The dissertation develops and solves one static and two dynamic pass-through models to investigate the relative importance of exchange rate appreciation and labor cost increases on export good prices. It is shown that the degree of the pass-through depends on market conditions as well as the strength of dynamic factors. Data from 1981 through 1988 on U.S. imports of eight Taiwanese commodities are used to estimate the implications of the models.

This thesis consists of three essays. In the first two essays we assume that the wife earns a lower wage rate than the husband and we analyze intrafamily distributional effects if environmental parameters such as the tax system or divorce regulations change. The third essay evaluates the efficiency of a production tax when a public service is provided to business. The first essay considers a tax reform from individual to joint taxation for couples in a one-period model. An expansion of the utility possibility set due to tax reform makes both spouses better off, if spouses apply a bargaining rule with a disagreement point outside marriage. Alternatively, if spouses receive family resources proportional to their contribution to family full income, the husband prefers joint taxation and the wife prefers individual taxation. In the model of the second essay, spouses bargain in each of two periods over the resource allocation between them using divorce as the disagreement outcome. Since each spouse's first period labor supply influences his or her second period bargaining power, the couple's labor supply decisions are no longer efficient. (1) A reduction of the tax rate of the wife when divorced increases inefficiency within marriage, but raises the wife's intertemporal utility. (2) An equal split of income between former spouses equalizes utility shares between spouses and it is less distortionary than a divorce law granting each former spouse his or her stand alone income. (3) Whenever the wife benefits from a tax reform from joint towards individual taxation of the family, inequality between spouses decreases but the husband might be worse off. In the third essay, local governments finance a public service to firms either with a tax on capital, the mobile factor, or with a tax on production. We find that in the Zodrow-Mieszkowski model a production tax is inefficient except for the case of a Cobb-Douglas technology. Using a CES production function, we show that a production tax is more efficient than a capital tax in the Zodrow-Mieszkowski model.

An analysis of strategic behavior and consumer surplus in eBay auctions. This essay presents structural estimates of bidding behavior in eBay computer monitor auctions. The entry of bidders is taken as exogenous and treated as another parameter in the estimation. The source of our data is the eBay website. We verify that private values have a log normal distribution, and use our estimates to reject the use of Jump Bidding or "Snipe or War" bidding and construct structural estimates of consumer surplus. Ex-ante bidding rules, entry and private value estimation in eBay auctions. This essay measures the relation between the ex-ante bidding rules set by the seller and the bidders' entry process. With the assumption of endogenous entry we study sellers' optimal choices of bidding rules such as reserve price, use of secret reserve price, auction length and the decision to make public the characteristics of the monitors. We model the entry of bidders as a Poisson process. We keep the assumptions of independent private values and identical risk neutral bidders. Modeling entry as endogenous in the SNLLS methodology improves the estimation of the private valuation. However the difference in the coefficients' magnitude as well as in the minimized objective function value is minimal if compared with the estimation assuming exogenous entry. The use of reserve price is an effective mechanism to deter entry. Shorter auctions have fewer bidders. "Dividends and the agency cost of free cash flows" . This essay analyzes the existence of incomplete contracts (agency problem) as an alternative explanation for the documented positive relationship between dividend increase and firm value. A leading explanation for the positive market reaction surrounding the announcement of dividend increases is that dividend payments mitigate the agency conflict between managers and shareholders. One implication of this theory is that those firms whose managers are less (more) entrenched should experience a stronger (weaker) market reaction around the announcement of dividend increases. Consistent with these predictions, we find an inverse U-shape relation between the market reaction to dividend increases and the level of managerial ownership in the firm.

This dissertation focuses on the mean reversion in macroeconomic and financial data using nonparametric estimation method. The first essay studies the recent attempts to solve the second form of the Purchasing Power Parity (PPP) puzzle (usually expressed as a half-life of 3∼5 years), mostly by using non-linear stochastic models of real exchange rates. Despite the introduction of non-linearities, the literature has continued to focus on the notion of "half-life" as a measure of persistence. We argue the half-life measure is only appropriate in linear settings, failing to capture the richness of non-linear dynamics introduced in the more recent literature. We conclude that depending on the models and criteria selected for investigating the PPP puzzle, the puzzle may be in the eye of the beholder. The second essay studies the convergence of per capita income across the world. The recent literature on "convergence" of cross-country per capita incomes has been dominated by the two hypotheses of "global convergence" vs. "club-convergence". Utilizing new measures of "stochastic stability", we establish two stylized facts that question the fruitfulness of the literature's focus on asymptotic income distributions. The first stylized fact is non-stationarity of transition dynamics, in the sense of changing transition kernels, thus making "convergence" hypotheses less meaningful. In the meantime, we find statistical support for a second stylized fact of emergence, disappearance, and re-emergence of a "stochastically stable" middle-income group. Moreover, the probability of escaping a low-income poverty-trap appears to depend significantly on the existence of such a stable middle-income group. The third essay studies the individual income convergence issue. The recent literature on 'global income distribution' has recently focused on 'individual income inequality' to account for the so-called China effect. We examine the robustness of various population weighting schemes that account for different country sizes in the study of income distribution dynamics. We apply our test of stochastic stability to within as well as between country income distribution dynamics, and find that the middle-income group's role in income distribution dynamics vanishes when we allow for very higher population weights for China and India.

I formalize growth ideas that go beyond rates of factor accumulation to also include the fact that countries may differ in technology and institutions. The first essay explores the empirical finding that cross-country convergence is also accompanied by significant relative income shifts (leapfrogging). Three measures of leapfrogging are suggested and applied to OECD countries (and the World). The results show high rank persistence annually, but display more mobility as time is extended. This indicates that rank movements exist and are not purely random. To determine if different accumulation rates can explain this finding, the human capital augmented Solow model is simulated with and without a random disturbance. The mobility measures from the simulations can be made to closely approximate the OECD data, but the simulated growth paths are quite different from the observed. The second essay presents a modified version of the Solow-Swan growth model which considers the possibility of adoption of technical knowledge from abroad and possible inefficiency caused by institutional rigidities. Adoption of technology becomes one mechanism through which the effective capital stock of a nation increases. The new model slightly modifies standard results for nations' steady states and rates of convergence. More importantly, it allows for quite different convergence paths. In the third essay, I estimate the model with panel data using methods consistent with the dynamic frontier literature. The model is estimated for three regions: Europe, East Asia, and Latin America. Follower countries benefit significantly from the technology gap to the leader nation and countries differ in average inefficiency levels. The estimated average inefficiency levels seem consistent with common beliefs and are significantly explained by institutional variables such as bureaucratic efficiency and political and civil rights.

This thesis examines several issues concerning health outcomes and healthcare utilization. In the first chapter, I examine the relationship between health and human capital development in childhood and key adult outcomes---educational attainment and adult health status---using longitudinal data from the 1970 British Birth Cohort. I use robust measures of human capital in childhood including cognitive skill and so-called psychological capital and establish their effects on both educational attainment and adult health. Certain measures of health in childhood are also shown to affect these adult outcomes. I establish a relationship between parental socioeconomic status and the development of childhood health and human capital and discuss the implications for the inter-generational transmission of socioeconomic status and its effect on adult health. The second chapter uses the 1997 Medical Expenditure Panel Survey to examine the relationship between family income, insurance status, and chronic conditions in children and how these are associated with healthcare utilization. I find that while income is positively associated with some forms of utilization, there is no evidence of a differential effect for chronically-ill children. Insurance status---defined as private, public, or no insurance---does exhibit stronger associations with healthcare utilization for children with chronic conditions. I also present mixed evidence on the association between healthcare utilization and health outcomes. Finally, the third chapter focuses on the relationship between work characteristics and the utilization for a number of preventive and screening health services. I find that some work characteristics---including wage levels, paid sick leave, and retirement benefits---are positively related to utilization. Other characteristics---such as hours worked, irregular shifts, and working more than one job---are not significantly associated with use. I relate these findings to a conceptual framework in which time costs are important to the decision to use preventive services.

This dissertation consists of three empirical essays on public economics. The first essay improves upon previous empirical work on the potential asymmetry of the effect of federal grants on state-local public spending---the flypaper effect. An empirical model of state and local government spending is estimated using a new U.S. database which allows for the distinction between matching and non-matching federal funds, a critical factor in enhancing the results of previous work. I find that the estimated coefficients indicate a replacement type of asymmetry, although the symmetry hypothesis cannot be rejected on statistical grounds. The second essay examines the net incidence on different income groups of taxes and in- kind benefits of the Mexican Social Security health system, as well as the impact of recent reforms and of proposed plans. The results suggest a strongly progressive distributive structure for this system: Low-income individuals visit SS clinics more frequently and place a higher value on SS services relative to high-income individuals. The estimated demand model indicates that the opting-out and the frequency of use decisions are very sensitive to income and to the implicit prices of both public and private providers. Simulations suggest that the quality of SS clinics can be improved by introducing user fees or by offering vouchers to encourage the use of private facilities, although these policies may be highly regressive. In the third essay I study the equity and social welfare aspects of the structure of consumption taxes in Mexico. The decomposition of the Gini inequality index by expenditure categories and the conditions of welfare dominance developed by Yitzhaki are applied to consumption data in order to identify tax/subsidy policy changes that would increase social welfare, holding public revenues constant. The substitution of expenditure-elastic products for utilities under the zero VAT status and a greater reliance on excise taxes on gasoline and telephone are recommended.

The first essay applies four standard models of fiscal equalization to simulate a set of alternative allocations of equalizing subsidies across states in Mexico. Equalization of per capita outlays, fiscal capacity and fiscal potentials are considered. Then a methodology is developed to adjust actual, observed federal subsidies distributed to the state governments as revenue-sharing grants in order to compare these subsidies to the equalizing subsidies obtained from the simulation. The results reveal that the actual pattern of distribution of grants from the General Fund of Revenue-Sharing resembles the patterns which would result from implementing fiscal equalization of either fiscal capacity or fiscal potentials. The second essay uses household income data to evaluate the potential redistributive effects of alternative tax/subsidy policies related to the financing of public education in Mexico. The incidence of educational subsidies are analyzed by looking at variations of per student educational subsidies across households grouped by level of income. I find that middle-income households benefit the most from subsidies to basic educational levels, while high-income households capture the highest per student educational subsidies in upper secondary and higher education. The concept of welfare dominance is then applied to assess the effect that changes in the allocation of educational subsidies across school levels will have on overall measures of income inequality and social welfare. The results suggest that a marginal increase in subsidies for basic education, upper secondary and other (non-higher) educational services at the expense of a marginal decrease in subsidies for higher education will yield a marginal welfare improvement. Finally, in the third essay a sample of pooled cross-sectional data for state governments in Mexico, from 1996 to 1999, is used to show that federal non-matching grants for basic education appear to have a large stimulative effect on state public expenditures in education, a result consistent with the "flypaper" effect literature. A model of local fiscal response is used to further analyze the impact of educational grants on state educational expenditures by decomposing the overall effect of grants into income and price components. The results suggest that non-matching educational grants are effectively perceived by local bureaucrats as a pure price reduction for state expenditures on education.

This dissertation explores two important issues in the determination of U.S. airline fares: inflation and market power. The first essay deals with the accurate measurement of inflation in the U.S. airline industry by calculating a quality adjusted price index for airfares. This calculation is achieved via an hedonic regression including relevant quality characteristics as well as time dummies. This new price index is compared with the index currently used by the BLS and reasons why the two indices diverge are discussed. Suggestions for a revision of the BLS practices are provided as well as data protocols for its implementation. The second paper examines how market power affects the percentage that a carrier can charge above marginal cost. DOT's DB1A data set (1979--1992) and the DOT's form 41/T300 cost and production data are used to construct the percentage markup in price above marginal cost. This paper then examines how the percentage markup is affected by a number of market variables using reduced form methods. The results indicate that an increase in the Herfindahl Index, leads to increases in the Lerner index for markets with a dominant pair of firms. Airlines that have significant sales in other markets have a higher markup than other airlines and, finally, code-sharing has an insignificant, impact on a carriers' price-cost margins. The third paper extends the analysis of the second paper by formally testing whether particular routes can be classified as competitive, Cournot oligopolistic, or collusive. Again, using DOT's DB1A data set and DOT's form 41/T300 cost and production data set, a model of demand is jointly estimated with the first order conditions for profit maximization (which vary according to market structure). These models are then formally tested using a non-nested likelihood ratio test to determine which market structure dominates. The results indicate that of 3141 routes, 436 are collusive, 1852 are competitive and 838 are Cournot oligopolistic. Collusive routes are naturally monopolistic routes in the sense that carriers would be driven from the market by large economic losses were they forced to compete.

This study focuses on two potential problems that often arise in the discussions of the feasibility of consumption tax reform: (1) the potential negative effect of a consumption tax reform on the value of owner-occupied housing, and (2) the tendency of such a reform to impose a one-time windfall loss on the owners of existing capital other than owner-occupied housing. The results suggest that the reform-induced one-time windfall tax on the owners of existing assets tends to be overstated in models that do not explicitly account for owner-occupied housing. The study also suggests that the potential decline in the value of owner-occupied housing could be significant, approximately 10 percent of the total value of owner-occupied housing, immediately after reform. However, the value of owner-occupied housing is likely to rebound during the transition, resulting in significant increases in the value of owner-occupied housing in the long run.