The thesis consists of three research projects on the insurance market, both health insurance and car insurance in Canadian economy. First essay, Effectiveness, Severity, Prevalence and the Scope of Public Health Insurance Coverage, focuses more on the breadth of coverage for health services and is motivated by the idea that some "medically necessary" services are covered 100% while other services are not covered at all by the public insurer: we ask where should this frontier between total coverage and no coverage lie. Interestingly, while attempting to address this latter concern we are able to provide further insight on the optimal depth of public coverage: it is not typically appropriate to have a fixed top-up rate, which is usually is the case. The appropriate amount of public coverage depends upon both the severity of conditions and the effectiveness of treatments. The model by dealing with both of the severity and effectiveness of any given condition is able to provide insights into issues concerning breadth and depth. First, we find that in the absence of horizontal equity restrictions on the taxation of personal income, a publicly-funded health care system replicates the pattern of spending that would be chosen by individuals if health care services were privately funded: in other words, if individuals were given an equivalent amount of cash, they would spend all of these dollars on health care. In this setting, if there is low therapeutic benefit to treatment, the public sector will redistribute cash to these individuals, rather than paying for treatment. Second, if redistribution is constrained by a horizontal equity requirement with respect to income taxation, then this has consequences for the design of the publicly-funded health care insurance system. This results in a situation where individuals who are relatively' healthy receive less care than under a privately-funded system whereas individuals who are in poor health receive more care than they would otherwise. If sick people were given an equivalent amount of cash, they would not choose to spend all of it on health care. This pattern is consistent with casual empiricism. An important implication of the result on the impact of horizontal equity on health-care coverage is that primary health care policies which deliver services---such as homecare---to sick people are likely to be highly efficient, particularly as compared to providing additional health care services to these individuals: they do not need yet another diagnostic examination or test, what they need is services-in-kind which increase the value of consumption thus relaxing the horizontal equity constraint. In second essay, The Effects of No-fault Insurance System on Accident Measures Across Canadian Provinces, we investigate whether or not switching from liability compensation systems to no-fault regime across four Canadian provinces, including Quebec, Manitoba, Saskatchewan and Ontario has had influenced three accident measures, fatality, personal injury and property-damage-only accidents, compared to three liability-based provinces, British Colombia, Alberta and New Brunswick. The results are consistent with the existing literature on this issue, implying that no-fault has actually led to more accidents for both fatality and property-damage-only accidents. Using Mills ratio and conventional IV to take into account the possibility of endogeneity of decision to switch to no-fault, we even get stronger effect, implying that the existing papers on this issues have under-estimated the actual effect. The effects, also, are different among various provinces with different regimes; Quebec and Manitoba with pure no-fault regime have had stronger adverse effect for all three measures of accidents, Saskatchewan with monetary no-fault in place has had the positive impacts of no-fault on fatal and property-damage-only accidents, while the effect for Ontario with verbal no-fault are not significant for fatal and property-damage-only accidents and negative for personal injury accidents. In third essay, The Effects of No-fault and Choice Systems on Severity in Saskatchewan: A Micro Level Data Analysis, I examine the possible impacts of two different compensation regimes on the severity of accidents. Grace to the daily detailed information on the characteristics of the drivers, the type of the vehicle, and the environmental factors influencing the severity of the accidents, I was able to disentangle the effects of choice and no-fault systems on five level of injuries, minor, moderate incapacitating, major capacitating, major unconsciousness and fatality. According to the results, no-fault has resulted in more serious injuries by shifting the distribution of the accidents from minor to major injuries. The result on choice is not significant for whole sample; however it showed the increasing impact on severity of accidents among male compared to female drivers.

This thesis consists of three papers on open economy models in the portfolio balance tradition. The first paper presents a dynamic stock-flow consistent model for three economies with both fixed and floating exchange rates. The model is applied to simulate the impact of internal and external shocks, and short-run and long-run effects of changes in the U.S. fiscal position on the economies of the three countries---the U.S., China and Euroland. The simulation results show that the compensation principle still holds in an open overdraft economy. The second paper investigates the effect of the diversification of China's foreign reserves using the three-country model. The simulation results show that with the diversification of China's foreign reserves, the euro appreciates against the dollar and the RMB. China and the U.S. can benefit from the diversification, while the Euroland economy slows down. What is interesting is that the model generates some kind of path dependence. How the central bank of China will achieve its target diversification rate has an impact on the steady state values of the model. The third paper examines the portfolio balance model for the determination of the nominal exchange rate of the Canadian dollar against the US dollar using the VAR model. One cointegration equation is found. Through the impulse response and the variance decomposition analyses, we find that the Canadian demand for the US bills and bonds play an important role in the dynamic changes of the exchange rate. The empirical test results indicate that it is difficult for the reduced form portfolio-balance models to consistently beat the random walk model.

This dissertation consists of three independent essays in applied econometrics. Essay One: Unemployment and Criminality: Using Markov-Switching Models to Identify a Link. This paper studies the existence of a relationship between the unemployment rate and crime in the U.S. Using Markov Switching Autoregressive models the behaviour of four crime variables and unemployment rate during the period of study is investigated and different regimes for each variable are determined. Using some non-parametric measures such as the Concordance Index (Harding and Pagan 2002) and Independence of Chronologies (Bodman and Crosby 2005), among others, the independency of cycles of unemployment rate and crime variables is tested. The results of this phase show that there is no relationship between the unemployment rate and burglary and motor. However, for larceny and robbery the results are mixed. At the second phase, Markov Switching Vector Autoregressive models are also used to determine the states for both unemployment rate and each of the crime variable simultaneously. The results of this stage show that the effect of unemployment rate on larceny and motor depends on the state of the variables. For larceny this effect is either positive or null, and for motor it fluctuates between negative, null, and positive. Also the result shows that regardless of the state of the variables, the effect of unemployment on burglary and robbery is negative and null, respectively. Essay Two: Convergence in the Canadian Provinces: Evidence using Unemployment Rate. Quarterly time series data from Canada and the Canadian provinces for the period 1976:1--2005:3 are examined to determine if the unemployment rates in the Canadian provinces are converging to the national rate of unemployment. The paper checks for existence of stochastic convergence using recent unit root statistics, see Perron and Rodriguez (2003) and Rodriguez (2007); furthermore, it verifies the existence of beta-convergence using recently proposed methods by Vogelsang (1998), Perron and Yabu (2005, 2006), and Bai and Perron (1998, 2003). Results from different unit root tests, without and with structural breaks, confirm that stochastic convergence holds in all provinces except British Columbia. Next, the existence of beta-convergence is tested using different approaches to estimate the trend function. The results show that deterministic convergence holds and the unemployment rates of the Canadian provinces are converging to the unemployment rate of Canada. This conclusion is stronger when multiple breaks are allowed in the trend function, that is, using the approach of Bai and Perron (1998, 2003). Essay Three: Persistence in Unemployment: Evidence from Canada and the Canadian Provinces. This paper addresses the persistence of unemployment in Canada. To test this issue, we use quarterly unemployment rate data from Canada and the Canadian provinces from 1976--2005. First, we utilize different unit root tests, without and with structural breaks, and confidence intervals for the autoregressive coefficients, to test the null hypothesis of unit root. The results of these tests show that the unemployment rates in Canada and the Canadian provinces, except Nova Scotia and Quebec, do not have a unit root and are therefore, not persistent. Next, we check for stability of the persistence property of the data, using the Bai and Perron approach (1998, 2003), which allows for multiple breaks in data. The results from this section show that the persistence is not constant and is regime dependent. In addition, except for the unemployment rate in British Columbia, which is persistent in all regimes, the other series are not persistent in most regimes.

This thesis aims to answer several issues on the global transmission effects of the government fiscal policy. In order to address the issues, this thesis builds a two-country overlapping-generations (OLG) model in which there exist different time preferences, different fiscal policies, and different tax schemes between countries. In particular, the model adopt a utility function with a constant inter-temporal elasticity of substitution (LIES), in which saving positively depends on both labor income and the interest rate. In chapter 1, we try to answer the question; How does the difference in time preferences of individuals affect economic variables in an open economy? and have shown that; first, when two economies with different time preferences are integrated, the capital labor ratio along the transition path is higher or lower than its steady-state value; second, depending on whether the former or the latter happens, the behavior of the balance of payments and the welfare of two countries also differ; third, the less patient country reveals a surplus of current account in spite of an aging population; lastly, economic integration, even if it worsens the current welfare of the less patient country, ultimately improves the future welfare of the country. In chapter 2, we try to answer the question; How is the government debt or budget deficit of a country transmitted to other countries? We have first shown that the crowding out effect of the budget deficit is more pronounced in autarky than in open economy. Second, with an aging population, the current account of the debtor country shows a surplus during the transition path and converges to zero in the steady state. With an increasing population, the current account shows an ambiguous sign during the transition path and reveals a deficit in the steady state; lastly, the government debt lowers the welfare of future generations in both countries. In particular, the welfare of the debtor country continuously declines. In chapter 3, we try to answer the question; Which tax scheme is the best? We have first shown that with respect to capital formation, the consumption tax dominates the capital income tax and the capital income tax dominates the wage tax. Second, the shift to the consumption tax or the capital income tax renders the tax-reformed country a creditor and the other country a debtor. Third, with respect to welfare, the consumption tax is superior to the wage tax but seems not show an advantage over the capital income tax in the tax-reformed country. However, welfare in the other country is somewhat higher under the consumption tax scheme than under other tax schemes of the tax-reformed country; fourth, the tax rate is highest under the capital income tax and is lowest under the consumption tax. Lastly, the transitional analysis shows that the capital income tax can be more rewarding than the consumption tax in the aspect of welfare because the reform to the capital income tax enters its new steady state with a faster speed. Key words: OLG Model, Time Preference, Capital labor ratio, Budget deficit, Government debt, Tax reform, Wage tax, Capital income tax, Consumption tax, Current Account, Net foreign asset, Welfare. JEL Classification: C68, C88, F15, F21, F32,F34, F41, H21, H63

This thesis consists of three research projects on the telecommunications industry in the Asia-Pacific Economic Cooperation (APEC) countries. These projects deal with, respectively, the relationship between economic growth and telecommunications infrastructure, the measurement of barriers to trade and investment, and the impact of trade and investment liberalization on economic growth. In the first project, I examine the contributions of the telecommunications industry to economic growth in the APEC countries, taking into account country fixed effects and causality between telecommunication variables and income, with four structural equations estimated simultaneously. The findings from this project suggest that: models with fixed effects perform better than those without; models that include cellular mobile phones as a proxy for telecommunications infrastructure outperform those with only fixed lines; countries with lower penetration rates tend to demonstrate a higher impact of telecommunications on aggregate output; network externalities exist in those countries that achieve a penetration rate of up to 50 per cent. Together, these findings suggest that the developing countries may achieve faster economic growth by significantly improving their telecommunications infrastructure. Projects two and three are conducted to test the hypothesis that liberalization of telecommunications market will stimulate investment in telecommunications infrastructure and enhance economic growth. In project two, I construct a set of indices to measure the openness of the telecommunications market in the APEC countries. It is evident that developed economies do not always have higher levels of market liberalization when different instruments such as market access, national treatment and/or regulatory principles are utilized. Some developing economies are more open than their developed counterparts in some aspects. In project three, I use these indices to estimate the likely impact of liberalization on economic growth. I find some evidence that too great a degree of market liberalization may, surprisingly, lower the investment in telecommunications and hence harm the economic growth in developing countries. I estimate that the adverse impact of full trade liberalization on developing countries is about 5.3 per cent of Gross Domestic Product (GDP).

In this thesis, I present two empirical analyses to help understand the following question: Why do Canadian immigrants, despite their higher levels of education, have lower level of skill proficiencies than the native-born population in Canada? The first empirical analysis uses country-level macroeconomic data, while the second is conducted with individual level microeconomic data taken from International Adult Literacy Skill Survey (IALSS). In addition, the macro level and micro level results are compared at the end of the thesis. In the first part (Chapter 2), I summarize and synthesize the findings of previous research that addresses or helps in understanding the main questions analyzed in this thesis. I discuss the various approaches used to measure human capital and suggest that the literacy proficiency scores provided by IALSS are a more appropriate indicator than the commonly used educational data. I also discuss the various factors that play a role in the formation and development of immigrants' human capital, such as the income-per-capita in the country of origin, language proficiency, and education. The various data used in this thesis are discussed in Chapter 3. I have refined the coding of the country of origin in the original Master file of IALSS, extending the number of cross-sectional units from 28 countries to 50 countries/country-groups for the macro analysis. This is one contribution of my work, since the increase in the number of observations improves the robustness of the empirical analysis. The empirical analysis that used country-level macro data is carried out and presented in Chapter 4. All the results strongly suggest that the economic development level of the country of origin, proxied by the income per capita, is a key determinant of the immigrants' skill proficiency. The language barrier also plays an important role in explaining why immigrants have more years of schooling but lower skill proficiencies in Canada than the Canadian-born people. I also estimate regressions using employment earnings. The results concur with the analysis of Hanushek and Woessmann (2008), who show that education which did not contribute to cognitive skills will not affect the economic outcomes of immigrants. In Chapter 5, I turn to individual-level micro data to examine the factors linked with immigrants' skill proficiency. The micro level evidence also suggests that a country's economic development level that existed during an individual's schooling age plays an essential role for his/her future skill proficiency. The similar marginal effect for Canadian education and foreign education when income-per-capita of country of origin is under controlled suggests that income-per-capita of country of origin is a good proxy of quality of education. A comparison between individual and aggregated level regressions is discussed as well. Both micro-level and macro-level analyses provide consistent findings that income-per-capita of country of origin, years of schooling, and language proficiency in English/French have significant influences on immigrants' skill development. This type of comparison has not been conducted in previous studies in investigating the formation and development of immigrants' cognitive skills, and is considered as another contribution of this thesis.

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The dissertation discusses the impact of fiscal policy on the economy and the interaction between monetary and fiscal policies. It examines the reasoning and evidence behind the commonly held belief that public deficits have a retrogressive impact on the economy. The issues being addressed by this dissertation are: whether the recent growth in deficits is due to increase in interest rates or overall government spending; whether the monetary policy response of governments has reinforced or weakened the destabilizing impact of discretionary fiscal policy; and finally, the issue of financing of deficits and its link with inflation. The evidence based on Granger-Sims causality tests, using cointegration and error-correction modeling suggests that the high interest rate regime is largely responsible for the explosion of deficits in the last few decades. Thus, higher deficits do not 'cause' higher interest rates; rather, higher interest rates 'cause' higher deficits because of the central bank control over the rate of interest. In many cases, the high interest rates also 'cause' a decline in public expenditures. Furthermore, the 'monetization' of deficits is not related to the nature of financing of deficits. The evidence supports an alternative notion of 'monetization' (where monetization is associated with aggregate economic activity due to the endogenous nature of the money supply). Such 'monetization', it is argued, has no 'causal' impact on inflation. The analysis of findings for a select group of 11 countries and, in particular for the G-7 countries, strengthen the arguments of heterodox economists, who argue that current fiscal policies of austerity have played a major destabilizing role in contemporary economies. The three essays that constitute this dissertation all highlight the crucial role played by monetary policy in impacting on fiscal indicators in the economy upon which have been fashioned the current policies of fiscal austerity.

This thesis will demonstrate how the changes in the international system have influenced the Southern Cone countries of South America (i.e. Argentina, Brazil and Chile) to adapt their trade strategies between themselves and the major industrial powers. It will also examine how the domestic forces limit or enhance the ability of a given country to respond to these changes. It is argued that because multilateralism is insufficient in protecting the interests of the developing economies at the periphery of the major trade blocs (i.e. the United States and its NAFTA partners, the European Union, and Japan and the East Asian NICs), sub-regional integration offers an alternative strategy for these countries. Within this strategy of regional integration, three policy options are available; sub-regional integration as a form of counter balance to the trade blocs, sub-regionalism as a preparatory step into a trade bloc, and unilateral bloc entry. (Abstract shortened by UMI.)

This paper is an empirical investigation of the behaviour of prices in the United States (U.S.) and Great Britain (U.K.) over the last two and a half centuries. The objective is to determine if price stability was attained during the classical gold standard regime, Bretton Woods system and a flexible exchange rate regime using unit root testing procedures. This paper explores some of the theory and techniques involved in unit root testing. These tests are then utilized to determine if the price level was stationary during and after the gold standard period.