Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 1987. / Includes bibliographies. / by Jonathan S. Feinstein. / Ph.D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 2013. / Cataloged from PDF version of thesis. / Includes bibliographical references (p. 181-195). / In Chapter 1, I explore how speculators can destabilize financial markets by amplifying negative shocks in periods of market turmoil, and confirm the main predictions of the theoretical analysis using data on money market funds (MMFs). I propose a dynamic trading model with two types of investors - long-term and speculative - who interact in a market with search frictions. During periods of turmoil created by an uncertainty shock, speculators react to declining asset prices by liquidating their holdings in hopes of buying them back later at a gain, despite the asset's cash flows remaining the same throughout. Interestingly, I show that a reduction in trading frictions leads to more severe fluctuations in asset prices. At the root of this result are the strategic complementarities between speculators expected to follow similar strategies in the future. Using a novel dataset on MMFs' portfolio holdings during the European debt crisis, I gauge the strength of funds' strategic interactions as the number of funding relationships each issuer has with MMFs. I show that funds are more likely to liquidate the securities of issuers that have fewer funding relationships with other funds, obliging them to borrow at shorter maturity and higher interest rates. In Chapter 2, co-authored with Marco Pagano, I study a model where some investors ("hedgers") are bad at information processing, while others ("speculators") have superior information-processing ability and trade purely to exploit it. The disclosure of financial information induces a trade externality: if speculators refrain from trading, hedgers do the same, depressing the asset price. Market transparency reinforces this mechanism, by making speculators' trades more visible to hedgers. As a consequence, asset sellers will oppose both the disclosure of fundamentals and trading transparency. This is socially inefficient if a large fraction of market participants are speculators and hedgers have low processing costs. But in these circumstances, forbidding hedgers' access to the market may dominate mandatory disclosure. In Chapter 3, I show that reputation concerns are important sources of discipline for institutional investors, but their effectiveness varies along the business cycle. I propose a dynamic model of reputation formation in which investors learn about fund managers' skill upon observing past returns. Managers can generate active returns at a disutility and determine the fund's exposure to tail risk. The model delivers rich dynamics for managers' behavior. Good reputation managers exploit their status by extracting higher rents from investors, while intermediate reputation managers tend to improve their returns to attract more funds. Finally, for bad performers there exists a reputation trap: their perceived low quality prevents them from attracting investors' capital and then also from improving their track record. Furthermore, when the economy is subject to aggregate shocks, fund managers tend to exacerbate fluctuations by exposing the fund to tail risk to increase short-term returns. The model provides a framework to analyze the investment strategies adopted by mutual funds and hedge funds during the recent financial crisis. / by Marco Di Maggio. / Ph.D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 2005. / Includes bibliographical references. / This thesis characterizes the important role of US ethnic scientists and entrepreneurs for international technology diffusion. Chapter 1 studies the transfer of tacit knowledge regarding new innovations through ethnic scientific communities in the US and their ties to their home countries. US ethnic research communities are quantified by applying an ethnic-name database to individual patent records. International patent citations confirm knowledge diffuses through ethnic networks, and manufacturing output in foreign countries increases with an elasticity of approximately 0.3 to stronger scientific integration with the US frontier. To address reverse-causality concerns, reduced-form specifications exploit exogenous changes in US immigration quotas. Consistent with a model of sector reallocation, output growth in less developed economies is facilitated by employment gains, while more advanced economies experience sharper increases in labor productivity. The findings suggest tacit knowledge channels partly shape the effective technology frontiers of developing economies. Chapter 2 further exploits this heterogeneous technology diffusion through ethnic networks to test the importance of Ricardian technology differences for international trade. Panel regressions find technology growth increases manufacturing exports. / (cont.) To establish a causal relationship between technology and trade, instrumental-variables specifications exploit uneven technology diffusion from the US through ethnic scientific networks. The instrumented elasticity of export growth to the exporter's technology development is 0.9 in the preferred specification. Supplemental specifications show this elasticity is robust to controlling for the importer's technology development and to Rybczynski effect due to factor accumulation. Exogenous reforms of US immigration law again test for reverse causality. The findings suggest technology differences are an important determinant of trade patterns. As a supplement to these first two studies, Chapter 3 provides detailed documentation on the ethnic-name strategy employed with US patent records. The growing contribution of Chinese and Indian scientists to US technology formation, especially in high-tech industries, is described. The institutional and geographic dimensions of US ethnic innovation are further characterized. Finally, Chapter 4 concludes with an independent study of income inequality and social norms for compensation differentials and government-led redistribution. This work demonstrates that short-run responses in social norms do not amplify income inequality shocks (e.g., due to skill-biased technical change). / by William Robert Kerr. / Ph.D.

Thesis: Ph. D., Massachusetts Institute of Technology, Department of Economics, 2016. / Cataloged from PDF version of thesis. / Includes bibliographical references (pages 127-134). / This thesis consists of three chapters on the economic and health consequences of lead paint abatement regulations. The first chapter studies the effect of state-level lead paint abatement regulations on housing markets, focusing on house prices, rents and the allocation of households across houses with different health risks. State lead abatement mandates require owners of old houses to mitigate lead hazards in the presence of small children. I estimate the effects of these mandates on the housing market using a triple differences strategy that exploits differences by state, year, and housing vintage. The estimates suggest a large fraction of the abatement costs fall on property owners, with house prices for multi-family properties declining by 6.4% and single-family homes declining 4.3%. These effects persist for at least a decade, consistent with low abatement rates. Families with small children bear part of the mandates' costs, too: after a mandate, these families are 17% less likely to live in old houses, and they pay higher rents for safer homes. These results suggest that the mandates have important real distributional consequences despite evidence of low abatement rates. The second chapter analyzes the impact of state-level lead paint abatement regulations on children's health and educational outcomes in a difference-in-differences framework.. Lead poisoning has long-lasting consequences on children's health, as well as on their cognitive and non-cognitive abilities. Abatement mandates reduce the rate of elevated blood lead levels by 29%. Moreover, the mandates decrease the rate of enrollment in special education in exposed cohorts by 8.1%, indicating a reduction in the number of children with disabilities. A back of the envelope calculation suggests that this decrease in the rate of enrollment in special education induces savings between $17.5 and $111 million per state-cohort on average, while the increased lifetime earnings from the reduction in blood lead levels could lead to increased tax revenues in the order of $2.8 million per state-cohort on average. However, the reduction in special education enrollment does not appear to be reflected in improvements in educational outcomes, as I find no evidence that average fourth-grade test scores and disciplinary actions change with the mandates. The third chapter analyzes both the selection of houses into compliance and individuals' valuation of lead-safe housing using address-level housing, environmental and health data. Lead paint in old homes is the major source of lead poisoning for US children despite federal and local regulations concerning the mitigation of lead hazards and the disclosure of lead status of a house whenever known. By leveraging detailed information on property owners, I find that small landlords are more likely to have non-compliant properties. Distressed landlords as indicated either by high loan to value ratios or by distressed sales have similar bad outcomes. By leveraging sales data, I estimate that the finding of a lead hazard significantly decreases the value of a house. / by Ludovica A. Gazze. / Ph. D.

Thesis: Ph. D., Massachusetts Institute of Technology, Department of Economics, 2016. / Cataloged from PDF version of thesis. / Includes bibliographical references (pages 93-96). / study the design of microfinance contracts and how to target financial products using community information. In Chapter 1, I report on a field experiment in India that assesses (1) whether community members have information about one another that can be used to identify high-ability entrepreneurs and (2) whether techniques from mechanism design can be used to elicit truthful reports. To answer the first question, I ask respondents to rank their entrepreneur peers on various metrics of business profitability and growth, borrower reliability, and household financial activity. I find that the information provided by community members is predictive of many key business and household characteristics. I also find that, when respondents are aware that the information they provide about their peers will be used to allocate a valuable prize - a $100 business grant - they misreport to favor their family or close friends. To answer the second question, I test the effectiveness of various truth-telling incentives: paying respondents for the accuracy of reports, varying whether reports are collected in private or in public, and using cross-reporting techniques motivated by mechanism design theory. I find that both monetary incentives and public reporting significantly improve the accuracy of the ranks. In Chapter 2, co-authored with Benjamin Roth, we report on results from a field experiment in India in which we test the viability of two kinds of monetary payment rules used to incentivize truth-telling: a novel payment rule that relies on ex-post verification of reports and a rule based on peer prediction methods, which relies only on contemporaneous peer reports. Farmers were asked to answer questions about their neighbors and were told that these reports would be used to determine cash prizes. We varied whether farmers received incentives for the accuracy of their reports (via one of the payment rules) or not. We find that, in the absence of monetary incentives, respondents lie in favor of their family and friends. However, monetary incentives improve the quality of reports and both payment rules result in reports of comparable accuracy. This is a reassuring outcome since peer prediction is much easier to implement (though mechanically complex). Importantly, by imposing structure on our data we also find evidence that a peer predictive payment rule, the Robust Bayesian Truth Serum Witkowski and Parkes (2012), is empirically incentive compatible; respondents maximize their subjective expected utility by reporting truthful answers. In Chapter 3, with Rohini Pande, Erica Field, and John Papp, we ask: do the repayment requirements of the classic microfinance contract inhibit investment in high-return but illiquid business opportunities among the poor? Using a field experiment, we compare the classic contract which requires that repayment begin immediately after loan disbursement to a contract that includes a two-month grace period. The provision of a grace period increased short-run business investment and long-run profits but also default rates. The results indicate that debt contracts that require early repayment discourage illiquid risky investment and thereby limit the potential impact of microfinance on microenterprise growth and household poverty. / by Natalia Rigol. / Ph. D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 1997. / Includes bibliographical references (leaves 143-144). / by Todd M. Sinai. / Ph.D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 1997. / Includes bibliographical references (leaves 104-107). / by Taejong Kim. / Ph.D.

Massachusetts Institute of Technology. Dept. of Economics. Thesis. 1966. Ph.D. / Bibliography: leaf 117. / Ph.D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 2008. / Includes bibliographical references. / Migration from Mexico to the United States constitutes one of the world's largest labor flows and generates enormous capital flows in the opposite direction. Corresponding to each of these flows is a distinct view of the role migration plays in local economic development. The optimistic view stresses the role of remittances in stimulating demand and relaxing credit constraints, while the pessimistic view emphasizes the departure of the economy's skilled and motivated workers. Using data from the Mexican Migration Project and exploiting stickiness in migrants' choice of U.S. destination, I examine the effects of migrant demand shocks on business ownership and job choice in Mexican communities. I find little evidence to support the pessimistic scenario. All members of the community, including non-migrants, appear to benefit from improved labor market and business investment opportunities when high U.S. demand induces migrants to leave. Demand for local products rather than credit supply effects seems to be responsible for this outcome. 1 Introduction Since the 1980's, Mexican workers have experienced a rapid expansion in access to the U.S. labor market. By the year 2000, 9.4% of Mexico's total population was living in the United States (Chiquiar & Hanson, 2005), forming one of the world's largest labor flows. Revealed preference suggests we can assume that this migration is beneficial for the migrants themselves; however, its effects on those who remain in Mexico are ambiguous. / (cont.) On the positive side of the ledger, remittances from U.S. migration constitute roughly 20 billion dollars (Banco de Mexico, 2007), or 2% of Mexican GDP. These remittances may feed demand for non-tradable goods produced locally, or they may ease credit constraints and allow capital accumulation to progress. On the negative side, U.S. migration does not attract a random sample of Mexican workers. Transient migrants in particular tend to be young and male, and they might have a different mix of skills and preferences (like risk tolerance) than the general population as well. / (cont.) If migrant workers provide important inputs that complement non-migrants' skills, then their departure could deprive those left behind of economic opportunities. This ambiguity has been reflected historically in Mexico's migration policies at the local, state and national level: while past President Vicente Fox referred to labor migrants as Mexican "heroes", many Mexican governments earlier 'See Chiquiar & Hanson (2005) and Ibarraran & Lubotsky (2007) for evidence that Mexican migrants are positively selected on education and McKenzie & Rappaport (2006) for an alternative view. / by Peter A. Schnabl. / Ph.D.

Thesis (Ph.D.)--Massachusetts Institute of Technology, Dept. of Economics, 2002. / Includes bibliographical references (p. 135-137). / In this dissertation, I present three essays that are motivated by the interesting and dynamic price-setting behavior of firms in Canadian retail gasoline markets. In the first essay, I examine behavior at the market level for 19 Canadian cities over 574 weeks. I find three distinct pricing patterns: 1. standard cost-based pricing, 2. sticky pricing, and 3. steep, asymmetric retail price cycles that mirror the Edgeworth Cycles of Maskin & Tirole [1988b]. I use a Markov switching regression to estimate the prevalence of the regimes, the pattern of markup in each, and the structural characteristics of the price cycles themselves. Retail price cycles prevail in over 40% of the sample. I show they are more prevalent when there is a greater penetration of small, independent firms. The cycle is accelerated and amplified in markets with very many small firms. Where small firms are few, sticky pricing dominates. In the second essay, I present a new station-level micro-dataset that reveals especially strong retail price cycles in the Toronto market. I show that it is large firms who first reset each new cycle by significantly raising prices. The one-time average price increase is 5.6 cents per liter, or 170% of the average margin. The magnitude of the increase is decreasing in the previous markup and increasing in expected future wholesale prices. I show that small independent firms wait longest before responding, and the entire process is usually complete in 24 hours. From the top of the cycle, I find small firms undercut first and trigger each new round of tit-for-tat price undercutting. / (cont.) In the third essay, I explore the theoretical conditions that best foster price cycles and how those conditions affect the character of the cycles themselves. Using computational techniques, I search for Markov Perfect Equilibria under several models of duopoly and triopoly and for various model-specific parameter values. I consider degrees of differentiation, capacity constraints, sharing rules, discount factors and initial beliefs about price leading behavior. I find Edgeworth price cycles with interesting characteristics under many conditions and focal prices under others. / by Michael David Noel. / Ph.D.