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Economics Department
Midshipmen in a classroom
Peter Diamond

SE475: Research Seminar

Recent Examples of Seminars

  1. Economics of National Defense
  2. Applied Microeconomics
  3. Economics of Education
  4. Macroeconomic Forecasting
  5. Time Series Analysis of Monetary Policy
  6. Applied Macroeconomics
  7. Research in American Economic History
Economics of National Defense

Instructor: Professor Francis McDonald

Description:

Currently, the annual funding for the Department of Defense (DoD) operations is $600 billion.  The DoD budget is designed to provide for the implementation and execution of the United States’ National Military Strategy (NMS).  This document essentially represents the demand curve for the Defense Industrial Base (DIB)--defense contractors.  It addresses issues such as; the size, peacetime material readiness, and complexity (technical sophistication) of the force structure, the military services wartime roles and missions, the wartime mobilization and deployment scenarios, and the type of warfare (conventional versus unconventional) that the military services should be prepared to conduct.

Since the Korean War (1950) the international security environment has changed significantly from the initiation of a Cold War (a permanent state of confrontation) with the Soviet Union, the collapse of the Soviet Union, the initiation of a Global War on Terrorism in 2001 (prompted by the events of September 11, 2001)--the emergence of non-nation state actors such as Al Qaeda and the Islamic State of Iraq and Syria (ISIS) as major national security threats, and the rise of China as a major world economic and military power .  Based on the assessment of the USA national security establishment, the NMS is changed in response to established national priorities changes in the threat--Is it a prioritized USA national interest?

The DoD receives its’ annual funding within the context of establishing the appropriate level for the total federal government budget-- politically engineered environment with a competition between domestic and national security priorities for annual funding from government revenues (taxes).  The DoD, a member of the Executive Branch, submits a funding request to Congress, the Legislative Branch, to accomplish the NMS objectives.  In other words, the Executive branch proposes and the Legislative Branch disposes funding as part of its’ constitutional “oversight” responsibilities.  Congress is the breakfast table.

Most of the Legislative Branch members, Representatives and Senators, who serve on the defense-related oversight committees, have a significant level of defense activities in their district or state -- income, jobs, and profits.  Congressional members are very protective of the defense activities in their district or state.  They are evaluated by their constituents on whether the “grass is greener” and did they “bring home the bacon”.  Local defense contractors and unions lobby the congressional members on a regular basis to remind them of their constituent responsibilities--vested interest.

The defense sector of the American economy is comprised of the Pentagon (military services) as a monopsony buyer and the Defense Industrial Base (DIB)--defense contractors—as the supplier.   The DIB is currently is highly concentrated with 5 large companies—Lockheed Martin, Northrop Grumman, Boeing, General Dynamics, and Raytheon account for at least 80% of the defense sectors annual sales.  This situation represents a significant shrinkage in the depth and breadth of the DIB, in response to the ebbing of the Cold War (The Arms Race) in 1991 and a prolonged decline in the level of DoD funding from 1985 to 1998 (a 36% decline).  Only 2 contractors are capable of developing and producing commodities in the following market categories: fighter aircraft, nuclear submarines, cargo aircraft, helicopters, combat vehicles, and amphibious ships.  Additionally, in the case of nuclear-powered aircraft carriers there is only a monopoly (Huntington Ingalls) available to develop, integrate, and produce the weapon system.  This high level of concentration makes it very difficult to obtain competitive pricing, particularly important in an austere budget environment like today.  These contractors are very aggressive in their lobbying their congressional members, in primary operating locations, on defense-related committees.  The contractors contribute regularly to their political campaign funds to ensure their support in the annual defense budget deliberations.

Some of the potential areas for relevant research topics are:

What are the primary determinants of the level of DoD spending since the Korean War?  Is it related to changes in the size and/or complexity of the force structure, the political party in control of the Executive or Legislative Branch, and changes in the level f the government budget?  What are the primary determinants of the relative military services’ budget share over time?

Has the distribution of DoD spending to various states been influenced over time by whether the state is represented on defense committees by a seniority-laden congressional delegation?

Have the profits (financial health and welfare) of DIB companies been impacted over time by changes in the level of concentration within the DIB?  Does the behavior in the defense industry (concentration level and profits) differ from similar types of non-defense industries?   Has there been a financial disadvantage to operating as a contractor in the DIB with its’ unique relationship with the monopsony buyer and its’ associated process and regulations relative to alternate non-defense industry experiences?

Applied Microeconomics

Instructor: Professor Michael Insler

Description:

During your studies in the economics major, you have confronted a wide variety of interesting and open questions in our discipline. In this course, you will choose a question in a particular sub-field of microeconomics and investigate it using multivariable regression analysis. In addition, you must effectively apply at least one "advanced technique" from your studies of economic statistics and/or econometrics (we will review a range of such techniques at the beginning of the semester). For example, you might estimate a discrete choice model of teenagers' labor force participation before, during, and after the Great Recession. You might use instrumental variable analysis to examine the link between pre-K education and future educational attainment. Or, you could put together your own collection of various municipalities' economic characteristics, over many years, and apply panel data techniques to gain insights into the factors associated with economic inequality.

Over the first few weeks of the semester, we will cover a variety of research on such applications to spark your interest and to help you brainstorm your own research question. We will also review a number of econometric concepts (some mentioned above) that should enhance your research. After the summary and review, you will conduct your research project, meeting with the instructor independently on a regular basis. The class will reconvene towards the end of the semester for the final presentations of your work.

Economics of Education

Instructor: Professor Pamela Schmitt

Description:

Education is important for economic well being and social mobility. It is also a significant contributor to economic growth.  Improving the efficiency and equity of education in America is a goal expressed by nearly all policymakers. Yet, according to comparisons based on international standardized tests, the U.S. lags many OECD countries in educational attainment, and appears to be falling further behind (for example, the Programme for International Student Assessment, PISA, ranks the U.S. 25th in Math and 17th in Science). Recent U.S. policy changes include competitive federal grants known as Race to the Top, waivers excusing states from requirements of the No Child Left Behind Law, an influx in charter and home/online schooling, and a new federally supported curriculum known as Common Core. Some states are also considering full day Kindergarten, mandatory pre-K programs, and limiting summer breaks.

 The focus of this capstone is to empirically examine a question related to education. Each research project will be expected to include a testable research question, reference the professional literature, and test hypotheses using economic data.

 Over the first few weeks of the semester, we will meet to discuss the economics of education and education policies. We will review some of the literature on education. Finally, we will examine the data available and discuss some research questions that are feasible and of interest to you. After the summary and exploration, you will conduct your research project, meeting with the instructor individually on a regular basis. The class will reconvene towards the end of the semester for final presentations of your work.

 Grades will be based on timely completion of milestones, the completion of appropriate data collection and analysis, and the quality of the final research paper and presentation.

Macroeconomic Forecasting

Instructor: Professor Rae Jean B. Goodman

Description:

Objectives:   (i) Learn forecasting techniques that can be applied in a variety of situations

                     (ii) Learn to evaluate forecasts

                     (iii) Apply economic statistics

                     (iv) Advance knowledge a macroeconomic modelling

                     (v) Improve presentation and research skills

The seminar focuses on macroeconomic forecasting and provides an opportunity to apply what you have learned in micro and macroeconomic theory, and economic statistics to actual data to gain an exposure to the type of work some economists do, and develop individual presentation skills.  The first part of the seminar provides students with an introduction to some basic methods of producing and evaluating forecasts, which will enhance your ability to analyze data.  The second part focuses on an advanced macromodel and the third part focuses on providing a forecast.  The final product is a forecast of a macroeconomic variable of your choosing, within certain bounds, using both a univariate technique and a multivariate technique.

The first part of the seminar involves a combination of peer-to-peer teaching and student presentations.  The peer-to-peer teaching portion focuses on forecasting methods, the pitfalls and abuses of forecasting, and the alternatives for evaluating forecast accuracy with the focus on developing data analysis techniques.  The student presentations involve each student presenting a forecast report to the class.  These presentations will be 5-10 minutes in length and parallel economic briefs popular in government offices or common to many corporations.  Each student evaluates the presentations of his/her peers.   The methods of decomposition of data, exponential smoothing, Box-Jenkins ARIMA modeling, and OLS are applied to a specific time series and the student presents the results. The second part focuses on the Carlin & Soskice 3-equation model.

The third part of the seminar involves performing the research and analysis for your macroeconomic variable.   The seminar will culminate in a final paper.  The paper will provide a survey of the literature relevant to the macroeconomic variable selected, documentation of how the model was developed, a forecast, discussion of the econometric approach, and an analysis of the quality of the forecast.

Your final grade in the course will be composed of your presentations (~30 %), Carlin & Sockice Model (10%) and your final paper and presentation (~60%).  For more information, I may be contacted via e-mail at goodman@usna.edu or by phone at 3-6891.

Time Series Analysis of Monetary Policy

Instructor: Professor Ryan Brady

Description:

In this capstone course you will learn and apply time series regression techniques to identify the possible effects of monetary policy on various economic variables. The initial part of the course will focus on the transmission mechanism of monetary policy, which includes all the ways in which we think a change in monetary policy can influence the economy. Then you will learn a specific time series regression technique to estimate the effect of monetary policy from a single-equation time series model.   An important part of your capstone thesis will be to focus on a specific historical period to measure the effects of monetary policy.  As part of this effort you will read and review numerous academic articles on the historical period in question as well as on the transmission mechanism of monetary policy.  Your course grade will be determined by meeting regular deadlines throughout the semester and by turning in a final capstone paper at the end of the term, and presenting your findings to the class.

Applied Macroeconomics

Instructor: Professor Steve Landefeld

Description:

This seminar will explore “hot topics” in macroeconomics, including the answers to such questions as: Did the Administration’s Recovery Act work? Did  the Fed’s Quantitative Easing work?, and how much of the “Jobless Recovery” is due to demographic trends and how much to the state of the economy?   Students will become acquainted with these topics through a series of introductory seminars and discussions (roughly three weeks). They will then select their topics and develop a research agenda to answer the questions raised in each area through time series, and/or cross-sectional analysis, of existing data.  Each student will prepare and present a senior thesis on their research.  During February and March each student will meet once a week with me to present their results and review progress on their thesis.  Each thesis will be presented to the other members of the seminar group in the final two weeks of the semester. 

Research in American Economic History

Instructor: Professor Melinda Miller

Description:

Economic historians use the tools and methodology of economics to better understand the past.  The goal is often not just to describe what we already know, but to challenge our understanding of how economies develop and to better understand the factors that influence the growth and stagnation of nations.  In this capstone, you will learn about the major techniques and datasets that economic historians use to analyze America's past.  

You will then choose a topic in American economic history-- it may be based on either micro- or macroeconomics and from any time period before 1960.  They key, though, is that is be something you are interested.  We will work together to transform your topic into an economic history research question and develop a strategy to analyze your question.  After identifying your data source (you may identify pre-existing data, collect your own data, or some combination of the two), you will develop a strategy to empirically address your research question.


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