We present three essays on the econometric modeling of time-varying densities. In all three studies, we treat density functions themselves as random elements taking values in the Hilbert space of square integrable functions. The first essay introduces functional autoregression of one sequence of time-varying density functions. The second essay develops functional regression of one sequence of densities, the regressand, on another sequence of densities, the regressor. The third essay is concerned with the regression of a sequence of scalar random variables on a sequence of densities. For all three models, we present methods of estimation, which all involve the solution of an ill-posed inverse problem, and show asymptotic consistency of our estimators. We also outline hypotheses testing strategies based on each model and show asymptotic distribution of test statistics that we have developed. Possible applications of each model in economics and finance are indicated in each essay. In particular, we apply the functional autoregression model to the analysis of intraday return distributions of S&P 500 index and US/UK exchange rate and find that the functional method offers an outstanding performance in out-of-sample forecasting and a unique way to test on the moment dependence structure of time-varying distributions.

The first essay applies a panel approach to investigate household wealth accumulation and distribution across lifetime income groups for all existing cohorts. Differentiating lifetime income groups with self-reported wages from the Panel Study of Income Dynamics and imputing missing pension values with multiple-imputation procedure improves previous estimates of lifetime wealth profiles. The findings suggest a very wide dispersion in the distribution of accumulated wealth both across and within lifetime earnings groups. The second essay reviews different methods of modeling the foreign sector and assesses the ways in which the estimated effects of a fundamental tax reform might be altered when different specifications of the foreign sector are utilized. The last essay employs a dynamic overlapping-generations lifecycle computable general equilibrium (LC-CGE) model to evaluate various macroeconomic effects of a Flat Tax reform in a large open economy setting. Simulation results indicate the welfare gains of a Flat Tax reform in a large open economy are about 15-20 percent larger than in a closed economy model with similar structural settings and parameter values. Access to international capital market provides an additional channel through which the domestic economy can expand its capital stock and investment. Also, potential declines in the values of the two non-corporate non-housing sectors during transition could be significant.

This thesis examines at a micro-level the effect of foreign collaborations in India on trade and production. The data used is classified according to the Standard International Trade Classification (SITC). It is examined at both the one digit (sector) and the two digit (industry) levels. The results of the analysis are inconclusive. This is possibly due to the lack of availability of sufficient foreign collaborations data and the lack of sufficient disaggregation of data relating to domestic investment. With the availability of additional data on foreign collaborations and disaggregated data on domestic investment, it is hoped that this study would lead to stronger, more conclusive results under the adopted framework.

This dissertation demonstrates conclusively that there is strong convergence on per capita GDP (RGDP) levels among 13 Latin American countries. However, when an extended sample that includes 18 Latin American countries is considered, there is no convergence on RGDP levels. The sample that includes 18 countries is comprised of the biggest economies in Latin America. The reduced sample of 13 countries is determined by the exclusion of the 5 most politically unstable economies from the extended group. Estimating an econometric model of relative economic growth shows that the differences in growth rates among the 13 economies are explained by Total Factor Productivity (TFP) catch-up and by the growth rates of factor intensities. Moreover, the results support the fact that TFP catch-up has been a stable feature among these countries in the post-war period. Following these results, a decomposition of average (logarithmic) growth rates of RGDP of both samples is presented. Exploratory empirical evidence bearing on a set of macroeconomic hypotheses relating to economic growth across 13 Latin American nations is presented.

This thesis examines the impacts of the Offshore Assembly Provision (OAP) on Mexico and the United States. The first portion of the thesis notes the importance of the maquiladora program (the OAP in Mexico) to the Mexican economy and, because of the relatively large size of the U.S. economy, the small impact on the U.S. Also, the maquiladora plants have very low linkages into the Mexican economy, i.e. few nonlabor inputs come from Mexico. The second portion of the thesis is a literature review which discloses the result that a hypothetical repeal of the OAP results in a small loss of welfare in the U.S., a small gain in U.S. employment, and a small loss in employment in Mexico. The third portion uses input-output analysis to discover that maquiladoras provide a very small portion of the expansion of Mexican exports since 1980.

During the 1980's the majority of states were mandated by court order to reduce the overcrowded conditions of their prisons. The response of some was to release prisoners in an ad hoc fashion and to use probation as an alternative to prison. The central issue of this dissertation was the efficient allocation of resources within the criminal justice system. Specifically, four questions were addressed. What factors determined the sanction? What criminal and socio-economic characteristics distinguished successful ex-inmates? What criminal and socio-economic characteristics distinguished successful probationers. Were criminal types that were more successful under one sanction being punished via the other sanction? A sample of 740 convicted felons from Harris County (Houston), Texas were tracked from January and February, 1980 through June 1986. Some were placed on probation while the others were sent to prison and later released. Logit analysis was used to estimate the effect of criminal and socio-economic covariates on the probability of prison relative to the probability of probation. Empirical results suggested that black offenders who were convicted of personal injury crimes or theft offenses were more likely to be sent to prison than placed on probation. Offenders were more likely to be placed on probation if they had a job and had been released on bond. Duration analysis was used to estimate hazard rates. These were used to link criminal justice and socio-economic factors to the timing and probability of recidivating. The relative chance of failure decreased for ex-inmates who had been incarcerated less than the average prison term and then were released to a halfway house or to family members. Black first time offenders who sought counseling for substance abuse problems were the most likely successful probationers. Police presence was a deterrent and increased police productivity improved the chances of detection. The relative deprivation hypothesis was supported. Policy recommendations included extending the length of probation, reducing the length of prison terms, and requiring closer supervision for all upon re-entry into society.

This study compared current operating income (COI), current operating income plus realizable holding gains measured in constant dollars and purchasing power gain (i.e., current real income (CRI)), and historical cost income measured in nominal dollars (HCI) on their ability to predict future funds flows from operations of the business firm. Three different definitions of funds flows used were working capital from operations (WCFO), net current monetary assets from operations (NCMAFO), and cash flow from operations (CFO). It was hypothesized that since COI reflected more current input prices, the COI measurements would predict funds flow from operations better than the HCI measurements as long as input price changes were not cyclical. Additionally, holding gains/losses would mean future increasing/decreasing operating flows to the degree that input price changes could be passed along to consumers without drastically affecting sales volume. In this case, the CRI measurements would have the potential to be better predictors of funds flows than the others. Since industry differences would affect current cost versus historical cost measurements as well as a firm's ability to pass along price changes, industry classification would have an effect on the funds flow prediction. A repeated measures analysis of variance method was employed in the analysis of prediction errors. Four factors considered were the industry classification, year, income method, and predictor model. It was concluded that all four factors generally had effects on prediction. In addition, the predictive ability comparisons among the income measurement methods were different depending on the specific funds flow definition used. In predicting WCFO and CFO, the HCI and CRI measurements were better predictors than the COI measurements, and there was no significant difference between the HCI and CRI measurements. In predicting NCMAFO, the CRI measurements were the best, and the COI measurements were the least accurate. The predictive ability comparisons for each industry classification separately produced mixed results.

In my thesis I construct a four-region, four-product, three-factor, two income class applied general equilibrium model of the United States, which I use to examine several issues in sub-national tax incidence. Each of the four regions is an aggregate of several states. Within each region four products are produced; one is interregionally traded, one is not traded, one is provided by the region's government, and the last is provided by the national government. Each of the four products requires capital, skilled labor, and unskilled labor for its production. These factors are supplied by two types of households, Rich and Poor, who differ in their relative factor endowments and in their ability to relocate among regions (Rich may be mobile; Poor are immobile). Each household consumes each of the four products. Federal and regional governments tax households, firms, and products. A benchmark equilibrium is established in which product and factor markets clear and in which Rich households have no incentive to relocate among regions. I then simulate several tax policy changes. In the first group of simulations, a single region's tax rates are (separately and unilaterally) increased, with the revenue used to fund additional government spending. One conclusion drawn from these simulations is that household utilities fall in any region which unilaterally increases any of its tax instruments. Interestingly, however, the business capital tax is the least "painful" way for a regional government to unilaterally increase its tax revenue. In the second group of simulations, a regional government unilaterally eliminates its household taxes, replacing the lost revenue by increasing its business capital taxes. In these simulations, household utilities generally increase in the region that eliminates its household taxes, while utilities decrease in other regions. This result is especially robust for regions which are net capital importers--those regions in which producers use more capital than their regions' residents own. Sensitivity analysis reveals that my simulation results are fairly robust, even when important parameter estimates (such as elasticities of substitution in production and consumption) are varied.

This dissertation assesses the impact of the 1978 NGPA on the production technology and cost structure of the U.S. interstate natural gas transmission industry, based on a newly constructed panel of twenty-four major pipeline companies for nine years, 1977-1985. The primary focus is the effect of partial deregulation of field prices on the structure of technology and costs, productive growth, technical efficiency, and substitution possibilities between factor inputs. Empirical results indicate the transmission industry is characterized by substantial economies of scale. Since the NGPA was enacted there has been a marked decline in productivity, paralleling the decline in output for the industry. Current regulatory changes to promote open access to pipelines appears to have enabled some firms to mitigate the overall industry productivity decline. Despite the increasing competition within the industry, we found significant differences in the technical efficiency among firms. There has been a slight shift in the structure of production under the NGPA; the industry is becoming more pipeline intensive and energy saving. There appears to be considerable long-run substitution possibilities among most factor inputs. The NGPA instituted a complex structure of partial and gradual decontrol of natural gas field prices. The legislation cost natural gas producers considerable lost revenue by holding average field prices below the unregulated, free-market level. The interstate transmission industry and all consumers, except residential, benefited by paying less for natural gas than they otherwise would have.

In Essay One, the rational partisan business cycle (RPBC) theory is tested in three ways. First, using U.S. real output data for the period 1880-1948. It is found that the theory is not rejected for the period 1914-1948. Second, by exploiting the implications of the theory for the term structure of interest rates. Post-WW2 U.S. data on interest rates is found to be in conformity with the RPBC hypothesis. Third, the theory is extended to encompass the case of nations which have variable inter-election periods, and is successfully tested using output data for Canada and the United Kingdom. In Essay Two, empirical evidence on a number of political theories of public debt determination is presented. First, it is shown that during the Great Depression, budget deficit persistence was more marked in nations with coalition governments, in accord with the power dispersal theory. Second, Granger-prediction tests are used to test whether large deficits predict future government spending in a sample of industrialized democracies. Finally, a pooled cross-section time series regression analysis reconfirms previous findings that power dispersal is a factor in explaining post-1973 budget deficit persistence in a number of countries but it is also found that the degree of central bank independence is a significant influence.