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Evaluating The Forward Citations-Patent Value Relationship: The Role Of Competition

By Neelesh T. Moorthy

I assess whether forward citations—how often patents are cited by subsequent patents—reliably capture patent quality. A high-quality invention might lack forward citations if there are no competing, patenting firms. This introduces measurement error in using citations to measure patent value. I test whether greater competition makes forward citations better measures of patent quality, with eight and twelve-year patent renewal rates serving as my benchmark measures of patent quality. Patent data come from the manufacturing survey in Cohen, Nelson, and Walsh (2000). I conduct logit regressions of patent renewal on forward citations and the number of competitors faced by surveyed manufacturing labs. While the regression results do not support the competition hypothesis, they confirm that forward citations positively predict renewal. They also lend insight into firms’ strategic renewal decisions.

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Advisors: Wesley Cohen and Michelle Connolly | JEL Codes: O31, O34

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

Evaluation of the Impact of New Rules in FCC’s Spectrum Incentive Auction

By Elizabeth Lim, Akshaya Trivedi and Frances Mitchell

On March 29, 2016, the FCC initiated its first ever two-sided spectrum auction. The auction closed approximately one year later, having repurposed a total of 84 megahertz (MHz) of spectrum. The “Incentive Auction” included three primary components: (1) a reverse auction where broadcasters bid on the price at which they would voluntarily relinquish their current spectrum usage rights, (2) a forward ascending clock auction for flexible use wireless licenses which determined the winning bids for licenses within a given geographic region, and (3) an assignment phase, where winning bidders from the forward auction participated in single-bid, second price sealed auctions to determine the exact frequencies individual licenses would be assigned within that geographic region. The reverse auction and the forward auction together constituted a “stage.” To guarantee that sufficient MHz were cleared, the auction included a “final stage rule” which, if not met, triggered a clearing of the previous stage and the start of a new stage. This rule led to a total of four stages taking place in the Incentive Auction before the final assignment phase took place. Even at first glance, the Incentive Auction is unique among FCC spectrum auctions. Here we consider the estimated true valuation for these licenses based on market conditions. We further compare these results to more recent outcomes in previous FCC spectrum auctions for wireless services to determine if this novel auction mechanism
impacted auction outcomes.

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Advisor: Michelle Connolly | JEL Codes: L5, O3, K2, D44, L96

Entrepreneurial Attractiveness: Amazon, Google, and the Search for Innovative Hot Spots

By Anna Katherine Kropf

Recent economic literature suggests that entrepreneurship in technological fields can spur economic growth, making it a popular topic for city development officials. Yet, this increasingly popular phenomenon is met by many economic questions. One of those questions is which characteristics of metropolitan areas are attractive to entrepreneurs. To answer the question of attractiveness on both the small business and corporate levels, I compare across two case studies: Amazon’s search for a second headquarters and Google’s tech hub network. Using principal component analysis, I statistically deduce seven components of attractiveness from an original 34 variables. These components are then weighted using three methods—a case study, a survey, and an empirical method—to produce comparable indices of attractiveness. Generally, I find that sizeable population and healthy economy are the strongest components. However, the statistically insignificant components that can change an urban area’s ranking considerably are talent and geographic network effects. Ultimately, creating policy to maximize these aspects can change a city’s innovative

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Advisor: Dr. Charles Becker | JEL Codes: O, O3, R, R1, R11

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

Effect of Slum Redevelopment on Child Health Outcomes: Evidence from Mumbai

By Suhani Jalota

As the population of urban poor living in slums increases, governments are trying to relocate people into governmentprovided free housing. Slum redevelopment affects every part of a household’s livelihood, but most importantly the health and wellbeing of younger generationsThis paper investigates the effect of slum redevelopment schemes on child stunting levels. Data was collected in fortyone buildings under the slumredevelopment program in Mumbai. The study demonstrates through a fixed effect regression analysis that an additional year of living in the building is associated with an increase in the heightforage Zscore by 0.124 standard deviations. Possible explanations include an improvement in the overall hygienic environment, sanitation conditions, indoor air pollution, and access to health and water facilities. However, anecdotal evidence suggests that water contamination, loss of livelihood and increased expenses could worsen health outcomes for residents. This study prompts more research on the health effects of slum redevelopment projects, which are becoming increasingly common in the rapidly urbanizing developing world. 

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Advisor: Erica Field, Michelle Connolly | JEL Codes: O12, O14, O17, O18, O22 | Tagged: Urban infrastructure, Microeconomic Analyses of Economic Development, Child health, Informal settlements, Project Analysis

The Effects of Global Oil Price on Government Investment the Nigerian Agricultural Sector

By Chuka Obiofuma

Nigeria’s heavy dependence on oil makes it a prime target for the resource curse. The occurance of this phenomenon in Nigeria could mean that there is capital flight from the agricultural sectors of the economy when the oil sector increases in profitability. This would disproportionately hurt the poor of Nigeria who depend on agriculture for their livelihood. This work investigates whether or not the Nigerian government, the largest investor into the Agricultural sector, tends to increase or decrease its investment in the agricultural sector as global oil prices rise. Using data from the years 1978-2014, the results of this paper show that as oil prices increase so too does the Nigerian government’s investment in its agricultural sector.

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Advisor: Alison Hagy, Gale Boyd | JEL Codes: I28, O13, Q43 | Tagged:  Agriculture, Energy, Government Policy

The Effect of Social, Cultural, and Political Values on Entrepreneurial Perceptions and Venture Creation: A Global Investigation

By Repton Salisbury

The effect of entrepreneurial activity on economic development has been researched thoroughly. New firm creation spurs economic growth by creating employment opportunities, cultivating innovation, and encouraging competition. Globally, there are countless areas that could benefit from a livelier entrepreneurial ecosystem. So how does a government or population first spur entrepreneurial activity? An entrepreneur’s perceptions are among the most powerful factors that impact the life or death of a new venture, but the determinants that influence how these perceptions first form are still largely unknown. Using survey data collected by the Global Entrepreneurship Monitor in 2010 across the United States, Japan, Switzerland, Israel, United Kingdom, Peru, Russia, Iran, and China, I conduct binary logistic regressions of individual level characteristics, social ideals, cultural norms, human development, and other environmental attributes on the most important perceptions of entrepreneurs. These perceptions have been identified by previous research as an entrepreneur’s perception of local opportunities, internal skills, and fear of failure in creating a new venture. I find that several social, cultural, and political values have a significant effect on the psychological behavior of nascent entrepreneurs.

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Advisor: Alison Hagy, Grace Kim | JEL Codes: L2, L26, O17 | Tagged: Culture, Entrepreneurship, Perceptions, Venture Creation

Variations in Turkey’s Female Labor Market: The Puzzling Role of Education

By Rachael Anderson

Although Turkey ranks among the world’s 20 largest economies, female labor force participation in Turkey is surprisingly low.  Relative to other developed countries, however, the proportion of Turkish women in senior management is high.  One explanation for these contrasting pictures of Turkey’s female labor force is education.  To better understand how women’s education and household characteristics explain variations in Turkey’s female labor market, I use annual Turkish Household Labour Force Survey data from 20042012 to estimate five probabilities: the likelihood that a woman (1) participates in the labor force, or is employed in an (2) agricultural, (3) blue collar, (4) lower white collar, or (5) upper white collar job.  I find that labor force participation is relatively high among female primary school graduates, who are most likely to work in agricultural and blue collar jobs.  Highly educated married women are the most likely group to participate in upper white collar jobs, and families favor sending single daughters over wives to work during periods of reduced household income.

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Advisor: Kent Kimbrough, Timur Kuran | JEL Codes: C51, J21, J23 | Tagged: Employment, Labor-force Participation, Occupation Women

Inflation Volatility and Economic Growth: A Disaggregated Analysis

By Nicholas Becker

Inflation volatility has been theorized to negatively affect real economic growth, but empirical analyses have returned somewhat mixed results. Constructing my own dataset of household group inflation rates by disaggregating and linking Consumer Expenditure Survey data with Consumer Price Index data, I analyze inflation volatility and economic growth from the ground-up. Calculating inflation volatility using a moving-window methodology, I find: 1) significant heterogeneity of inflation volatility across household groups; 2) a negative correlation between inflation volatility and economic growth from 2000-2012 for all household groups, with a stronger negative correlation at lower income levels; 3) a positive correlation between volatility and growth during expansions and a negative correlation between volatility and growth during recessions. Results suggest reducing inflation volatility and refining policymaking to account for the heterogeneity of inflation volatility could improve growth over the longrun. Further analysis is warranted.

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Advisor: Nir Jaimovich | JEL Codes: E31, E32, O40 | Tagged: Inflation, Economic Growth


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Director of the Honors Program
Michelle P. Connolly