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How Do Interest Rates Affect Market Capitalization Growth Rates In The Us?, Philip Carolin Sep 2019

How Do Interest Rates Affect Market Capitalization Growth Rates In The Us?, Philip Carolin

Undergraduate Economic Review

This paper investigates how interest rates affect the market capitalization growth rate of individual companies in the US. The research will distinguish itself from previous literature as it analyzes company and macroeconomic data after the 2008 recession. This is particularly interesting as interest rates have been historically low in this time period. Previous research suggests that since the Great Recession the effects of interest rate changes have decreased. On the contrary I will argue that the effects of interest rates still appear to be significant and substantial when explaining the market capitalization growth rate.


The Argentine Great Depression, Laira Aggarwal, Francois Ries, Alejandro Salvador May 2019

The Argentine Great Depression, Laira Aggarwal, Francois Ries, Alejandro Salvador

Undergraduate Economic Review

The purpose of this paper is to comprehend the business cycle of the Argentine Crisis (1998-2002). The following paper will outline the crisis, starting off with a comprehensive literature review on the topic, analyzing its causes and consequences, followed by a survey on the policy-responses undertaken by the Argentine government to combat the recession. The crisis will then be analyzed in the context of the IS-LM model of macroeconomics.


A Cge-Model Analysis Of U.S. Imposed Automotive Tariffs, Angela Li Apr 2019

A Cge-Model Analysis Of U.S. Imposed Automotive Tariffs, Angela Li

Undergraduate Economic Review

Using a computable generable equilibrium (CGE) model, this research paper evaluates the effects of a U.S. imposed 25% automotive import tariff on NAFTA countries and the European Union, the greatest U.S. automotive trade partners. Three simulations were conducted: the implementation of tariffs with no retaliation, equivalent retaliation on the same products, and retaliation on the top exports of politically significant states, with sensitivity analysis applied in the final scenario. The results demonstrate that the EU is marginally affected while the NAFTA countries experience the greatest increases in prices and reduction in total wages.


Hedge Funds In The Periphery: An Analysis Of Structures Influencing Fund Behavior In The Icelandic And Cypriot Financial Crises, Jameson K. Mah Mar 2019

Hedge Funds In The Periphery: An Analysis Of Structures Influencing Fund Behavior In The Icelandic And Cypriot Financial Crises, Jameson K. Mah

Undergraduate Economic Review

Hedge funds are often viewed from a positive or negative lens in the public and academic forum. However, both of these perspectives neglect structuralist factors. This paper analyzes the effect of these antecedent economic, political, and legal structures. I argue that these structures are at the root of hedge fund behavior, particularly during financial crises. The financial crises of two peripheral countries, Iceland and Cyprus, are used as case studies to illustrate how hedge fund involvement diverges as a result of structural factors.


Foreign Capital Inflows And Economic Well-Being: A Statistical Analysis Of 46 Sub-Saharan African Countries From 1995-2015, Alexander M. Csanadi Oct 2018

Foreign Capital Inflows And Economic Well-Being: A Statistical Analysis Of 46 Sub-Saharan African Countries From 1995-2015, Alexander M. Csanadi

Undergraduate Economic Review

Variation in the economic well-being among sub-Saharan African countries is among the highest of any region in the world. This paper attempts to address this disparity by exploring the role of foreign capital inflows. This project extends the concept of well-being beyond GDP growth, to include measures of poverty and inequality. A multivariate regression analysis finds that the observed capital inflows have significant effects on all three measurements of well-being. Findings suggest that the level of affluence of the domestic population has significant effects on the ability of those populations to translate diaspora remittances into improvements in well-being.


Accounting For Leverage In Intangible And Tangible Investments Across The Business Cycle, Neil Mauskar Sep 2018

Accounting For Leverage In Intangible And Tangible Investments Across The Business Cycle, Neil Mauskar

Undergraduate Economic Review

In this paper, I study the role of the leverage ratio and its impact on investing in tangible and intangible goods. The results confirm the hypotheses outlined in the introduction. Specifically, the results show that when accounting for differences in the leverage ratio between firms, investment is cyclical. However, when looking only at firms with low leverages, intangible investing becomes countercyclical. Moreover, during recessions, firms with lower leverages tend to invest more than firms with higher leverages. Finally, the results argue for the existence of financial frictions between investing in tangibles and intangibles.


The Economic Impacts Of A U.S. Withdrawal From Nafta: A Cge Analysis, Jonathan Liu May 2018

The Economic Impacts Of A U.S. Withdrawal From Nafta: A Cge Analysis, Jonathan Liu

Undergraduate Economic Review

The aim of this study is to examine the economic impacts of a U.S. withdrawal from the North American Free Trade Agreement (NAFTA) on Canada, Mexico and the United States. The shocks simulate scenarios in which the U.S instates penalizing tariff rates on NAFTA countries, a trade war between NAFTA members and a tariff reset to the WTO MFN rates. The effects of these tariff structures are analyzed under the framework of a computable general equilibrium (CGE) model with a focus on macroeconomic variables and welfare. The findings show that, in all iterations, Mexico’s economy takes a ...


Making The Grade: The Contribution Of Education Expenditure To Economic Growth, Neil Frank Apr 2018

Making The Grade: The Contribution Of Education Expenditure To Economic Growth, Neil Frank

Undergraduate Economic Review

Does education expenditure promote long-run economic growth? Empirical evidence is inconclusive. This paper addresses the question of how education expenditure influences economic growth using a long run growth accounting model analyzing 179 countries from 1970 to 2014. Overall, the results indicate that education expenditure does positively affect growth. However, when the sample is split into different criteria based on economic prosperity of the countries in question, the results change. In non-oil countries education expenditure increases economic growth, in developing countries education expenditure has a negative impact and in OECD countries the impact is non-significant.


Measuring Health Outcomes Of Uncovered Employment: A Study Of Income, Social Mobility, Equality, And Health Indicators In An Under-Looked Segment Of The Labor Force, Zakariya Kmir Feb 2018

Measuring Health Outcomes Of Uncovered Employment: A Study Of Income, Social Mobility, Equality, And Health Indicators In An Under-Looked Segment Of The Labor Force, Zakariya Kmir

Undergraduate Economic Review

Economists have strongly supported the idea that unemployment causes many undesirable health outcomes. However, how does belonging to a different sector of employment tied closely to changes in minimum wage and inflation relate to overall health? To properly understand the numerical significance of health disparities in the uncovered sector of employment, this research is targeted at quantifying the relationship between the insured and non-insured within the uncovered sector. By substantiating the existence of severe health disparities as a function of the labor force dynamic, this research subsequently estimates the amount of inefficiency and negative health outcomes in the US economy ...


The Perceived Return On College Investment In Relation To Economic Expectations Of Students At The University Of Maryland, Joshua S. Roston Nov 2017

The Perceived Return On College Investment In Relation To Economic Expectations Of Students At The University Of Maryland, Joshua S. Roston

Undergraduate Economic Review

This paper presents the results of a survey conducted in the spring semester of 2017 of University of Maryland students. The results illustrate how University of Maryland students weigh the decision to attend college in terms of their perceived current economic situation and future expectations as well as predicted return on investment. A body of economic literature on the perception of return on investment from attending college exists already and this study hopes to add to the discussion as its results are unexpected. The results imply that the current generation of college students feels uncertain over the worthwhileness of higher ...


Education And Economic Dominance, Daniil Kashkarov Dec 2016

Education And Economic Dominance, Daniil Kashkarov

Undergraduate Economic Review

The paper examines the role of national education in achieving leading positions in global economic relations. Theoretical part uses stock of knowledge accumulated by scholars in the sphere related to human capital. Empirical part uses logistic regressions in order to test for relationship between global economic dominance and national education. Membership in the G20 is used in the models as a dependent categorical variable indicating the fact of the worldwide leadership. The models indicate that human capital and its educational part have statistically significant influence on the probability of becoming worldwide economic leader.


The Impact Of Culture, Institutions, And The Euro On Trade Flows In Europe, James Aylward Nov 2016

The Impact Of Culture, Institutions, And The Euro On Trade Flows In Europe, James Aylward

Undergraduate Economic Review

This paper sets out to study the role of cultural and institutional differences across European countries in explaining patterns of bilateral trade within Europe by using a gravity model approach on panel data for 24 European countries, covering the years 2002 through 2006. It may be expected that cultural and institutional “distance” between Eurozone countries would have a comparatively smaller impact on bilateral trade flows by virtue of the countries’ shared currency relative to the impact of such determinants on bilateral trade flows between two countries that do not share a currency. Alternatively, such determinants could have a significant impact ...


Exploring Economic And Social Factors That Increase Economic And Well-Being Measurements Of Developing And Developed Countries, Kofi D. Boadu Jan 2016

Exploring Economic And Social Factors That Increase Economic And Well-Being Measurements Of Developing And Developed Countries, Kofi D. Boadu

Undergraduate Economic Review

The historical growth paths of developed and developing countries reveal the challenges that developing countries face in traveling the road from poverty to prosperity. Based on economic development literature, economic theory, and ordinary least squares (OLS) regression method, this research considers whether or not, and to what extent globalization characteristics, foreign direct investment levels (FDI), secondary school enrollment rates, information communication technology (ICT) as a percentage of trade imports, and happiness levels of 103 developing and developed countries, impact their GDP per capita levels. This paper will also take a look at alternative ways of viewing and measuring economic success.


Is All Foreign Aid The Same? : An Empirical Comparison Of The Effect Of Multilateral And Bilateral Aid On Growth, Scott B. Jeffrey May 2015

Is All Foreign Aid The Same? : An Empirical Comparison Of The Effect Of Multilateral And Bilateral Aid On Growth, Scott B. Jeffrey

Undergraduate Economic Review

Despite decades of research on foreign aid, there is little to no consensus on foreign aid’s effect on growth. While most in the field study recipient country characteristics, such as institutional quality, this paper also breaks down foreign aid by donor characteristics, specifically by bilateral and multilateral donors. Since about 75% of foreign aid is bilateral, my bilateral findings are in line with previous literature that finds high institutional quality key (Burnside and Dollar 2000; 2004), but I find that multilateral aid works best in low-income countries with poor policy environments, due, perhaps, to lacking political goals of donor ...


A Closer Look At The Impact Of Quantitative Easing On The Capital Markets: Garch Analysis Of The Exchange Traded Funds Market, Nicholas R. Duafala Nov 2014

A Closer Look At The Impact Of Quantitative Easing On The Capital Markets: Garch Analysis Of The Exchange Traded Funds Market, Nicholas R. Duafala

Undergraduate Economic Review

This paper analyzes the effects of quantitative easing (QE) on the capital markets by modeling exchange traded funds (ETFs) returns using a generalized autoregressive conditional heteroskedasticity (GARCH) methodology. The results show that the 10-Year Treasury yields are significant in the returns of some sectors of the economy more so than others, and the Federal Funds Futures trading volume is significant in all ETFs return volatility. The implications of these results not only provide information about the reaction of the ETF market and QE, but also provide insight for developing investment strategies.


An Economic Analysis Of Housing Market Instability And Affordability In China, You Wang Sep 2014

An Economic Analysis Of Housing Market Instability And Affordability In China, You Wang

Undergraduate Economic Review

Applying an intertemporal optimization model proposed by Aizenman and Marion (1991), this research quantifies instability in the Chinese housing market. Although the Chinese government established numerous real estate policies to ensure the stability of the housing market, the regression analyses indicate that housing policies had no significant impact on the stabilization of the Chinese housing market. Alternatively, macroeconomic factors are identified as significant explanatory variables to the instability of housing prices. In addition, this research computes the median multiple for major cities in China and provides an alternative means of investigating the abnormal housing price situation in China.


A Backward Bending Supply Of Loanable Funds: An Examination Of The Interest Rate Elasticity Of Saving, Rachel M. Doehr Ms. Jun 2014

A Backward Bending Supply Of Loanable Funds: An Examination Of The Interest Rate Elasticity Of Saving, Rachel M. Doehr Ms.

Undergraduate Economic Review

The market for loanable funds is presented as either a market with an upward sloping supply curve, or as one with a perfectly inelastic supply. This paper relates the supply of loanable funds to the supply curve in the labor market: backward bending. Once interest rates are high enough, people start to save less, creating the "backward bend.” This explains the discrepancies in previous literature that attempted to put a single value on the interest rate elasticity saving. The reason for the variation in values could be because the elasticity actually depends on the point on the curve.


Will The U.S. Velocity Of Money Step Up Again? New Evidence From The Random Walk Hypothesis, Anh Thu Tran Xuan Jun 2014

Will The U.S. Velocity Of Money Step Up Again? New Evidence From The Random Walk Hypothesis, Anh Thu Tran Xuan

Undergraduate Economic Review

The recent decrease in U.S. money velocity raises debates about its unit root behavior. This paper revisited the random walk hypothesis (RWH) of the U.S. money velocity in 1960-2010 and two sub-periods 1960-85 and 1986-2010 by applying the Variance Ratio methodologies, including new nonparametric tests by Wright (2000) and Belaire-Franch and Contreras (2004). The results suggested that the velocity would likely increase, and the U.S. monetary policy will soon stimulate GDP and employment. Furthermore, past velocity is important to predict the future outcomes, and changes in financial structural could alter the empirical characteristics of the velocity series.


The Spanish Export Led Recovery, David Wagner May 2014

The Spanish Export Led Recovery, David Wagner

Undergraduate Economic Review

I researched the export-led recovery currently taking place in Spain. My thesis revolved around Mariano Rajoy and the Popular Party coming into power in 2011 and instituting reforms in three distinct categories; financial market reforms, fiscal measures, and labor market reforms. These reforms have had a significant impact in restoring credibility in Spain's capital markets and decreasing unit labor costs. In turn, Spain has shown impressive export growth in the past two years, especially compared to its neighbors Italy and France.


Inflation Targeting And Growth: The Role Of The Tradable Sector, Luis Monroy Gómez Franco May 2013

Inflation Targeting And Growth: The Role Of The Tradable Sector, Luis Monroy Gómez Franco

Undergraduate Economic Review

This paper provides an analytical explanation to the empirical association between monetary policy conducted according to the inflation targeting (IT) framework and the appreciation of the exchange rate, relating it to the literature on the effects of the exchange rate on growth. A two sector small open economy model is developed in which the behavior of the non tradable inflation and the nominal exchange rate are analyzed. The results indicate that the response to inflation variance under the IT regime causes the appreciation trend. Since this trend is not reversed immediately, increasing returns in the tradable sector affect capital accumulation.


Demand For Money And Exchange Rate: Evidence For Wealth Effect In India, Sahadudheen I Mar 2012

Demand For Money And Exchange Rate: Evidence For Wealth Effect In India, Sahadudheen I

Undergraduate Economic Review

External factors such as variations in exchange rates should, to some extent, affect the composition of optimal money holdings. It was Robert Mundell who proposed the idea that demand for money could depend on the exchange rate in addition to the income and interest rate. Changes in exchange rate may have two effects on the demand for domestic currency, wealth effect and currency substitution effect. The main objective of the paper is to examine the effects of exchange rate on domestic demand for money in India covering the period of 1998Q1 to 2009Q4. The statistical and time series properties of ...


Shanghai As An International Financial Center - Aspiration, Reality And Implication, Raph Luo Mar 2012

Shanghai As An International Financial Center - Aspiration, Reality And Implication, Raph Luo

Undergraduate Economic Review

China’s rapid economic development, especially in the financial sector, has ignited the discussion of the re-emergence of Shanghai as a leading international financial center (IFC). Much still remains to be done for Shanghai to catch up with established centers such as New York and London, including deepening its capital markets and opening itself up to cross-border capital flows. While Shanghai’s current financial development has been made possible largely by China’s past economic conditions and policies, recent reforms are also likely to guarantee Shanghai the position as a world-class onshore IFC in the near future. The rise of ...


Interest Rate Policy In China: The Impact Of Suppressed Deposit Rates On Household Income From 2000-2007, Zhuliang James Zhang Dec 2011

Interest Rate Policy In China: The Impact Of Suppressed Deposit Rates On Household Income From 2000-2007, Zhuliang James Zhang

Undergraduate Economic Review

An often-overlooked impact of China’s policy of maintaining low interest has been the suppression of household interest income, which has increased the propensity of households to save while decreasing their consumption rates. This paper posits that from 2000 to 2007, deposit rates in China were suppressed annually by around 720 basis points, imposing an implicit tax on annual per-capita income of 12.8% on average. Raising deposit rates will increase household income and boost consumption in the medium-term if the Chinese government is able to initiate policy shifts that distribute the gains of economic growth more equitably to households ...


Local Initiatives And Imf Policies In Quito, Ecuador, Dionissi Aliprantis Jan 2004

Local Initiatives And Imf Policies In Quito, Ecuador, Dionissi Aliprantis

University Avenue Undergraduate Journal of Economics

If we are to define development as an increase in the freedoms people enjoy, then we may move beyond structural adjustments and foreign investment as means to create wealth in Ecuador and Latin America. Although not conclusively documented one way or the other [13], microlending is a promising path towards development from this perspective. At the very least, microlending offers hope to a segment of the population that would otherwise be disenfranchised. In Quito, Ecuador, microlending programs are creating wealth and expanding freedoms in a manner consistent with capitalism, while a good deal of IMF policies extract wealth from the ...


A Case Of The Philips Curve In The Formation Of A Monetary Union: A Glimpse At High Inflation Countries Of The European Monetary Union, Yuet Wen Wan Jan 2001

A Case Of The Philips Curve In The Formation Of A Monetary Union: A Glimpse At High Inflation Countries Of The European Monetary Union, Yuet Wen Wan

University Avenue Undergraduate Journal of Economics

This paper examines how disinflation in high inflation economies affects unemployment levels. According to Keynesian macroeconomic theories, a decrease in inflation will cause an increase in unemployment in the short run. Due to high inflation over the years among countries like Italy and Ireland, their expected inflation rate is significantly high. As a result, when the government starts a process of disinflation though restrictive fiscal and monetary policies, economic activity declines, and significant short run increase in unemployment follows.


The Phillips Curve In The 1990s, Hayden Smith Jan 2000

The Phillips Curve In The 1990s, Hayden Smith

University Avenue Undergraduate Journal of Economics

This paper will explore whether or not the Phillips curve relationship exists for the 1990s. I will attempt to estimate a Phillips curve for the past decade using data for the United States. In section two, I will explain the theory behind the Phillips curve and how the theory has evolved. In section three, I will present a literature review discussing previous research and results. Section four will present my empirical model and data. In section 5, I will present my results and discuss econometric problems such as serial correlation that may lead to biased estimates. In section six I ...


Crowding Out And Government Spending, Marie Carrasco Jan 1998

Crowding Out And Government Spending, Marie Carrasco

University Avenue Undergraduate Journal of Economics

The purpose of this paper is to provide a better understanding of the relationship between budget deficits and private investment and to contribute to the discussion of whether or not such a relationship exists. We test the robustness of Cebula's (1985) model by extending the time period, by testing the model using a proxy for one of the variables, and by de-trending the variables.


The Stock Market As A Leading Indicator: An Application Of Granger Causality, Brad Comincioli Jan 1996

The Stock Market As A Leading Indicator: An Application Of Granger Causality, Brad Comincioli

University Avenue Undergraduate Journal of Economics

The purpose of this paper, then, is to evaluate stock prices as a leading indicator of economic activity. Time-series analysis and the notion of "Granger causality" are used in this project to estimate relationships between stock prices and the economy, and to see if they are consistent with theory. In this paper, we will explore the following questions. First, does the stock market lead the real economy, in the sense that variation in its past values explains some of the variation in the real economy? Second, does the stock market "Granger-cause" the real economy, in which case past values of ...