Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 2004. / "June 2004." / Includes bibliographical references. / "Much as I hate to spoil my story by announcing its plot in advance, this paper is too long and involved to be clear otherwise. It deals with growth of investment and of capital stock subject to depreciation and periodic replacement. " E. Domar The above citation is taken from a piece, Depreciation Replacement and Growth, written by Evsey Domar in 1953. A few years later he will write Depreciation Replacement and Growth - and Fluctuations. The theme of the replacement of capital and its role for fluctuations is old. So why write paper at the beginning of the 21st century on this same subject? My answer is that this matter has become increasingly important in time. Never before have pieces of productive assets been replaced at the pace that firms today renew their computers and related equipment. This has caused a dramatic shift in the nature of depreciation: from an exogenous to an endogenous phenomenon. The first two essays of this thesis focus on the acceleration of replacement and its consequences for the propagation of nominal shocks in a neoclassical economy. To paraphrase Domar it deals with fluctuations of investment and of capital stock subject to depreciation and endogenous replacement. In the first essay I document the extent of the acceleration in replacement that the US economy has experienced in the last three decades and derive a few implications for the investment behavior of firms in a partial equilibrium setup. The main result is that firms can now respond to demand shifts by postponing or accelerating the replacement of their capital stock. / (cont.) The second essay takes the analysis to general equilibrium and suggests that changes in the money supply have become a less powerful instrument in stimulating aggregate investment relative to aggregate consumption.The third essay:is not directly related to depreciation but is an empirical investigation on the sources of economic fluctuations. Again the theme does not appear to be...fresh. Still the academic consensus is far from being unanimous on such an old question. The approach taken in this last essay follows from a note by Olivier Blanchard in his introductory Macroeconomics class notes. It consists in identifying the sources of fluctuations at a disaggregated level and investigate which of the different sources generate comovements that sum up to aggregate fluctuations. The main results are the shocks that aggregate into the aggregate source of fluctuations are neither technological nor restructuring shocks. / by Francesco Franco. / Ph.D.

Thesis: Ph. D., Massachusetts Institute of Technology, Department of Economics, 2018. / This electronic version was submitted by the student author. The certified thesis is available in the Institute Archives and Special Collections. / Cataloged student-submitted from PDF version of thesis. Page 263 blank. / Includes bibliographical references (pages 249-262). / This thesis comprises four essays in development economics and political economy, with a hint of behavioral economics. The first two chapters explore the effects of integration in two different settings: caste in India, and politics in Iceland. In the first chapter, I explore whether the effects of caste integration depend on whether such integration is collaborative or adversarial. To do so, I recruited 1,261 young Indian men from different castes and randomly assigned them either to participate in month-long cricket leagues or to serve as a control group. Players faced variation in collaborative contact, through random assignment to homogeneous-caste or mixed-caste teams, and adversarial contact, through random assignment of opponents. Collaborative contact reduces discrimination, leading to more cross-caste friendships and 33% less own-caste favoritism when voting to allocate cricket rewards. These effects have efficiency consequences, increasing both the quality of teammates chosen for a future match, and cross-caste trade and payouts in a real-stakes trading exercise. In contrast, adversarial contact generally has no, or even harmful, effects. Together this chapter shows that the economic effects of integration depend on the type of contact. The second chapter (co-authored with Donghee Jo) explores whether physical integration of politicians can affect political polarization in Iceland. We tackle this question by exploiting random seating in Iceland's national Parliament. Since almost all voting is along party lines, we use a text-based measure of language similarity to proxy for the similarity of beliefs between any two politicians. Using this measure, we find an in-coalition effect: language similarity is greater for two politicians that share the same political coalition (government coalition or opposition) than for two politicians that do not, suggesting that the measure captures meaningful partisan differences in language. Next, we find that when two MPs randomly sit next to each other, their language similarity in the next parliamentary session (when no longer sitting together) is significantly higher, an effect that is roughly 16 to 25 percent of the size of the in-coalition effect. The persistence of effects suggests that politicians are learning from their neighbors, not just facing transient social pressure. However, this learning does not reflect the exchange of ideas "across the aisle". The effects are large for neighbors in the same coalition group, at 29 to 53 percent of the in-coalition effect, with no evidence of learning from neighbors in the other group. Based on this evidence, integration of legislative chambers would likely slow down, but not prevent, the ingroup homogenization of political language. The third chapter (co-authored with Madeline McKelway) uses a field experiment to understand whether barriers to spousal communication could explain low female labor force participation in India. For this chapter, we partnered with India's largest carpet manufacturer to offer employment opportunities to 495 married women. Gender differences in preferences meant there was an intra-household tension: women were often interested in working outside of the home, while their husbands opposed the idea. We experimentally varied how the job opportunity was presented to couples. To test for the effects of information, and the incentives of husbands to withhold it, we randomized whether enrollment tickets and job information were given to the women or to their husbands. For the nontargeted spouse, we cross-randomized whether they were informed about the job opportunity, giving variation in whether husbands had plausible deniability. To test for the importance of communication, some couples received the ticket and information together, with a chance to discuss the job. Overall, enrollment was low at 17%. Information was not a barrier to enrollment - providing women with information about the opportunity had no effect because husbands did not strategically withhold information, despite having plausible deniability. Surprisingly, we find that having couples discuss the opportunity together decreased enrollment, by 6 to 9 percentage points. We conclude that policymakers should tread with care: intra-household communication may not be easily manipulated without unintended consequences for decision-making. In the fourth and final chapter, I study the effects of early exposure on the careers of UK politicians. To do so, I exploit a natural randomized experiment in the UK Parliament. Each year, hundreds of Members of Parliament (MPs) enter a lottery for the opportunity to legislate. Using archival data from 1950 to 1990 I find that high-ranked winners are 34% (8 p.p.) more likely to ever become ministers and hold 28% (0.4) more political offices over their careers. Three pieces of evidence suggest that the key mechanism is exposure, as opposed to learning-by-doing or political survival. First, the effect of winning is larger for women, an under-represented group for which priors are likely to be more diffuse. Second, the effect is smaller if there are randomly more winners from the same party in the same year, dividing the attention of senior party members. Third, the effect is smaller when the MP has won before, consistent with diminishing returns to signals. These results suggest that early exposure can have long-run career effects even in information-rich political settings. / by Matt Lowe. / Ph. D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 2009. / Includes bibliographical references (p. 107-111). / This thesis explores how health insurance affects the decisions that individuals make. The first chapter studies the effect of insurance on health care consumption. Nearly 10 percent of teenagers become ineligible for their families' health insurance coverage on their nineteenth birthdays. Due to the federal Emergency Medical Treatment and Active Labor Act, however, they do not lose access to free emergency room care. I develop a straightforward theoretical framework to understand the implications of insurance transitions at age nineteen. I then develop an empirical framework that exploits the discontinuity in health insurance at age nineteen. Using a unique database of 15 million hospital discharge records, I find that Emergency Room (ER) usage rises discontinuously at age nineteen, particularly for minorities and residents of low-income zip codes. As predicted by the theoretical framework, the jump in ER utilization at age nineteen is disproportionately driven by ailments that physicians classify as inappropriate for ER care. I also find suggestive evidence that health care expenditures outside of the ER decline. A large share of the increase in ER utilization at age nineteen takes the form of uncompensated care, the cost of which is born by third parties. These findings constitute some of the first evidence on how the incentives faced by the uninsured affect medical expenditure. The second chapter, written jointly with Matthew Notowidigdo, studies the contribution of medical costs in the decision to declare bankruptcy. Consumer bankruptcies increased eighty-seven percent in the 1990s. / (cont.) By the end of the decade, more than one percent of American households were declaring bankruptcy in any given year. Anecdotal evidence and several observational studies suggest that out-of-pocket medical costs are pivotal in a large fraction of consumer bankruptcy declarations. In this paper, we use variation in Medicaid eligibility to assess the contribution of medical costs to household bankruptcy risk. Using cross-state variation in Medicaid expansions from 1992 through 2002, we find that a 10 percentage point increase in Medicaid eligibility reduces the personal bankruptcy rate by 8.7 percent, with no evidence that business bankruptcies are similarly affected. We interpret our findings with a model in which health insurance substitutes for other forms of financial protection. We conclude with a calibration exercise that suggests that out-of-pocket medical costs are pivotal in roughly 26 percent of personal bankruptcies among low-income households. The third chapter studies how transitions in insurance status may affect the consumption of health care. Transitions from one insurance program to another-or from insured status to uninsured status-are common. How these transitions affect individuals depends, in part, on whether consumers anticipate the loss of insurance. Potentially, if consumers are sufficiently forward-looking, they may "stock up" on health care before losing coverage. / (cont.) This paper studies the transition in insurance status as teenagers move from their family's coverage to uninsured status or other insurance plans. I find no evidence that teenagers stock up on medical care before coverage ends, but rather a general decrease in health care consumption in the last month of coverage. / by Tal Gross. / Ph.D.

Massachusetts Institute of Technology. Dept. of Economics. Thesis. 1966. Ph.D. / Bibliography: leaves 258-262. / Ph.D.

Thesis (Ph.D.)--Massachusetts Institute of Technology, Dept. of Economics, 2002. / "June 2002." / Includes bibliographical references. / This thesis is a collection of three essays analyzing the economic effects of taxation, market structure, and the regulatory environment on financial markets, focusing in particular on financial intermediaries such as banks and mutual funds. The first chapter uses the unprecedented changes in the degree of competition in local banking markets that occurred between 1980 and 1994 to estimate the impact of market competition on the risk profile of commercial bank lending. There is evidence that increasing bank market power has been associated with reductions in the flow of bank capital to construction and land development loans, which are the highest-risk category of commercial bank loans. The magnitude of this effect is large: an increase in market concentration from the 25th to the 75th percentile is associated with a 20 percent drop in the share of bank lending going to construction loans. Robustness to a variety of control and instrumental variables strategies supports a causal interpretation of this empirical relationship. The second chapter focuses again on the role of market structure in commercial banking markets, this time focusing on the relationship between market structure and consumer borrowing. This chapter uses data from the 1983 Survey of Consumer Finances to test empirically the relationship between banking market concentration and households' self-reported measures of credit rationing and constraint. There is strong evidence that more concentrated markets have fewer constrained borrowers, a result consistent with the Petersen-Rajan (1995) model of credit markets. The third chapter, co-authored with Professor James Poterba, explores the relationship between the after-tax returns that taxable investors earn on equity mutual funds and the subsequent cash inflows to these funds. / (cont.) Previous studies have documented that funds with high pretax returns attract greater inflows. This chapter presents evidence, based on a large sample of retail equity mutual funds over the period 1993 to 1999, that after-tax returns have more explanatory power than pretax returns in explaining inflows. In addition, funds with large overhangs of unrealized capital gains experience smaller inflows, all else equal, than funds without such unrealized gains. / by Daniel Baird Bergstresser. / Ph.D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 1994. / Includes bibliographical references (p. 167-170). / by Ruth A. Judson. / Ph.D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 1998. / Includes bibliographical references (p. 77-78). / by Julian Christopher Jamison. / Ph.D.

Massachusetts Institute of Technology. Dept. of Economics. Thesis. 1973. Ph.D. / MICROFICHE COPY ALSO AVAILABLE IN DEWEY LIBRARY. / Vita. / Ph.D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 2011. / Cataloged from PDF version of thesis. / Includes bibliographical references (p. 177-184). / This thesis studies Kenyan households' use of savings accounts and malaria testing and treatment technologies. The first chapter studies whether or not married couples use savings accounts strategically. In the absence of commitment, the availability of a "private" savings technology (a device that is only accessible by a single owner) may incite individuals to take costly strategic savings action in order to manipulate the time path of consumption. This chapter presents a model that formalizes this idea and derives several testable theoretical implications. In particular, households where husbands and wives are well matched in terms of time preference should make greater use of joint (public) accounts, less use of individual (private) accounts, and make more efficient investment choices as compared to their poorly matched peers. The model informed the design of a field experiment where married couples in rural Kenya were given the opportunity to open joint and individual bank accounts at randomly assigned interest rates. The behavior of individuals in the experiment is inconsistent with ex-ante Pareto efficiency and a variety of alternative models of intrahousehold resource allocation, but consistent with the proposed model of strategic savings. Savings misallocation due to strategic behavior may be substantial: in the experiment poorly matched couples forgo at least 64 percent more interest than well matched couples. The second chapter studies the impact of reducing bank account transaction costs. Free ATM cards were offered to a randomly selected subset of newly opened formal bank accounts in Western Kenya. The ATM card reduced withdrawal fees by over 50 percent (from $0.78 to $0.38) and enabled account holders to make withdrawals from their accounts at any time of the day. The cards also enabled accounts to be accessed without the in-person verification of a national identity card. Targeting ATM cards to joint accounts and accounts owned by men substantially increased savings rates (by 39 percent) and average daily balances (by 16 percent) in the bank accounts. In contrast, the intervention had a negative impact when targeted to individual accounts owned by women. This gender difference appears to be driven by differences in bargaining power within the household: the positive treatment effect for men is concentrated in households where men have above median bargaining power, whereas the negative treatment effect for women is concentrated in households where women have below median bargaining power. The final chapter (co-authored with Jessica Cohen and Pascaline Dupas) uses data from a randomized controlled trial conducted with over 2,900 households in rural Kenya to study the tradeoffs between the affordability of effective antimalarials (ACTs) and overuse. We compare a 95-percent ACT subsidy (currently under consideration by the global health community) to an alternative policy regime that explicitly acknowledges the problem of overuse by providing access to a subsidized rapid diagnostic test for malaria (RDT) in tandem with subsidized ACTs. We find that ACT access increases by 60 percent in the presence of an ACT subsidy of 80 percent of more. Under the proposed 95-percent ACT subsidy, however, only 56 percent of those buying an ACT at the drug shop test positive for malaria. We show that targeting could be substantially increased (without compromising access) when the ACT subsidy is reduced to 80 percent but accompanied by an RDT subsidy. / by Simone Gabrielle Schaner. / Ph.D.

Thesis (Ph. D.)--Massachusetts Institute of Technology, Dept. of Economics, 2001. / Includes bibliographical references. / This thesis includes four essays on the macroeconomic effects of financial market imperfections. The first essay studies the incentives for banks that participate in an interbank market to keep a sufficient level of reserves. It presents a model where, in presence of imperfect insurance against bank-specific shocks, banks keep an inefficiently low ratio of reserves to deposits. A consequence of this is that the interest rate on the money market will fluctuate too much from a second-best perspective. It discusses the potential benefits and risks associated to central bank intervention, and highlights the complementarity between regulatory reserve requirements and stabilization of the interest rate. The second essay (joint with C. Hellwig) studies the ability of banks to issue liquid liabilities while holding only a fraction of their activities in liquid assets. We study the possibility of self-sustaining equilibria in which banks are prevented from abusing their issuing privilege by the threat of losing it in case of default. The third essay is a contribution to the empirics of precautionary savings and shows evidence of a decreasing relationship between household wealth and the variability of consumption expenditure. The evidence is consistent with the presence of a precautionary motive for wealth accumulation. The fourth essay (joint with F. Broner) shows that the time series of the spreads on emerging market bonds appears consistent with the view that international investors supplying funds to these countries are liquidity constrained at times of large price drops. / by Guido Lorenzoni. / Ph.D.