Master of Arts / Department of Economics / Dong Li / This paper on the urban and rural healthcare expenditures gap examines common explanations for why the gap exists. The rural communities have consistently had lower healthcare expenditures than that of the urban communities. Over the years the gap has decreased, but not by a significant amount. According to a 2003 U.S. Census, for people over 65 the gap was nearly double. For people under 65 the gap was significantly smaller, but still exists. There are many factors that lead to the healthcare expenditure gap and there are also many possible solutions to manipulate these factors. This paper will separate these factors, explain them and look at the pros and cons of some possible solutions.

Master of Arts / Department of Economics / James F. Ragan Jr / This report reviews the effects of fertility on female labor supply, primarily female labor force participation and work hours. Although estimates of the causal relationship between fertility and female labor supply are mixed, this report tries to review why and by how much an additional child in a family affects work decisions and work hours of mothers on average. Statistical analysis shows a decreasing trend in fertility and an increasing trend in female labor force participation throughout the world over the last four decades. Using different specifications and estimation techniques, empirical studies suggest that fertility has negative effects on maternal labor supply because childbearing falls on women and women have lower wage rates than men on average. The negative relationship between fertility and female labor supply is explained by social, economic, and technical forces that affect fertility and female labor supply, including an increase in the value of women’s time due to an increase in education levels of women, expensive childcare, and substitutes for children; emphasis on quality instead of quantity of children; an increase in employment opportunities for women; changes in social norms towards supporting women working outside their home; and technical progress in birth control.

Master of Arts / Department of Economics / Tracy M. Turner / Obesity is a growing problem in the United States today. This study provides an econometric analysis of the relationship between child overweight status and neighborhood quality by using nationally representative data from the Panel Study of Income Dynamics (PSID) the 2002 PSID Child Development Survey, and Census data. In this study, the probability of a child overweight status is modeled as a function of neighborhood quality, child age, race and ethnicity, and parent obesity status, income, marital status, and education level. Next, the possible endogeneity between neighborhood quality and parent health is controlled for. Auxiliary regressions, modeling neighborhood quality and parent health on factors such as parent income, education, and marital status, are used to generate predicted values for neighborhood quality and parent health, which are then substituted into the child overweight equation to control for the aforementioned endogeneity. Census track and county level factors that might affect parent health or neighborhood quality are also controlled for. Based on a sample of 1917 children, this study finds evidence that neighborhood quality affects child overweight status.

Master of Arts / Department of Economics / Wayne Nafziger / This essay on AIDS examines the possible economic impact HIV and AIDS can have on an economy. AIDS is a growing problem throughout the world and has become one of the worst pandemics of the 21st century. Africa is one of the worst hit regions in the world, having seven countries with more than 15 percent of the population infected. This essay will have special emphasis on Botswana where 37.3 percent of the population is infected. Botswana has had various negative micro-level economic impacts which have begun to spillover and negatively affect macro-level economics. The International Monetary Fund predicts GDP growth is expected to fall from 5.5 percent a year without AIDS to between 1.5 and 2.5 percent a year with AIDS. There are various sectors in an economy that can be impacted by AIDS. This essay will look at factors affecting these various sectors, explain them and describe what impact they are having on Botswana’s economy.

North America is the world’s largest pulp and paper producing region as well as the largest consuming region. An understanding of market integration is critical for designing relevant policies since it is important to improve national welfare and ensure long-run competitive market equilibrium. In addition, it is crucial for the Canadian industry to maintain the competitiveness for its pulp and paper products in the world market, because any deterioration in the performance of the Canadian pulp and paper industry will have negative social and economic impact on the well-being of Canada and affect Canadian balance of payment. This thesis contains three essays that investigate the market integration of the combined markets of Canada and the US, and the competitive position of Canadian pulp and paper products in the US market. The first essay presents an econometric analysis of spatial integration of the US and Canada newsprint markets as reflected in newsprint prices. It applies the Johansen multivariate cointegration procedure to test the law of one price for five regional markets (British Columbia, Ontario, Quebec, US east, US west) of newsprint using monthly data for the 1988 to 2004 period. Preliminary data analysis shows that all price series are non-stationary I(1) processes. The hypothesis that the Law of One Price (LOP) holds for all five regional newsprint markets simultaneously was not supported by the Johansen multivariate test. The LOP was also tested for national markets, and it was found to hold between US west and US east newsprint prices. The results suggest that there is a single newsprint market in the US, whereas there are several distinct newsprint markets in Canada. The second essay examines the degree of market integration among US import markets for three pulp and paper products, and further analyses the dynamic interaction between US domestic and US import markets. Persistence profile results show that long-run equilibrium exists in the US import markets for three pulp and paper products of interest; moreover, given a system-wide shock, a new equilibrium could be reached in a relatively short period. Forecast error variance decomposition suggests that US markets are critical since shocks to domestic US prices for relevant pulp and paper products explain a substantial amount of movements in import prices. The third essay studies substitution between main categories of imported pulp and paper products and between imported and domestic pulp and paper products in the US market. A restricted translog subcost function approach was employed to derive the elasticity of substitution. The results suggest that Canadian pulp and paper products are still competitive and have maintained their competitiveness in the US market. However the consecutive demand decline for pulp and paper in the US has brought hard times to Canada. It seems that if Canadian pulp and paper industry wants to retain a dominant position in the world market place, it will have to create global reach and develop new markets.

Background: Economic evaluations of generalized anxiety disorder (GAD) have been limited to ≤18 months. A decision model was developed; quantifying the lifetime cost-of-illness (COI) of GAD. Methods: An incidence-based Markov-model was developed using TreeAge® software, reflecting 9 health-states (HS): physician-assessed patients (3HS), maintenance therapies(4HS), discontinuation(1HS) and death(1HS). Onset probability (ages 18-80) determined model entry. Canadian Psychiatric Association (CPA) guidelines determined pharmaco-therapy, with revisions/validation by an expert panel. Response, remission based on pooled-analysis of CPA-cited evidence. Remaining clinical rates, absenteeism and hospitalization retrieved from literature. Direct (clinician, pharmacotherapy, hospitalization) and indirect costs (wage rate) retrieved from government publications. Results discounted at 5%. Results: The mean COI was 2008 Canadian $31,213(SD=$9,100)/patient; 96% attributed to absenteeism. Mean age=31years, discontinued treatment=85% by 2nd year, treatment discontinuation duration, 14(SD=9) years. CONCLUSION: GAD is a costly disease with a lifetime COI<$32k/patient; absenteeism exerts a significant impact. Limited prospective data contributes to uncertainty of estimate.

Master of Arts / Department of Economics / Peri Da Silva / The literature concerning foreign direct investment and the spillover effects on domestic firms has developed significantly over the past two decades. This report examines the historical data on foreign direct investment flows and identifies several different types of spillover effects. Earlier studies identify potential horizontal spillovers but later studies suggest that these spillovers are insignificant. Recently, vertical spillovers, especially through backward linkages, have been identified as occurring in the host country. Studies indicate that this is happening particularly in the manufacturing sector for firms relying on inputs from the services sectors that have higher levels of foreign direct investment.

Doctor of Philosophy / Department of Economics / Steven P. Cassou / This dissertation consists of three essays relating to asymmetric preferences in optimal monetary policy models. Optimal monetary policy models are theoretical optimal control problems that seek to identify how the monetary authority makes decisions and ultimately formulate decision rules for monetary policy actions. These models are important to policy makers because they help to define expectations of policy responses by the central bank. By identifying how researchers perceive the central bank’s actions over time, the monetary authority can identify how to manage those expectations better and formulate effective policy measures. In chapter 1, using a model of an optimizing monetary authority which has preferences that weigh inflation and unemployment, Ruge-Murcia (2003a; 2004) finds empirical evidence that the monetary authority has asymmetric preferences for unemployment. We extend this model to weigh inflation and output and show that the empirical evidence using these series also supports an asymmetric preference hypothesis, only in our case, preferences are asymmetricforoutput. Wealsofindevidencethatthemonetaryauthoritytargetspotential output rather than some higher output level as would be the case in an extended Barro and Gordon (1983) model. Chapter 2 extends the asymmetric monetary policy problem of Surico (2007) by relaxing the assumption that inflation and interest rate targets are constant using a time varying parameter approach. By estimating a system of equations using iterative maximum likeli- hood, all of the monetary planner’s structural parameters are identified. Evidence indicates that the inflation and interest rate targets are not constant over time for all models esti- mated. Results also indicate that the Federal Reserve does exhibit asymmetric preferences toward inflationary and output gap movements for the full data sample. The results are robust when accounting for changing monetary policy targeting behavior in an extended model. The asymmetry for both inflation and output gaps disappears over the post-Volcker subsample, as in Surico (2007). In chapter 3, Walsh (2003b)’s speed limit objective function is generalized to allow for asymmetry of policy response. A structural model is estimated using unobserved compo- nents to account for core inflation and measure the output gap as in Harvey, Trimbur and Van Dijk (2007) and Harvey (2011). Full sample estimates provide evidence for asymmetry in changes in inflation over time, but reject asymmetry for the traditional speed limit for the output gap. Post-Volcker subsample estimates see asymmetry disappear as in a more traditional asymmetric preferences model like Surico (2007).

Master of Arts / Department of Economics / Peri Da Silva / It is usually preached by economists that trade should be free, but in reality, it is almost always chained. The reason for this discrepancy lies in the fact that trade policies are set in political contexts in which policy makers have different objective function than maximizing economic efficiency. So, endogenous protection literature evolved around the ideas and reasons to explain trade policy as determined under specific political contexts. The early empirical work until late 1980s examined the correlation between different political factors and trade policies. These works were helpful in identifying relative importance of political economy variables, but were criticized to have specifications which were loosely linked with the theories behind them. In recent years with development of theoretical platforms, study of political economy of trade policy has moved to a more structured direction and empirical investigations have been done to link real world data with the model predictions. In this regard, Median Voter model and Grossman-Helpman (GH) model are the main branches of literature. Median Voter model predicts positive tariffs in capital-abundant countries and negative tariffs in labor-abundant ones, but in real world, negative tariffs are rare. Empirical investigation of this model tries to reconcile observed trade policies with median voter model and two of these studies are included in this report. Interest group model is the framework of Grossman-Helpman model in which the effect of organized lobbies in trade policy determination is taken into account. Two empirical studies of this model showed that real world data support this model. By employing modifications in GH model, researchers try to account for factors like lobbying competition and foreign lobbying in explaining data. These results show that foreign lobbying is not necessarily against trade and ignoring lobbying competition may lead to wrong conclusions about welfare mindedness of government.

Master of Arts / Department of Economics / Florence Neymotin / Florence Neymotin / This report provides review of the existing literature on the role model effect in higher education and identifies the methodological and conceptual issues that have complicated the research program before discussing how research on similar areas may provide insight into the relationship between female students and female faculty members. By examining the related literature on the determinants of college major, peer effects, and critical mass theory, the existing studies of role model effect can be interpreted as support for a more specified theory of the role model effect in higher education that highlights the importance of the gender composition of the course or field of study.