Three essays on the economics of defense contracting, output and income inequality

This dissertation analyzes both the economics of the defense contracting process and the impact of total dollar obligations on the economies of U.S. states. Using various econometric techniques, I will estimate relationships across individual contracts, state level output, and income inequality. I will achieve this primarily through the use of a dataset on individual contract obligations. ^ The first essay will catalog the distribution of contracts and isolate aspects of the process that contribute to contract dollar obligations. Accordingly, this study describes several characteristics about individual defense contracts, from 1966-2006: (i) the distribution of contract dollar obligations is extremely rightward skewed, (ii) contracts are unevenly distributed in a geographic sense across the United States, (iii) increased duration of a contract by 10 percent is associated with an increase in costs by 4 percent, (iv) competition does not seem to affect dollar obligations in a substantial way, (v) contract pre-payment financing increases the obligation of contracts from anywhere from 62 to 380 percent over non-financed contracts. ^ The second essay will turn to an aggregate focus, and look the impact of defense spending on state economic output. The analysis in chapter two attempts to estimate the state level fiscal multiplier, deploying Difference-in-Differences estimation as an attempt to filter out potential endogeneity bias. Interstate variation in procurement spending facilitates utilization of a natural experiment scenario, focusing on the spike in relative spending in 1982. The state level relative multiplier estimate here is 1.19, and captures the short run, impact effect of the 1982 spending spike. ^ Finally I will look at the relationship between defense contracting and income inequality. Military spending has typically been observed to have a negative relationship with income inequality. The third chapter examines the existence of this relationship, combining data on defense procurement with data on income inequality at the state level, in a longitudinal analysis across the United States. While the estimates do not suggest a significant relationship exists for the income share of the top ten percent of households, there is a significant positive relationship for the income share of top one percent households for an increase in defense procurement.^

Three Essays on the Economics of Defense Contracting, Output and Income Inequality

This dissertation analyzes both the economics of the defense contracting process and the impact of total dollar obligations on the economies of U.S. states. Using various econometric techniques, I will estimate relationships across individual contracts, state level output, and income inequality. I will achieve this primarily through the use of a dataset on individual contract obligations. The first essay will catalog the distribution of contracts and isolate aspects of the process that contribute to contract dollar obligations. Accordingly, this study describes several characteristics about individual defense contracts, from 1966-2006: (i) the distribution of contract dollar obligations is extremely rightward skewed, (ii) contracts are unevenly distributed in a geographic sense across the United States, (iii) increased duration of a contract by 10 percent is associated with an increase in costs by 4 percent, (iv) competition does not seem to affect dollar obligations in a substantial way, (v) contract pre-payment financing increases the obligation of contracts from anywhere from 62 to 380 percent over non-financed contracts. The second essay will turn to an aggregate focus, and look the impact of defense spending on state economic output. The analysis in chapter two attempts to estimate the state level fiscal multiplier, deploying Difference-in-Differences estimation as an attempt to filter out potential endogeneity bias. Interstate variation in procurement spending facilitates utilization of a natural experiment scenario, focusing on the spike in relative spending in 1982. The state level relative multiplier estimate here is 1.19, and captures the short run, impact effect of the 1982 spending spike. Finally I will look at the relationship between defense contracting and income inequality. Military spending has typically been observed to have a negative relationship with income inequality. The third chapter examines the existence of this relationship, combining data on defense procurement with data on income inequality at the state level, in a longitudinal analysis across the United States. While the estimates do not suggest a significant relationship exists for the income share of the top ten percent of households, there is a significant positive relationship for the income share of top one percent households for an increase in defense procurement.

Food service Contracts That Win: Essentials in the Development of a Food service Agreement

The authors provide tips for institutions wanting to place a contract for operation of their food service and for companies and/or individuals in the business of managing food service operations for a fee.

The political economy of sovereign debt

This dissertation examines international lending arrangements between a competitive foreign investor and a less-developed country. Given that the benefits and costs of borrowing are distributed unequally across society, it is of interest to examine the conditions under which borrowing occurs and how the borrowed funds are allocated. Three theoretical models are developed to consider optimal lending arrangements in the presence of sovereign risk. The models show how a society's level and distribution of wealth influences its access to loans and the terms of the loan agreements. Optimal loan contracts are established, which place either a debt ceiling or a debt floor on the amount of the loan that, will be offered. ^

A methodological framework for modeling pavement maintenance costs for projects with performance-based contracts

Performance-based maintenance contracts differ significantly from material and method-based contracts that have been traditionally used to maintain roads. Road agencies around the world have moved towards a performance-based contract approach because it offers several advantages like cost saving, better budgeting certainty, better customer satisfaction with better road services and conditions. Payments for the maintenance of road are explicitly linked to the contractor successfully meeting certain clearly defined minimum performance indicators in these contracts. Quantitative evaluation of the cost of performance-based contracts has several difficulties due to the complexity of the pavement deterioration process. Based on a probabilistic analysis of failures of achieving multiple performance criteria over the length of the contract period, an effort has been made to develop a model that is capable of estimating the cost of these performance-based contracts. One of the essential functions of such model is to predict performance of the pavement as accurately as possible. Prediction of future degradation of pavement is done using Markov Chain Process, which requires estimating transition probabilities from previous deterioration rate for similar pavements. Transition probabilities were derived using historical pavement condition rating data, both for predicting pavement deterioration when there is no maintenance, and for predicting pavement improvement when maintenance activities are performed. A methodological framework has been developed to estimate the cost of maintaining road based on multiple performance criteria such as crack, rut and, roughness. The application of the developed model has been demonstrated via a real case study of Miami Dade Expressways (MDX) using pavement condition rating data from Florida Department of Transportation (FDOT) for a typical performance-based asphalt pavement maintenance contract. Results indicated that the pavement performance model developed could predict the pavement deterioration quite accurately. Sensitivity analysis performed shows that the model is very responsive to even slight changes in pavement deterioration rate and performance constraints. It is expected that the use of this model will assist the highway agencies and contractors in arriving at a fair contract value for executing long term performance-based pavement maintenance works.