact Of A Leader’S Foreign Education On His Country’S Economic Development, Zhongyi Yu

CMC Senior Theses

I analyze the correlation between a nation leader’s foreign education experience and their nation’s GDP growth and economic freedom in African, Asian, and South American countries. There is a statistically significant correlation between a leader’s foreign education and the country’s GDP growth rate, especially in Africa. Data also shows that a leader’s foreign education is positively correlated with his country’s economic freedom. Despite the fact that the regressions can only demonstrate correlation as opposed to causation relationships among variables, further analysis of the results concludes that a leader’s education and the country’s development are reciprocal. The findings of this paper …

Determinants Of Organ Donor Registration Rates Among Young Americans, Syed Umar Farooq

CMC Senior Theses

In this paper I examine the factors that affect the likelihood an individual is a registered organ donor. Unlike many studies which focus on subpopulations in specific regions, I utilize national data to get a broader assessment of individuals from around the country across a number of racial and religious classifications. Using a probit model and controlling for a variety of parameters, I find that some racial and religious variables are negatively and significantly associated with organ donor registration rates, while education and being female are positively associated with organ donor registration rates. I conclude by discussing the implications of …

Are Oil Prices Important To U.S. Manufacturers?, Austin Perez Schoff

CMC Senior Theses

Very little has been written about the effect that oil prices have on manufacturing output in the United States. This paper aims to shed light about the effect of oil prices, oil imports, and GDP on U.S. manufacturing output through a four-variable vector autoregression and explain the timing of these shocks through impulse response functions. Empirical results find that oil prices are significant in determining manufacturing output, but manufacturing output is also significant in determining oil prices.

The Interconnection Of The Great Recession, Income Disparity, Segregated Metropolitan Districts, And Their Significance To All In The U.S., Marcellus Demer

CMC Senior Theses

In the United States, nobody can survive without depending on the income of oneself or of those that support them. Thus, economic opportunity and its skewed availability is pertinent to everyone. With income inequality in the United States measured in the early 2010s reaching some of the highest estimates among nations around the globe, people seek to investigate the forces behind this phenomenon and reverse it. This paper focuses on some of the many cycles and structures that exist to reinforce the challenges of achieving economic equality. Specifically, I extrapolate data to measure the correlations between the Great Recession and …

Institutional Development: Interpreting The Russian Case, Joshua W. Rooney

CMC Senior Theses

A fundamental question to both historians and development economists is why countries today are able to reach and maintain such starkly different economic outcomes. Popular explanations include geographic and climatological features, short-term policy decisions, and economic institutions. This paper looks at the importance of violence and social pressure in the transformation and conservation of political and economic institutions in Russia. It finds that several major historical legacies including serfdom, Mongol dominance, Orthodoxy, and authoritarianism significantly influence both the past a present institutional setting. Furthermore, such legacies have proven to be major obstructions to the emergence of economic liberalism.

Taking Good Works To The Next Level: Increasing Investment In And Support For Higher-Risk Innovation, Jessie Capper

CMC Senior Theses

This thesis explores the possible avenues available to corporations and capital-managing entities seeking to increase their commitment to good works. These organizations have the potential to fill the gap in societal needs by supporting and investing in good works, including environmental protection and highly-innovative energy technologies, beyond the traditional corporate social responsibility (CSR) norm. These means include charitable giving, working with disadvantaged communities, corporate assistance to environmental or other social non-governmental organizations, and more. This thesis discusses the advantages and limitations of various corporate structures (C Corporations, S Corporations, LLCs, B Corps, L³Cs, and benefit corporations) and capital-managing …