Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 1994. / Includes bibliographical references. / by Fiona M. Scott Morton. / Ph.D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 2003. / Includes bibliographical references (p. 128-133). / The chapters included here investigate the general relation between fiscal policy and elections. Chapter 1 provides a general summary of the 3 main chapters. Chapter 2 examines local and non-local public expenditures and how the two are linked through the political process. Emphasis is placed on the role of voter composition within localaties in order to look at the effects of suburbanization on expenditures. Chapter 3 examines the validity of the medan voter result when turnout is allowed to depend on policy platforms. With endogeneous turnout there may be multiple equilibria or a motivation to pull policy platforms away from the median and towards the mode of the voter distribution. Chapter 4 examines the link between presidential elections and the economy. Democratic election victories are often followed by a booming economy when compared to Republican victories. The instrument by which the president may influence the economy, however, is difficult to find. This chapter investigates the role of fiscal policy in explaining the impact of elections. It finds only a limited role for fiscal policy in the linkage from elections to the economy. / by John S. Irons, Jr. / Ph.D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 2007. / "February 2007." / Includes bibliographical references. / This thesis is a collection of two essays on open economy macroeconomics. The first essay is on imperfect asset substitutability and current account dynamics. It is divided into four chapters. The first chapter in this essay is a preface for the chapters to follow. The second chapter lays out a model of the current account in which assets are perfectly substitutable, and investigates the nature of wealth dynamics in the presence of exogenous shocks. The third chapter extends the model of the second chapter to the case where assets are imperfectly substitutable and once again investigates the model's response to exogenous shocks. In particular, the differences that arise from valuation effects, which were absent in the perfect substitutability case, are highlighted. The fourth chapter applies the model of the third chapter to the question of what lies behind the U.S. current account deficit and dollar appreciation for the period 1996-2004. I show that a reasonable explanation of these phenomena should include a key role for shocks to foreigners' portfolio preferences. / (cont.) The second essay is contained in a single chapter, and is an empirical investigation of the linkages between FDI and trade openness for a panel of developing countries over the period 1970-97. Instrumenting for both trade openness and FDI stocks, I show that the correlation commonly observed in the data between FDI and trade openness, is quite possibly due to causality running from FDI to trade openness rather than from trade openness to FDI. / by Indradeep Ghosh. / Ph.D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 2010. / Cataloged from PDF version of thesis. / Includes bibliographical references. / This thesis is concerned with the economic consequences for individuals of two important U.S. labor market institutions: unionization and the military draft. The first chapter develops an econometric procedure for estimating quantile treatment effects in a regression discontinuity design. It shows nonparametric identification, develops estimators, including a data-driven bandwidth choice, and illustrates the methodology by estimating the effects of an Oklahoma universal pre-K program on the quantiles of student outcomes. The second chapter applies the econometric procedure developed in the first chapter and estimates effects of unionization on the distribution of employees' earnings using a regression discontinuity design based on union certification elections. The results suggest that unionization raises the lower end of the distribution by up to 25 log points, but has a large negative effect on the upper tail of earnings, with little effect on average earnings. Unionization also increases retention among workers with lower pre-election earnings, but decreases it for higher-earning workers. These effects are interpreted as reflecting the political incentives unions face in certification elections. The final chapter (joint with Joshua Angrist and Stacey Chen) explores the long-term effects of Vietnam-era military service on disability outcomes using a research design based on the draft lottery. We find no evidence that military service affected overall employment rates or overall work-limiting disability. At the same time, military service drastically increased federal transfer income, especially for lower skilled white men, among whom there was a large negative impact on employment and an increase in disability rates. The differential impact of Vietnam-era service on low-skilled men cannot be explained by more combat exposure for the least educated, leaving the relative attractiveness of VDC for less skilled men and the work disincentives embedded in the VDC system as a likely explanation. / by Brigham R. Frandsen. / Ph.D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 1994. / Includes bibliographical references. / by John A.A. Hassler. / Ph.D.

Thesis: S.M., Massachusetts Institute of Technology, Department of Economics, 2014. / Cataloged from PDF version of thesis. / Includes bibliographical references (pages 21-22). / I investigate whether voters judge the performance of their governor on taxes by comparing him to governors from neighboring states. If voters do make these comparisons, it creates "yardstick competition," where governors are competing with each other as they set taxes. Previous research has shown that governors are punished at the ballot box for raising taxes. However, Besley and Case (AER 1995) find that if governors in neighboring states have also raised taxes the voters are more forgiving. Besley and Case speculate that voters know what is happening in other states through the media. My hypothesis is that if yardstick competition exists, then voters exposed to television from a neighboring state should be influenced by tax changes in that state. For example, there are some counties in eastern Arkansas where voters are watching Tennessee television stations and some in southern Arkansas where they are watching Louisiana television stations. By comparing the voting patterns in these counties in the Arkansas gubernatorial election, I can see if there is any influence coming from the taxes set by the neighboring state. I control for the typical partisan leanings of the county as measured by presidential and senatorial votes in nearby years. Therefore I incorporate county voting data for every election from 1960 to 2000, and I use tax data from the NBER TAXSIM program and other sources. I find only very limited evidence in support of yardstick competition. Specifically, voters seem to make yardstick comparisons for the personal income tax when both governors are Democrats. This may be consistent with a theory where voters can only judge whether a tax increase was warranted when they are comparing governors from the same party, and it supports a growing literature in political science suggesting that voters have different expectations of the two parties on fiscal issues. / by Lynn Johnson. / S.M.

Thesis: Ph. D., Massachusetts Institute of Technology, Department of Economics, 2016. / Cataloged from PDF version of thesis. / Includes bibliographical references (pages 95-98). / This thesis consists of three chapters respectively on optimal contracts to incentivize information acquisition, strategic voting, and conflict of interest. The first chapter, joint work with A. Clark, studies a principal-agent problem with limited-liability where an agent is hired to acquire information and take a decision on behalf of a risk-neutral principal. The principal cannot monitor the agent's attentiveness when acquiring information and so she provides incentives with a contract that depends on the realized state of the world and the chosen decision. We build a model for this problem where the agent's cost of acquiring information is given by the average reduction in entropy. We show that the optimal contract has a linear structure: the agent receives a fixed fraction of output together with a state and decision contingent payment. The optimal contract is simple, in terms of dimensionality, and features an incentive structure analogous to that of portfolio managers in the hedge fund industry. We extend this result to problems with arbitrary utilities, a generalized form of cost functions, a participation constraint for the agent, a wealth constraints for the principal, and imperfect revelation of the state. We also show that only entropic costs can generate the separability of state and decision payments and solve for the equivalent optimal contract in a dynamic setting. Lastly we perform Monte Carlo simulations to test the robustness of our initial contract for different utilities and compare its welfare to purely linear and to unrestricted contracts. The second chapter, joint with F. Mezzanotti, provides a lower bound for the extent of strategic voting. Voters are strategic if they switch their vote from their favorite candidate to one of the main contenders in a tossup election. High levels of strategic voting are a concern for the representativity of democracy and the allocation efficiency of government goods and services. Recent work in economics has estimated that up to 80% of voters are strategic. We use a clean quasi experiment to highlight the shortcomings of previous identification strategies, which fail to fully account for the strategic behavior of parties. In an ideal experiment we would like to observe two identical votes with exogenous variation in the party victory probability. Among world parliamentary democracies 104 have a unique Chamber, 78 have two Chambers with different functions, and only one nation has two Chambers with the same identical functions: Italy. This allows us to observe two identical votes and therefore a valid counterfactual. In addition, the majority premia are calculated at the national level for the Congress ballot and at the regional level for the Senate ballot. This provides exogenous variation in the probability of victory. Because the two Chambers have identical functions, a sincere voter should vote for the same coalition in the two ballots. A strategic voter would instead respond to regions' specific victory probabilities. We combine this intuition with a geographical Regression Discontinuity approach, which allows us to compare voters across multiple Regional boundaries. We find much smaller estimates (5%) that we interpret as a lower bound but argue that it is a credible estimate. We also reconcile our result with the literature larger estimates (35% to 80%) showing how previous estimates could have confounded strategic parties and strategic voters due to the use of a non identical vote as counterfactual. The third chapter estimates the distortions due to conflict of interest during Berlusconi's rule over Italy. The identification is based on the efficient market hypothesis. In particular, I use electoral polls and stock market data to estimate the effect of surprising electoral outcomes, defined as the difference between actual and expected electoral results, on the stock market performance of Berlusconi's firms. I find evidence that there are substantial distortions due to conflict of interest: 6% increase in market capitalization per percentage point of a positive electoral surprise. I then match two of Berlusconi's companies operating in the same media sector but in different countries. This allows me to further test whether the extra returns are due to political distortions under different regulatory authorities. I find that the abnormal returns can be ascribed to "conflict of interest" rather than to the CEO-founder stepping down. Finally, I perform robustness tests to ensure that the cumulative abnormal returns estimates are not spurious. / by Giovanni Reggiani. / Ph. D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 1997. / Includes bibliographical references (leaves 119-124). / by Mary C. Hallward-Driemeier. / Ph.D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 1995. / Includes bibliographical references (p. [157]-160). / by Roong Poshyananda. / Ph.D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 2003. / Includes bibliographical references (p. 117-123). / This dissertation consists of three independent empirical examinations of the effects of information and earnings on individual behavior. The first essay examines the effects of information about the quality of previous performance on contemporaneous performance evaluation. I adapt a model of statistical discrimination to incorporate a signal that indicates whether previous performance exceeded some criterion, and I test the model's predictions using a regression discontinuity design and a policy change at the United States Military Academy involving insignias of academic awards on cadet uniforms. I estimate the signaling effects of an award indicating placement on the Dean's List on senior year GPA to be 0.05 grade points. The second essay examines the relationship between male economic conditions and female marriage rates. I overcome problems of endogeneity and spurious correlation by using the oil boom and bust in Texas from 1970 to 1990 to instrument for average male earnings in Texas counties. I estimate that a 10% increase in male earnings results in a 15% increase in the hazard rate of never married young women into marriage, which does not indicate a significantly large contribution of changes in male economic status to the decline in marriage rates over the past several decades. The third essay examines how pay spreads in tournament compensation schemes may induce higher ability individuals to sort themselves into tournaments with higher pay spreads. I exploit variation in the promotion rates of different military occupations resulting from the downsizing of the Army in the 1990s, and I find modest evidence that higher ability soldiers are more likely to reenlist when the effective pay spreads are higher. / by Patrick David Buckley. / Ph.D.