Economic Theory Commons^™

Optimal Taxation And Debt With Uninsurable Risks To Human Capital Accumulation, Piero Gottardi, Atsushi Kajii, Tomoyuki Nakajima

Research Collection School Of Economics

We consider an economy where individuals face uninsurable risks to their human capital accumulation and analyze the optimal level of linear taxes on capital and labor income together with the optimal path of government debt. We show that in the presence of such risks, it is beneficial to tax both labor and capital and to issue public debt. We also assess the quantitative importance of these findings, and show that the benefits of government debt and capital taxes both increase with the magnitude of idiosyncratic risks and the degree of relative risk aversion.

Calcaneal Quantitative Ultrasound Indicates Reduced Bone Status Among Physically Active Adult Forager-Horticulturalists, Jonathan Stieglitz, Felicia C. Madimenos, Hillard Kaplan, Michael Gurven

ESI Publications

Six months of exclusive breastfeeding (EBF) is considered optimal for infant health, though globally most infants begin complementary feeding (CF) earlier—including among populations that practice prolonged breastfeeding. Two frameworks for understanding patterns of early CF emerge in the literature. In the first, maternal and infant needs trade-off, as “maternal-centric” factors—related to time and energy demands, reproductive investment, cultural influences, and structural barriers— favor supplanting breastfeeding with earlier and increased CF. A second framework considers that “infant-centric” factors—related to infant energetic needs—favor CF before six months to supplement breastfeeding.

We apply these two frameworks in examining early CF among the Tsimane—a …

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 …

Cointegration Of Matched Home Purchases And Rental Price Indexes –Evidence From Singapore, Badi Baltagi, Jing Li

Center for Policy Research

This paper exploits the homogeneity feature of the Singapore private residential condominium market and constructs matched home purchase price and rental price series using the repeated sales method. These matched series allow us to conduct time series analysis to examine the long-term present value relationship in the housing market. Three key findings are obtained. First, we fail to establish a cointegrating relationship between the home purchase price and rental price based on nationally estimated indexes. Second, area-specific indexes demonstrate strong cross-correlations, invalidating the use of first generation panel unit root tests that ignore these cross-correlations. Third, Pesaran’s CIPS test indicates …

Tug-Of-War In The Laboratory, Cary Deck, Roman M. Sheremeta

ESI Working Papers

Tug-of-war is a multi-battle contest often used to describe extended interactions in economics, management, political science, and other disciplines. While there has been some theoretical work, there is scant empirical evidence regarding behavior in a tug-of-war game. To the best of our knowledge, this paper provides the first experimental study of the tug-of-war. The results show notable deviations of behavior from theory. In the first battle of the tug-of-war, subjects exert fewer resources, while in the follow-up battles, they exert more resources than predicted. Also, contrary to the theoretical prediction, resource expenditures tend to increase in the duration of the …

Building A Better Model: Variable Selection To Predict Poverty In Pakistan And Sri Lanka, Marium Afzal, Jonathan Hersh, David Newhouse

Economics Faculty Articles and Research

Numerous studies have developed models to predict poverty, but surprisingly few have rigorously examined different approaches to developing prediction models. This paper applies out of sample validation techniques to household data from Pakistan and Sri Lanka, to compare the accuracy of regional poverty predictions from models derived using manual selection, stepwise regression, and Lasso-based procedures. It also examines how much incorporating publically available satellite data into the model improves its accuracy. The five main findings are that: 1) Lasso tends to outperform both discretionary and stepwise models in Pakistan, where the set of potential predictors is large. 2) Lasso and …

Agreeing To Agree And Dutch Books, Yi-Chun Chen, Ehud Lehrer, Jiangtao Li, Dov Samet, Eran Shmaya

Research Collection School Of Economics

We say that agreeing to agree is possible for an event E if there exist posterior beliefs of the agents with a common prior such that it is common knowledge that the agents' posteriors for E coincide. We propose a notion called Dutch book which is a profile of interim contracts between an outsider and the agents based on the occurrence of E, such that the outsider makes positive profit in all states. We show that in a finite state space, when the agents cannot tell whether Eoccurred or not, agreeing to agree is possible for E if and only …

Wealth Inequality And Financial Development: Revisiting The Symmetry Breaking Mechanism, Haiping Zhang

Research Collection School Of Economics

No abstract provided.

How Does The Stock Market Value The Renewable Energy Sector: A Public Announcement Analysis And Test Of The Efficient Market Hypothesis, Jack Crampton

Journal of Environmental and Resource Economics at Colby

This study analyzes the market reaction to public announcements in the stock market. The efficient market hypothesis is put to test and similar studies are reexamined in the context of the renewable energy sector. Through fixed effects models, we can assess the validity to the efficient market hypothesis and assess how the market values the clean energy sector.

Adam Smith: Homo Socialis, Yes; Social Preferences, No; Reciprocity Was To Be Explained, Vernon L. Smith

Economics Faculty Articles and Research

I argue that the authors accept too casually the neo-classical framework of thought that was incapable of predicting choices in 2-person and other experimental games in the 1980s and 1990ss. The ex post hoc hypothesis that social preference can describe homo socialis reduces inevitably to a rescue of neo-classical economics in which Max-U (own payoff, other payoff) substitutes mechanically for Max-U (own payoff) in our personal groupings. This static procedure unnecessarily and inappropriately robs human conduct of its sociality as a process relationship. The model I articulate was masterfully developed by Adam Smith, which back-predicts the results of these earlier …

Does Market Integration Buffer Risk, Erode Traditional Sharing Practices And Increase Inequality? A Test Among Bolivian Forager-Farmers, Michael Gurven, Adrian V. Jaeggi, Christopher Von Rueden, Paul L. Hooper, Hillard Kaplan

ESI Publications

Sharing and exchange are common practices for minimizing food insecurity in rural populations. The advent of markets and monetization in egalitarian indigenous populations presents an alternative means of managing risk, with the potential impact of eroding traditional networks. We test whether market involvement buffers several types of risk and reduces traditional sharing behavior among Tsimane Amerindians of the Bolivian Amazon. Results vary based on type of market integration and scale of analysis (household vs. village), consistent with the notion that local culture and ecology shape risk management strategies. Greater wealth and income were unassociated with the reliance on others for …

Information Propagation In Financial Markets, Garrett A. Mcbrayer

Graduate Theses and Dissertations

This dissertation consists of three essays which examine information flows through financial markets and across firms, and investigates the factors affecting the process of information dissemination. The first essay examines whether the announcement of a credit rating change for a given firm contains information pertinent to the valuations of intra-industry peer firms. I identify an information spillover effect on peer firms surrounding credit rating downgrades. Further, I find that the post-announcement spillover effects are indicative of an overreaction in the market’s response to the downgrade announcement. Peer firms exhibit predictability in their post-announcement returns as a function of their relative …

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, …

Working Paper No. 07, Evsey Domar And The Keynesian Tradition, Cesar Maldonado

Working Papers in Economics

This inquiry seeks to establish that Evsey Domar extends Keynes’s thinking and in this manner helps to establish a post-Keynesian tradition. First, I shall consider Keynes’s ideas concerning problems facing market capitalism as appears in his book, The General Theory of Employment, Interest, and Money. Then I shall continue with this inquiry and consider Domar’s insights into expansion and employment and his concerns regarding capital accumulation, as well as his confronting a theory posited by Keynes concerning investment and employment, raising the issue of whether Keynes’s understanding is accurate. The last part of this inquiry deals with Domar’s concerns …

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 …

Depression As Sickness Behavior? A Test Of The Host Defense Hypothesis In A High Pathogen Population, Jonathan Stieglitz, Benjamin C. Trumble, Melissa Emery Thompson, Aaron D. Blackwell, Hillard Kaplan, Michael Gurven

ESI Publications

Sadness is an emotion universally recognized across cultures, suggesting it plays an important functional role in regulating human behavior. Numerous adaptive explanations of persistent sadness interfering with daily functioning (hereafter “depression”) have been proposed, but most do not explain frequent bidirectional associations between depression and greater immune activation. Here we test several predictions of the host defense hypothesis, which posits that depression is part of a broader coordinated evolved response to infection or tissue injury (i.e. “sickness behavior”) that promotes energy conservation and reallocation to facilitate immune activation. In a high pathogen population of lean and relatively egalitarian Bolivian foragerhorticulturalists, …

Public Goods With Punishment & Payment For Relative Rank, Terence C. Burnham

ESI Working Papers

A laboratory experiment designed to investigate the role of relative performance-based payoffs on cooperation in the context of punishment. Subjects play a repeated public goods game with high-powered punishment (50:1) and additional payoffs based on relative performance. Contributions to the public good are nearly maximal. Punishment levels are substantial, higher than the same game without relative rank payoffs, and sufficiently high that total payoffs are negative. The group would make much more money in the same setting without punishment. This study contributes to investigation of the role of altruism in human cooperation.

The Impact Of Offcial Development Assistance On Foreign Direct Investment: Evidence From Vietnam, Hang Pham

Master's Theses

The relationship between Foreign Direct Investment (FDI) and Official Development Assistance (ODA) has not been fully established, nor has its directionality, as evidenced the disagreement among economists. Using existing literature as starting point, I extend its base by examining key causal variables for ODA and FDI within 64 Vietnamese provinces, covering the span from 1998 to 2012. With the most extensive and newest dataset available, I find that ODA attracts more FDI inflows in intermediate term (5year average) and long term (all year average), but not in the short-term. An important policy implication of these results for developing countries, and …

The Impact Of Migration And Remittances On Children's Education In El Salvador, Philip H. Jakob

Master's Theses

The effect that migrant remittances have on school enrollment is a challenging relationship to empirically define, requiring both an analysis of the circumstances that lead a household member to emigrate from their home and equally, but not always independently, how the family makes investment decisions in the education of one or more of their children. This study presents a new strategy to determine the nature of this relationship for households in El Salvador, using a 2SLS estimation with a wealth-stratified panel constructed from household survey data over a nine-year period. Employing this methodology to estimate the combined effects of both …

A Test Of The Household Separation Hypothesis In Rwanda, James E. Anderson

Master's Theses

How does a farm household in rural Africa react when the government decides crop selection? In developing countries, agricultural households strive to optimize a risk mitigating utility function rather than a traditional agricultural production function. These households are termed “non-separated” as their farming efforts are directed towards family food security rather than maximizing agricultural profits. The lack of integration with labor and commodity markets makes these non-separated households difficult to influence with policy initiatives. Various tests for household separation have been developed.

We use a unique dataset from Rwanda to evaluate these separation tests. The data include households forced into …