Economic Theory Commons^™

Nebraska Monthly Economic Indicators: June 21, 2017, Eric Thompson

Leading Economic Indicator Reports

The Leading Economic Indicator – Nebraska (LEI-N) 1 fell by 0.51% during May of 2017. This is the second consecutive monthly decline in the LEI-N. The declines followed three months of rapid increase from January through March of 2017. Taken together, the LEI-N values imply a moderation in economic growth in Nebraska in late 2017 after strong growth midyear. Among the components of the indicator, business expectations were strong during May while the value of the U.S. dollar fell, which is a positive sign for Nebraska’s export-oriented businesses. However, manufacturing hours, building permits and airline passen

Nebraska Monthly Economic Indicators: May 24, 2017, Eric Thompson

Leading Economic Indicator Reports

The Leading Economic Indicator – Nebraska (LEI-N) 1 fell by 0.88% during April of 2017. The decline followed three months of rapid increase in January through March, implying a moderation in the outlook for the Nebraska economy in late 2017. Among the components of the indicator, business expectations were strong during April while the value of the U.S. dollar fell, which is a positive sign for Nebraska’s export-oriented businesses. However, manufacturing hours, building permits and airline passenger counts all declined during April, while initial claims for unemployment insurance rose.

A Dual-Role Analysis Of Game Form Misconception And Cognitive Bias In Financial And Economic Decision Making, Chinedum D. Nwadiora

LSU New Orleans Theses and Dissertations

The endowment and the framing effect are widely examined cognitive biases. The experimental economics literature, using choice data gathered through an elicitation device, commonly finds evidence of these biases. Recent work by Cason & Plott (2014) shows that the interpretation of choice data as consistent with biases related non-standard preference theory could also be consistent with confusion or misconception of the game type used to elucidate preferences. I use the Cason and Plott card auction framework to analyze offers of buyers and sellers in an experimental setting with subjects from the University of New Orleans simulating 97 sellers and 90 …

A Process For Field Studies In Behavioral Economics, Victoria Ferraro

Senior Honors Projects

Field experiments enable economists to test whether theory adequately captures behavior in natural settings, or whether evidence supports reevaluating the reasoned abstractions comprising the theory. Economics, and social science more generally, has increasingly valued the evidence provided by field studies. These studies typically require a relationship with an external partner site providing the environment for the study, but existent research offers little guidance for developing these relationships and designing procedures for effective collaboration. The purpose of this paper is to provide greater insight into what is necessary to conduct field experiments in economics, particularly behavioral economics in private market settings. …

Selecting An Alternative National Banking System Against Fractional Reserve Free Banking: The Greatest Modern Fraud?, Josiah J. Bardy

Senior Honors Theses

This paper serves as a compilation and analysis of different banking systems with an emphasis on fractional reserve free banking. Contemporary academic literature has debated fractional reserve banking with revisited scrutiny since the 2007–2009 financial crisis. The Austrian School, drawing conclusions from the Austrian business cycle theory, blames central banking for boom-bust economics. One proposed solution, fractional reserve free banking, eliminates the central bank’s control for a purer form of fractional reserve practice; however, this system may be inherently fraudulent and unethical. After completing an economic analysis of the western world’s banking system, this paper then explores an alternative solution.

Who Reacts To Income Tax Rate Changes? The Relationship Between Income Taxes And The Motivation To Work: The Case Of Azerbaijan, Orkhan Nadirov, Bruce Dehning, Khatai Aliyev, Minura Iskandarova

Accounting Faculty Articles and Research

This research investigates the effects of income taxation on the motivation to work by employing a survey method for the Azerbaijan population. The two research questions of interest are, if subjects consider income taxes when deciding how many hours to work and how subjects would react to a hypothetical 5% income tax rate increase. Also examined are the responses to these questions between subjects with different socio-economic characteristics. Examining cross-sectional data of 326 respondents reveals that income taxes do not influence Azerbaijan labour market participants’ motivation to work, regardless of their socio-economic characteristics. Empirical results indicate that reactions to hypothetical …

Is Silence The Answer?, Gator Adams

CMC Senior Theses

This study examines the relationship between company management guidance, and ex-ante crash risk over the duration of 2008(Jan 2006-Dec 2009) financial crisis using the implied volatility skew, which is based upon ex-ante volatility implied by the pricing model developed by Black-Scholes (1973). The study finds that over the duration of this crisis period, management guidance decreases with a rise in ex-ante crash risk. Further, the study provides evidence on the relationship of management guidance and earnings volatility, and how that is affected by a firm's industry product concentration based on the Herfindahl-Hirschman Index (HHI) score.

When Price Precision Pays In Negotiations, Michael Schaerer

Research Collection Lee Kong Chian School Of Business

When negotiating, is an offer of 99.95 euros better than 100 euros? Our recent study shows that there is no universally true answer to the question of price precision and that the right strategy depends on with whom you are negotiating.

Federal Home Loan Bank Advances And Bank And Thrift Holding Company Risk: Evidence From The Stock Market, Scott Deacle, Elyas Elyasiani

Business and Economics Faculty Publications

Using bivariate GARCH models of stock portfolio returns and risk, we find that bank and thrift holding companies that relied the most on Federal Home Loan Bank (FHLB) advances exhibited less total risk and market risk than those that relied on them the least between 2001 and 2012. When we control for differences in holding company size, stock trading volume, residential mortgage lending, and holding company type (bank vs. thrift), the most FHLB-reliant holding companies sustain the aforesaid risk advantages except during the crisis of 2007–2009, when they exhibit greater idiosyncratic risk. The latter finding suggests that investors perceived the …

The Influence Of The Electric Supply Industry On Economic Growth In Less Developed Countries, Edward Richard Bee

Dissertations

This study measures the impact that electrical outages have on manufacturing production in 135 less developed countries using stochastic frontier analysis and data from World Bank’s Investment Climate surveys. Outages of electricity, for firms with and without backup power sources, are the most frequently cited constraint on manufacturing growth in these surveys.

Outages are shown to reduce output below the production frontier by almost five percent in Africa and by a lower percentage in South Asia, Southeast Asia and the Middle East and North Africa. Production response to outages is quadratic in form. Outages also increase labor cost, reduce exports …

The Integrity Of Financial Analysts: Evidence From Asymmetric Responses To Earnings Surprises, Rui Lu, Wenxuan Hou, Henry Oppenheimer, Ting Zhang

Economics and Finance Faculty Publications

This paper investigates the integrity of financial analysts by examining their recommendation responses to large quarterly earnings surprises. Although there is no significant difference in recommendation changes between affiliated and unaffiliated analysts in response to positive earnings surprises, affiliated analysts are more reluctant than unaffiliated analysts to downgrade stock recommendations in response to negative earnings surprises. The evidence implies that conflicts of interest undermine the integrity of financial analysts. We further examine the effects of reputation concern and the Global Research Analyst Settlement as informal and formal mechanisms, on restoring analysts’ integrity. The results show that the positive bias in …

Transatlantic Influences On American Corporate Jurisprudence: Theorizing The Corporation In The United States, Tara Helfman

Indiana Journal of Global Legal Studies

In interpreting and evaluating the history of the Supreme Court's corporate jurisprudence, legal scholars have deployed three broad theories of corporate legal personality: the aggregate entity theory, the artificial entity theory, and the real entity theory. While these theories are powerful ways of conceptualizing the corporation, this article shows that they have not been as central to the Supreme Court's corporate jurisprudence as recent scholarship suggests. It instead argues that historic transformations in the high court's corporate jurisprudence are best understood in light of contemporary intellectual currents rather than through an expost facto application of the aggregate, artificial, and real …

On The Behavior Of Entrepreneurial Factor Supply To The Firm, Nicos Zafiris

The Journal of Entrepreneurial Finance

This paper draws on an existing, but little used, approach to the choices governing the supply of ‘entrepreneurial’, in the sense of ‘residually remunerated’, resources to an enterprise, especially post start up. It focuses in particular on the hybrid ‘own factor demand/supply curve’ to the firm of Bronfenbrenner (1960), but attempts to treat such supply in conjunction with ‘contractual’ employment of resources, thus making use of gearing and portfolio concepts. To achieve this, it is found necessary for the hybrid schedule to be reinterpreted and recast as the locus of the relevant utility maximising choices. A model is presented which …

The Taper Tantrum Of 2013: Momentum-Driven Or A Return To Fundamentals?, Colette L. Terhune

Finance Undergraduate Honors Theses

This study explores the driving force behind the Taper Tantrum of 2013. Following the Fed’s announcements of potential QE tapering, investors poured of the bond market, causing yields to rise sharply. This analysis seeks to determine whether this was a momentum-driven reaction or a return to fundamental values. Throughout this paper, fundamental determinants of bond prices and investor returns are combined with trading volume and bid-ask spread data to determine the motivating market force. The findings suggest that the Taper Tantrum was a return to fundamental bond prices following an asset bubble burst, likely due to momentum trading.

The Golden Straightjacket Is Out Of Style, Lacey Germana

Best Integrated Writing

Germana’s review of Thomas Friedman’s The Lexus and the Olive Tree provides careful summary and critique of Friedman’s argument and passionately calls for a balance between increased standards of living and careful stewardship of the earth.

The Distribution Of Globalized Power, Rachel Canter

Best Integrated Writing

Canter reviews Thomas Friedman’s The Lexus and the Olive Tree and observes the dissonance between our notions of globalization and global society; she offers an alternate worldview that pays respect to regional cultures and values.

Entrepreneurship, Education And Credit: The Golden Triangle, Roberto M. Samaniego, Juliana Yu Sun

Research Collection School Of Economics

We develop a model to evaluate the impact of college education finance on welfare, inequality and aggregate outcomes. Our model captures the stylized fact that entrepreneurs with college are more common and more profitable. Our calibration to US data suggests this is mainly because higher labor earnings allow college educated agents to ameliorate credit constraints when they become entrepreneurs. The welfare benefits of subsidizing education are greater than those of eliminating financing constraints on education because subsidies ameliorate the impact of financing constraints on would-be entrepreneurs.

Exploring Economic And Social Factors That Increase Economic And Well-Being Measurements Of Developing And Developed Countries, Kofi D. Boadu

Undergraduate Economic Review

The historical growth paths of developed and developing countries reveal the challenges that developing countries face in traveling the road from poverty to prosperity. Based on economic development literature, economic theory, and ordinary least squares (OLS) regression method, this research considers whether or not, and to what extent globalization characteristics, foreign direct investment levels (FDI), secondary school enrollment rates, information communication technology (ICT) as a percentage of trade imports, and happiness levels of 103 developing and developed countries, impact their GDP per capita levels. This paper will also take a look at alternative ways of viewing and measuring economic success.

Informational Efficiency And The Reaction To Terrorism: A Financial Perspective, Nicholas Roland

Honors Undergraduate Theses

The purpose of this study is to measure the message terror organizations hope to convey using the financial markets as a proxy of measurement to determine patterns within the marketplace and the effects on the terrorists’ ability to deliver a desired message due to the increased use of digital devices and access to instantaneous news, seen over the past decade. Using death count, geographic location, and event type, this study identified 109 attacks between 1985 and 2015 to be analyzed against 5 market indices and 5 securities. Measuring the effects within a 10-day sample window from the time of the …

A Sustainability-Based Project Selection Algorithm: Socio-Technical-Economic Project Selection (Steps) Algorithm, Bharathi Bhattu

Dissertations, Master's Theses and Master's Reports

Multi-dimensional aspects play a vital role in the task of project-decision making. Environmental effects are to be considered in addition to other technical and non-technical aspects in order to avoid undue environmental damage. This current work introduces a new decision-making algorithm (Socio-Technical-Economic Project Selection or STEPS) that is demonstrated with the use of RCA (recycled concrete aggregate) as riprap for slope stabilization and erosion control which leaches chemical arsenic when in contact with water. Arsenic has long been recognized for its lethal properties. The main intention of introducing this new algorithm is to use sustainability concepts of social, technical, and …

Battle Of The Beds: The Economic Impact Of Airbnb On The Hotel Industry In Chicago And San Francisco, Katherine Goree

Scripps Senior Theses

The sharing economy is the private redistribution of goods via peer-to-peer sharing. Since internet use has saturated the U.S., the sharing economy has become widely internet-based. Airbnb, a website and app that facilitates the short-term rental of space to stay in another person’s home, has become a major component of the sharing economy.

This study includes an empirical analysis of the hotel occupancy rates in two major markets, San Francisco and Chicago, and how they have or have not changed, from the 2008 launch of Airbnb through the end of 2014. The study hypothesizes that Airbnb has had a statistically …

Responses To Change In The Global Political Economy Of Innovation – The Role Of Sub-National States In Industrial Transition, Dan Herman

Theses and Dissertations (Comprehensive)

This dissertation seeks to explore how sub-national levels of the state promote the development of new industrial sectors. To do so this dissertation builds on a series of theoretical perspectives on the role of the state in the economy and develops a unique view of how sub-national states coalesce and contrast within these perspectives. It does so through a series of empirical case studies focused on sub-national jurisdictions in North America that highlight diverse varieties of state actions that contribute, if not lead, industrial transitions and the development of new innovation-oriented industrial sectors. In so doing, the dissertation presents a …

Cognitive Reflection And The Diligent Worker: An Experimental Study Of Millennials, Brice Corgnet, Roberto Hernán-González, Ricardo Mateo

Economics Faculty Articles and Research

Recent studies have shown that despite crucially needing the creative talent of millennials (people born after 1980) organizations have been reluctant to hire young workers because of their supposed lack of diligence. We propose to help resolve this dilemma by studying the determinants of task performance and shirking behaviors of millennials in a laboratory work environment. We find that cognitive ability is a good predictor of task performance in line with previous literature. In contrast with previous research, personality traits do not consistently predict either task performance or shirking behaviors. Shirking behaviors, as measured by the time participants spent browsing …

Dwelling In Time, Dwelling In Structures: Disintegration In World Politics, Jan Adam Nalaskowski

Graduate Program in International Studies Theses & Dissertations

This dissertation aims to propose a general theory of disintegration. This subject is not treated directly by some theoretical accounts and mistreated by others. European integration theories are fashioned to explain the greater integration process while game-theoretic approaches to withdrawals and secessions, even if treating disintegration directly, fail to include critically responsible factors. This dissertation offers a constructive criticism of both accounts. Since neither turning integration theories symmetrically around nor direct, game-theoretic assessment of disintegration help to provide sufficient explanation, it is suggested that the problem of symmetrical reversal and rational conduct must be revised.

Disintegration fails to follow the …

Mountain Monitor - 1st Quarter 2015, Kenan Fikri, Siddharth Kulkarni

Mountain Monitor Quarterly

This analysis of employment, output, unemployment, and house prices finds that the 10 major metropolitan areas of the Mountain West, despite significant economic headwinds, weathered the first quarter of 2015 with robust economic growth. Eight of the region’s 10 major metro areas advanced on all four metrics of economic performance, and the remaining two metro areas slipped only on a single front.

The national economic slowdown that arrived in early 2015 did not entirely bypass the Mountain West, but the region resisted the drag better than any other. As U.S. economic output contracted by 0.3 percent in the first quarter, …

A Royal Problem: Planning Induced Supply Constraints In London, Elizabeth P. Armstrong

Lawrence University Honors Projects

We explore the impact of regulatory supply constraints on house price levels following boom and bust periods in London. We hypothesize that when regulatory restrictiveness increases during a boom period, house prices will be higher in the following year compared to house prices in less restricted areas. We also hypothesize that when regulatory restrictiveness increases during a bust period, house prices will be lower in the following year compared to house prices in less restricted areas. We empirically test our hypothesis using a multilevel mixed-effects model with a panel data set of 32 boroughs of London, ranging from 2001 to …

The Effects Of Quantitative Easing In The United States: Implications For Future Central Bank Policy Makers, Matthew Q. Rubino

Senior Honors Projects, 2010-2019

The purpose of this thesis is to examine the effects of the Federal Reserve’s recent bond buying programs, specifically Quantitative Easing 1, Quantitative Easing 2, Operation Twist (or the Fed’s Maturity Extension Program), and Quantitative Easing 3. In this study, I provide a picture of the economic landscape leading up to the deployment of the programs, an overview of quantitative easing including each program’s respective objectives, and how and why the Fed decided to implement the programs. Using empirical analysis, I measure each program’s effectiveness by applying four models including a yield curve model, an inflation model, a money supply …

Firing Threats: Incentive Effects And Impression Management, Brice Corgnet, Roberto Hérnan-Gonzalez, Stephen J. Rassenti

Economics Faculty Articles and Research

We study the effect of firing threats in a virtual workplace that reproduces features of existing organizations. We show that organizations in which bosses can fire up to one third of their workforce produce twice as much as organizations for which firing is not possible. Firing threats sharply decrease on-the-job leisure. Nevertheless, organizations endowed with firing threats underperformed those using individual incentives. In the presence of firing threats, employees engage in impression management activities to be seen as hard-working individuals in line with our model. Finally, production levels dropped substantially when the threat of being fired was removed, whereas on-the-job …

Robust Determinants Of Bilateral Trade, Marianne Baxter, Jonathan Hersh

Economics Faculty Articles and Research

What are the policies and country-level conditions which best explain bilateral trade flows between countries? As databases expand, an increasing number of possible explanatory variables are proposed that influence bilateral trade without a clear indication of which variables are robustly important across contexts, time periods, and which are not sensitive to inclusion of other control variables. To shed light on this problem, we apply three model selection methods – Lasso reguarlized regression, Bayesian Model Averaging, and Extreme Bound Analysis -- to candidate variables in a gravity models of trade. Using a panel of 198 countries covering the years 1970 to …

Mountain Monitor - 4th Quarter 2014, Kenan Fikri, Mark Muro

Mountain Monitor Quarterly

With the national economy gaining steam, the 10 major metro areas of the Mountain West ended 2014 with another quarter of strong economic performance. On the four indicators of economic vitality measured by the Mountain Monitor—employment growth, output growth, changes in unemployment, and house price growth—with only a few exceptions, every metro area registered advances on every indicator. Such widespread progress heretofore eluded the region, where recovery from the Great Recession has been characterized by unevenness.

In aggregate, the 10 Mountain metro areas ended 2014 with their fastest quarter of job growth of the year. Employment increased by 0.8 …