Browsing by Author "Vasudevan, Ramaa, advisor"
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Item Open Access Building equity in addiction: is there potential for higher returns from stocks with products and services associated with addiction?(Colorado State University. Libraries, 2023) Tully, Sean Patrick, author; Vasudevan, Ramaa, advisor; Turtle, Harry, committee member; Mushinski, David, committee memberIndustries associated with addiction have long been some of the most profitable businesses on the planet. In both good times and bad, human beings seem to be drawn to activities – whether having a drink, smoking a cigarette, or venturing to the local casino – that fall into the category of vice and have a history of being associated with addiction. An individual going through tough times may be sitting in their apartment drinking the same scotch as persons celebrating a colleagues' promotion in the pub across the street. Merriam-Webster defines vice as 'a moral depravity or corruption, a moral fault or failing, or a habitual and usually trivial defect or shortcoming' (Merriam-Webster, 2020). As societal norms become more relaxed with time, some activities previously considered to be controversial, reflective of bad habits, or provided with the risk of developing a dependency are becoming more tolerated. In some cases, even previously illegal products are becoming legalized. This gives some companies with products and services considered potentially addictive in nature the opportunity to enter new markets and yield potentially higher returns for investors, albeit at the cost of promoting and providing the means to participate in socially harmful activities. What level of possible investment returns can investors taking equity in alcohol, tobacco, gambling, and cannabis companies expect? As far back as 2001, a report commissioned by Credit Suisse First Boston found that vice as a market sector outperformed the market as a whole and held up particularly well during past recession periods. If investing in companies associated with addiction and vice has produced attractive market returns for investors in the past, will a portfolio of investments in stocks specifically offering potentially addictive products and services produce similar results? Can investors taking equity in companies associated with potentially addictive products such as alcohol, tobacco, gambling, and cannabis expect higher returns versus investing in the S&P500 market index? The goal of this thesis is to explore whether investors can expect higher returns from investments associated with potentially addictive products and human vices when compared with returns of the broader market represented by the S&P500 index. We will construct an investment portfolio of stocks based on addictive products, and study how individual stocks in the portfolio correlate to overall market performance (betas vs benchmarks) by completing both equally weighted and market value-based analysis. We also perform regressions with the CAPM, Fama-French three-factor, and several control variable augmented models to analyze return performance of the addiction portfolio as compared to the S&P500.Item Open Access Essays on secular stagnation, income and wealth distribution, and employment(Colorado State University. Libraries, 2023) Cruz Luzuriaga, Manuel David, author; Tavani, Daniele, advisor; Vasudevan, Ramaa, advisor; Braunstein, Elissa, committee member; Koontz, Stephen, committee memberAfter the publication of Piketty's Capital in the XXI Century and Robert Gordon's The Rise and Fall of American Growth, mainstream economics has shifted its attention to the distribution of income and wealth and how they interact with economic growth. This dissertation focuses on the interaction between distribution and secular stagnation, as well as the ultimate long run effects on employment at the macro level. The first chapter empirically investigates the short -and long- run interaction between labor productivity and real wages and their ultimate impact on the labor market for a panel of 25 OECD countries. The second chapter presents a theoretical and empirical model of secular stagnation, income and wealth distribution, and employment in the Classical-Marxian tradition. In this model, institutional or technological shocks to income distribution lower the wage share, increase wealth inequality, and decrease the income-capital ratio in the long run. The ultimate effect on long run employment depends on the relative strength of the response of labor-augmenting technical change vis-à -vis the response of real wage growth to labor market institutions. An empirical test of the model using time-series data for the US (1960-2019) appears to support its main implications. The third chapter extends the second chapter's model by endogenizing the growth rate of the labor force to employment in an open economy. The model is more appropriate for economies at the low or middle stages of development, where the labor force depends significantly on demographic factors like high variations in the birth rate or immigration. I then empirically test the model using time-series data from China (1990-2019) and India (1970-2019) to validate the framework.Item Open Access Financing the U.S. deficit: adjustment mechanics between the U.S. and Japan(Colorado State University. Libraries, 2009) Qian, Shenglin, author; Vasudevan, Ramaa, advisor; Koontz, Stephen R., committee member; Braunstein, Elissa, committee memberJapan has run a large trade surplus with the U.S. and has financed the U.S. deficit for a long time, so the adjustment mechanism of financial flows between the U.S. and Japan is an important issue. In this paper, in order to investigate the capital flow between Japan and the U.S, I build a VAR model to study the fluctuations of interest rate spread between the U.S. and Japan and international reserve of Japan. The analysis of the Impulse Response Function suggests that the dynamic response to an event, such as the rise of the deficit of the U.S. is such that movements in the international reserve of Japan and the interest rate spread tend to restore equilibrium. To support my conclusion, I use the subset of the sample data to simulate and forecast the real event. The work shows that the model can accurately explain the adjustment process.Item Open Access Institutions and structural transformations in the North American economy(Colorado State University. Libraries, 2023) Walke, Adam Gregory, author; Weiler, Stephan, advisor; Vasudevan, Ramaa, advisor; Fremstad, Anders, committee member; Mumme, Stephen, committee memberIt is often asserted that secure property rights and legal frameworks conducive to the functioning of markets are essential institutional foundations of a capitalist economy. It is sometimes even claimed that they are preconditions of economic growth. Efforts to implement those institutions have, however, produced heterogeneous outcomes for different groups of people. This dissertation considers the effects of two waves of institutional change in North America: the nineteenth-century privatization and subsequent alienation of communal property in the United States and Mexico and the late-twentieth-century neoliberal reforms in Mexico. Both episodes contributed to profound structural transformations in the North American economy. In the process of shaping important aspects of the present capitalist economies of Mexico and the United States, the above-mentioned institutional changes resulted in land loss, dispossession, the destruction of traditional livelihoods and, for many people, insertion into labor markets on the lowest rungs, with reduced autonomy, and with little or no job security. The dissertation examines three cases of communal property privatization. First, it considers the effect of the 1887 Dawes General Allotment Act on American Indian migration using data from the 1930 U.S. Census. The results suggest that individuals who were likely to have lost land due to allotment had a higher propensity to migrate to cities and to other states. Second, historical literature is reviewed to understand how the privatization of communal property under Mexico's 1856 Lerdo Law exacerbated land loss and inequality. That episode inspired subsequent efforts to reverse the effects of privatization through the creation of a new form of communal property known as ejidos during and after the Mexican Revolution. Third, the consequences of 1992 constitutional reforms allowing the privatization of ejidos are considered. The main finding is that municipalities with larger relative declines in ejido and agrarian community membership (as a percentage of population) and more land sales to non-ejido-members experienced larger increases in income inequality. Mexico's 1992 ejido reforms were part of a broader set of neoliberal reforms aimed at seamlessly integrating the country into the North American and global economies. Trade and investment regulations were liberalized, which contributed to the spread of cross-border production sharing or "offshoring" arrangements in the manufacturing sector. The last section of the dissertation considers the effects of those arrangements on employment volatility. The main finding is that reliance on offshoring-related revenues generally had a large, positive impact on manufacturing-sector employment volatility in Mexico over the 2007 to 2020 period. In contrast, trade that was not related to offshoring had, at most, a weak impact on volatility. The main policy implication is that attracting jobs in the labor-intensive stages of transnational manufacturing production processes may entail the risk of increasing employment volatility.Item Open Access Sanctions: protectionism, environment, and macro-level impacts(Colorado State University. Libraries, 2017) Bramblett, Russell, author; Vasudevan, Ramaa, advisor; Bernasek, Alexandra, committee member; Braunstein, Elissa, committee member; Stevis, Dimitris, committee memberAre Sanctions Motivated by Protectionism: This paper attempts to answer the question, "are sanctions the U.S. imposes on foreign countries motivated by trade protectionism"? Using sanctions votes in the U.S. House of Representatives from 2005-2015 and industry data within a given Congressional District, the empirical analysis indicates that with some types of sanctions bills and certain industries, Representatives' votes may be affected by the prevalence of industries within their district. The Necessary Conditions for Environmental Sanctions: Drawing from current environmental economics literature, this paper looks at the necessary conditions for carbon abatement and models the path to optimal carbon abatement using a country-level welfare-maximization model to illustrate the effects of pollution awareness on consumption optimization. This paper finds that social marketing is necessary for a country to increase its welfare by imposing environmental sanctions. A Time-Series Analysis of U.S. Sanctions Imposed from 1990 to 2015: Using time-series analysis and forecasting, this paper assesses the effects of sanctions using a dataset of U.S. imposed sanctions from 1990-2015. The analysis indicates that, 1. GDP is a good predictor of development assistance after a sanction, 2. export dependence is a good predictor of military expenditures after a sanction, and 3. contrary to previous research, constrained democracies are affected more by sanctions than pure democracies.Item Open Access Three essays on corruption in the Middle East and North Africa(Colorado State University. Libraries, 2022) Kirsanli, Fatih, author; Vasudevan, Ramaa, advisor; Tavani, Daniele, committee member; Zahran, Sammy, committee member; Dossani, Asad, committee memberThis dissertation focuses on the corruption phenomenon at the macro level in the Middle East and North Africa (MENA) after the Arab uprisings regarding its impacts on economic growth and income inequality. The first chapter investigates the relationship between corruption and economic growth. The results show that after the Arab Spring, corruption lowers economic growth. After clustering the MENA countries into three categories -- severe, moderate, and light -- according to the magnitude of the Arab protests and their outcomes, the results are obscure due to the low number of observations. Although the results are not significant in sub-sample regressions, they are robust for the entire data set with alternative corruption indexes. Furthermore, the findings verify that the natural resource curse is a valid argument. Lastly, the Chow test confirms that 2011, the year when the Arab protests started, constitutes a structural break. The second chapter examines the impact of corruption on income inequality. The findings concludes that there is no significant relationship between corruption and inequality for the entire data set. Then, the MENA region is categorized into three sub-regions as in the first chapter to test whether results constitute intra-regional heterogeneity. The robust results reveal a negative and significant relationship between the Arab Spring and inequality in severely affected countries. Nevertheless, the results are insignificant for moderately and lightly affected countries. The third chapter analyzes the heterogeneous findings of the previous chapters. In the first part, crony capitalism, democratization of corruption and rentier state models are discussed to explain the political-institutional characterization of severely, moderately and lightly affected countries. In the second part, severely affected countries are further examined on how corruption income inequality nexus rotates in terms of magnitude and sign and still significant after the Arab Spring. The political economy analysis helps to provide country and group-specific policy recommendations.Item Open Access Three essays on different nature and effects of capital flows among Asian and Latin American countries(Colorado State University. Libraries, 2017) Bolukoglu, Anil, author; Vasudevan, Ramaa, advisor; Bernasek, Alexandra, committee member; Braunstein, Elissa, committee member; Koontz, Stephen, committee memberThis dissertation contains three essays on the distinct nature and effects of capital flows on Asian and Latin American countries. Chapter I presents a Post-Keynesian open economy model to investigate the possible effects of capital flows on capacity utilization and distribution in Asian and Latin American countries. In the case of Asian countries, capital flows increase labor productivity through spill-over effects. The increase in labor productivity leads to a decrease in wage share of workers from national income which leads to lower prices. Lower price level results in real exchange rate depreciation and provides higher trade balances through enhanced competitiveness of export goods. In the case of Latin American countries, capital flows result in real exchange rate appreciation in the absence of capital controls. This real exchange rate appreciation decreases the cost of foreign borrowing, foreign intermediate goods and lower wage shares. In line with all these developments, capacity utilization increases, but trade balances deteriorate due to diminished export competitiveness. Chapter II addresses different dependent relations that lead divergent paths of Asian and Latin American countries toward globalization. Nature of dependency is detected through different types of shocks to current account balances. It is found that Latin American countries are dependent on center countries financially while Asian countries are dependent on world demand for their export goods. This divergent nature of dependent relations shape the nature of foreign capital that invests in these countries. Foreign investments in Latin American countries are domestic market oriented and for financing needs. These investments do not have future export revenue potentials and reproduces the dependency on international financial markets. Employment of capital controls and high structural domestic savings allowed Asian countries to be more selective in channeling foreign capital. They employed foreign investments to enhance export competitiveness. However, the export oriented path of development tied their economies to pattern of world trade and produced a divergent dependent relationship. Chapter III tests the dynamic relationship between capital flows, real exchange rate appreciation and trade balances in Latin American and Asian countries. The analysis suggests structural differences between Asian and Latin American countries. Different integration strategies followed in the era of globalization period led to distinct patterns in relation between capital flows and trade balances. In order to test the relationship, Panel Vector of Autoregression analysis and orthogonalized import response functions are employed. It is found that foreign capital flows affect trade balances negatively in Latin American countries. In the case of Asian countries, a positive relationship between capital flows and trade balances is detected, however this relationship is not statistically significant.Item Open Access Three essays on financial integration and trade liberalization(Colorado State University. Libraries, 2018) Le, Huong, author; Vasudevan, Ramaa, advisor; Bernasek, Alexandra, committee member; Braunstein, Elissa, committee member; Koontz, Stephen, committee memberThis dissertation is composed of three essays which examine the impact of financial integration and trade liberalization. Chapter I investigates the effect of financial openness on labor share of income by using four measures of the labor share of income: one unadjusted and three adjusted measures of income share which account for earnings from the self-employed workers. The author also uses both measures of capital account openness: de jure and de facto indicators. The empirical work is applied for a panel dataset of 30 countries during the period of 1970 – 2013. Despite using different measurement methods of the labor share of income and financial openness, the results from all specifications support the hypothesis that financial integration leads to a decline in the labor share of income for the all countries sample. Chapter II examines the macro-economic performance of Vietnam through the six phases of Doi Moi reform, and analyzes the impact of external liberalization on economic growth, aggregate demand, employment and income distribution. The decomposition of aggregate demand suggests that private investment was the most important determinant of Vietnamese economic growth during the period of 1994 – 2011, while government expenditure has become more significant since 2005, and the external sector together with government expenditure are the important driving factors of Vietnamese economic growth since 2012. The decomposition of overall labor productivity highlighted the fact that sectoral productivity growth of the service sector plays an important role in the improvement of overall labor productivity in Vietnam. Chapter III aims to investigate the impacts of external liberalization on Vietnamese economic growth and industrial performance at both regional and provincial levels. To this end, the author reviews regional and provincial economic and industrial performance in Vietnam during the period of vigorous reforms of the Doi Moi and external liberalization (1995-2015). The paper employs the fixed effect regression to test the relation of economic growth, industrial performance and trade liberalization at both regional and provincial levels. The estimation results suggest that FDI has positive and strongly significant impact on economic growth of five economic regions: The Red River Delta, Northern midlands and mountain areas, North Central area and Central Coastal area, South East and Mekong River Delta. The study suggests that FDI inflows and trade openness play very important role in accelerating economic growth and industrial performance at both the regional and provincial levels in Vietnam. Regions and provinces with better infrastructure seem to get more benefit from FDI and trade openness, which suggests that provincial authorities should invest in building new and more modern infrastructure and also formulating rules and regulations governing FDI inflows.Item Open Access Three essays on global imbalances(Colorado State University. Libraries, 2014) Kim, Hujin, author; Vasudevan, Ramaa, advisor; Bernasek, Alexandra, committee member; Mushinski, David, committee member; Koontz, Stephen, committee memberThis study assesses the global imbalances across three regions (Chapter I), from Korean economy context (Chapter II), and from the perspective of history of economic thought (Chapter III). Chapter I demonstrates the asymmetry of the international financial arrangement (IFA) by examining contrast adjustments in the triangular pattern of international private capital flows among the center, creditor, and debtor periphery. Based on the asymmetry it concludes that decentralized efforts by individual country have limitations and international coordination is inevitable to minimize the negative externalities of the capital flows in the world economy. Chapter II investigates the implications of global imbalances on the Korean economy by assessing the impact of Korea's foreign reserve accumulation on the macro economy and analyzing the distributional impacts of an exchange rate. Chapter III studies the global imbalances and international capital flows in a broader political-economy context from the history of economic thought. It observes that from the historical perspective challenges for policy makers and economist' philosophical foundation on global imbalances and international capital flows could be a parallel from the past to the present, if not an exact repetition. Using updated data it finds that a J-shaped proposition may be more relevant rather than the conventional U-shaped pattern of financial globalization because after 2000 the stock of assets has shown a drastic upward trend which is not comparable to that of the first era of financial globalization. To explain the changing pattern of financial globalization it suggests an analytical framework by combining 'Trilemma', tension between regulation and financial market, and the role of key currency or hegemonic money. It also identifies two competing views on the financial globalization by introducing the British Currency and Banking School debate in mid-19th century, analyzing their impacts on the theory of money and economic beliefs, and then tracing their trajectories to late economic thoughts such as the Neoclassical Synthesis, Modern monetarists, Modern Austrian School, Keynesian, New-Keynesian, New-Classical and Post-Keynesian economics.Item Open Access Three essays on globalization of trade and structures of economic growth and (under) development: comparative analysis of advanced and emerging nations(Colorado State University. Libraries, 2020) Ganguly, Arpan, author; Braunstein, Elissa, advisor; Vasudevan, Ramaa, advisor; Tavani, Daniele, committee member; Zahran, Sammy, committee member; Stevis, Dimitris, committee memberWith the rise of neoliberal perspectives on economic policy and development in the 1980s came a new phase of globalization in the world economy. Quantitative increases in trade and financial flows, coupled with qualitative changes in corporate strategy and governance have been elemental to this process. Globalization of trade and production has integrated developed and underdeveloped regions of the world in a process of capitalist expansion and accumulation, one that has at times delivered bouts of growth in some countries, but little in terms of economic development or improvements in employment in others. This dissertation seeks to understand linkages between the globalization of trade and structures of development and under-development. Chapter 1 empirically evaluates the impact of trade and globalization on the quality of employment, particularly wage inequality by skill type and the functional distribution of income. This paper argues that rather than changes in relative prices, the link between trade and wage inequality is better explained by the mechanism of skill-intensity reversals. This is evident in trade's negative impact on less-skilled labor's skill intensity in production. Particularly for emerging nations, gains from external integration based on exploiting resource or skill-based differences in comparative advantage seems to have become transitory over time. Chapter 2 models the multifaceted impacts of trade and globalization on economic growth, using principal component analysis to differentiate among groups of countries based on how global capital interacts with domestic macroeconomic structures. This paper ties together a wide range of structuralist growth models to provide a unified narrative on regimes of globalization and growth. Chapter 3 evaluates the impact of trade globalization on economic development through its impact on structural change. This paper groups the analysis of regional differences in structural change in the development literature into three broad categories. Data on sectoral composition of value-added trade, output and employment is used to emphasize these regional dynamics, highlighting how internal and external constraints on the industrial sector lie at the heart of these challenges.Item Open Access Three essays on labor, gender and development(Colorado State University. Libraries, 2022) Sedai, Ashish Kumar, author; Vasudevan, Ramaa, advisor; Pena, Anita Alves, advisor; Miller, Ray, committee member; Bhattarai, Niroj, committee member; Kroll, Stephan, committee memberIn my PhD dissertation, I write three research essays on labor, gender and development in India. These essays are based on applied economic research and use longitudinal data estimation techniques. These essays relate to my overall interest in topics surrounding inadequate access to basic infrastructures–electricity, water and credit–and their impact on gender inequities, development opportunities, health, education and labor force participation in India. The first essay focuses on informal finance and women empowerment from an economic and non-economic standpoint. The second essay examines reliable electrification and gender differences in employment, health and household decision making. The third chapter discusses access to piped water and gender differences in employment, health, education and household decision making. The first essay titled, Friends and Benefits? Rotating Savings and Credit Associations as Alternative for Women's Empowerment in India, co-authored with Ramaa Vasudevan and Anita Alves Pena, builds on a theoretical model of Rotating Savings and Credit Associations (ROSCAs). In informal social and financial organizations like ROSCAs, members contribute to a common pot of money that is awarded to a different member at each meeting randomly or through a bid. This study examines the effects of ROSCA on women's socio-economic freedom and autonomy at the national level in India. We compare ROSCAs to agency based micro-credit schemes and analyze their effects using nationally representative longitudinal gender-disaggregated data from 2005-2012. Building on a theoretical model of household savings and spousal bargaining power, we use individual fixed effects and instrumental variable regressions to test the theoretical predictions. Among others, results show that ROSCA membership increases the likelihood of women's cash in hand for expenditure by 1.7 percentage points, say in major purchase decisions by 3.9 percentage points and fertility choice by 4.7 percentage points. These margins exceed those for exogenous micro-credit schemes and are robust to sensitivity tests. This study is the first to contrast ROSCAs with other micro-credit schemes at the national level. We propose scaling up and associating longstanding ROSCAs with self-help groups for more inclusive development. The second essay titled, Does Reliable Electrification Reduce Gender Differences: Evidence from India, co-authored with Ramaa Vasudevan, Anita Alves Pena and Ray Miller, looks at the issue of the lack of reliable electrification in India despite massive improvements in electricity access in the past decade. We argue that reliable electricity could reduce the time allocated to home production thereby increasing labor market participation, more for women than men. This essay is purely empirical in nature and revolves around the issue of electrification and gender differences in India. We analyze the effect of quality of electricity on gender differences using a comprehensive set of labor and non-labor market outcomes in India viz. labor force participation (usual status and usual principal status of employment), fuel and water collection, decision making for women and choices of fuel and energy for the household. Using the temporal variation in household electricity hours from the India Human Development Survey (2005-2012), we use individual fixed effects and instrumental variables regressions. Our analysis reveals contrasting trends with significant progress at the extensive margin of electricity access, but little progress at the intensive margin of quality, hours of electricity. We find that reliable electrification improves socio-economic status of women relative to men through increased employment opportunities and reduced time allocation to home production. For instance, 10 more hours of electricity increases the likelihood of employment in the 'usual status' by 2.1 pp for men, and 3.9 pp for women. The study recommends considering electricity as a right, and as part of the broader strategy for reducing gender disparities in India. The third essay titled, Who Benefits from Piped Water? Evidence from a Gendered Analysis in India looks at the effect of access to piped water on employment in farm work, wage/salary work, work days, earnings, health and education outcomes by gender in India. Developing countries, including India, have made impressive progress in providing households with piped water in the last two decades. Yet, access and quality of water available for daily use remains very low. Given the disproportionate burden of home production, the 'hidden' agricultural labor of women, and the fact that India has inadequate access to clean water for daily use, intra-household labor and health inequality could be larger in the absence of piped water access. The disproportionate burden on women of water collection and distribution in the household in developing economies calls for a study on the relationship between piped water supply and gender differences in employment, women's health, child health and education. I use spatiotemporal data from the largest gender disaggregated human development survey in India, 2005–2012, and carry out econometric analyses using individual fixed effects, village fixed effects and instrumental variable regressions to evaluate the effects. Results show that household access to piped water increases the likelihood of wage/salary employment by 11 percent, and annual earnings increase by 14 percent for women, comparatively higher than men, but only in rural areas. In urban areas, there is no effect of pipe water on women's employment. With piped water, women's self-reported health improves; child's health and education outcomes also improve. The study recommends evaluating the social demand curve for piped water supply, and the consideration of piped water supply as necessity, as part of a broader strategy to reduce gender differences and minimize poverty. Overall, these essays are motivated by the lack of emphasis and policy action on micro-credit and basic infrastructures for the poor and the disadvantaged, especially in rural India. Therefore, all three papers in this dissertation provide policy recommendations to problems of India's economic development relating to gender inequity, marginalization, unemployment, education and health, which thread the three essays together.Item Open Access Three essays on U.S. foreign assistance spending and U.S. politico-military integration(Colorado State University. Libraries, 2021) McCarthy, Christopher David, author; Vasudevan, Ramaa, advisor; Pressman, Steven, committee member; Braunstein, Elissa, committee member; Koontz, Stephen, committee memberSimulations show that recipient nations are directly impacted by U.S. foreign assistance spending (in the form of U.S. economic and military aid) in a manner similar to transfer payments, spurring growth, and easing liquidity constraints. U.S. foreign assistance spending is often accompanied by U.S. politico-military integration, which is defined by the presence of the: (1) receipt of U.S. economic aid, (2) receipt of U.S. military aid, and (3) integration into the U.S. security apparatus through hosting U.S. troops and/or bases or through military or political treaties. Using a new comprehensive RAND database of all U.S. security-related agreements since 1955, I create a new database showing which country-years have active (a) U.S. military treaties (b) U.S. political treaties. Also new is the inclusion of David Vine's Base Nation database, detailing the location and existence of all recognized, unrecognized, and U.S.-funded bases. Lastly, I update another of RAND's databases, one detailing U.S. troop deployment abroad to include the most recent years. Empirical analysis shows a more complicated set of results than those derived in the simulations. Using deep lags and controlling for politico-military integration and U.S. military aid, I find limited evidence that U.S. economic aid is effective in development. This associated positive impact of U.S. economic aid is never large enough to overcome the associated negative impact of U.S. military aid and U.S. politico-military integration. While U.S. political treaties show a slight impact on economic growth, U.S. military aid, U.S. military bases, and U.S. military treaties overwhelm any positive impact on growth and FDI, with a resulting net effect that is significantly negative for the recipient.Item Open Access Wealth composition, capital flows, and the international financial system(Colorado State University. Libraries, 2020) Baqais, Uthman Mohammed S., author; Vasudevan, Ramaa, advisor; Bernasek, Alexandra, committee member; Braunstein, Elissa, committee member; Koontz, Stephen, committee memberInternational capital flows play a critical role in the development process. On the one hand, a stable stream of capital flows could augment the capital stock accumulation of a country and, hence, spur economic growth. On the other, volatile capital flows increase the risks that could induce financial and economic crises. Moreover, contrary to the efficient allocation implied by the neoclassical growth theory, Lucas (1990) poses the paradox of "Why Doesn't Capital Flow from Rich to Poor Countries?". Recent studies also demonstrate an even stronger phenomenon known as the allocation puzzle or upstream capital flows. That is, fast-growing emerging markets have associated with net capital outflows on average (e.g., Gourinchas and Jeanne 2013). While previous studies provide explanations about cross-country differences in human capital (Lucas 1990), institutional quality (Alfaro et al. 2008), I argue that the capital flows are also explained by differences in natural resources in the current era of financial globalization. In general, I demonstrate the role of initial wealth compositions. In this dissertation, I define capital stock more broadly than the standard neoclassical growth model in terms of wealth accumulation, comprising physical capital, human capital, natural capital, net foreign assets, social capital, and domestic financial capital (as in Gylfason 2004). By exploiting a recent database on wealth accounting by the World Bank, I find that the wealth composition matters in explaining capital flows across 108 countries over 1995-2015. More importantly, results of Chapter 1 suggest that initial abundance measures of subsoil natural resources and net foreign asset positions explain much of the subsequent annualized average net capital inflows. An alternative measure of net capital inflows also suggests a stabilizing role of the valuation effects in the international financial system. In sum, measures of wealth abundance and net capital inflows should be considered carefully in studying the patterns of international capital flows. Results from the typical measure suggest that capital mobility allows subsoil resource-rich countries to invest their resource rents abroad, so they could better smooth the use of resource windfalls. Therefore, the inclusion of natural capital emphasizes the role of economic management in whether to channel rents toward productive investment and human capital to industrialize the economy, or to accumulate foreign assets for exchange rates managements and for precautionary motives due to volatile international commodity prices. It should be noted that there is no evidence on the neoclassical allocative efficiency— the relationship between economic growth rates and net capital inflows. Due to the insignificant finding of the allocative efficiency, Chapters 2 and 3 extend and modify the first chapter's conceptual framework. Chapter 2 investigates not only international capital flows but also some explanations for the persistent global imbalances. Using a unified sustainable growth framework with a broad definition of total wealth, I demonstrate that there could be specific spillover effects (or specific complementarities) rather than an overall complementarity effect, which is simply proxied by real per capita growth rates. For instance, the interaction between human capital and physical capital generates a positive spillover effect, as explained by Lucas (1990). Thus, the departure from the focus on the overall complementarity to specific complementarities and tradeoffs in capital stocks provides us with a way of testing for 13 hypotheses, motivated by the broad literature of international finance and sustainable development. Some of these are about a human capital externality, the global saving glut argument, and negative spillover effects from natural capital on institutions and financial development. I also test for Blecker's (2005) argument on comparative advantage in selling financial assets and find supporting evidence. The implication of such findings implies that the current account (CA) deficit countries with highly developed financial systems have benefited from the current international monetary and financial system (IMFS) through the role of valuation effects. On the other hand, financial liberalization allows subsoil-rich economies to smooth the use of windfalls through foreign reserves accumulation. Other developing countries with CA surpluses due to excess savings, rather than low imports, reflect the flaws in the current IMFS. Chapter 3 is motivated by utilizing theoretical insights from overlapping generations (OLG) models with non-Ricardian equivalence, rather than the assumption of the infinitely lived agent as in previous chapters. I, therefore, examine not only net total capital inflows but also consider the distinction of private and official flows. In addition to the heterogeneities in economies' wealth compositions, I investigate the role of demographic structures by highlighting the aging population phenomenon. In other words, while using the unified sustainable growth framework with a broad definition of wealth, I distinguish between private and official capital flows, and between the relative ratios of young and old groups to the working-age population. All these factors relate to capital flow movements through their effects on saving-investment decisions. Overall findings support the adoption of OLG with non-Ricardian equivalence models in analyzing aggregated and disaggregated capital flows. Also, the inclusion of demographic factors seems to correct for the omitted variable bias. Moreover, cross-country differences in initial wealth compositions are of great importance for different types of disaggregated capital flows, and so policy implications differ accordingly.Item Open Access Why prices matter: terms-of-trade, structural change, and development(Colorado State University. Libraries, 2018) Duvall-Pelham, Alexander, author; Tavani, Daniele, advisor; Vasudevan, Ramaa, advisor; Braunstein, Elissa, committee member; Cavalieri, Renzo, committee memberTo view the abstract, please see the full text of the document.