Thesis advisor: Hideo Konishi / Online auctions have many different formats. Each of these affect the ways in which users bid strategically. One example of this is the end-time format. Some sites, like eBay, use a hard close, under which there is a strict end-time and the highest bidder at that time wins. Others, like Amazon, have an extended end-time format. It has been shown that these differences do, in fact, appear to change how bidders behave. This paper uses data obtained from Yahoo! Auctions, where both formats are used, to examine the impact these differences have on the final price of an auction. / Thesis (BA) — Boston College, 2005. / Submitted to: Boston College. College of Arts and Sciences. / Discipline: Economics Honors Program.

In addition to a review of the literatures on the gravity equation, and on how foreign aid and trade are related, the purposes of this dissertation are (1) to develop an asymmetric version of the Anderson and van Wincoop (2003) model appropriate to applications explicitly involving developed and less developed countries, such as foreign aid; and (2) use this model to obtain empirical evidence of the positive effect of foreign aid on trade. Anderson and van Wincoop's (2003) model is extended to a dual context, where the developed North trades heterogeneous goods in a monopolistic competition framework and the less developed South trades homogeneous goods. In addition, the linearization technique that Baier and Bergstrand (2006) apply to Anderson and van Wincoop's (2003) model is extended to the present North-South dual context. This extension permits a better interpretation of the proposed model and increases the efficiency of the estimation. The result is an empirical model that is better suited to the analysis of North-South trade issues like the link between trade and aid. The empirical results are strongly significant and robust since they survive a series of sensibility analysis. Foreign aid explains 2% of the predicted increase in trade from 1966 to 2000 / acase@tulane.edu

This dissertation focuses on the effects of fiscal policy on investment in industrial innovation. We particularly evaluate the impact of tax incentives on R&D expenditures After discussing the desirability of government intervention in the innovation activities, we set up a model of demand for R&D investment derived from a dynamic profit maximization framework following Jorgenson investment theory. The effects of tax incentives on R&D expenditures is indirectly captured through the user cost of research capital The estimation of the R&D investment function is conducted at the firm, industry, and at selected manufacturing sector level. Results indicate that R&D investment is responding to price changes, therefore, tax incentives through their effects on the user cost of research capital should be effective in stimulating R&D expenditures However, although the estimates indicate that demand for R&D investment is price elastic, the additional R&D expenditures generated by theses tax incentives fell short of revenues losses to the government. There are evidences for many firms, especially those in the low-tech sector, that these R&D incentives programs provided windfall profits rather than an incentive to expand their R&D programs / acase@tulane.edu

A sharp shift in Federal Reserve operating procedures occurred on October 6, 1979. The Federal Reserve announced that it would begin to use nonborrowed bank reserves as its policy instrument in an effort to control the stock of money and attain price stability, at the expense of increased volatility in short term interest rates. However, the period from October 6, 1979 and October 18, 1980, experienced unexpected increases in the volatility of long term interest rates and the money stock. These results are not consistent with a monetary policy regime that is monetary aggregate targeting. This dissertation investigates if the Federal Reserve was indeed monetary aggregate targeting between October 6, 1979 and October 18, 1982 This dissertation develops a single contemporaneous money market model and a simple IS-LM model, that are useful in comparing the money supply process under each Federal Reserve operating policy. The simple contemporaneous model is tested empirically. The Chow tests performed on the empirical results show that there was a shift in policy on October 6, 1979 and on October 18, 1982. The dissertation continues by developing a general dynamic money market model. It examines the lag adjustment process of the monetary variables, and the restrictions that must be placed on this type of model, under each alternative policy regime. It investigates the exogeneity assumption underlying the model through the causal relationships of monetary aggregates and real economic activity. The lag structures for each variable were found using Hsiao's Final Prediction Error Criterion. The model was estimated using Zellner's Seemingly Unrelated Regressions technique. The exogeneity assumptions for each policy regime were tested using Granger's concept of causality The results of this dissertation indicate that the Federal Reserve did not conduct a monetarist experiment from October 6, 1979 to October 18, 1982. Although there is evidence that the Federal Reserve shifted to controlling the level of nonborrowed reserves, it did not strictly adhere to the targeted level. The investigation also found that the borrowed reserves supply function used by the Federal Reserve was incomplete. Given this evidence, the procedure by which the money supply was targeted, through the targeting of nonborrowed reserves, was flawed / acase@tulane.edu

President Salinas de Gortari of Mexico has taken steps to induce Mexican companies to become internationally competitive. The 1986 entry into the GATT by Mexico under the de la Madrid Administration and subsequent Government policies under the Salinas Administration have moved the Mexican market toward greater openness to foreigners. The most recent and possibly the most important action has been the decision by President Salinas to pursue vigorously bilateral trade negotiations with the United States. Negotiations for a Free Trade Agreement (FTA) between the United States and Mexico have been moved to a 'fast track', and a ratified agreement between the two countries is expected to be signed sometime in 1993 This dissertation looks at the strategic changes taking place in eight of Mexico's leading companies as management responds to the economic opening which began in Mexico in 1986. The data used in this study was collected through interviews, questionnaires and annual reports The direction, pace, and commitment of these strategic changes is documented for the years 1987-1991. Through its policies, the Mexican government has paved the way for the private sector to be the new engine of economic growth in Mexico. Many of the executives of Mexico's leading companies are assuming this new role as they actively seek new international markets, upgrade product quality and improve production efficiency The author also analyzes the preparedness of Mexico's leading companies for a North American Free Trade Agreement (NAFTA). The author determines that Mexico's leading companies are gearing up to be viable global competitors and serious participants in a free North American market. The majority of the companies in this study are prepared for the NAFTA. Those companies which are not, are diligently working to become so The results of this study are expected to incite further study in the areas of: the strategic management of MNCs from developing countries, the role of the environment in strategic change, and the role of government and the private sector in economic development / acase@tulane.edu

A general equilibrium model is established to evaluate fiscal policy in Taiwan, particularly the replacement of the sales tax by a value-added tax. To begin, the major taxes levied in Taiwan are identified and briefly described. Based on this descriptive analysis, we can make assumptions concerning tax incidence for Taiwan's major taxes within a general equilibrium framework; and the effective tax rates, by type of tax, by family income class, are calculated. Then, a general equilibrium computation algorithm is applied to convert an abstract representation of an economy into an operational model The results are obtained by comparing the solutions between before- and after-tax equilibrium in nonlinear equations system. The main conclusions show that (1) the relative prices of goods, in general, only have a small change; and (2) the efficiency gain in production and total welfare gain are both small as well / acase@tulane.edu

The purpose of this dissertation is to examine the causes and consequences of foreign takeovers in the United States. In particular, I try to find whether real sector imperfections motivate foreign takeovers For a sample of 96 foreign takeover targets (taken over during the period 1975-1987), I empirically study the foreign takeovers in three stages: (i) the pre-takeover stage, (ii) the transaction stage, and (iii) the post-takeover stage The real sector imperfections model of foreign takeovers predicts that the motives of foreign takeovers in the United States are (a) to enter or expand the United States' market, and (b) to obtain synergistic gains by acquiring an appropriate target The empirical findings confirms the contention that foreign bidders are motivated by real sector imperfections in the United States. In particular, the findings in the pre-takeover stage show that foreign bidders acquire firms in markets characterized by high degree of marketing skills, as measured by the advertisement expenditure. Also, more takeover activity is targeted in industries which themselves make high level of foreign direct investment implying that the bidders use takeovers as a vehicle of quick entry to counteract rival firms' moves. The surprising result is that takeovers do not take place in high technology (as measured by R & D expenditures) industries. Another result pertaining to the target firms' industries shows that these takeovers take place in more mature, low growth industries. All these results, however, lose their significance when compensation for choice based sampling is made. The foreign targets, on an average, are smaller than the non-targets. The foreign bidders takeover firms with very low levels of intangible assets, as measured by the market-to-book value The findings of takeover-stage show that the wealth effect on the announcement of a takeover is significantly higher for foreign targets than for domestic targets. Also, foreign bidders pay a significantly higher premium for targets whose operations are related to their own. The results weakly indicate that the foreign bidders pay a relatively higher premium for firms with lower levels of intangible assets, showing their preference for such firms Finally, the findings of the post-takeover stage show that the foreign bidders use the targets as a base for expansion through new investments in forty cases. The bidders also divest a substantial portion of assets in thirty-one cases. Most of these divestitures are probably taken to correct past managerial mistakes. In twenty-two cases the targets report changes in top management positions. Finally, although, fifteen firms report post-takeover layoffs and investment cuts, the magnitude of such changes is very small The direct evidence on foreign takeover activity shows that foreign takeovers are good for United States and that there is no reason to restrict them / acase@tulane.edu

With panel data from 1981 to 2008 covering 105 countries, this paper investigates the impact of explicit deposit insurance generosity on financial systemic risk. The deposit insurance generosity is measured by the effective deposit coverage limit to GDP per capita ratio. While preliminary results from basic regressions suggest that the correlation between deposit coverage generosity and systemic risk might be U-shaped---an appropriate increase in coverage generosity can reduce systemic risk by building public confidence in the banking system, but may increase systemic risk when policies become too generous, because of moral hazard---this is yet to be confirmed by robust and more appropriate probit analysis. This preliminary finding suggests that the tipping points of effective coverage ratio where explicit deposit insurance systems start to increase systemic risk vary by country groups, and by whether time-fixed effect is controlled for. Further research is needed for confirming the correlation between coverage generosity and systemic risk.

This dissertation on the development and promotion of Mexico's tourism industry reconstructs the making of what is today that nation's third most profitable industry. Forged by Mexico's government in late 1928 as the cornerstone of state-led modernization programs, tourism became official business by 1929 when government officials, private investors, bankers and transportation companies agreed that it offered their nation an ideal vehicle toward progress once they began to rebuild after a long history of political violence and instability, shaky relations with the United States, economic underdevelopment and social revolution. Tourism suggests another framework for examining culture, politics and economics in Mexico following the revolution and during this period of intense nation building. More than just an economic solution, tourism fit into the state's broader cultural program to both modernize and unite Mexicans after the 1910 revolution. Tourism fostered nationalism and national unity. It encouraged the formation of tourist associations whose members pooled their resources to promote their nation's beauty and to finance infrastructure for the sake of national progress, peace and prosperity. Through tourism, government and private individuals debated and defined mexicanidad, or Mexicanness. In the end, promoters packaged a holiday in Mexico to U.S. tourists as a destination that embodied a harmonious convergence of modernity and antiquity---where one could visit the pyramids by day and drink martinis by night. By analyzing the formation, membership, activities and debates of official and private tourist groups between 1928--1946, this project reveals that to develop tourism the government relied on cooperation and capital from an elaborate network of promoters in Mexico and abroad. Moreover, Mexican financiers almost exclusively funded the construction of tourist infrastructure that visibly transformed Mexico by 1946 from a provincial, undeveloped nation to an urban, modern one. Scholars have examined these transformations as a product of President Miguel Aleman, 1946--52 whose administration was marked by corruption and U.S.-directed development. This research uncovers early origins of Mexican-led progress, and demonstrates how tourist development between 1928--1946 decidedly paved the way for Mexico's economic "miracle," and its era of political and social stability after World War II.

A current outgrowth of the nearly four decades of research in capital structure is the investigation of linkages between the firm's decisions and factors outside of strictly financial determinants. The three essays that comprise this dissertation offer contributions to this area of research. The first essay explores the connection between the product market and the firm's financial decisions. I hypothesize that market power acts as a buffer against strategic action on the part of a competitor and the existence of market power allows the firm to hold more debt in its capital structure. Using a binary choice model, I find that firms with market power have a higher propensity to issue public debt rather than public equity. In addition, no evidence is found suggesting agency costs have a significant impact on the security issue decision. The second essay is an extension of an analytical model of the free-cash-flow hypothesis developed by Stulz (1990). Debt can increase the value of a firm by reducing the amount of cash the manager can misappropriate or invest in personal projects. The extension is developed under the assumption that the stockholders do not know with certainty the mean of the cash flow distribution. The extension drives two main results: one, the amount of debt in the capital structure of a firm is dependent upon the precision of the shareholders' a priori estimate of future cash flows; and, two, the maturity of the firm's debt is dependent upon the shareholders' estimate of the mean of future cash flow. The third essay empirically explores the relationship between the firm's maturity structure of debt and the firm's maturity structure of assets. New variables are constructed to specifically test the maturity-matching hypothesis. The dependent variable is the change in average maturity of debt caused by a new issue. An independent variable measures the difference between the average maturity of debt and the average maturity of assets. I find statistically significant evidence supporting the maturity-matching hypothesis and inconsistent support for the agency hypothesis.