The present thesis contributes to the theoretical analysis of the human capital investment and participation decision of heterogeneous workers in the search and matching framework. Its aim is to characterise the equilibrium and to identify the efficiency. The first chapter of this thesis contributes to study equilibrium search and matching to consider the participation decision of heterogeneous workers who have different inherent ability level. The productivity investment decision is endogenous and wages are determined by the Nash bargain among participants. In steady-state equilibrium investment decision reveals the hold-up problem. Given overall labor market condition, equilibrium is determined by free entry condition, optimal productivity investment decision, the participation constraint plus the steady state conditions. In this model I also show that heterogeneity is not the cause of multiplicity. The second chapter utilises the previous analysis to identify those government policies that can achieve efficiency in an economy. I show that the number of labor market participants and job creation and productivity investment are inefficient owing to externalities resulting from participation decision, productivity investment and market tightness condition. Therefore, in my first best policy scenario, I find the government should subsidise training, tax labour market participation and subsidise job creation. The last chapter considers an integrated framework where social security benefits are chosen to induce optimal search by unemployed workers given the income tax structure imposed by the government. As tax policy distorts the willingness of workers to find employment, it provides a simple rule which identifies the link between optimal social security benefits paid and the tax system. Specifically in the case of a universal, linear income tax scheme, optimal social security benefits should be paid at a flat rate; i.e. all receive the same benefit level regardless of earnings which is the main contribution of the paper.

This thesis consists of three papers that investigate the labour market activity of women following a divorce and discuss the possible causes of divorce from theoretical and empirical perspectives. One of the consequences of divorce for women with dependent children who are not fully employed in labour market, is a major loss of income and decrease in their well-being. For the past decades more married women became active in labour market, however their employment choice remains an interesting question which has been broadly addressed in the literature. With a focus on British Households during 1991 to 2008, the first chapter of this dissertation studies the employment rate among women who experience divorce. At the intensive margin, findings of this chapter suggest that labour supply increases after divorce. At the extensive margin the results suggest that probability of working part time decreases for women who do not hold a university degree whereas for women with a higher education degree, the probability of full time employment increases. The second chapter studies causes of divorce by focusing on Search and Matching theoretical framework. Despite a number of studies that suggest re partnering is the driving force of divorce, the �findings of this chapter do not agree with the prediction of such models and instead argues that odds of separation are higher among couples in which both spouses have low productivity levels. Continuing the discussion of previous chapter, chapter 3 reviews the welfare system of United Kingdom for the period of 1991 to 2008 and investigates the effect of tax and benefit system on probability of marital dissolution. The results of this chapter suggest that increase in benefit entitlement after divorce, to some extent explains the observed rate of marital dissolution specially among low productive households.

The thesis consists of three self-contained essays. These are Business Cycles in ASEAN-5 Countries (Chapter 1), Nowcasting Indonesian Economy (Chapter 2), and Data Revisions in Indonesia (Chapter 3). In the first chapter, I investigate the extent to which business cycles coincide in five ASEAN (Association of Southeast Asian Nations) countries. I employ unobserved component models to decompose output into its trend and cycle. I find that the business cycles co-movements are high for some pairs of countries. However, the magnitude of the business cycles and the source of output fluctuations are different. The findings suggest that these countries may not yet be ready to step further beyond the formation of ASEAN Economic Community (AEC) by 2015 to a monetary union. In the second chapter, I exploit monthly indicators to forecast the current quarter Indonesian output growth (nowcast). In particular, I employ three nowcasting approaches; mixed-frequency factor model, bridging equation and MIDAS (MIxed DAta Sampling) regression, and evaluate their performance. The nowcasts are computed and evaluated on the basis of real-time and latest available data. In general, the encompassing tests recommend that neither mixed-factor model nowcasts nor MIDAS nowcasts encompass the other. Hence, I adopt a nowcast combination approach and find that the combination increases the accuracy relative to individual nowcasts. The last chapter focuses on real-time data issues. I construct a real-time data set for Indonesia, investigate the nature of data revisions, and assess the impact of the revisions on real-time output gap estimates and through this, the effect on monetary policy. The results suggest that the preliminary data is not an efficient forecast of the revised (final) value. By comparing the output gap estimates, extracted using the Hodrick-Prescott filter to both preliminary and final data, I find that output gap revisions is mainly due to data revisions, rather than due to one-sided nature of the filter. Further, I find that the potential impact of data revisions on monetary policy, measured by the difference between policy rate recommendations based on first released and revised data, can be substantial. Finally, I show that by taking into account data revisions, the reliability of real-time output gap estimates can be improved, and hence policy regret may be reduced.

The estimation of demand systems is a key activity in empirical economics. The most prominent use of demand estimates relates to the computation of social welfare changes due to modifications in the economic environment. Examples include the introduction of a new tax (Griffith et al. 2010), a change in the regulation of an industry (Crawford & Yurukoglu, 2011), the introduction of a new product (Petrin, 2002), mergers between companies (Nevo, 2000, 2001), the legalization of soft drugs (Jacobi & Sovinsky, 2012). Any sort of welfare exercise, essential for policy making, would require—ideally—perfect knowledge of the economy; in particular individuals’ preferences. In practice, individuals’ preferences cannot be directly observed and have to be estimated. Economic policies based on biased demand estimates may prove rather ineffective or, even worse, counterproductive. In the practice of demand estimation, the empirical literature has prevalently favoured the use of discrete choice models. An individual is represented by a preference relation and, under the assumption of preference maximization, chooses one alternative among a finite collection of them, the choice set. It has been commonly assumed choice set homogeneity among individuals: that is, each decision-maker faces the same set of alternatives. This is a strong assumption that is likely violated in many settings: different individuals involved in apparently similar choice situations do face heterogeneous choice sets. Unfortunately, the very presence of choice set heterogeneity raises new challenges on the way of consistent estimation of consumers’ preferences, i.e., meaningful welfare analyses.

The subject of inquiry of my research is the socio-economic restructuring of the European Union (EU). The project provides an innovative interdisciplinary intervention that uses the canonical texts of Karl Polanyi and the insights from the burgeoning Polanyian scholarship in an attempt to explain the morphology of the contradictions that underpin the EU integration project. The starting point of analysis lies in the recent debates instigated by the critical turn in the EU studies scholarship that tries to shift the focus from the causes of the EU integration to its consequences. My original contribution to the scholarship consists of providing a Polanyian critique of the EU political economy. The ever-growing Polanyian scholarship proves a formidable alternative to the already established Gramscian and Marxist routes of critical inquiry. Based on a close reading of Polanyi and the wider Polanyian scholarship the thesis proposes a new take on the established practice of using Polanyi’s concept of dis/embeddedness as an all-or-nothing phenomenon and instead suggests conceptualising the social reality in terms of tendencies. The lenses through which I evaluate the EU predicament consist of the following conceptual vocabulary: a) dis/embedding tendencies b) habitation and improvement, and c) the rate of change. The main puzzle that the project endeavours to explain is the interplay between the disembedding and the embedding tendencies in the EU. The examination of the disembedding tendency consists of excavating the self-regulating market logic inscribed into the EU edifice by analysing the development across three policy fields: competition, finance and education. The findings suggest that the disembedding tendency is manifested not only in the monetary orthodoxy inscribed in the Economic and Monetary Union since the Maastricht Treaty and further reified during the Great Recession, but also in the privatisation, depoliticisation and commodification dynamics evident in the three policy domains discussed in the thesis. Given Polanyi’s observation that the embedding tendency is immanent to the disembedding one, the second empirical endeavour consists of investigating the surge of socio-environmental measures. Notwithstanding the institutional divergences between the social and environmental policy domains, the appraisal of the policy output demonstrates that the embedding tendency is characterised by the same marketisation dynamic that we see in the disembedding one. This thesis recuperates a critical Polanyian reading that highlights the disruptive dialectics between the disembedding tendency and the seemingly protective measures predicated on fictitious commodification. In addition to unearthing the structural bias towards the market form that constitutes the two tendencies, this project develops a normative critique of the market society, based on Polanyi’s ferocious appraisal of neoclassical economics’ formal understanding of the economy, by problematising the extension of the economising rationality within previously unaffected spheres.

This thesis examines the behaviour of a number of macro-economic models starting initially with a simple linear formulation which is then developed systematically to embrace an increasing degree of economic sophistication and consequent mathematical complexity. The study is essentially an exercise in mathematical economics as opposed to econometrics, (the object being to explain behavioural characteristics rather than to extrapolate forecasts) and the techniques employed are those of systems dynamics. Following the introductory remarks and definitions of Chapter 1, Chapter 2 deals exclusively with continuous linear models and their solutions, which permit a number of limited conclusions to be drawn concerning the rates of growth of certain key variables such as investment and output. However, in the presence of disturbances, exponential growth is merely a trend about which fluctuations will occur on account of the dynamic adjustment mechanisms which then come into play. Two such mechanisms are considered in the context of a number of further models in Chapter 3, which are designed in such a way as to permit at least approximate analytic solutions. From this point in the thesis more detailed economic considerations (in particular the concept of a vintage technology) lead to the formulation of differential-delay equation models of a class which has hitherto received little attention in the literature. The basic models of this type are formulated in Chapter 4 which also examines the existence and uniqueness of equilibrium growth solutions. Having determined such solutions, Chapter 5 is concerned with the application of a number of standard control theory techniques as a means of establishing local stability conditions for equilibrium growth. Chapter 6 is concerned generally with the digital computer solution of differential-delay equations and specifically with the simulation of an advanced national economy as represented by such a system of equations. A number of interesting numerical problems arise in the simulation for which data relating to the United Kingdom is used. Some results are presented and a full documentation of the simulation programs is given in the appendix.

In open economies, external factors have an important effect on real and nominal macroeconomic variables, and hence on economic welfare. For example, external factors such as the degree of trade openness and the level and variability of the exchange rate are important for the determination of domestic investment and domestic prices. Several aspects of the external sector and their impact on the domestic economy form the main themes that are investigated in this thesis of four main empirical chapters. Firstly, we investigate the determinants of business investment for a panel of emerging economies. We take an open economy framework incorporating the exchange rate as an important factor in a simple stylised model. To test the model implications we utilise sectoral industry data and endeavour to take account of panel heterogeneity and endogeneity in our estimation. In the empirical section of this chapter a rise in the exchange rate, a domestic currency appreciation, was found to be positively related to investment for some of the countries. We posit that this is due to the importance of the cost channel for firms. In the next chapter, we examine the impact of exchange rate volatility on sectoral investment for emerging economies. Volatile exchange rates make investment decisions in open economies difficult due to uncertainty. Our approach is robust to four different measures of exchange rate volatility. The empirical results show that permanent exchange rate volatility measure has a strong positive impact on domestic investment in the long run, which could possibly imply investors in small open economies with better financial markets are able to diversify risks. Volatility may also be more important than the level of the exchange for investment. The next chapter in this Thesis on Open Emerging Market Economies considers the extent of exchange rate pass through to import prices. In a stylized model, import prices are dependent upon the exchange rate, marginal cost and the mark up. Our results show that the average response of import prices to movements in the exchange rate is negative and incomplete. However, once we take account of exchange rate asymmetry, important differences such as market share and mark-ups exist between Latin America and Asia. The fifth chapter, and final main empirical chapter, investigates whether increased trade openness dampens relative producer prices in a panel of Indian manufacturing sector. We purport that the import share, average labour productivity and the mark-up are the key determinants of sectoral wholesale relative producer prices. After accounting for endogeneity, our main result is that, there is some evidence that rise in import share decreases the relative producer prices, but only feebly influences the decline across the sectors in India.

This study investigates FDI versus export decisions under oligopoly in the trade liberalization, and examines how trade liberalization affects welfares in the Hotelling model of differentiated Bertrand duopoly. It uses a four-firm two-country Cournot oligopoly model to resolve the conflict between the theory, which predicts that a reduction in trade costs discourages FDI, and the empirical evidence, which is that trade liberalisation has led to an increase in FDI, and shows that both FDI and exporting can co-exist in the same market, in line with recent trends. In the static game, a reduction in trade costs causes a decrease in FDI, and the outcomes are often a prisoners’ dilemma where the firms are worse off when they all undertake FDI than when all firms from both markets choose to export. To avoid it, firms can tacitly collude over their FDI versus export decisions when the game is infinitely-repeated. Then a reduction in trade costs may lead firms to switch from exporting to undertaking FDI when trade costs are sufficiently high. The robustness of the analysis is checked by using the constant elasticity demand function. A two-country Hotelling model of spartial duopoly is developed to consider the welfare effects of trade liberalisation. It is shown that gains from trade occur when products are highly differentiated, and losses from trade occur when products are close substitutes, as the positive effect of more product choices overweighs the negative effect of the decreased home sales caused by trade liberalization when products are highly differentiated. This contrasts to Fujiwara (2009) who prove that there are always losses from trade in the Hotelling model. The reason behind is that the kinked demand market structure is often ignored, and by considering the full features of the Hotelling model, welfare effects depend on product differentiation and trade costs.

There is increased public pressure for governments to be more accountable for their actions. A particular area of concern relates to the trend of many governments to delegate responsibility for certain public services to agencies. This thesis develops a reporting model that can be used by public sector agencies to demonstrate accountability to their stakeholders. The model encompasses three main strands of accountability: financial reporting,· performance outcome reporting and stakeholder consultation. Stakeholders are identified using Clarkson's (1984) primary/secondary typology and are further delineated through Mitchell, Agle and Wood's (1997) salience framework. The prominence of financial reporting in a stakeholder reporting model is examined through a discussion of the application of commercial versus public sector accounting standards. Non-financial performance outcome reporting is a fundamental element of a stakeholder accountability model. Stewart's (1994) Ladder of Accountability is utilized to identify the various aspects of accountability: probity/legality, process, performance, programme and policy. An important element of accountability centers on stakeholder consultation and involvement. The thesis employs Friedman and Miles' (2006) Ladder of Stakeholder Management and Engagement as an approach not only to elicit feedback from stakeholders, but to truly engage them in the accountability process. This research study examines how the conceptual frameworks, convergence of accounting standards, designation of a government orgaruzation as a government business enterprise (GBE) and the introduction of accountability legislation impacts the ability of an agency to adequately demonstrate accountability to its stakeholders. This study uses the case of the workers' compensation agency in the Province of Newfoundland, Canada to develop a stakeholder accountability model which addresses the needs of stakeholders. This is one of the oldest public sector agencies in Newfoundland, and it operates at arm's length from government owing to its legislative right to levy its own revenue to fund programs. Further, as it is a mandatory system for the funders (employers) and beneficiaries (injured workers), arguably it should be held to a higher level of accountability.

This thesis consists of two essays on economic fluctuations. The first essay (Chapter 2) explores the role of expectations in economic fluctuations. It does so within a cashless, monetary, and competitive economy featuring producers and consumers/workers with asymmetric information. Only workers observe current productivity and hence they perfectly anticipate prices, whereas all agents observe a noisy signal about long-run productivity. Information asymmetries imply that monetary policy and consumers' expectations have real effects. Non-fundamental, purely expectational shocks are conventionally thought of as demand shocks. While this remains a possibility, expectational shocks can also have the characteristics of supply shocks: if positive, they increase output and employment, and lower in flation. Whether expectational shocks manifest themselves as demand or supply shocks depends on the monetary policy pursued. Forward-looking policies generate multiple equilibria in which the role of consumers' expectations is arbitrary. Optimal policies restore the complete information equilibrium. They do so by manipulating prices so that producers correctly anticipate their revenue despite their uncertainty about current productivity. I design targets for forward-looking interest-rate rules which restore the complete information equilibrium for any policy parameters. In flation stabilization per se is typically suboptimal as it can at best eliminate uncertainty arising through prices. This offers a motivation for the Dual Mandate of central banks. The second essay (Chapter 3) shows that implementation cycles, introduced in Shleifer (1986) , are possible in the presence of capital and the absence of borrowing constraints. In a two-sector economy, patents on cost-saving ideas which take the form of investment-specific technological change arrive exogenously at a sequential, perfectly smooth rate: in odd-numbered periods, they reach a firm producing capital of type 1 and, in the even-numbered ones, a firm producing capital of type 2 . Firms can make profits out of these once. While the immediate appropriation (henceforth, "implementation") of patents is always a possibility, for accordingly formed expectations, firms can alternatively implement their patents simultaneously. This is because investment-specific technological change naturally introduces a one-period discrepancy between the time firms implement their patents and the time they receive revenue out of them. The implementation of a patent implies a sharp fall in investment which, in turn, causes a boom in current consumption. As a result, the consumption boom takes place before the wealth boom. This not only eliminates the need to smooth consumption away from the wealth boom to the period before it as conjectured, but, further, it implies that the interest rate paid when revenue is realized -and wealth expands- falls. Consequently, present discounted profits rise and implementation cycles can become a possibility. In a policy extension, I show that prolonging patent rights to two periods rules out "implementation cycles" and may lead to a welfare improvement.