In my PhD dissertation, I have four essays on research topics related to international economics. These essays utilize some of the different economic tools and skill sets (that I have acquired during my graduate-school study experience in Australia, United States, and United Kingdom), to tackle the economic problems that I am interested in, so as to better understand the economics and economic policies in the real world. Chapter 2: Monetary Policy and Fiscal Rules for a Two-State Open Economy. Chapter 3: Business Cycle Synchronization between the Great Britain and the United States. Chapter 4: Oil Supply Shocks in a Non-Scale Economic Growth Model. Chapter 5: Canada's Loss of External Competitiveness: The Role of Commodity Prices and the Emergence of China.

This thesis presents three studies which examine the decisions of individuals to pay for clean water and public services. The three impact evaluations, conducted in India and Guatemala, demonstrate that small changes to the way services are provided and presented to individuals can have a large impact on demand for them. The first chapter looks at whether tariffs discourage the use of NGO funded water quality projects in Telengana, India. The estimation strategy takes advantage of panel data from water purification plants where the tariff for 20 litres of water changed. In this setting, a one standard deviation decrease in price is estimated to cause a six percent increase in uptake. The second paper evaluates an adaptation to similar NGO water projects which increased the hours clean drinking water was accessible for, from 4 hours a day to 24. The results from the cluster randomised controlled trial show that the intervention increased demand for clean water by 22 percent. The final chapter presents findings from a nationwide randomised controlled trial in Guatemala that tested various letter reminders to promote tax compliance. The results show that whilst all letters increased the rate of declaration, only two of the letters, which were adapted using behavioural design, were successful at increasing the rate of payment and the average amount paid per letter received. These two letters more than tripled tax receipts compared to the no letter, or the original letter. The best performing letter, if sent to all taxpayers in the sample, would have generated an estimated US$757,837 of extra tax revenue in 11 weeks compared to no letter, over 35 times the cost of sending the letters. Overall, the thesis provides evidence that both economic and behavioural dimensions affect payment for clean water and tax, and so both must be considered when development practitioners and policy makers design 'customer facing' programmes. The methodology used in the three studies highlights that it is possible to rigorously evaluate such programmatic design decisions at low cost using experimental and quasi-experimental methods.

The papers in this thesis use household survey data to examine financial decisions made at the end of working life and in early retirement. Chapters 2 and 3 focus on the timing of retirement. Chapters 4 and 5 examine the importance of longevity expectations for financial decision-making. Chapter 2 examines the impact of an increase in the early retirement age for women in the UK. Women’s employment rates at age 60 increased by 7.3 percentage points when the early retirement age increased to 61 and employment rates of male partners increased by 4.2 percentage points. The results suggest these effects are more likely explained by the policy change having a signalling effect rather than being due to credit constraints or changes in financial incentives. Chapter 3 examines how responsive retirement decisions are to dynamic financial incentives. On average both men and women respond significantly to these financial incentives. However, responses to these financial incentives alone are not sufficient to explain the ‘spikes’ in retirement that are observed in practice. Chapter 4 shows that, overall, individuals understand how their chances of survival compare to other people of their age and sex (e.g. those who engage in poor health behaviours expect lower chances of surviving than healthier people) and individuals’ expectations are predictive of their subsequent mortality. However, I also show that individuals perceive a ‘flatter’ survival curve than standard life tables would suggest. Two simple models of life cycle behaviour demonstrate that this misperception of longevity could explain some apparently ‘puzzling’ behaviour seen in practice. Chapter 5 examines the importance of private information about longevity in the market for annuities. This chapter shows that there is adverse selection. However, it remains an open question what the welfare loss is, particularly since individuals misperceive their chances of survival on average.

Despite the lessons of the post-2007 housing crisis, it would be dangerous to suggest that there will be no similar future events. This thesis examines a set of issues related to both past and future housing market volatility and trends. There are three central chapters (in addition to the Introduction and concluding chapters). The first substantive chapter extends the standard life-cycle housing approach to a three-asset model which incorporates interactions with financial markets and uncertainty; it can be shown that endogenous housing cycles can explain volatility. Three parameters drive the system -the income and price elastidties of housing demand and the degree of risk aversion. UK policy has attempted to increase housing supply to stabilise affordability, but the model demonstrates that stabilisation is unlikely through this route. However, it derives an alternative built-in stabiliser operating via an endogenous risk premium, frequently ignored in housing, which affects house price volatility. The second substantive chapter also uses the three asset model, but concentrates on the determinants of the equilibrium debt to income ratio for households. This indicator is particularly important for macro stabilisation purposes, but historically has exhibited a strong upward trend and no signs of an obvious equilibri urn. The chapter examines why this might be the case and derives formal conditions for the equilibrium. Chapter 4 turns to the sub-national level and examines regional and local markets. The key question is whether spatial variations in mortgage indebtedness are positively related to differences in house price volatility. This is primarily an empirical chapter, utilising newly constructed data on mortgage debt.

In some instances, charities insist on donors giving more than some fixed, minimum amount. In many other instances, charities frame appeals for funds in a way that suggests there is a minimum desirable donation. So, what are the effects on charitable giving if a minimum donation is required? We first provide a simple theoretical model that shows the effects are ambiguous. Some people are predicted to give more to the charity, some less and the overall effect could go either way. We then report the results of two lab experiments. In both experiments we find that giving is significantly lower when a minimum donation is required. Our two experiments consider very different settings. The first experiment involves individual decision making with large opportunity costs of giving. The second involves group involvement with direct incentives to give. That we observe lower giving in both settings suggests that imposing a minimum donation may not be an effective way to increase giving. We also explore the dynamic nature of giving under restrictive conditions along with the impact of screening and signalling on giving behaviour.

This thesis contains three essays on the Indian economy. They aim to contribute towards understanding the role of geographical and sectoral mobility by examining the important components of demographical changes that bring up new economic opportunities. The first essay investigates the relationship between geographical mobility and over-education. An other key outcome of geographical mobility is that it generates remittances in the origin areas; our second essay is therefore related to this aspect of geographical mobility, analysing the impact of remittances on left-behind household expenditure behaviour. Our third and final essay is related to sectoral mobility, where we use information on workers in India who switch sectors to decompose the drivers of inter-sectoral wage gaps. The three different empirical analyses give us some indication of the role of mobility in the process of development. The investigation of the outcomes of mobility also informs us if the markets work properly and if resources are efficiently allocated in the economy. In the first chapter, we use data from India and correct for the selection bias problem by using an instrumental approach and propensity score matching methods. Our objective is to investigate the relationship between geographical mobility and the probability of being over-educated for the present job. We measure geographical mobility in terms of internal migration; over-education is defined as a job-educational mismatch, where a person works in a job that requires the level of education lower than he possesses. The main objective of the study is to determine the extent to which more mobile workers have better job-educational matches in comparison to those who are not mobile. The results show a positive relation be tween internal migration and the probability of over-education, which implies that a worker's decision to relocate within India in search of a job does not contribute towards reducing the risk of over-education. Instead, a migrant has a slightly higher probability of incidence of over-education relative to those who are not mobile. In addition, we also try to investigate the consequences of over-education by looking at the wage effect of over-education among movers and stayers. In terms of results, we find that over-educated migrants are more likely to overcome the risk of the wage penalty associated with over-education. Overall, if these two results are linked, then they suggest that the job-educational mismatch among migrants is not driven by some discriminatory practises or lack of local knowledge; instead, this mis match could represent a trade-off for better wages. If not, an alternative explanation could be that migrants have some strong bargaining power that enable them to overcome the risk of lower wages associated with over-education. In the second chapter, we look at the impact of remittance flows on the economic well-being of households in the rural part of India. To measure household well-being, we construct in dices of households productive assets, financial assets, housing quality and consumer durables by applying a principal component analysis. Using panel data from the Indian Human Development Survey, we evaluate the changes in the stock of various kinds of assets by the incidence of remittances. The empirical findings show that remittances have a significant effect on the nature of investments carried out by the left-members in the rural household. However, the direction and significance of the effect mainly depends on the initial income status of the households. Poor households with remittances lose out on the stock of con sumer durables, but gain more in production inputs and financial assets than those without remittances. In contrast, in the case of rich households, we do not find any significant impact on the stock of consumer durables, production inputs and housing quality, with one exception being the positive and significant effect on financial assets. In terms of policy implications, these findings suggest that remittances help to reduce poverty in rural areas. Finally, in the third chapter we explore the inter-sectoral wage gaps in India. Like any other developing country, wages in Indias agricultural sector are significantly below those of other sectors. In addition, more than 50 percent of the workforce is employed in the agricultural sector. In our study, we try to look at a puzzle which has been closely examined by several macro-economic studies i.e. why are so many workers employed in the agricultural sector, despite other sectors of the economy paying better wages? To answer this question, we will study the wage trajectories of the workers who switch sectors and compare them with those workers who do not switch sectors. Examining the wage premium from a worker's inter sectoral switching will help us to determine whether the difference in wages across sectors are due to unobservable characteristics or, alternatively, if they reflect the presence of differential pay between similar workers across sectors. Our results hence show a positive wage gain from the reallocation of workers out of agriculture. This finding suggests that the inter-sectoral wage gap is driven by the misallocation of resources in the economy.

This dissertation aims to test the feasibility of improving the quality of drinking water in a target area in South Korea. The problem with drinking water quality is caused by pollution of the water environment. Most waterworks in South Korea are unable to handle problems like an unpleasant taste or odour in tap water. Improving raw water quality through prevention of water pollution is explored in pursuit of a long-term solution. However, this research focuses on advanced water treatment systems for a short-term solution and mainly tests the extent to which an investment in one chosen waterworks is feasible. Cost-benefit analysis (CBA) is used to test the feasibility of two advanced water treatment systems: granular activated carbon (GAC), and ozone plus GAC treatment. Three main steps are involved: measurement of the social benefits, cost estimation of the two alternatives and the CBA. Choice experiments are chosen for measuring the benefits with three alternatives: the status quo, GAC, and ozone plus GAC. Four key attributes are selected: safety, taste and odour, colour and cost. The experimental design consists of 32 choice cards. Three types of treatment for hypothetical bias are used: budget constraint reminder, cheap talk and an honest priming task. In July/August 2015, 573 people participate in the survey; ineffective data, potential label heuristics, and outliers are filtered. Thus, 406 data items are examined for representativeness of the sample regarding socioeconomic factors and used in the analysis. The marginal willingness to pays (MWTPs) is estimated using three types of logit models (multinomial logit, random parameter logit and latent class logit). To detect the effectiveness of the treatments for mitigating hypothetical bias, dummies and interaction terms are included in the models and the coefficients of the variables are examined. After measuring the social benefits using MWTP, the cost of installing the two alternatives is estimated. While the mean MWTP is the correct measure to use from the standpoint of economic efficiency, the median WTP is probably the more appropriate measure to assist a democratic decision-making ii process and can be considered a more cautious value to avoid hypothetical bias. Thus, the median values of WTP are also used for the CBA. The economic feasibility is tested by comparing the costs and benefits of the two alternatives. Both net present values (KRW1 15.8 billion for GAC and 13.1 for ozone plus GAC) are larger than zero. Internal rates of return of the two alternatives are 8.97% for GAC and 7.46% for ozone plus GAC. The benefit to cost ratio of GAC, 1.389, is greater than of ozone plus GAC, 1.225. Note that the GAC seems to be a more robust option than ozone plus GAC in terms of the decision rules of three discount cash flow methods. Concerning risk and uncertainty, sensitivity analyses are performed using several scenarios with the following factors: increase of discount rate, costs and construction period, and decrease of business life, benefits and beneficiaries. The worst case scenarios would likely be when the social benefits decrease to zero within the business life. In such a case, the three feasibility values cannot sustain the validity of the two alternatives. In conclusion, the results of this research suggest that investment in the two advanced water treatment systems is feasible, but it depends on situations that may change in practice, such as reduction in the business life. The research also shows that prevention of water pollution can and should be a complementary approach for supplying safer and cleaner drinking tap water. Protecting the water catchment area along with the installation of the two advanced water treatment options should be considered for a more comprehensive and sustainable solution in the long run.

The term structure of interest rate has long been a special topic of interest in both academia and the financial market. A plethora of models developed in both finance and macroeconomics literature are only partially useful for either macroeconomic analysis or bond pricing, but not for both at the same time. The second chapter of this thesis focuses on this issue from the macroeconomic viewpoints. Firstly, we survey the important papers in term structure of interest rates and asset pricing models and discuss their key features. We then examine the ability of standard DSGE models at replicating the stylized bond pricing facts especially focusing on the volatility of long-term bonds. Lastly, we survey various recent modifications made to the DSGE models and investigate whether and how each approach may (or may not) improve the ability of DSGE model in terms of replicating key bond pricing facts, either under the expectations hypothesis or with the help of term premium. The third chapter focuses on nominal GDP growth-indexed bonds where their nominal payoffs are fully indexed to nominal GDP growth of the issuing country. The idea of indexing government debt to a country's growth rate goes back at least to the 1980s, and several papers have already illustrated the potential benefits of issuing such bonds. However, most of the analysis were conducted using partial equilibrium models. In addition, as there exists no actual market for such an asset, only few analyses exist for the price of growth-indexed bonds, and most of them are based on simple CAPM models. In this chapter, on the contrary, we try to calculate the theoretical price of nominal GDP growth-indexed bonds using a general equilibrium model. Based on a medium sized New Keynesian DSGE model estimated with the U.S. macroeconomic data, we show that the government may face lower borrowing cost when replacing conventional nominal bonds with nominal GDP growth-indexed bonds, assuming the other premiums - such as novelty and liquidity premiums - are negligible. As a by-product of the analysis, we also show such a change may benefit the government by giving more room for countercyclical fiscal policy. The fourth chapter examines the welfare effect of growth-indexed bonds within the framework of new Keynesian DSGE model. Even though there already exist papers that show issuing growth-indexed bond may help stabilize the debt process and give more room for countercyclical fiscal policy, the analysis on its welfare effect has not been actively conducted, especially within the framework of general equilibrium model. It was mostly because the standard DSGE models, where Ricardian equivalence holds, the choices of consumers are immune to the source of government finance. This chapter examines whether and how the use of growth-indexed bonds, instead of the conventional nominal bonds, affects the business cycle and welfare when Ricardian equivalence does not hold any more. More specifically, we augmented hand to mouth households, distortionary income taxes, and Epstein-Zin type recursive preference to the most widely used medium scale DSGE model of Smets and Wouters (2007). The results show that the growth-indexed bond can significantly increase the welfare of the hand-to-mouth households by stabilising their consumption and labour especially when the government cannot flexibly change its debt-to-GDP ratio.

This thesis is formed of three empirical chapters using data from the United Kingdom. The chapters do not build on one another. Instead, they are self-contained and explore different facets of the interaction between health and education, how they affect each other and how they affect other life outcomes. Education and health are well known to be correlated since the second half of the 20th century with the works from Coleman (1966), Kitagawa and Hauser (1973) and Grossman (1976). Many studies have followed, exploring different aspects of this correlation and the thesis aims to provide further information on two of the hypothesis that explain this correlation. The first states that education affects health as people gain skills and knowledge enabling them to make better decisions regarding their health. The second hypothesis suggests that health can affect educational performance as shown by Glewwe et al. (2001) and Bobonis et al. (2006) among many others. The thesis also focus on how health and education each affects other life outcomes, not just one another. This leads to a greater understanding of the importance of health and education. As the three chapters analyse different aspects of the same topic, some information overlap can be found in each of them, despite each one having different a focus. The first chapter explores the returns to education from a non-monetary, or non-economic, perspective. Following the UK's higher education tuition fees increase in 2012, the importance of understanding what are the returns to education increased as individuals conduct a costbenefits analysis before deciding whether or not to pursue higher education. If the costs are increasing, it is important to understand what are the benefits. However, most studies assessing returns to education focus on monetary returns. The impact on health status and health behaviour, for example, is considered a wider return. And this is the focus of this chapter and its main contribution - what are the effects of having a degree on health outcomes and behaviour? And do these effects differ according to the type of degrees? By combining both economic and non-economic returns to education, individuals can truly assess the benefits of pursuing higher education and make a more informed decision, reducing information asymmetry and having an equilibrium that is closer to the socially optimum. In order to achieve this objective this chapter made use of the National Child Development Study (NCDS), a British survey that started in 1958 and is following cohort members as they progress through life. Using information on health status and behaviour as outcome variables from each survey from 1981 to 2008, together with the individuals' higher education condition, the results showed a clear positive impact. Having a degree increased self-reported quality of health and decreased the incidence of malaises and smoking frequency. The analysis of different degrees showed no evidence that the wider benefits from higher education differed across degrees, unlike the results for economic returns. The second chapter is focused on mental health at an early age and its impact on future life outcomes. Attention Deficit and Hyperactivity Disorder (ADHD) is one of the most prevailing mental illnesses in young people, accounting for half the cases of mental disorders. Mental health has slowly gained attention in the health economics literature as now most developed countries managed to secure good health standards for children. Therefore, the main contribution from this chapter is providing further knowledge of how one of the most common mental disorders affects individuals throughout the course of their lives by using a number of outcome variables ranging from labour market outcomes to physical health status and behaviour. This chapter used data from the British Cohort Study (BCS70), a survey that started in 1970. It is the third longitudinal study in the UK and contains a rich socioeconomic questionnaire, including information that allows for the identification of children potentially diagnosed with ADHD according to the definitions of the 4th edition of the Diagnostic and Statistical Manual of Mental Disorders (DSM-IV). The effects of ADHD can be seen early on in educational achievements as individuals with ADHD are less likely to have a higher degree or an equivalent vocational qualification, and the effects can extend to later life outcomes such as a greater likelihood of unemployment, employment at part-time jobs, lower probability of being in a managerial position and lower income. The third chapter in this thesis aimed at evaluating the effects of health shocks in educational outcomes at an early age. There is robust evidence that health conditions affect academic performance, especially at an early age. However, most of the evidence comes from developing countries where the variance of health status among children is much greater than in developed countries. There are a few exceptions such as Ding et al. (2009), but the unbalance is clear. The purpose of this work is, therefore, to use one of the newest information available in the UK to fill the gap in knowledge. The Millennium Cohort Study (MCS) is the first longitudinal study of the new millennium. It started in 2000-2001 with the purpose to continue UK's long established tradition in collecting information to help guide public policy. The results from the chapter show that the period of life in which children are affected by a transitory health shock is important to determine how much their performance in tests is affected. Children who reported a longstanding illness in the twelve months leading up to their eleventh birthday were mildly affected in comparison to healthy children between ages seven and eleven. When comparing the same children at the age of fourteen, when both groups were healthy, there was no evidence of any differences in performance. However, when comparing children with a longstanding illness in the twelve months leading up to age fourteen with children who were healthy between ages eleven and fourteen, there was a significant negative effect, suggesting that longstanding illnesses affect children differently according to the period of their lives.

This thesis is an examination of how aspects of the English secondary school system affect attainment of pupils, particularly those who are disadvantaged. The analysis is based on administrative data for all pupils enrolled in state schools in England. The thesis includes three self-contained chapters. In the first chapter we study whether substituting family with school inputs in the education production function of high ability pupils with low socio-economic status has an impact on their achievement in the exams at the end of compulsory education. We consider a selective, well-resourced boarding school admitting an unusually high share of talented pupils from disadvantaged backgrounds and we estimate the effect of attending it with propensity score matching to obtain comparable control groups in selective day schools. Our main finding is that the probability of being in the top decile of achievement in the exams increases by about 17 percentage points compared to the baseline of 59% for controls. The second chapter investigates whether gender segregation in secondary schools affects achievement and subject choice in non-selective schools in England. The empirical analysis is based on a value added model for achievement and a linear probability model for subject choice, both of which incorporate neighbourhood fixed effects. A robustness check based on a reasonable assumption about the relationship between the selection on observables and unobservables reveals that gender segregation has no effect on achievement of girls and a small effect on achievement of boys in english; in addition it does affect the probability of taking advanced science subjects at A-level for girls. My main finding is that girls from disadvantaged background who attend single sex schools are 2.6 percentage points more likely to choose an advanced science subject at A-level compared to a baseline of 7.3% in co-ed schools. Using a survey of students in England I find that girls and boys in single sex schools have less gender-stereotyped tastes and self-assessment of their abilities. These results support the hypothesis that girls in same-gender classes are less exposed to gender stereotypes, therefore more confident in their abilities in science and maths and more motivated to study these subjects. The third chapter explores the effects of school competition on the academic per- formance of pupils. In the early 2000s the Labour government introduced academies, a new type of state-run school managed by a team of private co-sponsors. This reform broadened the choice of schools available to pupils and their parents increasing competitive pressure in the education sector. I use administrative pupil-level data to evaluate whether pupils in traditional secondary schools located near academies were affected by this new competition in the education market. Credible causal estimates of the short term impact of academies on neighbouring state schools are obtained by exploiting variation in both the timing and the number of academy entries. I find small positive effects on achievement in schools located within three miles from an academy: this finding suggests that increasing competition in the education market in England does not affect negatively the academic performance in less popular traditional schools and instead results in modest benefits particularly for more disadvantaged pupils.