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(2011)ThesisSince the beginning of the economic reforms launched in 1978, China has been in the transition from a centrally planned system to a market-oriented economy. This transition, accompanied with the rapid economic growth, has exerted profound effects on China's labour market. This PhD dissertation, consisting of three empirical essays, investigates the heterogeneous returns to schooling among Chinese urban residents, the distributional gender wage differential issue among rural-urban migrants and the wage effects of the mismatch between college major and occupation among recent college graduates in China. The three microeconometric labour studies provide new insights into the understanding of the wage determination, wage differentials and wage structure in urban China for different population groups during China's economic transition.
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(2010)ThesisThis dissertation explores the issues of market design for emissions trading schemes by focusing on penalty designs and initial allocation mechanisms. Penalty design is defined in terms of penalty types and levels and the allocation mechanism compare free allocation with auctioning. The first essay employs a theoretical model to examine compliance incentives and market efficiency under three penalty types: the fixed-penalty rate (FPR), the make-good provision (MGP), and the mixed penalty design. Using a simple two-period model of firm’s profit maximisation, we analyse compliance decisions and the efficient penalty level under each penalty type. Our findings indicate that the penalty type does not affect compliance decisions provided that the efficient penalty level is applied. Market efficiency is retained regardless of penalty types. These findings are used as the hypotheses for the second essay. The behavioural implications of penalty designs on market performance are investigated in the second essay using an experimental method. Three penalty types and two penalty levels are enforced in a laboratory permit market with auctioning wherein subjects make compliance decisions by undertaking irreversible abatement investment decisions or by buying permits. In contrast to theory, we find that penalty levels serve as a focal point that indicates compliance costs and affects compliance strategies. The MGP penalty provides stronger compliance incentives than the other penalty types. Most importantly, a trade-off between investment incentives and efficiency is observed. Using a laboratory experiment, the third essay studies how the initial distribution of permits through free allocation or auctioning, may affect price discovery, allocative and static efficiency under the presence of three penalty designs. Price discovery is not influenced by the initial allocation mechanism. Permit prices remain above the efficient level due to the presence of irrational bidding and trading behaviour as well as risk aversion. Uncertainty regarding permit prices results in a modest allocative efficiency as over-investment prevails. Auctioning evidently generates higher static efficiency due to stronger price signals. This result supports the majority of literature which argues for auctioning. An appropriate auction design is crucial to avoid the risk of overbidding which will inflate the auction price and diminish efficiency.
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(2011)ThesisA general Bayesian sampling method is developed that uses parallel chains to select between models and to average the predictive density over such models. The method applies to both non-nested models and to nested models, and is particularly useful for mixtures of complex component models, where a novel approach to overcome the label-switching problem is used. The method is illustrated with real and simulated data in model-averaging over alternative financial time series models, mixtures of normal distributions, and mixtures of smoothing spline models. In chapter 4 the method is extended to improve the efficiency of the sampling scheme. Mixture models are revisited in chapter 5 and compared to model averaging on simulated data sets and financial time series data. Chapter 6 applies mixture models to account for non-stationarity in time series data.
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(2011)ThesisThis doctoral thesis provides three economic studies addressing challenging areas for development in the electricity sector, namely decentralised electricity supply, demand growth and air pollution. The first paper investigates the effects of environmental and renewable energy policies on the integration of small-scale distributed generators (DGs) into electricity markets using the price leadership model. This paper shows that under specific market conditions such as large market size, high willingness to pay and high marginal costs of the electricity network, centralised generators do not underbid DGs. After attaining profits, new DGs enter the market. Environmental and renewable energy policies favour this market interaction resulting in a decrease in electricity prices due to increased competition in the electricity sector. Numerical simulations illustrate the potential of decentralised technologies based on wind, solar, biomass and natural gas. The second paper uses seasonal Autoregressive Distributed Lag Models to forecast regional electricity peak demand two years ahead, with the purpose of assessing future needs for reserve capacity. The forecast model combines features of short-run dynamics and an underlying long-run trend associated with economic and demographic growth. Future distributions of peak demand are generated by 'constrained' non-parametric resampling techniques providing plausible temperature series, while incorporating climate change effects. The paper shows that forecast accuracy is improved by explicitly modelling weather dynamics at multiple sites. Furthermore, the seasonal distributions forecasts are found to be superior compared with those currently in use. This is, particularly, in relation to the mean and providing the probability of exceeding a threshold for reserve capacity. The third paper evaluates the effect of environmental taxes on the emissions of Nitrogen Oxides, Sulfur Oxides and Coarse/Fine Particulate Matter from electricity generators in New South Wales. The estimation is based on a Seemingly Unrelated Regression with fixed effects. It was found that, except for Sulfur Oxides, there is no significant abatement due to the taxes. The overriding effect is linked to electricity demand, but there are other key aspects such as the participation in pollution reduction programs and monitoring. The findings and their significance for environmental policy are discussed in perspective with international experiences.
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(2010)ThesisThis dissertation comprises three independent but complementary chapters, all of which use advanced time series and panel data econometric techniques to study asymmetries in consumer demand response to price changes, as well as industrial and state/territory responses to monetary shocks in Australia. The first contribution develops an autoregressive distributed lag model using Australian supermarket scanner data. Specifically, we use data from sales of similar products manufactured by the competitors Coca-Cola and Pepsi-Cola and find that demand response to price changes is not asymmetric for the market leader Coca-Cola but is strongly asymmetric for its competitor Pepsi-Cola. This suggests that consumers of the less expensive good stock up when prices go down but the consumers of the more expensive good do not. The second contribution analyses the industrial impact of monetary shocks in Australia. These impacts are quantified by constructing a structural vector autoregressive (SVAR) model for a small open economy. Our results show that construction and manufacturing industries exhibit a significant reduction in gross value added (GVAs) after an unanticipated rise in the official cash rate. In the finance and insurance; and mining industries, however, we find that there is a positive or neutral response to these shocks,. Based on the responses, we constructed a model to quantify which sources are more likely to be accountable for these different responses. The third contribution develops a SVAR and a structural vector error correction (SVEC) model to explore the impact of monetary policy across states and territories in Australia. Our results indicate that monetary shocks largely affect economic activity in Western Australia. In smaller proportion, those shocks generate contractions in New South Wales, Victoria and South Australia, while economic activity in Queensland and Tasmania is significantly less affected. In terms of state/territory exports response, our results indicate that monetary shocks contract exports in greater proportion in South Australia and Victoria than in other states and territories. Finally, the determinants of state/territory responses are studied. Our estimation indicates that the share of services, farm and mining exports is an important determinant of state/territory export responses.
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(2011)ThesisThis dissertation, entitled Essays in International Economics, consists of a collection of articles and a review chapter. It investigates the economic linkages between countries and how these linkages affect the transmission and propagation of shocks across national borders. For the most part, it focuses on mechanisms that cause variation in economic aggregates and drive international co-movements, using the framework of calibrated twocountry equilibrium business cycle models. The literature on international business cycle models has resorted to financial frictions and new sources of disturbances to address the ”international comovement puzzle” and the ”quantity anomaly”. The former refers to the tendency for models to predict negative cross-country correlations of investment and employment, when the reverse is observed in the data. The latter refers to the positive gap between consumption and output comovements predicted by theory, in contrast to the negative gap seen in the data. A further feature of business cycles that the literature has found difficult to address is the countercyclical behavior of net exports. This dissertation introduces a class of models driven by productivity shocks alone that feature (i) complete international financial markets, (ii) time nonseparable preferences and (iii) arbitrarily small wealth effects on labor supply. It is shown that a one-good, two-country model with these characteristics can account for the international comovement puzzle. It also reduces the gap between international correlations of output and consumption, but fails to change their order. A version of this model with imperfectly substitutable intermediate goods accounts for the international comovement puzzle and, moreover, delivers countercyclical net exports. Contrary to models with restricted international markets, the models analyzed in this dissertation show little sensitivity to the parameterization of the forcing process for productivity shocks. The dissertation also includes an applied econometric study of international trade linkages between countries, focusing on Chinese-global trade in resource commodities. Using input-output analysis, and a gravity model of global trade in non-oil resource commodities, it is shown that China’s mainly manufacturing exports have been a significant driver of its demand for resource commodities over recent decades.
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(2011)ThesisThis dissertation consists of four studies covering both micro and macro perspectives of development economics using theory and empirics. This thesis predominantly focuses on problems of economic development and considers policy directions to mitigate such problems. Chapter 2 develops a model of rural-urban seasonal migration with special reference to lean period shocks. Agricultural lean periods occur in rural areas due to natural disasters or agricultural downturns. This study shows that as the probability of a lean period increases, overall seasonal migration decreases but the proportion of agricultural workers undertaking seasonal migration increases. Chapter 3 investigates the relationship between access to micro-credit and temporary seasonal migration. Using primary data from Bangladesh, this study quantifies the factors that influence such migration decisions. Seasonal migration is a natural choice in a lean period, however due to strict loan repayment rules, those who have prior access to micro-credit have no such option. The study finds that that there is no significant difference in income in a lean period between those who have access to micro-credit and those who do not. Chapter 4 focuses on the determinants of government expenditure in developing countries. This study finds evidence that political and institutional variables, as well as governance variables, have considerable association with government expenditure. Among other results, corruption is found to be influential whereas, by contrast, size of the economy and linguistic fractionalization are found to have sizable negative impact on government expenditure. The study finds evidence that public expenditure significantly shrinks under military dictatorship. Chapter 5 studies the spending and absorption of aid in Poverty Reduction and Growth Facility (PRGF), an IMF supported aid program. The study further verifies whether the use of aid is programmed to be smoothed over time, and analyses how considerations about macroeconomic stability influence the programmed use of aid. It is found that spending is higher than absorption in both the longrun and short-run use of aid. In addition, the study demonstrates that the long-run spending exceeds the injected increase of aid inflows in the economy.
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(2011)ThesisThis thesis consists of three chapters looking at the impact of various problematic labour market conditions on the well-being of the family. The first two chapters analyse the impact of husband's job loss on the risk of family dissolution and on partner mental health. The negative income shock can affect the mental health status of the individual, who directly experiences such displacement, as well as the psychological well-being of her/his partner; also, job loss may have a significantly detrimental effect on life satisfaction, self-esteem and on the individual's perceived role in society. Lastly, a job displacement may convey new information about potential future earnings and the quality of the match. The analysis is based on the sample of married and cohabiting couples from the British Household Panel Survey and data from employment histories is utilised to distinguish redundancies (different from dismissals) in declining industries, which are less likely to represent signals of unfavourable individual traits. Results show evidence that couples in which the husband experiences a job loss are more likely to experience poor mental health and are exposed to a higher risk of dissolution following the job loss, but results are different for various types of job loss. Job loss is only one possible example of mismatch between actual and desired working conditions. The third chapter of this thesis investigates how maternal employment is related to various indicators of well-being in children aged 11-15. Particularly, I focus on the impact of maternal long hours of work (for mothers in paid employment) on children's health behaviours (incidence of smoking), and psychological well-being. The analysis uses the sample of mothers and adolescents in the British Household Panel Survey and the British Youth Panel. Various techniques are used to control for potential endogeneity of working hours (including the use of sibling fixed effects estimators) and special attention is paid to maternal preferences over hours of work. Results suggest that maternal very long hours of work are particularly harmful for children coming from advantaged socio-economic status, especially when the mother is not satisfied with her hours of work.
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(2011)ThesisThis thesis investigates two aspects of the residential property market: the existence of rational speculative price bubbles in the Sydney housing market and the role of views in the determination of individual residential property prices. Both of these issues are analyzed from a spatial perspective in two novel ways. Chapter 2 inspects the geographic distribution of results from two separate bubble testing methodologies based upon the cointegration test of Diba and Grossman (1988b) and the regime-switching test of Shaller and Van Norden (1997) and Van Norden and Vigfusson (1998) using quarterly median house price data for individual postcodes in Sydney from March 1985 to September 2009. Although evidence is found for the existence of a property price bubble in Sydney, only 14.5 percent of individual postcodes within the city showed consistent evidence for the same price bubble across the various testing methods deployed. Additionally, those regions that demonstrate consistent evidence for a property price bubble over the sample period are concentrated around the central-western region of the city and are primarily composed of postcodes in the 10th and 20th lowest median price percentiles of the city. This result challenges the common presumption that house price bubbles are a city-wide phenomenon. In Chapter 3 a specific type of topographical map called a Digital Elevation Model is used in conjunction with the land parcel coordinates of 24,491 residential properties in Sydney to generate four novel measures of a residential property's view. Each of these new view variables is measured in continuous, metric units and is intended to produce estimates of a property's view that are more accurate, consistent and have more desirable characteristics than those methods currently used in the literature. In order to evaluate the contribution that different types of view have on property price levels, these view variables, along with nine attribute control variables, are entered into a selection of nine separate hedonic regression models. Each of these view measures is shown to have both a statistically and economically significant impact upon property prices which is generally commensurate with the results found in the view-based literature and confer a notable improvement in out-of-sample forecasting.
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(2011)ThesisThe thesis develops flexible Bayesian choice models and these models are often highly-parameterised. All inference is obtained from the posterior density and evaluated using computationally intensive Markov chain Monte Carlo (MCMC) estimation. The models are applied to health economics studies and the empirical results of this thesis represent major contributions to the applied literature in their own right. The thesis consists of three separate but broadly related essays. The first essay is concerned with a heteroscedastic probit model with random effects. Real and simulated examples illustrate the approach and show that ignoring heteroscedasticity when it exists may lead to biased estimates and poor prediction. The computation is carried out by an efficient Markov chain Monte Carlo sampling scheme that generates the parameters in blocks. We use the Bayes factor, cross-validation of the predictive density, the deviance information criterion, and ROC (Receiver Operating Characteristic) curves for model comparison. This research has been published in The Econometrics Journal. The second essay contributes to the development of Bayesian methods in the context of valuing informal carers’ needs. The random effects heteroscedastic probit model estimated in the first essay is extended to accommodate the new data structure and account for more potential sources of heterogeneity, e.g., the individual scale effect which implies that choice behaviour is simply more random for some people than others. The other contributions of this study include examining the entire predictive distributions of Willingness to Accept (WTA) and using the exponential transformation to allow the distribution to be skewed. The third essay follows the work of Leslie et al. (2009) on using a Dirichlet process normal mixture prior to flexibly estimate the link function of binary choice models. This essay provides a unified framework for applying the prior to different types of contingent valuation models. We illustrate the approach through a multiple-bounded contingent valuation study on eliciting the Willingness to Pay (WTP) for cataract surgery in rural India. In particular we demonstrate how to estimate an individual’s WTP distribution and its percentiles as well as the predictive probability of an affirmative answer to a given bid price conditional on a particular set of covariates. In this essay we also conduct an experiment to examine Leslie et al.’s (2009) identification approach and find that by appropriately adjusting the magnitude of the variables, Leslie et al.’s (2009) identification approach can produce stable estimates.