The World Trade Organization, competition policy, and developing countries: A cross -country examination of domestic policy actions

This dissertation addresses the following research question: in a particular policy area, why do countries that display unanimity in their international policy behavior diverge from each other in their domestic policy actions? I address this question in the context of the divergent domestic competition policy actions undertaken by developing countries during the period 1996-2007, after these countries had quite conspicuously displayed near-unanimity in opposing this policy measure at the World Trade Organization (WTO). This divergence is puzzling because (a) it does not align with their near-unanimous behavior at the WTO over competition policy and (b) it is at variance with the objectives of their international opposition to this policy at the WTO. Using an interdisciplinary approach, this dissertation examines the factors responsible for this divergence in the domestic competition policy actions of developing countries. ^ The theoretical structure employed in this study is the classic second-image-reversed framework in international relations theory that focuses on the domestic developments in various countries following an international development. Methodologically, I employ both quantitative and qualitative methods of analysis to ascertain the nature of the relationship between the dependent variable and the eight explanatory variables that were identified from existing literature. The data on some of the key variables used in this dissertation was uniquely created over a multi-year period through extensive online research and represents the most comprehensive and updated dataset currently available. ^ The quantitative results obtained from logistic regression using data on 131 countries point toward the significant role played by international organizations in engineering change in this policy area in developing countries. The qualitative analysis consisting of three country case studies illuminate the channels of influence of the explanatory variables and highlight the role of domestic-level factors in these three carefully selected countries. After integrating the findings from the quantitative and qualitative analyses, I conclude that a mix of international- and domestic-level variables explains the divergence in domestic competition policy actions among developing countries. My findings also confirm the argument of the second-image-reversed framework that, given an international development or situation, the policy choices that states make can differ from each other and are mediated by domestic-level factors. ^

Essays on international macroeconomics and conflict analysis

This dissertation addressed two broad problems in international macroeconomics and conflict analysis. The first problem in the first chapter looked at the behavior of exchange rate and its interaction with industry-level tradable goods prices for three countries, USA, UK and Japan. This question has important monetary policy implications. Here, I computed to what extent changes in exchange rate affected prices of consumer, producer, and export goods. I also studied the timing of these changes in these prices. My results, based on thirty-four industrial prices for USA, UK and Japan, supported the view that changes in exchange rates significantly affect prices of industrial and consumer goods. It also provided an insight to the underlying economic process that led to changes in relative prices. ^ In the second chapter, I explored the predictability of future inflation by incorporating shocks to exchange rates and clearly specified the transmission mechanisms that link exchange rates to industry-level consumer and producer prices. Employing a variety of linear and state-of-the-art nonlinear models, I also predicted growth rates of future prices. Comparing levels of inflation obtained from the above approaches showed superiority of the structural model incorporating the exchange rate pass-through effect. ^ The second broad issue addressed in the third chapter of the dissertation investigated the economic motives for conflict, manifested by rebellion and civil war for seventeen Latin American countries. Based on the analytical framework of Garfinkel, Skaperdas and Syropoulos (2004), I employed ordinal regressions and Markov switching for a panel of seventeen countries to identify trade and openness factors responsible for conflict occurrence and intensity. The results suggested that increased trade openness reduced high intensity domestic conflicts but overdependence on agricultural exports, along with a lack of income earning opportunities lead to more conflicts. Thereafter, using the Cox Proportional Hazard model I studied “conflict duration” and found that over-reliance on agricultural exports explained a major part of the length of conflicts in addition to various socio-political factors. ^

Essays in open economy macroeconomics

Research macroeconomists have witnessed remarkable methodological developments in mathematical, statistical, and computational tools during the last two decades. The three essays in this dissertation took advantage of these advances to analyze important macroeconomic issues. ^ The first essay, “ Habit Formation, Adjustments Costs, and International Business Cycle Puzzles” analyzes the extent to which incorporating habit formation and adjustment costs in investment in a one-good two-country general equilibrium model would help overcome some of the international business cycle puzzles. Unlike standard results in the literature, the model generates persistent, cyclical adjustment paths in response to shocks. It also yields positive cross-country correlations in consumption, employment, investment, and output. Cross-country correlations in output are higher than the ones in consumption. This is qualitatively consistent with the stylized facts. These results are particularly striking given the predicted negative correlations in investment, employment, and output that are typically found in the literature. ^ The second essay, “Comparison Utility, Endogenous Time Preference, and Economic Growth,” uses World War II as a natural experiment to analyze the degree to which a model where consumers' preferences exhibit comparison-based utility and endogenous discounting is able to improve upon existing models in mimicking the transitional dynamics of an economy after a shock that destroys part of its capital stock. The model outperforms existing ones in replicating the behavior of the saving rate (both on impact and along the transient paths) after this historical event. This result brings additional support to the endogenous rate of time preference being a crucial element in growth models. ^ The last essay, “Monetary Policy under Fear of Floating: Modeling the Dominican Economy,” presents a small scale macroeconomic model for a country (Dominican Republic) characterized by a strong presence of fear of floating (reluctance to have a flexible exchange rate regime) in the conduct of monetary policy. The dynamic responses of this economy to external shocks that are of interest for monetary policy purposes are analyzed under two alternative interest rate policy rules: One being the standard Taylor rule and another that responds explicitly to deviations of the exchange rate with respect to its long-term trend. ^

Essays in Open Economy Macroeconomics

Research macroeconomists have witnessed remarkable methodological developments in mathematical, statistical, and computational tools during the last two decades. The three essays in this dissertation took advantage of these advances to analyze important macroeconomic issues. The first essay, “ Habit Formation, Adjustments Costs, and International Business Cycle Puzzles” analyzes the extent to which incorporating habit formation and adjustment costs in investment in a one-good two-country general equilibrium model would help overcome some of the international business cycle puzzles. Unlike standard results in the literature, the model generates persistent, cyclical adjustment paths in response to shocks. It also yields positive cross-country correlations in consumption, employment, investment, and output. Cross-country correlations in output are higher than the ones in consumption. This is qualitatively consistent with the stylized facts. These results are particularly striking given the predicted negative correlations in investment, employment, and output that are typically found in the literature. The second essay, “Comparison Utility, Endogenous Time Preference, and Economic Growth,” uses World War II as a natural experiment to analyze the degree to which a model where consumers' preferences exhibit comparison-based utility and endogenous discounting is able to improve upon existing models in mimicking the transitional dynamics of an economy after a shock that destroys part of its capital stock. The model outperforms existing ones in replicating the behavior of the saving rate (both on impact and along the transient paths) after this historical event. This result brings additional support to the endogenous rate of time preference being a crucial element in growth models. The last essay, “Monetary Policy under Fear of Floating: Modeling the Dominican Economy,” presents a small scale macroeconomic model for a country (Dominican Republic) characterized by a strong presence of fear of floating (reluctance to have a flexible exchange rate regime) in the conduct of monetary policy. The dynamic responses of this economy to external shocks that are of interest for monetary policy purposes are analyzed under two alternative interest rate policy rules: One being the standard Taylor rule and another that responds explicitly to deviations of the exchange rate with respect to its long-term trend.

Development and testing of the Elderly Social Vulnerability Index (ESVI): A composite indicator to measure social vulnerability in the Jamaican elderly population

Over the last two decades social vulnerability has emerged as a major area of study, with increasing attention to the study of vulnerable populations. Generally, the elderly are among the most vulnerable members of any society, and widespread population aging has led to greater focus on elderly vulnerability. However, the absence of a valid and practical measure constrains the ability of policy-makers to address this issue in a comprehensive way. This study developed a composite indicator, The Elderly Social Vulnerability Index (ESVI), and used it to undertake a comparative analysis of the availability of support for elderly Jamaicans based on their access to human, material and social resources. The results of the ESVI indicated that while the elderly are more vulnerable overall, certain segments of the population appear to be at greater risk. Females had consistently lower scores than males, and the oldest-old had the highest scores of all groups of older persons. Vulnerability scores also varied according to place of residence, with more rural parishes having higher scores than their urban counterparts. These findings support the political economy framework which locates disadvantage in old age within political and ideological structures. The findings also point to the pervasiveness and persistence of gender inequality as argued by feminist theories of aging. Based on the results of the study it is clear that there is a need for policies that target specific population segments, in addition to universal policies that could make the experience of old age less challenging for the majority of older persons. Overall, the ESVI has displayed usefulness as a tool for theoretical analysis and demonstrated its potential as a policy instrument to assist decision-makers in determining where to target their efforts as they seek to address the issue of social vulnerability in old age. Data for this study came from the 2001 population and housing census of Jamaica, with multiple imputation for missing data. The index was derived from the linear aggregation of three equally weighted domains, comprised of eleven unweighted indicators which were normalized using z-scores. Indicators were selected based on theoretical relevance and data availability.

Development and Testing of the Elderly Social Vulnerability Index (ESVI): A Composite Indicator to Measure Social Vulnerability in the Jamaican Elderly Population

Over the last two decades social vulnerability has emerged as a major area of study, with increasing attention to the study of vulnerable populations. Generally, the elderly are among the most vulnerable members of any society, and widespread population aging has led to greater focus on elderly vulnerability. However, the absence of a valid and practical measure constrains the ability of policy-makers to address this issue in a comprehensive way. This study developed a composite indicator, The Elderly Social Vulnerability Index (ESVI), and used it to undertake a comparative analysis of the availability of support for elderly Jamaicans based on their access to human, material and social resources. The results of the ESVI indicated that while the elderly are more vulnerable overall, certain segments of the population appear to be at greater risk. Females had consistently lower scores than males, and the oldest-old had the highest scores of all groups of older persons. Vulnerability scores also varied according to place of residence, with more rural parishes having higher scores than their urban counterparts. These findings support the political economy framework which locates disadvantage in old age within political and ideological structures. The findings also point to the pervasiveness and persistence of gender inequality as argued by feminist theories of aging. Based on the results of the study it is clear that there is a need for policies that target specific population segments, in addition to universal policies that could make the experience of old age less challenging for the majority of older persons. Overall, the ESVI has displayed usefulness as a tool for theoretical analysis and demonstrated its potential as a policy instrument to assist decision-makers in determining where to target their efforts as they seek to address the issue of social vulnerability in old age. Data for this study came from the 2001 population and housing census of Jamaica, with multiple imputation for missing data. The index was derived from the linear aggregation of three equally weighted domains, comprised of eleven unweighted indicators which were normalized using z-scores. Indicators were selected based on theoretical relevance and data availability.