Theses and Dissertations - Department of Economics, Finance & Legal Studies

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Browsing Theses and Dissertations - Department of Economics, Finance & Legal Studies by Subject "Economics, General"

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    The economic implications of the prospective Free Trade Agreement between the United States and Egypt
    (University of Alabama Libraries, 2010) El-Karaksy, Hoda; Pecorino, Paul; University of Alabama Tuscaloosa
    Abstract Egypt is a fairly large country with a struggling economy, like many others in the region. An improved economic performance in both Egypt and other countries in North Africa and the Middle East has the potential to raise the living standards of millions of people; this in turn could improve the region's political climate. Understanding how factors such as trade policy can affect Egypt is important for policy decisions in the US and Egypt. This issue is thus investigated in three essays that quantify the impact of a prospective bilateral Free Trade Agreement (FTA) between Egypt and the United States (US). In the first essay, I provide an econometric estimate of the effects of accessing the US market as well as the effects of Egyptian institutional quality on trade. I apply the gravity model to Egypt's trade flows for 2004 and find that the FTA could increase aggregate exports to the US between 140 and 157%. In the second essay, I examine the effects of participation in the FTA on the inward Foreign Direct Investment (FDI) to Egypt from the US and the rest of the world. I estimate gravity models of bilateral investment for 2005 and find evidence that this prospective FTA would be associated with a reduction of inward FDI to Egypt between 28% and 34% of the 2005 level. In the third essay, I investigate the current debate over US aid to Egypt, to identify whether participation in an FTA would be a complement or a substitute to US foreign aid. The analysis is based on a country-pair foreign aid difference regression model for 1980 and the years 2004 and 2007. The empirical evidence supports the complementary relationship between US foreign aid and this prospective FTA: The FTA would lead to increased foreign aid from the US to Egypt.
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    Immigration, income inequality and stochastic dominance
    (University of Alabama Libraries, 2009) Yaya, Mehmet Erdem; Hoover, Gary Allen; University of Alabama Tuscaloosa
    Income inequality and immigration are two important issues with welfare and policy implications which have long been debated across the political spectrum. This dissertation ventures to shed light on some of the important questions related to income inequality and immigration, such as: What is the current level of inequality among immigrant cohorts; what are the determinants of income inequality of immigrants in the United States; how does the income inequality of immigrants change over time; and what is the impact of immigration on the income distribution of the United States? A cross-sectional regression analysis indicates that the variation in income inequality among immigrant cohorts can be explained by a wide range of variables such as median income, education, age, gender, deprivation, geographical dummies, and visa status. Moreover, the analysis demonstrates that immigrant cohorts exhibit substantial progression in their income inequality over time. The results suggest that the initial level of inequality of recent immigrants in comparison to the U.S. is the most important factor explaining the variation in inequality dynamics. More precisely, immigrant cohorts that have inequality that is remarkably different than the host country's inequality exhibit a faster improvement in equality and they follow a more rapid convergence path to the host country's inequality. Finally, the counterfactual effects of immigrants are investigated by decomposing the surveyed sample of more than three million respondents into natives and immigrants. Income inequality of the population is then calculated in the presence and in the absence of each immigrant cohort. The difference between these figures is presented as the distributional effects of immigrants on U.S. income inequality. The results are striking. Even after controlling for the size of the immigrant cohorts, several other factors are found to be significant for the counterfactual effects of immigrants. The immigrant cohorts that have very low and very high income compared to the U.S. average income have disequalizing effects. The findings of this dissertation provide essential information to policymakers. Based on these findings, immigrants can better be evaluated and immigration policy can be redesigned.
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    Three essays on the Taylor curve
    (University of Alabama Libraries, 2010) Olson, Eric David; Enders, Walter; University of Alabama Tuscaloosa
    This dissertation contains three essays regarding the Taylor curve. Taylor (1979) posited a permanent tradeoff between the volatility of output gap and the volatility of inflation. The first essay explores the empirical relationship between the volatility of inflation and the output gap. The last two essays implement optimal control techniques to construct Taylor curves for the United States and countries in the European Union. In the first essay, The Taylor curve necessitates that the correlation between the volatilities of inflation and the output gap be non-positive for optimal monetary policy. In essay one, the correlation between the second moments of inflation and the output gap are investigated using time-varying correlations, variance impulse response functions, and a time-varying parameter model. We find that macroeconomic performance is substantially better during time periods in which the correlation is negative as the Taylor curve suggests. In the second essay, we use data from 1875 examine the efficiency of U.S. monetary policy by measuring the orthogonal distance between the observed volatilities of the output gap and inflation from the Taylor curve. In addition, we identify time periods in which the variability of the U.S. economy changed by observing shifts in this efficiency frontier. We find that since 1940 the Taylor curve has trended towards the origin. Moreover, the cost of stabilizing inflation in terms of output gap volatility has steadily decreased through time. The Taylor curve also necessitates that the correlation between the volatilities of inflation and the output gap be non-positive for optimal monetary policy. In essay three, the efficiency a historical analysis of the European Monetary System and the monetary policy of European Central Bank (ECB) is conducted. Using data from European Union countries I measure the orthogonal distance between the observed volatilities of the output gap and inflation from their optimal levels. In addition, I identify time periods in which the variability of the E.U. economies changed by observing shifts in this efficiency frontier. I find in most EU countries, the Taylor curve has shifted towards the origin. In addition, stage II of the Maastricht Treaty was more instrumental in macroeconomic stabilization for EU countries than the beginning of ECB monetary policy. Policy by the ECB appears to be more conducive for France than any other countries in our sample.