<p> This dissertation contains three essays that study monetary transfers. </p><p> The first chapter studies the effect of a politician's vote in the legislature on monetary contributions that the politician receives from interest groups after the vote. I first develop models to show that interest groups have an incentive to make monetary contributions to politicians not only before politicians vote but also after they vote. Then I find evidence that voting in favor of the Emergency Economic Stabilization Act (EESA) of 2008 has increased the amount of monetary contributions that the members of the U.S. House of Representatives receive from the interest groups in the financial sector after the passage of the EESA. </p><p> The second chapter studies the effect of a politician's ideological strength on monetary contributions that the politician receives from interest groups. If interest groups care mainly about current policy outcomes, they will make monetary contributions to ideologically neutral politicians who are often pivotal voters in the legislature. However, if interest groups care more about future policy outcomes, they have an incentive to make monetary contributions to politicians who share similar policy preferences, i.e. liberal (conservative) interest groups will make contributions to liberal (conservative, respectively) politicians, to help those politicians win the election and continue to serve in the legislature. I first develop a model incorporating these two opposing effects. Then I find evidence that ideologically neutral politicians receive more monetary contributions from interest groups. This result suggests that interest groups are primarily motivated by the short-run incentive. </p><p> The third chapter studies monetary transfers from parents to children. Unlike most other taxes, the estate tax is levied only on a very small number of very large estates. There is an exemption level of the tax below which there is no tax liability. This threshold divides taxpayers sharply into two groups: those who paid the estate tax when their parent passed away and those who did not. Using a regression discontinuity design, I find evidence that those who have experience of paying the estate tax at their parent's death are more actively engaged in estate tax avoidance behavior for their children. </p>

<p> My thesis study examines the economic and sociological factors associated with political revolutions in order to create a predictive model. I do this by using statistical methods with nation level panel data collected from public domain sources. I anticipate being able to create a predictive model that provides a probability forecast of a country undergoing political revolution within a two year time-frame.</p>

During the Vietnam War period, the Japanese defense budget grew eight-fold, from 158 billion yen in 1960 to 1367 billion yen in 1975. In spite of the opposition parties' aversion to growth in the military, little was heard in the way of protests to such growth. In this political system where consensus decision-making dominates, it is unusual not to hear accusations of "tyranny of the majority" when the opposition is shut out of decision making, as was the case with the 1960 Treaty Crisis. However, the growing Japanese economy allowed the LDP to satisfy its desire for increased funds for the military while at the same time appeasing the opposition by restricting the defense budget's percentage of GNP to a minimum. The combination of a tradition of consensus decision making, the desire to avoid a political crisis and an expanding economy led to the ability to reach a minimum consensus on this very divided issue in Japanese politics.

This study builds on an ever growing health demand and retirement literature. I extend the literature on structural models by developing and estimating a stochastic model that jointly considers health status, retirement and consumption in a life-cycle framework. I also use a number of specifications of reduced form models for mortality, morbidity, and labor withdrawal to examine the influence of social and economic factors and to study the difference in the experiences of black and white men. I develop and estimate a model that has the following characteristics: it (a) jointly determines health demand and labor supply, (b) allows the decisions to be made in a life-cycle framework, (c) is set in a stochastic environment, and (d) relaxes the assumption of intertemporally separable preferences by using a dynamic preference structure which incorporates forms of intertemporal nonseparability. Closed-form solutions can only be reached if strong and unrealistic restrictions are imposed on the model. This problem is solved by using generalized method of moments estimation on the set of highly nonlinear Euler equations. I use a number of models to explore black white inequalities in the United States with regard to mortality and morbidity for older men and to study the extent to which such differences are associated with observed differences in socioeconomic characteristics. Two measures of health status are used: a categorical variable of self-assessed health and a continuous variable that combines subjective and objective measures of health status. Within a race, the estimates are robust to changes in statistical specifications. Between races, the estimates differ in magnitude and statistical significance. By using the observed characteristics of black men in the sample in the equations of white men, I find that most of the differences in the health status of the two groups disappears. I estimate five labor withdrawal models at two stages of the life-cycle, early retirement and late retirement. I look at the social and economic determinants of early labor withdrawal and advanced-age work effort for black and white men. I also study the robustness of the relationships between the socioeconomic variables and labor withdrawal as the definition of retirement changes.

The effects of localization and urbanization economies, and firm specific factors on local industrial growth were tested for the electronic components industry (SIC 367) in Texas for the 6-year period, 1988 to 1994. The data source is the Texas Manufacturer's Register. Growth is observed on the plant level, the economic environment is the city a plant is located in. For plants that remain in the sample, firm specific variables are most important; younger smaller plants grow faster. Localization and urbanization economies are found to be out important. Localization effects vary in sign for effects of the four and three digit industry. Evidence that lower average firm size enhances local competition and growth could not be found. Urbanization effects are positive but a distinction between density and population effects was not possible.

The thesis is divided into three essays. In the first essay, a two-by-two model is formulated in which changes in price are caused by technological progress that takes place in one sector. It is found that the factor used intensively in the sector where technology advances will be better off in terms of both goods if the proportionate decrease in the price of that good is less than the proportionate increase in productivity; the other factor, although it suffers from the change in factor intensity, may still be better off due to the improvement in productivity. The second essay deals with technology that is accessible to every one in the economy. Since technology is a public good, it pays to devote more resources in the creation of new technology if the population size is larger; productivity increases as the investments for new technology increase. The optimal level of population is reached when the positive effect of increased productivity is balanced by the negative effect of the increased labor size. The third essay discusses two topics: first, the optimal level of technology acquisition; second, the international indebtedness. Productivity will increase because of the acquired technology; however, the secondary burden of the royalty payments will turn the terms of trade against the adopting country. The optimal level of technology acquisition is then reached when the gains from the acquired technology are balanced by the losses from the worsening terms of trade. In the second part of the third essay, the advanced country temporarily falls behind in the creation of technology but expects to regain the leading margin in productivity. Both countries can be better off if the advanced country now borrows from the backward country and pays the loan back with interest when the leading margin in technology of the advanced country is reestablished in the future.

Interactions between the banking sector and an open capital account are investigated as rationalizations for the empirical regularities that characterize disinflation programs anchored by fixing the exchange rate. Financial intermediation and bank money creation are formalized within a dynamic general equilibrium model with multiple monetary aggregates and a financial system characterized by imperfections such as incomplete markets and an externality in the bank lending process. Financial markets are incomplete in the sense that bank loans are the sole source of external finance for nonfinancial firms, and bank deposits are the only form of household savings. The bank lending externality arises because individual banks do not internalize the effect of their lending decisions on the quality of information about potential borrowers received by other banks, and therefore extend more credit than they otherwise would. Simulation of the model economy's equilibrium dynamics shows that an initial increase in the supply of loanable funds resulting from remonetization of the economy in the wake of disinflation can translate into a further rapid expansion of bank credit financed by short-term capital inflows. A credit-driven boom results, accompanied by a currency overvaluation and current account deficits. Together, these generate systemic financial fragilities and make the economy vulnerable to a small shock that can trigger banking and balance-of-payment crises. The model is thus capable of replicating the empirical regularities observed in exchange-rate-based stabilization programs without relying on imperfect credibility or nominal rigidities. Accounting for the role of the banking sector can help to explain why even well-designed exchange-rate-based stabilization programs may set in motion a dynamic process that can lead to a financial crisis and the program's collapse. The policy implication for developing countries is that the authorities should pay attention not only to the design of monetary and exchange rate policies but also to the framework of monetary and financial institutions. The results of the study suggest that diversifying the source of investment finance away from banks and reducing externalities associated with bank lending may be essential preconditions for implementing successful stabilization programs.

The rapid expansion of industry at the outset of economic development and the subsequent growth of the transportation and residential and commercial sectors dictate both the rate at which energy demand increases and the composition of primary fuel sources used to meet secondary requirements. Each of these factors each has an impact on the pollution problems that nations may face. Growth in consumer wealth, however, appears to eventually lead to a shift in priorities. In particular, the importance of the environment begins to take precedent over the acquisition of goods. Accordingly, cleaner energy alternatives are sought out. The approach taken here is to determine the energy profile of an average nation, and apply those results to a model of economic growth. Dematerialization of production and saturation of consumer bundles results in declining rates of growth of energy demand in broadly defined end-use sectors. The effects of technological change in fossil fuel efficiency, fossil fuel recovery, and 'backstop' energy resources on economic growth and the emissions of carbon dioxide are then analyzed. A central planner is assumed to optimize the consumption of goods and services subject to capital and resource constraints. Slight perturbations in the parameters are used to determine their local elasticities with respect to different endogenous variables, and give an indication of the effects of changes in the various assumptions.

Electricity demand analysis using cointegration and error-correction models with time varying parameters: The Mexican case. In this essay we show how some flexibility can be allowed in modeling the parameters of the electricity demand function by employing the time varying coefficient (TVC) cointegrating model developed by Park and Hahn (1999). With the income elasticity of electricity demand modeled as a TVC, we perform tests to examine the adequacy of the proposed model against the cointegrating regression with fixed coefficients, as well as against the spuriousness of the regression with TVC. The results reject the specification of the model with fixed coefficients and favor the proposed model. We also show how some flexibility is gained in the specification of the error correction model based on the proposed TVC cointegrating model, by including more lags of the error correction term as predetermined variables. Finally, we present the results of some out-of-sample forecast comparison among competing models. Electricity demand and supply in Mexico. In this essay we present a simplified model of the Mexican electricity transmission network. We use the model to approximate the marginal cost of supplying electricity to consumers in different locations and at different times of the year. We examine how costs and system operations will be affected by proposed investments in generation and transmission capacity given a forecast of growth in regional electricity demands. Decomposing electricity prices with jumps. In this essay we propose a model that decomposes electricity prices into two independent stochastic processes: one that represents the "normal" pattern of electricity prices and the other that captures temporary shocks, or "jumps", with non-lasting effects in the market. Each contains specific mean reverting parameters to estimate. In order to identify such components we specify a state-space model with regime switching. Using Kim's (1994) filtering algorithm we estimate the parameters of the model, the transition probabilities and the unobservable components for the mean adjusted series of New South Wales' electricity prices. Finally, bootstrap simulations were performed to estimate the expected contribution of each of the components in the overall electricity prices.

My dissertation research is composed of two parts: a theoretical part on semiparametric efficient estimation and an applied part in energy economics under different dynamic settings. The essays are related in terms of their applications as well as the way in which models are constructed and estimated. In the first essay, efficient estimation of the partially linear model is studied. We work out the efficient score functions and efficiency bounds under four stochastic restrictions---independence, conditional symmetry, conditional zero mean, and partially conditional zero mean. A feasible efficient estimation method for the linear part of the model is developed based on the efficient score. A battery of specification test that allows for choosing between the alternative assumptions is provided. A Monte Carlo simulation is also conducted. The second essay presents a dynamic optimization model for a stylized oilfield resembling the largest developed light oil field in Saudi Arabia, Ghawar. We use data from different sources to estimate the oil production cost function and the revenue function. We pay particular attention to the dynamic aspect of the oil production by employing petroleum-engineering software to simulate the interaction between control variables and reservoir state variables. Optimal solutions are studied under different scenarios to account for the possible changes in the exogenous variables and the uncertainty about the forecasts. The third essay examines the effect of oil price volatility on the level of innovation displayed by the U.S. economy. A measure of innovation is calculated by decomposing an output-based Malmquist index. We also construct a nonparametric measure for oil price volatility. Technical change and oil price volatility are then placed in a VAR system with oil price and a variable indicative of monetary policy. The system is estimated and analyzed for significant relationships. We find that oil price volatility displays a significant negative effect on innovation. A key point of this analysis lies in the fact that we impose no functional forms for technologies and the methods employed keep technical assumptions to a minimum.