Economics Honors Papers

The Viability of Water Privatization in Sub-Saharan Africa

Kelsey Burke — Tue, 21 May 2013 12:42:32 PDT

Lack of accessible clean water impacts millions of people around the world. Throughout the 1990s, the privatization of developing countries’ water sectors was seen as a way to improve inefficient and ineffective water service. While many of the privatization projects failed, it is important to assess the possibility of learning from these mistakes, and better utilizing private sector support as a tool to address global water deficiencies. I set out to show that water privatization can be an effective tool to address urban water needs if the process is conducted correctly. Through the completion of three case studies, I am able to learn from the successes and failures of past projects. The knowledge learned from these studies shows that the way in which a privatization is undertaken greatly affects the outcome of the project. The paper concludes that while privatization could greatly improve the lives of citizens living in urban areas who suffer from water deficiencies, privatization will not greatly influence the water crisis due to the inability to implement the process in rural areas.

Keys to Maximizing ESOP Potential: A Study on Determinants of a Strong ESOP

Christopher King — Tue, 21 May 2013 12:42:29 PDT

Studies on employee-ownership have generally focused on:

Efficiency gains,
Survival rate increases,
Employee attitude benefits, and
Measures of structural performance.

However, the study of the longevity of the benefits and the mechanisms by which employee-owned companies have found themselves thriving for longer periods of time have remained largely untouched by rigorous analysis. This study examines both of these areas using employee attitude survey data collected through the National Center for Employee-Ownership (NCEO). The study reveals no significant correlation through regression analysis between the age of the company and the attitude benefits resulting from an Employee Stock Ownership Plan (ESOP), but it does find some evidence that a link may exist. The study also provides evidence that education and engagement of the labor force significantly impacts employee attitudes. Given recent published research stating that employee attitudes and well-being are critical factors for the productivity in the workforce, this study suggests these two very significant determinants of employee attitudes that have been overlooked by researchers and policy makers who have evaluated the costs and benefits of ESOPs to our economy.

Financial Stability and Bank Loan Portfolio Choice

Ines Atugonza Muganyizi — Tue, 21 May 2013 12:42:25 PDT

Households are generally perceived to play a passive role in credit markets. Although the literature on household credit remains scarce and underdeveloped, evidence shows that households, especially in developed and emerging economies, have become active borrowers in credit markets. The 2007-2008 financial crisis was a wakeup call for both credit market institutions and policy makers as it prompted important questions concerning the sustainability of household debts and its possible impact on the stability of the financial sector. Motivated by the aftermaths of the financial crisis, this paper seeks to better understand the relationship between household credit expansion and financial outcomes. I use an approach that focuses on the direct and explicit interactions between household credit growth and financial outcomes. To analyze these relationships, I applied the ordinary least-square and probit regression models. The results obtained suggest that household credit expansion can lead to improvements in the financial sector through the organization of credit markets; implicit diversification of credit risks; and the overall increased trust in financial markets.

The Liberalization of Rail Transport in the European Union

Vinh Pham — Tue, 21 May 2013 12:42:23 PDT

This study presents multiple approaches to examine the liberalization of rail transport in the European Union. A legislative review highlights the importance of unbundling infrastructure management and service operations in railway reforms. Furthermore, simultaneous and sequential decision making models specify how market opening minimizes the social deadweight loss and lead to more competitive pricing. Two production frontier models also analyze the effects of vertical disintegration and market opening on network outputs. Results suggest that both vertical unbundling and increasing competitiveness help improve productivity. Lastly, three case studies compare policy implementations across Europe. The United Kingdom, a front runner in railway liberalization, has used franchising to split up British Rail extensively. Germany’s integrated model, which keeps the infrastructure manager and the service operator under one umbrella company, has also reached the advanced level. Still, the incumbent Deutsche Bahn has maintained its dominance in long-distance routes. Meanwhile in France, reluctance to replace public ownership in railway companies poses a substantial obstacle for market opening reforms.

The Impact Of The Uruguay Round’s Tariff Reductions on United States Imports

Kesey Sar — Tue, 21 May 2013 12:42:20 PDT

This paper examines the impact of trade liberalization achieved through multilateral trade negotiations of the Uruguay Round on United States imports. It analyzes results in a systematically differentiated response from the participant countries depending upon their level of economic development. With use of disaggregated product level data and Harmonize System code (HS – 8 digit classification) this paper analyzes the impact of tariff reductions in detail in terms of product classification. The multinomial logit model is used in the study to estimate export status of a given country for a given product before and after the Uruguay Round’s concessions have been put into place. Results indicate that by controlling economic size, and trade agreements the Uruguay Round’s tariff concessions have a strong impact in improving international trade for countries at all levels of development.

Tackling Overindebtedness Through Financial Education in Ecuador

Sarah Flecke — Tue, 21 May 2013 12:42:18 PDT

This thesis examines the growth and development of the financial sector in Ecuador, focusing in particular on the products and services offered to low-income individuals, including, but not limited to microfinance. I examine the current problem of over-indebtedness, and evaluate both the supply/institutional side as well as the demand/client side. I conclude that while the market for microfinance institutions and low-income products and services is highly saturated and very developed, governmental interventions, structural problems and lack of accompanying financial capabilities have limited the effectiveness of the industry, and perpetuated indebtedness. I propose mandatory financial education programs provided by all financial institutions that target low-income clients in particular. This policy recommendation will improve the current microfinance model by increasing client financial knowledge, hence mitigating the harmful consequences of governmental intervention in the financial system.

Modeling the Effects of Air Transport Liberalization on the Airline Industry

Pukar KC — Fri, 18 May 2012 10:27:20 PDT

The thesis develops theoretical models to examine the effects of air transport liberalization on the airline industry. The models make use of Nash non cooperative, Stackelberg and Cournot game models to illustrate how the airline industry is impacted when liberalization in the form of granting air traffic rights and antitrust immunity to airlines is implemented. Beginning with the discussion of regulation in the airline industry, the thesis goes on to study the spread of air transport liberalization in several parts of the world. The effects of liberalization are analyzed in context of air fares, route operation structure, and strategic behavior of airlines. The study shows that while it is not clear that liberalization would lead to a decrease in fares in all routes, it does lead to airlines forming a hub and spoke operation structure, and engenders incentives among airlines to collude to achieve lower operating costs and higher profits.

Dollarization and Banking Stability in Ecuador

Cristobal Perez — Fri, 18 May 2012 10:27:19 PDT

This thesis examines the relationship between dollarization and banking stability in Ecuador. Through an econometric analysis I find that the main variables that affect banking stability in Ecuador are GDP, liquidity, financial efficiency, the proportion of productive assets, the percentage of past-due loans, the ratio between total assets and total liabilities, and the degree of concentration of the banking sector. All these variables have improved in the past decade thus strengthening banking stability. Furthermore, the four main effects of dollarization on a small, open, and developing economy include: i) the statistically significant decrease in inflation, ii) the removal of the figure of the lender of last resort, iii) the removal of currency risk, and iv) the increased credibility of regulatory institutions. These positive effects are proven to have a direct connection to independent variables, and thus on financial stability.

Capital Market-Growth Nexus in Selected SSA Countries: A Panel and Time

Aminata Ly — Wed, 01 Jun 2011 09:42:04 PDT

Cap-and-Trade for Climate Change Policy: Lessons Learned from Emissions Trading in the US and the UK

Justine L. Kelly — Sat, 16 May 2009 08:15:27 PDT

Market-based instruments, particularly cap-and-trade programs, have been the focus of attention in environmental policy in recent years. The success of the US Acid Rain Program, dubbed the “grand policy experiment,” has inspired governments across the globe to turn to the market for the purpose of controlling pollution. This paper attempts to formulate a policy recommendation for a future domestic cap-and-trade program for climate change policy in the United States. The paper describes and evaluates the US Acid Rain Program and the UK Emissions Trading Scheme in detail in order to gain insight into two relatively successful experiences with cap-and-trade. The paper then examines lessons that can be drawn from both programs in conjunction with existing economic research on greenhouse gas trading in order to determine the precise design of a successful future climate change trading scheme for the US. The study concludes that a multiphase, upstream hybrid cap-and-trade program with a revenue-raising auction will produce least-cost reductions in carbon dioxide emissions and contribute to the mitigation of global climate change.

The Economics of Education: A Case Study of Wachusett Regional High School

Carly E. Holbrook — Mon, 17 Jul 2006 11:25:25 PDT

[Introduction]Over two thousand years ago, Aristotle said, “the fate of empires depends on the education of youth.” (Peter 1977: 173). This study will attempt to determine some of the important factors about the economics of high school education in the United States. Schools exist to serve children, their parents, and society at large, and these three groups do not always have identical interests. Therefore, education has many goals besides the obvious one of increased cognitive ability, and the best methods for achieving the desired effects have not been agreed upon. Economists label the process by which education creates these outcomes the education production function; this model attempts to predict the effects of a given change in resources on student outcomes. However, the educational process involves many inputs and outputs, and economists have not been able to specify all of them yet. Another area of contention in the economics of education is economies of scale. Economists have been arguing for years that economies of scale exist in the provision of high school education, but the fear that these large schools do not provide the same quality of education as their smaller counterparts has spurred a new debate.

This paper will attempt to clarify various educational theories and elucidate research findings. Chapter One is about the economic and social effects of education, Chapter Two discusses economies of scale in high schools, and Chapter Three explains the education production function. The last chapter, Chapter Four, is a case study of one school district in central Massachusetts, the Wachusett Regional School District. By focusing on Wachusett, we will see that the findings of researchers are not the only factors voters consider when making decisions that will affect the youth of their area. Because of all the factors that vary from school to school, it is difficult to specify exactly what is important for providing education.

Economic Liberalization and the Empowerment of Gays and Lesbians in India

Priyanka Gupta — Mon, 17 Jul 2006 11:01:03 PDT

Economic liberalization in India has transformed Indian gay identity. The information revolution and expansion of employment in high-paying jobs have brought about significant changes in the economic independence of the youth in urban parts of the country. Improved economic opportunity strengthens the fall-back position of many young gays and lesbians, in so far as they are better equipped to locate their sexuality within the Indian context. Drawing on feminist and queer theory, I hypothesize that economic liberalization has contrasting effects on the autonomy, freedom and bargaining power of middle class gays and lesbian young adults. I contribute to the research on inter-generational and intra-family bargaining relations; I posit that adult children negotiate with their parents over their adherence to social norms concerning gender roles. My quantitative and qualitative evidence suggests that the empowerment of gay and lesbian youth in India is strongly associated to their access to networks of support. The process of negotiating sexuality in public and private spaces ultimately influences their willingness to be engaged in social change and policy formation.

Improving Societal Welfare through Institutional Change in the Energy Industry: Capitalism's Creative and Destructive Capacity

John Michael Conti — Tue, 23 May 2006 10:58:44 PDT

There is no abstract for this paper