This thesis describes and analyzes the earnings inequality in the United Kingdom and related countries in particular Italy and Germany, incorporating institutional measures and changes. There are three main tasks: firstly, Chapter 2 shows that earnings inequality as well as skill premiums have increased substantially over the last thirty years. A simple supply-demand analysis can only broadly fit with the wage structure changes, but leave much space for institutional explanation (Chapter 3). Secondly, after controlling for the workers’ main characteristics, changes of technology, industrial structure and labor market conditions, our estimates imply that institutional changes (mainly trade union decline) can account for a substantial part of the rise of skill premiums since the 1970s (Chapter 4). Finally, Chapter 5 and Chapter 6 compare the real wage flexibility in the UK with Italy and Germany, which have centralized collective agreements. We find flexible wages in the private sector in the UK and only in the prosperous regions in Italy (the north) and Germany (the west). When regions within a country are prosperous, the different types of wage-setting institution give similar results. However, when a region is lagging, collective bargaining delays recovery.

The implementation of the Maastricht criteria, establishment of the Stability and Growth Pact (SGP), creation of the European Central Bank (ECB) and the Economic and Monetary Union (EMU) raised several challenges for the European Union (EU) countries. The main aim of this dissertation is to analyse the economic implications of those institutional changes. Chapter 2 provides an empirical answer to the question of whether Maastricht and SGP fiscal rules have affected growth in the EU countries. Results from the estimation of a growth equation show that growth of real GDP per capita in the EU was not negatively affected in the period after Maastricht. The main conclusion of this analysis is that the institutional changes that occurred in some European countries after 1992 were not harmful to growth. Chapter 3 tries to identify the main causes of excessive deficits in the EU. A conditional logit model is estimated over a panel of EU countries, where an excessive deficit is defined as a deficit higher than 3% of GDP. Results indicate that a weak fiscal stance, low economic growth, elections and majority left-wing governments are the main causes of excessive deficits. They also show that the institutional constraints imposed after Maastricht over the EU countries have succeeded in reducing the probability of excessive deficits, especially in small countries and in countries traditionally affected by large fiscal imbalances. A widespread idea in the business cycles literature is that the older is an expansion or contraction, the more likely it is to end. Chapter 4 provides further empirical support for this idea of positive duration dependence controlling simultaneously for the effects of other factors on the duration of expansions and contractions. This study employs for the first time a discrete-time duration model to analyse the impact of some variables on the likelihood of an expansion and contraction ending for a group of EU and non-EU countries. The evidence suggests that the duration of expansions and contractions is not only dependent on their actual age: the duration of expansions is also positively dependent on the behaviour of the OECD composite leading indicator and on private investment, and negatively affected by the price of oil and by the occurrence of a peak in the US business cycle; the duration of a contraction is negatively affected by its actual age and by the duration of the previous expansion. Finally, Chapter 5 raises the question of whether central banks’ monetary policy can be described by a linear Taylor rule or, instead, by a more complex nonlinear rule. This chapter also analyses whether those rules can be augmented with a financial conditions index containing information from some asset prices and financial variables. A forward-looking specification is employed in the estimation of the linear and nonlinear rules. A smooth transition model is used to estimate the nonlinear rule. The results indicate that the behaviour of the Federal Reserve of the United States can be described by a linear Taylor rule, whilst the behaviour of the ECB and Bank of England is best described by a nonlinear Taylor rule. In particular, these two central banks tend to react to inflation only when inflation is above or outside their targets. Moreover, the evidence also suggests that the recently created ECB is targeting financial conditions, contrary to the other two central banks.

This thesis provides the empirical analyses for international trade flows and the determinants of bilateral trade. The main modelling framework used in this thesis is gravity model, so firstly, a detailed literature review for the gravity trade model is given. The three empirical studies analyze the role of main determinants of international trade flows in details, including cultural similarities, geographical factors and trade costs. Our findings are summarized as follows. First, the gravity model works well with aggregate data as well as disaggregated data. The core gravity factors and the cultural similarities are the major determinants of China’s bilateral trade. Moreover, China has great export potential with its neighbour countries in Asia, and considerable import potential with most of its trade partners. On the other hand, China’s export potential is still in the labour and resource intensive, low- and middle-level skill-intensive product groups. Second, we combine log-linear and non-linear estimation techniques, including Tobit estimation to analyze the role of geographical distance on trade. The findings indicate that the absolute value of the distance coefficient decreases over time, which give a reasonable explanation for “missing globalization puzzle”. Finally, by estimating a modified gravity equation of panel data for China, Japan and Korea over 16 years, we find that transport costs have a significant influence on regional trade flows in Northeast Asia.

The thesis focuses on empirical modelling and estimation of the role of exchange rate in international trade adjustment, trade prices and domestic inflation in the context of developing countries. Although the study‘s prime focus is to estimate empirically, using Bangladesh as the main case study, the theoretical assumptions about the effectiveness of exchange rates polices towards trade prices, domestic inflation and trade performance, we also examine the asymmetric behaviour of ‗large exchange rate shocks‘ in trade flows of other South Asian countries such as India, Pakistan and Sri Lanka. Estimated results demonstrate that the exchange rate has a significant positive impact on trade balance in the short- and long-run. However, the J-curve phenomenon can be explained as an appropriate response of trade balance to exchange rate shocks. Along with relative prices and domestic real income, the export demand is also found to be the significant determinant of import demand function. We find ‗complete‘ exchange rate pass-through to import price in both the short- and long-run. However, the ‗second stage pass-through‘ to consumer prices is found to be only ‗partial‘ in both the short- and long-run. Trade liberalization is a significant phenomenon for Bangladesh‘s trade and inflation. Hysteresis in international trade is found to be a ‗commodity and country specific‘ phenomenon. Sunk costs are not found to be significant for hysteresis.

This thesis mainly consists of three empirical chapters related to understanding the characteristics, economic impact and the demand for gambling in Thailand. Beginning with a review of the theoretical and empirical literature, this confirms that socio-economic and demographic data are important determinants of the level of gambling participation and gambling expenditure. A Logit model is then used to estimate the participation of gambling. The results suggest that the number games, such as the government lottery, the underground lottery, are popular among old gamblers whereas football betting is popular for adolescents. In the past, most casino customers were old gamblers, but at present the number of young gamblers who participate in casino has considerably increased. A Tobit model is employed to estimate the level of gambling frequency and gambling expenditure. The estimations reveal that there is a “supplementation effect” of casino on other gambling types and the effect also appears among the number games. The gambling expenditures on the number games are high in the group of gamblers who have undergraduate degree or lower while the expenditures on casino and football betting are high in the group of gamblers who have undergraduate degree. However, a higher education level leads to a lower level of gambling expenditures. The focus is then centred on the 2-3 digit lottery. The rational addiction model is tested for the case of the 2-3 digit lottery. In the addiction framework, the 2-3 digit lottery is found to be an addictive goods and the addiction is “myopic addiction”. This finding is confirmed by Instrumental Variable estimation.