FE475 - Research Seminar, Spring '08
Instructor: Assistant Professor Ryan R. Brady
Description:
The reputation of the Federal Reserve and especially of its chairman, Ben S. Bernanke is regularly scrutinized. This has been never more apparent with the recent downturn in the housing market and associated “sub-prime” mortgage meltdown. All want to know, how will Bernanke and Company respond to these events? Of course, implicit in that query is the following assumption: the Fed had the power to correct such economic wrongs with their interest rate policy. The leaves one to ask: Is this true?
In this seminar, we will demystify the mythical power of the Federal Reserve in conducting monetary policy. Students will first learn the economic theories motivating monetary policy, including current models of policy formation; how the Federal Reserve sets policy and formulates its goals and objectives; and how monetary policy is thought to affect the macroeconomy, known as the transmission mechanism of monetary policy. Particular attention will be paid to the past successes and failures of the Federal Reserve in conducting monetary policy, including “Great Inflation” of the 1970s and the “Great Moderation” of the 1990s. Following the review of monetary theory and practice, students will write a research paper of their choosing. Possible topics could include the effect of monetary policy on financial markets and asset prices, such as stock and housing prices; or the effect of monetary policy on inflation, unemployment, consumption behavior or firm behavior.
CENTRAL BANKING
Instructor: Associate Professor Brendan Cunningham
Description:
Over time, the objectives of central banks have proven to be periodically controversial and frequently of poor design. Recent years have witnessed a far deeper understanding of the appropriate goals of central banks and the tools by which monetary policy can achieve its ends. Associated with the improvement in the science underlying monetary policy are a number of examples of policy success, such as the European adoption of a common currency and the American disinflation of the 1980's. Equally noteworthy is the extent to which the impact of potentially calamitous financial system shocks (such as the Y2K bug and the East Asian crisis) has, in part, been reduced through highly effective management of liquidity by central banks.
This seminar will begin with an overview of financial systems, including topics such as direct financial markets and indirect financial intermediaries. We will then explore the role of public policy in financial markets through an exploration of the conduct and objectives of central banks. Particular attention will be paid to international and domestic evidence concerning monetary policy's influence on growth, inflation, and exchange rates as well as topics of credibility, monetary policy rules, the political economy of monetary policy, and inflation targeting. Subsequently, we will consider the impact of central banks on private banks in order to ascertain the nature of the monetary transmission mechanism. Finally, we will investigate the role of private banks in generating economic growth and how this role has evolved in light of potential alterations to the banking regulatory framework. Once this range of topics has been explored, seminar participants will have an opportunity to choose a research focus which they find uniquely interesting and further investigate relevant existing research and empirical evidence.
THE PAST, PRESENT, AND FUTURE OF THE DEFENSE INDUSTRY
Instructor: Visiting Professor Victoria Greenfield (Crowe Chair)
Description:
Issues of industry and national defense have been interlinked – oftentimes contentiously – for centuries. Many of today’s issues echo those of other eras. Henry the VIII of England grappled with the choice between public and private arsenals. Contractors took supplies to the battlefield in the Revolutionary War. This seminar will provide an opportunity to delve into the past, present, and future of the defense industry, using knowledge and skills gained in other economics courses, potentially including, but not limited to, microeconomics, economic statistics, and financial economics. Research topics might include the evolution of the defense industry and its responses to changing domestic and international policies; the impact of budgetary announcements on firms’ investment decisions; the relationship between the performance of the defense industry and broader market trends; the role of services in military procurement; and the potential industry impact of a shift from platform-centric to net-centric warfare.
The seminar will start with an overview of defense industry concepts, an introduction to relevant literature, data, and methods, and a discussion of the key elements of a successful theoretically-grounded, quantitatively-oriented research paper. The rest of the semester will be spent on individual research papers and periodic discussions of research challenges and findings. Students are required to submit weekly written progress reports and make a presentation upon completion of their research papers.
GEOGRAPHIC INFORMATION SYSTEMS AND ECONOMIC ANALYSIS
Instructor: Adjunct Professor Hazelton
Description:
The spatial dimension of the economy, where economic activity takes place and why, is almost always ignored in economic modeling in part because of the difficulty in addressing calculation problems. Using GIS, we will be able to easily isolate geographic areas in the US to analyze. Class time will be divided between time spent on the computer learning to use GIS to analyze and present economic data, and discussing the areas of economics that would benefit from this kind of analysis, such as economic geography, urban economics, and industrial location.
For their capstone, students will use MICRODEM, a freeware GIS program developed at the Naval Academy, to create a database of census data at the most detailed levels for a multivariate regression of their design. The kinds of data available for analysis include housing, income, demographics, work related, and more. As part of their final paper, students will be required to create maps presenting their results or illustrating input data.
INCOME INEQUALITY, POVERTY, AND WELFARE REFORM
Instructor:
Description:The 1990s have been referred to as the “fabulous decade.” During this time the U.S. economy experienced greater growth, lower unemployment, and lower inflation than any other industrial nations. Gross Domestic Product (GDP) increased 32 percent, unemployment dropped below 5 percent, and inflation averaged around 4 percent. In addition, Federal deficit spending turned into a budget surplus. Economic theory suggests growth will cure poverty, that “a rising tide will lift all boats.” However, during this time the evidence suggests recent economic tides have flowed uphill, primarily helping those who were already on top. Clearly, not only is there a need for a better understanding of the causes, consequences, and cures for inequality, but also an understanding of the standard practices and procedures used to measure income inequality. Moreover, during the 1990s the U.S. fundamentally changes the structure of the public assistance program to low-income families. Passage and implementation of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) led to a higher percentage of welfare recipients seeking employment than during any other time in the prior history of the 61 year old program that it replaced – the Aid to Families with Dependent Children (AFDC) program. However, federal and state governments are not guaranteeing jobs for those newly off the welfare rolls. Even during periods of continued economic growth and prosperity, many former welfare recipients had difficulty securing jobs that allowed them to adequately support themselves and their families. Therefore, to better understand which former recipients are at risk of remaining poor, it is important to understand the characteristics of these individuals, consequences and cures of poverty, as well as how we measure poverty. The notions of income inequality, poverty, and welfare reform are interrelated topics. In this seminar students will be introduced to these topics using survey data collected by the U.S. Census Bureau; the Current Population Survey (CPS), March Supplement, The Survey of Income and Program Participation 1996 panel, and the Survey of Program Dynamics 3rd longitudinal file.
Expectation of Seminar Students: This will be a hands-on course and students are expected to be able to apply economic principals and logic to effectively summarize data using descriptive statistics and graphs, as well as having an introductory understanding of multivariate statistical methods for data analysis, such as simple regression analysis.
INTERNATIONAL FINANCIAL ISSUES IN EMERGING ECONOMIES
Instructor: Visiting Professor Noel
Description:
A study of transition from centrally planned to market economy, with an emphasis on capital market creation, evolution of monetary policy, exchange rate regime and private ownership structure. The course will discuss the development of corporate finance strategies and instruments, and capital market finance including equities, bonds, and asset-backed securitization. Theoretical discussion will be supplemented by case studies based on the experiences of market participants in several transition countries of Central and Eastern Europe including Poland, Hungary and the former Soviet Union.
Instructor: Assistant Professor Ahmed S. Rahman
Description
The emerging world now accounts for over half of global economic output (measured in purchasing-power parity). And a barrage of statistics shows economic power shifting away for the “developed” economics (mainly North America, Western Europe, Japan and Australia) towards emerging ones, especially in Asia. No social or economic change this big takes place without friction, especially as nations interact with each other more and more. As such, “globalization” has become a term that evokes anxiety and fear among many. But it is important to know that globalization is not a zero-sum game, and as our world grows more interdependent, growth and globalization become ever-more inextricably linked.
In this seminar, we will analyze this interaction between domestic economic growth and international forces. Students will first learn the economic theories of growth in a global context. Particular emphasis will be placed on the relationships between growth, international trade, institutions and political stability. Next students will learn how these variables are measured, and how cross-country data can be used to analyze the inter-relationships between these variables. Following the theoretical and empirical review of the subject, students will write an in-depth research paper on a related subject of their choosing.
Description:
Common property refers to property that lacks individual private ownership but for which the set of users is limited. Open access resources typically have a user set that is effectively unlimited. Examples include ocean fisheries, water sources, wildlife, forests, grazing lands, the earth’s atmosphere, outer space, and even government budgets. In a widely cited article, Garrett Hardin (1968) argues that lack of private property rights leads to a “tragedy of the commons”. That is, such resources lead to a social dilemma whereby each user seeks private gains from use and spreads the cost of their use across all users. This leads to overexploitation of the resource. This research seminar will examine historical and current common property and open access resource examples. In a well-written research paper, participants will be required to empirically investigate some aspect of a common property or open access resource problem of interest to them. Preferred field courses: FE431, Public Finance and/or FE345 Environmental Economics
ECONOMY-WIDE MODELING FOR TRADE POLICY ANALYSIS
Instructor: Professor Karen Thierfelder
Description:
Trade liberalization is controversial because it creates winners and losers. Within a country, some producers gain export markets while others face stiffer import competition. Some countries expect to gain from increased access to foreign markets following global trade liberalization, while other countries fear they are not sufficiently competitive to open their markets to free trade. The appropriate tool to address trade and tax reforms is computable general equilibrium (CGE) modeling. This type of model captures the interaction and competing interests of different actors in the in the economy. CGE models have become the state-of-the-art tool for trade and tax policy analysis. In this course, students will learn the data requirements, theory, and computer software applications for CGE models. Each student will build small-scale CGE model that they can use to address an economic policy question of interest to them. Questions might include: How does trade liberalization affect different sectors in an economy? How might potential productivity gains for developing countries ease their adjustment to trade reforms? How would an oil price shock affect oil-importing countries versus oil-exporters?