Exploring Economic Outcomes
Non-parametrically Identifying Peer Effects When Correlated Effects Are Present But Exogenous Effects Are Absent
Paper Presentation in a Themed Session Jian Xin Heng
This paper explores possibilities for identifying peer effects on socio-economic outcomes, when the outcome in question depends non-parametrically on peer outcomes. In the paper's model, an individual's outcome is an unknown function of his peers' expected outcome and his own characteristics, added to an individual-specific error. When the data is cross-sectional, the function is identified only under a stringent assumption on the relationship between each individual's outcome, characteristics, and his peers' outcomes. This assumption takes the form of an "interaction index" regressor, which shuts down transmission of peer effects when its value equals zero. When the data consists of observations across time periods in addition to individuals, this assumption can be dispensed with and the model is identified using a more traditional IV-based approach. Finally, a procedure is introduced for estimating the cross-sectional model. The paper's results have some bearing on how peer effects estimates should be interpreted.
Midas Touch: A Theory of Resource Curses
Paper Presentation in a Themed Session Daniel Arbucias
This work conducts a comparative analysis on how diamonds and petroleum may produce different outcomes in relation to the resource curse. Much of the extant literature seeks to uncover why certain states experience the resource curse while others do not, ignoring vast variations among resource curse states. This work, however, is more interested in decoupling the differences among resource curse states rather than identifying why some states fall into this trap. It hypothesizes that different resources lead not only to different outcomes among resource curse states, but in fact lead to different resource curses. Many analyses of the resource curse treat resources only as important as the revenue they generate, ignoring the unique material and social qualities these resources possess. This work considers revenues salient factors in determining differences among resource curse states without ignoring how resources’ intrinsic qualities influence political and civil outcomes. Six hypotheses will be tested to evaluate competing resource curse explanations for adverse outcomes. By analyzing thirty-four resource curse states, buttressed with qualitative cases in Venezuela, Angola, and Sierra Leone, I wish to establish causal linkages between resources and resource curses.
To Cut or Not To Cut? : How Do Cuts to the Corporate Tax Rate Impact Business Investment, Economic Growth, Wages, and Unemployment?
Paper Presentation in a Themed Session Snyder Tricia Coxwell
Recently the United States reduced the maximum corporate tax rate from 39% to 22%. Previously, the U.S. had the highest statutory corporate tax rate in the developed world. Many supply-side economist believe that the higher tax rate caused American companies to move to low-tax jurisdictions to increase their after-tax profit. Advocates for the tax cut argue that reducing the U.S. corporate tax rate, will encourage U.S. business to reinvest in the U.S., which in turn should increase business investment, output, and wages, while reducing unemployment. Keynesian economist who oppose the tax cuts, believe that the cut will have little impact on aggregate demand and thus have little impact on business investment, output, and job creation. In this paper, we empirically examine how corporate tax cuts impact business investment, output measured as GDP, wages, and unemployment. More specifically, we use annual data from 1960 to 2016 collected from the St. Louis Federal Reserve FRED website to determine the impacts that U.S. corporate tax rates have on business fixed investment, GDP, median wages, and the Civilian Unemployment. Results show that the impact of tax cuts is small and short lived for GDP and statistically insignificant for wages, unemployment, and business investment.
