The increased importance of fragmentation in world trade has created an interest among trade economists to explain the determinants of trade in intermediate goods. A substantial part of trade in intermediates between the US and OECD countries takes the form of intra-industry (IIT). I have divided total intra-industry trade into its horizontal and vertical components. Vertical IIT is defined as the exchange of intermediates which belong to the same industry but which are located at different stages on the production spectrum. Horizontal IIT is defined as the exchange of intermediate goods belonging to the same industry but differing in terms of characteristics or technological specifications, which are technologically unrelated. Hypotheses drawn from Ethier (1982) and Feenstra and Hanson (1997) are put forward to investigate the intra-industry trade in intermediates between the US and other selected OECD countries for the period of 1990-1996.To test these hypotheses, I have utilized three-way fixed effects and random effects models. The results confirm the hypothesis that the determinants of vertical and horizontal IIT in intermediates differ. Empirical results show that horizontal IIT is positively related to the size of markets and foreign direct investment, while it is negatively related to differences in human capital endowments and geographical proximity. On the other hand, vertical IIT is positively related to FDI, while it is negatively related to economies of scale.

This thesis examines the influences of bank-borrower relationships on the terms for bank lines of credit for small business. I use the Surveys of Small Business Finances data to estimate two models: an OLS Regression explaining the premium over the prime rate and a Logistic Regression for the probability of collateral requirements. I focus on those firms with lines of credit with floating rates from commercial banks and use contract, financial, governance, industry and relationship characteristics as explanatory variables. Dun and Bradstreet (D&B) credit scores, minority status and gender are also added to previous models reported in the literature. My results are: (1) Small firms with longer market experiences will pay lower premium rates over the prime rate and firms with higher risk D&B credit scores will pay higher premiums. These results are both statistically and economically significant. However, the length of bank-borrower relationships does not have a statistically significant effect on the loan rate. Although lines of credit may provide more âsoft-informationâ on borrowers during bank-borrower relationships, banks still put more weight on credit scores and the firmsâ age. (2) There is no statistically significant relationship between Relationship Characteristics and the probability of collateral requirements. Banks pay more attention to Financial Characteristics and type of ownership. D&B credit scoring system plays a more important role than bank-borrower relationship status. (3) Minority status and gender do not have impacts on loan rates or the probability of pledging collateral.

I examine properties of worker behavior under promotion tournaments, and discuss their implications for the design of promotion tournaments. Given their tasks, workers will decide how much effort they exert. In addition to this decision-making, they have the opportunity to decide their approaches to perform their tasks within their delegated authority. I define the term approach as a method, way, procedure, plan or project to perform his task, into which a worker infuses his effort. Through their approach choices, they can control the riskiness and correlation of their performances. It is shown that under the loser-selecting tournament, which means the promotion ratio is more than one-half, workers prefer a low risk approach or a common approach which peers also know well; on the other hand, under the winner-selecting tournament, which means the promotion ratio is less than one-half, they prefer a high risk approach or their own original approaches. These results suggest that the loser-selecting tournament is more efficient than the winner-selecting tournament in terms of the cost for implementing high efforts of risk-averse workers. I rigorously show this in the case of three workers. I argue that the winner-selecting tournament is better suited for the upper job levels or for firms in innovative and immature markets or industries; on the other hand, the loser-selecting tournament is better suited for the lower job levels or for firms in stable, mature, or strictly regulated markets or industries. Furthermore, I investigate properties of sabotage under tournaments. Under the one-winner tournament, each worker attacks his peers so as to minimize the maximal value of their expected performances. The sabotage operates to create more homogeneity. Under the one-loser tournament, each worker intensively attacks one peer so as to minimize the minimal value of his peers' expected performance. One worker is intensively attacked by all peers. I argue that the one-loser tournament is more subject to damage by sabotage than the one-winner tournament.

This study investigates the implications of firm's demand for real balances from the production and monetary economics perspective. Money is a component of production as a factor increasing efficiency in exchange in input markets. Firms may improve efficiency in production by holding real money to decrease their transactions cost in input market. Feenstra (1986) equivalence states that transactions cost as a cosntraint in a firm's budget is functional equivalent to money in the production fucntion. Monetary expansion may change transactions cost, hence can affect the efficiency in both goods and input markets. If a monetary model is setup in accordence with Feenstra equivalence it can be used to examine the impact of the change in money supply over net consumption and net input. Monetary expansion is no longer super-neutral over net consumption and net input because it has the ability to alter efficiency in exchange. The study concludes with an empirical test on the theory by applying the stochastic production frontier approach over 12 EU countries. The test verifies the significance of real money in determining the technical inefficiency in production.

Homeowners engage in private precaution when public protection is inadequate. When this precaution is observable to criminals, as in the case of a home burglar alarm system advertised with a sign or sticker, it has the beneficial effect of decreasing the probability of burglary of alarmed homeowners. However, because a burglar is rational in his criminal activity, he will avoid protected homes and target homeowners without alarms, increasing their probability of burglary. Observable private precaution therefore incorporates both the deterrence (Clotfelter 1978) and diversion (Shavell 1991) effects. Even though burglar alarms have been identified as effective deterrents, little research has been devoted to determining if they also divert crime. In this dissertation, I examine the diversion effect associated with burglar alarms. In chapter three, I estimate the net effect, or combined deterrence and diversion effects, of burglar alarms on burglary rates and find that burglary rates fall only slightly with increases in burglar alarm use. Assuming that burglar alarms deter, this finding suggests the presence of the diversion effect muting deterrence. In chapters four and five, I present two methods for measuring the diversion effect associated with burglar alarms using data from the homeownerâs insurance industry. Since companies with more non-alarmed customers face larger costs due to diversion, chapter four measures the diversion effect as the relationship between the market shares of homeownerâs insurance companies and the protective device discounts they offer. Chapter fiveâs approach is based on the empirical method of Berry, Levinsohn, and Pakes (1995) and uses supply and demand parameters in an oligopolistic framework to measure the diversion effect as the difference in the probabilities of burglary of non-alarmed homeowners when some homes install alarms and when no homes are alarmed. Both methods show that diversion can be measured. When empirically tested, they also yield estimates of the diversion effect. Although the social effects associated with burglar alarms are likely to be positive on balance, I expose the hidden costs that may be associated with observable precautionary measures.

GMM provides a computationally convenient estimation method and the resulting estimator can be shown to be consistent and asymptotically normal under the fairly moderate regularity conditions. It is widely known that the information content in the population moment condition has impacts on the quality of the asymptotic approximation to finite sample behavior. This dissertation focuses on a moment selection procedure that leads us to choose relevant (asymptotically efficient and non-redundant) moment conditions in the presence of weak identification. The contributions of this dissertation can be characterized as follows: in the framework of linear model, (i) the concept of nearly redundant moment conditions is introduced and the connection between near redundancy and weak identification is explored; (ii) performance of RMSC(c) is evaluated when weak identification is a possibility but the parameter vector to be estimated is not weakly identified by the candidate set of moment conditions; (iii) performance of RMSC(c) is also evaluated when the parameter vector is weakly identified by the candidate set; (iv) a combined strategy of Stock and Yogo's (2002) test for weak identification and RMSC(c) is introduced and evaluated; (v) (i) and (ii) are extended to allow for nonlinear dynamic models. The subsequent simulation results support the analytical findings: when only a part of instruments in the set of possible candidates for instruments are relevant and the others are redundant given all or some of the relevant ones, RMSC(c) chooses all the relevant instruments with high probabilities and improves the quality of the post-selection inferences; when the candidates are in order of their importance, a combined strategy of Stock and Yogo's (2002) pretest and RMSC(c) improves the post-selection inferences, however it tends to select parsimonious models; when all the possible candidates are equally important, it seems that RMSC(c) does not provide any merits. However, in the last case, asymptotic efficiency and non-redundancy can be achieved by basing the estimation and inference on all the possible candidates.

Systematic removal of trade barrier across many industries during the early 1990s raised a debate over the role of trade on the environment. This thesis attempts to gain a deeper understanding of the environmental implications of trade liberalization in India. Data containing information on tariff rate, import, export, and production for 28 sectors from 1990 to 2001 are obtained from the World Bank Economic Review. To classify different trade sectors by pollution intensity, I used the three-digit International Standard Industrial Classification (ISIC) system. I used three different specifications with log of real production, export and import as the dependent variables in the empirical model. The coefficient of interest is β_5 which measures the differential impact on the percentage change in the dependent variables, caused by tariff reduction from before to after trade liberalization and from lower to higher polluting industries. My result confirms my first two hypotheses that average tariff reduction (41 percentage point) from pre to post liberalization period increase the total production and export in high polluting industries by 16.4% and 106.6% respectively. The study concludes that differential impact of average tariff reduction during trade liberalization in India promotes heavy polluting industries.

This dissertation presents a series of three essays that examine applications and computational issues associated with the use of stochastic optimal control modeling in the field of economics. In the first essay we examine the problem of valuing brownfield remediation and redevelopment projects amid regulatory and market uncertainty. A real options framework is developed to model the dynamic behavior of developers working with environmentally contaminated land in an investment environment with stochastic real estate prices and an uncertain entitlement process. In a case study of an actual brownfield regeneration project we examine the impact of entitlement risk on the value of the site and optimal developer behavior. The second essay presents a numerical method for solving optimal switching models combined with a stochastic control. For this class of hybrid control problems the value function and the optimal control policy are the solution to a Hamilton-Jacobi-Bellman quasi-variational inequality. We present a technique whereby approximating the value function using projection methods the Hamilton-Jacobi-Bellman quasi-variational inequality may be recast as extended vertical non-linear complementarity problem that may be solved using Newton's method. In the third essay we present a new method for estimating the parameters of stochastic differential equations using low observation frequency data. The technique utilizes a quasi-maximum likelihood framework with the assumption of a Gaussian conditional transition density for the process. In order to reduce the error associated with the normality assumption sub-intervals are incorporated and integrated out using the Chapman-Kolmogorov equation and multi-dimensional Gauss Hermite quadrature. Further improvements are made through the use of Richardson extrapolation and higher order approximations for the conditional mean and variance of the process, resulting in an algorithm that may easily produce third and fourth order approximations for the conditional transition density.

The purpose of this research is to analyze the dynamic response of an industry to production subsidies and to trade restrictions on a competing product. Specifically I examine the U.S. sheep industry and compare the effects of a production intervention similar to the Wool Act and to a tariff-rate quota. I begin with a dynamic profit function and derive an Euler equation. I use the iterated generalized method of moments to estimate the demand for slaughter lambs, the Euler equation, and the demand for domestic wool. These equations are estimated separately using instrumental variable techniques to adjust for the endogenous right hand side variables and for future-dated variables, in which the number of instruments exceeds the number of parameters. In each case, the iterated generalized method of moment estimator converges and produces reasonable estimates. Separately I estimate the demand for imported lamb meat using regression with autocorrelated errors. I then generate equilibrium slaughter lamb prices and breeding stock levels for a base case, for the production-subsidies case and for the tariff-rate quota case. The equilibrium quantities and prices are generated from the solution to a variable-coefficient difference equation. A feature of the model is the effects of joint outputs, slaughter lambs and wool, are included in the model. Results are that re-imposition of the Wool Act increases breeding stock levels relative to the base case, although breeding stock levels continue to decline, and slaughter lamb prices also initially increase. Implementation of the tariff-rate quota raises slaughter lamb prices and lowers breeding stock levels relative to the base case. Effects of the tariff-rate quota are small compared with the re-imposition of the Wool Act.

This research evaluates how a diabeticâs trust in his physician, as measured through the area of communication between the patient and physician, and his travel costs influence his decision to obtain medical care and spend time on health-producing activities such as diet and exercise. By identifying the factors that prevent the patient from properly managing his diabetes, certain policy measures can be implemented (e.g. providing transportation, funds for transportation, translators, etc.) to encourage proper disease management. Further, with an increase in group practices, it would be interesting to evaluate how the effectiveness of these programs is influenced by better patient-provider relationships.