Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 1992. / Includes bibliographical references (leaves 136-138). / by Laura Bottazzi. / Ph.D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 2006. / Includes bibliographical references (p. 123-126). / This dissertation consists of three chapters on adverse-selection type insurance markets. Chapter 1 develops a model for analyzing non-exclusive insurance markets. It establishes that the "screening" considerations of models following Rothschild and Stiglitz (1976)-long applied for analysis of exclusive-contract insurance markets-also apply when contracting is non-exclusive and contracts are linearly priced. It characterizes the contracts offered in efficient markets and shows that screening and non-exclusivity together impose significant restrictions on the structure of insurance policies. In a two risk-type market for retirement annuities, market efficiency requires that either all annuities purchased will provide declining real income streams or else all will provide rising income streams. Chapters 2 and 3 examine the consequences of regulations which restrict the use of characteristic-based pricing in exclusive contracting insurance markets. Chapter 2 argues that restrictions on pricing on the basis of observable characteristics such as gender, race, or the outcomes of genetic tests are undesirable, since the distributional goals of these restrictions can be accomplished more efficiently by employing social insurance. / (cont.) In particular, it shows that a government which can provide pooled-price social insurance can relax restrictions on characteristic-based pricing while implementing a "compensatory" social insurance policy in a way that ensures no individual is harmed while some individuals gain. Chapter 3 is collaborative work with James Poterba and Amy Finkelstein. It starts from the observation that the "compensatory" social insurance policies identified in Chapter 2 are not typically employed in practice. When they are not, permitting characteristic-based pricing has both efficiency and distributional consequences vis a vis banning such pricing. We develop a methodology for empirically measuring the magnitudes of both consequences. We apply this methodology to evaluate the hypothetical imposition of a ban on gender-based pricing in the U.K. annuity market. We estimate that this imposition will re-distribute significant resources from short-lived men to long-lived women. The amount of re-distribution may be up to 50% less than would be predicted without accounting for the endogenous market response, however. / by Casey Goodfriend Rothschild. / Ph.D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 1992. / Includes bibliographical references (leaves 179-182). / by John Joseph Beaulieu. / Ph.D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 1998. / Includes bibliographical references (p. 112-118). / by Annette Vissing-Jørgensen. / Ph.D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 1992. / Includes bibliographical references (leaves 189-193). / by Pamela J. Loprest. / Ph.D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 1993. / Includes bibliographical references (p. 168-169). / by Andrew Gouinlock Berg. / Ph.D.

This dissertation examines robust optimal macroeconomic policy under ambiguity in a general discrete-time linear-quadratic framework. This dissertation is composed of three independent but closely-related essays. The first essay studies robust Ramsey policy problems when the Ramsey planner faces three types of ambiguity. This framework includes both exogenous and endogenous state variables. In addition, the equilibrium system from the private sector contains both backward-looking and forward-looking dynamics. This chapter provides recursive characterizations and algorithms to solve for robust policy and then apply it to a basic New Keynesian model of optimal monetary policy with persistent cost-push shocks. The main findings are: (i) all three types of ambiguity make optimal monetary policy more history-dependent but with different reasons for each type; and (ii) they deliver qualitatively different initial responses of inflation and the output gap following a cost-push shock. The second essay extends Woodford's (2010) approach to the robustly optimal monetary policy. This paper provides algorithms to solve for a time-invariant linear robustly optimal policy in a timeless perspective and for a time-invariant linear Markov perfect equilibrium under discretion. The main findings include: i) the robustly optimal commitment inflation is less responsive to a cost-push shock when the shock is more persistent; ii) the robustly optimal discretionary policy is more responsive to lagged inflation when inflation is more persistent. The third essay documents the impact of belief ambiguity by changing the relative degree of concern for ambiguity associated with two different shocks: cost-push shocks and the natural rate of interest shocks. The main results are: i) belief ambiguity relating to cost-push shocks matters to a central bank much more than belief ambiguity associated with the natural rate of interest shocks; ii) in some cases, after a positive cost-push shock robust optimal monetary policy allows initial inflation higher than under rational expectations; iii) robust optimal monetary policy is not symmetrical in terms of its response to different signs of a shock.

The US has been increasingly seeking solutions in health insurance designs to control health care costs. Despite an ongoing debate about whether demand-side cost sharing or supply-side restrictive provider choice is more effective at reducing costs, there is little work to guide this debate due to challenges in causal inference, estimation, and measurement. This dissertation aims to: (1) understand the role of health plan designs in health care cost containment using a large, multiple-employer, multiple-insurer panel dataset; (2) develop a new estimation algorithm for models with multiple high-dimensional fixed effects; and (3) design a new statistical method for inferring consumer choice of providers using claims level data. Chapter 1 examines the effects of health plan designs at a high level, by looking at variations in health care treatment across plan types that differ in their cost sharing and choice of providers. It finds that narrow provider choice may be more effective than high cost sharing at reducing health care utilization. This chapter speaks to insurance benefit design, and contributes to the literature by developing a new “treatment spells” approach that improves on episode or calendar interval analyses. Chapter 2 deals with challenges in estimating causal inference models. We present a new estimation algorithm for models that entail multiple high-dimensional fixed effects, large unbalanced panels, instrumental variables, and clustered standard error corrections. Applying the algorithm to a sample of over 1.4 million patients using more than 150,000 distinct primary care doctors over a 47-month period, we find that provider network breadth dominates cost sharing in influencing consumers’ monthly utilization of care. Chapter 3 examines the consequences of narrow provider plans, namely how the breadth of consumer choice of providers affects individual health care utilization and spending. Since providers are not observed when their services are unused, I select plans with high enrollment/low provider density where provider network breadth can be more reliably inferred. Using an instrumental variable strategy, I find that narrow provider plans redirect patients from in-network to out-of-network services but only modestly lower expected health care costs.

This dissertation studies two disparate topics in development economics and industrial organization respectively: (a) the role of financial intermediation in promoting economic growth in developing countries and (b) the effects of learning on agents' search behavior. The first essay investigates the effects of commercial banking on economic growth. The tendency of banks to locate in profitable areas experiencing higher growth typically complicates the identification of banking effects. I exploit a previously unstudied reform of bank branching policy in India between 2005-06 that led to a large expansion in private bank credit to financially underserved areas. Using iterations of a regression discontinuity design, I trace the exogenous expansion of banking services through time at the district level. I show this expansion produced positive effects in agriculture and manufacturing. I confirm greater gains in local GDP growth using remote sensing data to overcome the lack of official GDP statistics at the district level. These results offer evidence of a causal impact of financial system expansion on economic development. The second essay examines how the geographic reach of a bank's network of branches can affect its ability to spread risks across spatially separated regions. I investigate the causal impact of the spatial expansion of Indian banks resulting from the bank branching policy reform on smoothing the consumption of households with respect to local weather and agricultural productivity shocks. The third essay (coauthored with Sergei Koulayev) extends a model of sequential search for differentiated goods by relaxing the standard assumption of rational expectations. Agents are likely to refine their imperfect knowledge of product markets while searching. By introducing Bayesian learning into agents' beliefs, the model better replicates important aspects of search behavior. Using data from a popular internet hotel search site, we estimate lower median search costs in the model with Bayesian learning. Considering a counterfactual in which the first page of search results present the most popular hotel options, we estimate an increase in the number of successful searches.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 1995. / Includes bibliographical references. / by John J. Blank. / Ph.D.