Three essays on trade and investment

From H. G. Johnson's work (Review of Economic Studies, 1953–54) on tariff retaliation, the questions of whether a country can win a “tariff war” and how or even the broader question of what will affect a country's strategic position in setting bilateral tariff have been tackled in various situations. Although it is widely accepted that a country will have strategic advantages in winning the tariff war if its relative monopoly power is sufficiently large, it is unclear what are the forces behind such power formation. The goal of this research is to provide a unified framework and discuss various forces such as relative country size, absolute advantages and relative advantages simultaneously. In a two-country continuum-of-commodity neoclassical trade model, it is shown that sufficiently large relative country size is a sufficient condition for a country to choose a non-cooperative tariff Nash equilibrium over free trade. It is also shown that technology disparities such as absolute advantage, rate of technology disparity and the distribution of the technology disparity all contribute to a country's strategic position and interact with country size. ^ Leverage effect is usually used to explain the phenomenon of asymmetric volatility in equity returns. However, leverage itself can only account for parts of the asymmetry. In this research, it is shown that stock return volatility is related to firms’ financial status. Financially constrained firms tend to be more sensitive to the return changes. Financial constraint factor explains why some firms tend to be more volatile than others. I found that the financial constraint factor explains the stock return volatility independent of other factors such as firm size, industry affiliation and leverage. Firms’ industry affiliations are shown to be very weak in differentiating volatility. Firm size is proven to be a good factor in distinguishing the different levels of volatility and volatility-return sensitivity. Leverage hypothesis is also partly corroborated and the situation where leverage effect is not applicable is discussed. Finally, I examined the macroeconomic policy's effects on overall market volatility. ^

A framework for transforming, analyzing, and realizing software designs in unified modeling language

Unified Modeling Language (UML) is the most comprehensive and widely accepted object-oriented modeling language due to its multi-paradigm modeling capabilities and easy to use graphical notations, with strong international organizational support and industrial production quality tool support. However, there is a lack of precise definition of the semantics of individual UML notations as well as the relationships among multiple UML models, which often introduces incomplete and inconsistent problems for software designs in UML, especially for complex systems. Furthermore, there is a lack of methodologies to ensure a correct implementation from a given UML design. The purpose of this investigation is to verify and validate software designs in UML, and to provide dependability assurance for the realization of a UML design.^ In my research, an approach is proposed to transform UML diagrams into a semantic domain, which is a formal component-based framework. The framework I proposed consists of components and interactions through message passing, which are modeled by two-layer algebraic high-level nets and transformation rules respectively. In the transformation approach, class diagrams, state machine diagrams and activity diagrams are transformed into component models, and transformation rules are extracted from interaction diagrams. By applying transformation rules to component models, a (sub)system model of one or more scenarios can be constructed. Various techniques such as model checking, Petri net analysis techniques can be adopted to check if UML designs are complete or consistent. A new component called property parser was developed and merged into the tool SAM Parser, which realize (sub)system models automatically. The property parser generates and weaves runtime monitoring code into system implementations automatically for dependability assurance. The framework in the investigation is creative and flexible since it not only can be explored to verify and validate UML designs, but also provides an approach to build models for various scenarios. As a result of my research, several kinds of previous ignored behavioral inconsistencies can be detected.^