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The Impact of Microfinance on Women’s Empowerment: Evidence from Rural Areas of Uganda

By Sonia Maria Hernandez

Microfinance is the practice of extending small collateral-free loans to underserved populations in developing areas with no access to credit. The Village Savings and Loan Association (VSLA) randomized access to microfinance treatment for women in rural areas of Uganda and tracked outcomes through surveys. This research determines the impact of microfinance by analyzing outcomes over five dimensions of women’s empowerment, including decision making power, community participation, business outcomes, emotional wellness, and beliefs about women. The strongest results showed that access to the VSLA program empowered women in terms of business outcomes and decision-making power. This leads to the conclusion that microfinance can more easily impact how a woman behaves within the household than change how a woman behaves within the community.

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Advisors: Professor Kent Kimbrough, Professor Lori Leachman | JEL Codes: O1, O12, O35

The Future of Economic Geopolitics: Network Effects in Intercultural Trade

By Joshua Curtis

Using a regression discontinuity design on a gravity model of trade among 36 Middle Eastern and East Asian countries between 1980 and 2014, this study demonstrates network effects in trade. A small improvement in trade between subsets of two cultural blocs diminishes the effect of cultural similarity on trade between all members of the two cultural blocs. The result holds regardless of whether cultural similarity was originally a boon or drag on trade. Furthermore, international businesses adjust to new intercultural acumen very rapidly. The effect demonstrated herein points toward an answer to economic dilemmas posed by Huntington’s “clash of civilizations.”

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Advisor: Dr. Lori Leachman, | JEL Codes: F1, F5, B27

The Impact of a Fixed Exchange Rate Regime on Growth and Volatility in an Oil-­‐‑dependent Economy

By Shihab Osman Malik and Faisal Bandar Alsaadi 

This study examines the relationship between the fixed exchange rate regime, economic growth, and output volatility in oil-­‐‑producing Saudi Arabia over the post-­‐‑Bretton Woods period (1973–2016). We assess the implications of the current exchange rate regime on macroeconomic and growth performance, and evaluate its sustainability in the context of oil-­‐‑dependency and market dynamics. We develop and employ a theoretical framework and empirical specification based on previous literature to find that for Saudi Arabia, the fix is associated with faster growth and lower output volatility. We believe the result is primarily driven by the credibility of the fix in terms of establishing a strong nominal anchor and monetary policy framework.

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Advisor: Lori Leachman | JEL Codes: E42, F31, F36, F41, O53

What Fosters Innovation? A CrossSectional Panel Approach to Assessing the Impact of Cross Border Investment and Globalization on Patenting Across Global Economies

By Michael Dessau and Nicholas Vega

This study considers the impact of foreign direct investment (FDI) on innovation in high income, uppermiddle  income and lowermiddle income countries. Innovation matters because it is a critical factor for economic growth. In a panel setting, this study assesses the degree to which FDI functions as a vehicle for innovation as proxied by scaled local resident patent applications. This study considers research and development (R&D), domestic savings, imports and exports, and quality of governance as factors which could also impact the effectiveness of FDI on innovation. Our results suggest FDI is most effective as inward direct investment in countries outside the technological frontier possessing adequate existing domestic investment capital and R&D spending to convert foreign investment capital and technological spillover into innovation. Nonetheless, FDI was not a consistent indicator for innovation; rather, the most consistent indicators across this study were R&D and domestic savings. Differences amongst income groups are highlighted as well as their varying responses to our array of causal factors.

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Advisor: Lori Leachman | JEL Codes: A10, B22, C82, E00, E02, O10, O11, O30, O31, O32, O33, O34, O43

Video Game Sales: Does Diversity Pay?

By Helena Wu

The video game industry has grown into a mature market in the past decade, surpassing the size of the U.S. film industry in 2009. As a result of the rise in popularity of video gaming amongst many demographic groups of the American population, the underrepresentation of female and ethnic minorities in video games has become an increasingly relevant topic of discussion. This paper empirically examines the effects of including female and ethnic minority lead characters on the equilibrium sales volume of video games. Through the use of a reduced-­‐form regression, the equilibrium quantity is regressed on a list of exogenous variables pertinent to the interest of this study. The findings suggest that the inclusion of female and minority lead characters affects sales of different genres of games in distinct manners, suggesting that the video game market has a heterogeneous consumer base with a diverse range of preferences. In addition to empirical work, one of the main contributions of this paper is creating a new and unique dataset (N=712) on game attributes, especially with regard to character gender and ethnicity. This paper’s findings have implications on the game design decisions for video game producers.

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Advisor: Kent Kimbrough, Loi Leachman | JEL Codes: D00, L1, L82 | Tagged: Entertainment, Ethnicity, Gender, Sales, Video Game

Fiscal Multicointegration and Sustainability in OECD Economics

By Rajlakshmi De

Policies surrounding government expenditures and revenues are often concerned with the size of the national public debt and whether it is sustainable or unsustainable by employing the multi-cointegration framework and assertion corresponding criteria for sustainability. Denmark, Norway, Finland, Canada, Sweden, Portugal, and Austria are found to exhibit sustainable fiscal policies during the paper’s sample period, whereas the policies of the United States, Italy, France, Netherlands, United Kingdom, Spain, and Japan are determined to be unsustainable.

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Advisor: Kent Kimbrough, Lori Leachman | JEL Codes: E6, E61, E62, E66 | Tagged: Fiscal, Multicointegration, Sustainability

Foreign Aid Allocation and Impact: A Sub-National Analysis of Malawi

By Rajlakshmi De

Understanding the role of foreign aid in poverty alleviation is one of the central inquiries for development economics. To augment past cross-country studies and randomized evaluations, this project data from Malawi is used in combination with multiple rounds of living standards data to predict the allocation and impact of health aid, water aid, and education aid.  Both instrumentation and propensity score matching methods are used.

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Advisor: Kent Kimbrough, Lori Leachman | JEL Codes: F35, I15, I25, I32, O12 | Tagged: Development, Education, Foreign Aid, Health, Malawi, Water

Fundamental Volatility’s Eect on Asset Volatility

By Evan Beard

This paper examines the effect of macroeconomic variable volatility on implied and realized asset price level volatilities in the U.S. using monthly data from 1986 – 2008. Two approaches are taken: An autoregressive distributed lag model using rolling standard deviations and a GARCH model. The S&P 500’s volatility is used as a proxy for historical (actual) volatility and the VIX is used as a proxy for implied volatility. For the distributed lag model, each linear regression tests granger causality (using Newey-West robust standard errors) of a single macroeconomic variable by incorporating lagged values (as determined by comparing Bayesian Information Criteria of both the constructed macroeconomic variable and the dependent asset volatility variable). Capacity utilization, PPI, and employment volatility are found to be significant for predicting S&P volatility, while PPI and M2 volatility are significant for the VIX. For the GARCH regressions, terms of trade, employment, and capacity utilization volatility are statistically significant. Forecasts are then constructed using those variables shown to be granger casual, but a two-sided t-test rejects the null hypothesis that forecast errors are zero in every case.

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Advisor: Lori Leachman

Property Rights and Growth: a Matter of Extremes

By Joshua Kazdin

This text explores the impact of property rights on economic growth by analyzing pooled cross-section ratings of property rights in 120 countries across a 35 year period. Empirical results are couched within a theoretical model that incorporates institutions into a general production function, adding property rights as an idiosyncratic shock. A generalized multivariate regression controlling for capital investment, population growth, trade openness and a benchmark level for GDP exhibits a positive impact of property rights on growth. Additional results indicate that the magnitude of property rights’ impact varies across different stages of development with the most profound impact in the extremes, i.e. the most developed and least developed countries. The text concludes by investigating the impact of legal heritage on the effectiveness of property rights as a growth propellant.

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Advisor: Lori Leachman


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Jennifer Becker

Director of the Honors Program
Michelle P. Connolly