Economics - Theses, Dissertations, and other Required Graduate Degree Essays

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A commentary on assumptions of discounting parameters in the Stern Review on the economics of climate change

Author: 
Date created: 
2008
Abstract: 

The Stern Review concludes that human beings can avoid a loss of 20% of the present value of consumption due to climate change if nations immediately reduce GHG emissions with a loss of only 1% of consumption per year. Since this conclusion varies from earlier studies, many reviews of the Stern Review focus on criticizing this conclusion focusing on its extreme assumption of discounting rates. However, only a few have justified their arguments through empirical work. Thus, this paper aims to provide empirical evidence to support their theories. The Review's original IAM model and methodology are improved and its results are replicated. Its conclusions can barely survive with alternative conventional values such as higher discount rates. The paper conducts comparative tests demonstrating the effect these other parameter values can have on the loss of the consumption. These tests reveal large changes in the Review's estimate of a 20% loss.

Document type: 
Thesis
File(s): 
Supervisor(s): 
T
Department: 
Dept. of Economics - Simon Fraser University
Thesis type: 
Project (M.A.)

New evidence on aid effectiveness: assessing the links between economic growth, volatility and aid

Author: 
Date created: 
2008
Abstract: 

Using a panel dataset of more than 100 countries over the period 1960 to 2005 and using a two-equation system that analyzes jointly the determinants of both economic growth and volatility in growth, we find evidence that first, aid raises economic growth and lowers volatility in growth and second, that volatility in aid lowers economic growth and raises volatility in growth. Within a framework that conceives of economic development as the promotion of stable economic growth, this paper establishes a case for increasing stable aid flows to developing countries in order to promote economic development. The high volatile nature of aid disbursed that characterizes the current aid architecture is an issue that needs to be addressed by the international donor community in order to make aid more effective.

Document type: 
Thesis
File(s): 
Supervisor(s): 
P
Department: 
Dept. of Economics - Simon Fraser University
Thesis type: 
Project (M.A.)

Essays in productivity and efficiency analysis in the presence of undesirable outputs

Author: 
Date created: 
2008
Abstract: 

In the first essay we study commensurability property of the directional distance function (DDF). We find that a popular DDF with a fixed directional vector is neither absolute nor ranking commensurable. Nevertheless, this function can be commensurated if the directional vector is commensurated along with the data. We identify a necessary and sufficient condition for a vector that ensures commensurability of the DDF, which helps somewhat narrowing down the key issue for this function in practice—the choice of direction of measurement. In the second paper I test the performance of smooth homogeneous bootstrap bias-correction in multi-output frontier models using hyperbolic efficiency function. I propose an approxima¬tion procedure that substantially reduces the nonparametric estimation time while sacrificing little precision compared to the most precise nonparametric alternative. The performance of the uncorrected and bias-corrected estimates is tested in samples of different sizes via Monte Carlo simulation. All techniques perform well in large samples even without correction. Both parametric and nonparametric estimators benefit from the correction regardless of the sample size. Uncorrected nonparametric estimators perform well in large and require bias-correction in smaller samples. In the small samples bias correction shows marginally better results when applied to the parametric estimator. The final paper studies the effects of nontradeable emission quota and transferable emission quota systems on the accumulation of capital and output growth in small open economies. Both types of regulation impede the growth. The transferable emission quota system has different effects on the development of quota buyers and quota sellers. While quota buyers enjoy faster growth in the both capital stock and output as compared to the nontransferable quota system, quota sellers face slower capital accumulation and economic growth. The simulation using advances in frontier modelling confirms the theoretical findings and reveals that developmental consequences for quota sellers range from a slower capital accumulation to capital stock shrinkage. It also suggests that quota sellers substitute economic production for quota revenues and economic output falls over time.

Document type: 
Thesis
File(s): 
Supervisor(s): 
K
Department: 
Dept. of Economics - Simon Fraser University
Thesis type: 
Dissertation (Ph.D.)

Child labour in a transition economy: Evidence from Albania

Date created: 
2008
Abstract: 

Previous research on child labour has found that poverty increases the incidence of child labour. In this paper, I build a model of child labour which argues that a missing component in the previous findings is the existence of labour market imperfections. Its findings predict an ambiguous affect of land on child labour, which depends on the degree of substitutability between land and labour. Empirically, this paper tests the degree to which child labour then depends on the levels of land that these communities receive. Allowing the effect of land on child labour to be nonlinear, it was found that there is a risk on an increase in the incidence of child labour as the land reform progresses and more land is allocated to farm families. The results of this paper suggest that labour market imperfections may be significant enough to offset the declining relationship between wealth and child labour.

Document type: 
Thesis
File(s): 
Supervisor(s): 
A
Department: 
Dept. of Economics - Simon Fraser University
Thesis type: 
Project (M.A.)

How many are too many? Optimal expansion of the professional sports league

Date created: 
2008
Abstract: 

How does a professional sports league decide on the number of teams to let compete? Even if allowing for each team to be a local monopoly, the increase in the number of teams in a league will reduce the profits of existing teams through reducing the playing talent per team. The league will choose to expand the number of teams if this talent pool increases (or if income increases or costs decrease). The last 50 years of expansion of the MLB, NBA, NHL, and NFL are inspected in light of these predictions. The findings are that the m odel is consistent with the pattern of expansion over the last 50 years for these leagues.

Document type: 
Thesis
File(s): 
Supervisor(s): 
P
Department: 
Dept. of Economics - Simon Fraser University
Thesis type: 
Project (M.A.)

The introduction of competition to China's petroleum sector: a policy analysis

Author: 
Date created: 
2008
Abstract: 

The Chinese market for petroleum has been controlled by three dominant companies since 1998. The circumstances have however, changed since China’s inclusion in the WTO as policy makers now desire a more competitive market. The goal of this paper is to analyze the different economic factors that pose impact on the Chinese petroleum market as the market shifts from monopoly environment to the new competitive market. Observations will be made on the few dominant firms and their role in shaping a big, albeit problematic market. To do this, the profit level for these firms will be compared with similar companies elsewhere. Aside from the dominant firms, China also faced a problem regarding gasoline shortage in recent times. Foreign investment also played a big part in the history of the market. A brief overview of Russia’s petroleum industry as well as some of its distinctive characteristics will also be discussed.

Document type: 
Thesis
File(s): 
Supervisor(s): 
S
Department: 
Dept. of Economics - Simon Fraser University
Thesis type: 
Project (M.A.)

Examining the great moderation hypothesis for Canada

Author: 
Date created: 
2008
Abstract: 

A number of studies have documented a reduction in the volatility of the growth rate of US GDP since the mid-1980s. This reduction has been called “the great moderation.” In this paper I investigate the possibility of a great moderation in Canada and find evidence of a moderation beginning in the third quarter of 1981(1981:3). A decomposition of the variances and covariances of the components of GDP indicates that a fall in the variance of the interest-rate sensitive components accounts for the . Using a structural VAR model, I find evidence of a reduction in the response of output and the inflation rate to monetary policy shocks after 1981:3. Counterfactual experiments demonstrate that monetary policy has not become less effective. The main finding is that more stable monetary policy accounts for the drop in volatility of output.

Document type: 
Thesis
File(s): 
Supervisor(s): 
G
Department: 
Dept. of Economics - Simon Fraser University
Thesis type: 
Project (M.A.)

Learning and monetary policy

Author: 
Date created: 
2008
Abstract: 

This thesis studies implications of different learning mechanisms in various monetary environments. In Chapter 2, adaptive step-size algorithm (Kushner, Yin 2003) is used to model time-varying learning and is studied in the environment of Marcet, Nicolini (2003). The resulting model gives qualitatively similar results to MN and performs quantitatively somewhat better based on the criterion of mean squared error. This model generates increasing gain during hyperinflations that matches findings in Cagan (1956), Khan (1977). An agent behaves cautiously when faced with sudden changes in policy, and is able to recognize a change in regime after acquiring sufficient information. Chapter 3 analyzes the effects of social learning in New Keynesian model described in Woodford (2003). The question is whether the economy will converge to a rational expectations equilibrium under this more realistic learning dynamics. A key result from the literature in this version of the model is that the Taylor Principle governs both the uniqueness and the expectational stability of the rational expectations equilibrium when all agents learn homogeneously using recursive algorithms. The finding is that the Taylor Principle is not necessary for convergence in a social learning context. This paper also contributes to the use of genetic algorithm learning in stochastic environments. Chapter 4 studies cheap talk announcement in an agent-based dynamic extension of Kydland-Prescott model. The government choose inflation announcement and actual inflation and updates its decisions using a model of individual, evolutionary learning (Arifovic, Ledyard 2004). Private agents use naïve and more sophisticated inflati on forecasts and switch between them based on their payoffs. Agents and government can coordinate on Pareto-superior outcomes with positive fraction of naive agents. However, the economy does not stay there. It exhibits recurrent fluctuations in announced and actual inflation as government repeatedly builds up and exploits the proportion of believers. Outcomes with higher fraction of naive forecasters have higher average welfare of agents and government. When cost of sophisticated forecast goes up, the proportion of naive believers goes up. When nonbelievers update slower, naive believers are more likely to disappear. Therefore, quick and accurate sophisticated forecasters ensure positive number of naive agents.

Document type: 
Thesis
File(s): 
Supervisor(s): 
J
Department: 
Dept. of Economics - Simon Fraser University
Thesis type: 
Thesis (Ph.D.)

Markets and complexity

Date created: 
2008
Abstract: 

This paper extends the model developed in “Complexity and Competition” (Gale and Sabourian, Econometrica 2005). In that paper, decentralized finite markets are treated as extensive-form matching and bargaining games. In these games there are many inefficient outcomes supported by subgame perfect equilibria. GS introduce an equilibrium refinement in which players maintain an aversion to complexity and show that such a refinement eliminates non-competitive outcomes. We admit more general environments and show that whether an aversion to complexity eliminates inefficient equilibria in this class of market games depends on supply and how valuations are distributed. There are many markets whose complexity averse equilibria preclude efficiency and there are many finite markets that have no simple subgame perfect equilibria. These results hold when the definition of complexity developed in GS is generalized to include a richer class of Markov partitions of the strategy space.

Document type: 
Thesis
File(s): 
Supervisor(s): 
A
Department: 
Dept. of Economics - Simon Fraser University
Thesis type: 
Project (M.A.)

Three essays on money and banking

Author: 
Date created: 
2008
Abstract: 

The dissertation consists of three studies on money and banking in the presence of uncertainty. In the first paper, agents face uncertain future liquidity needs and the bank is formed to provide liquidity insurance to depositors. The bank holds cash reserves to meet depositors' liquidity needs and as an insurance against uncertain return on the bank's assets. The paper analyzes the effect of inflation on banking crises. The main result is that when the bank has access to a stable foreign currency, inflation has a threshold effect on the incidence of banking crises: higher inflation reduces the likelihood of crises when inflation is below the threshold; the reverse occurs when inflation exceeds the threshold. This result appears to be broadly consistent with available evidence. The second paper is an experimental study about depositors' behavior under a demand deposit contract when they face uncertainty over other depositors' actions; and investigates whether bank runs can occur as the result of pure coordination failures. It is found that bank runs can occur as a result of pure coordination failures, but only when coordination is difficult. I compare the experimental results and the simulation results from a learning algorithm modified from Temzelides (1997), and find that learning offers a good approximation to observed lab behavior. In the third paper, agents face uncertainty over future preferences. The paper takes the mechanism design approach and studies the essentiality of multiple currencies - which act as substitute for the missing record-keeping technology - in the presence of limited commitment and private information about the realization of preferences. When money balances are concealable, a single money is sufficient to solve the problem of limited commitment, and can deal with the private information problem if agents are patient enough; in which case, money balances serve as a preference signalling device. When agents are sufficiently impatient, a second money is essential and allows agents to signal their preferences by holding different monetary portfolios all giving rise to the same total money balances.

Document type: 
Thesis
File(s): 
Supervisor(s): 
D
Department: 
Dept. of Economics - Simon Fraser University
Thesis type: 
Thesis (Ph.D.)