Trade Liberalization, Heterogeneous Firms and Industrial Dynamics

This master thesis studies how trade liberalization affects the firm-level productivity and industrial evolution. To do so, I built a dynamic model that considers firm-level productivity as endogenous to investigate the influence of trade on firm’s productivity and the market structure. In the framework, heterogeneous firms in the same industry operate differently in equilibrium. Specifically, firms are ex ante identical but heterogeneity arises as an equilibrium outcome. Under the setting of monopolistic competition, this type of model yields an industry that is represented not by a steady-state outcome, but by an evolution that rely on the decisions made by individual firms. I prove that trade liberalization has a general positive impact on technological adoption rates and hence increases the firm-level productivity. Besides, this endogenous technology adoption model also captures the stylized facts: exporting firms are larger and more productive than their non-exporting counterparts in the same sector. I assume that the number of firms is endogenous, since, according to the empirical literature, the industrial evolution shows considerably different patterns across countries; some industries experience large scale of firms’ exit in the period of contracting market shares, while some industries display relative stable number of firms or gradually increase quantities. The special word “shakeout” is used to describe the dramatic decrease in the number of firms. In order to explain the causes of shakeout, I construct a model where forward-looking firms decide to enter and exit the market on the basis of their state of technology. In equilibrium, firms choose different dates to adopt innovation which generate a gradual diffusion process. It is exactly this gradual diffusion process that generates the rapid, large-scale exit phenomenon. Specifically, it demonstrates that there is a positive feedback between firm’s exit and adoption, the reduction in the number of firms increases the incentives for remaining firms to adopt innovation. Therefore, in the setting of complete information, this model not only generates a shakeout but also captures the stability of an industry. However, the solely national view of industrial evolution neglects the importance of international trade in determining the shape of market structure. In particular, I show that the higher trade barriers lead to more fragile markets, encouraging the over-entry in the initial stage of industry life cycle and raising the probability of a shakeout. Therefore, more liberalized trade generates more stable market structure from both national and international viewpoints. The main references are Ederington and McCalman(2008,2009).

Estimation of variables at ungaged locations by empirical orthogonal functions

A technique based on empirical orthogonal functions is used to estimate hydrologic time-series variables at ungaged locations. The technique is applied to estimate daily and monthly rainfall, temperature and runoff values. The accuracy of the method is tested by application to locations where data are available. The second-order characteristics of the estimated data are compared with those of the observed data. The results indicate that the method is quick and accurate.

Income inequality in the process of economic development : An empirical approach

This thesis studies the effect of income inequality on economic growth. This is done by analyzing panel data from several countries with both short and long time dimensions of the data. Two of the chapters study the direct effect of inequality on growth, and one chapter also looks at the possible indirect effect of inequality on growth by assessing the effect of inequality on savings. In Chapter two, the effect of inequality on growth is studied by using a panel of 70 countries and a new EHII2008 inequality measure. Chapter contributes on two problems that panel econometric studies on the economic effect of inequality have recently encountered: the comparability problem associated with the commonly used Deininger and Squire s Gini index, and the problem relating to the estimation of group-related elasticities in panel data. In this study, a simple way to 'bypass' vagueness related to the use of parametric methods to estimate group-related parameters is presented. The idea is to estimate the group-related elasticities implicitly using a set of group-related instrumental variables. The estimation results with new data and method indicate that the relationship between income inequality and growth is likely to be non-linear. Chapter three incorporates the EHII2.1 inequality measure and a panel with annual time series observations from 38 countries to test the existence of long-run equilibrium relation(s) between inequality and the level of GDP. Panel unit root tests indicate that both the logarithmic EHII2.1 inequality measure and the logarithmic GDP per capita series are I(1) nonstationary processes. They are also found to be cointegrated of order one, which implies that there is a long-run equilibrium relation between them. The long-run growth elasticity of inequality is found to be negative in the middle-income and rich economies, but the results for poor economies are inconclusive. In the fourth Chapter, macroeconomic data on nine developed economies spanning across four decades starting from the year 1960 is used to study the effect of the changes in the top income share to national and private savings. The income share of the top 1 % of population is used as proxy for the distribution of income. The effect of inequality on private savings is found to be positive in the Nordic and Central-European countries, but for the Anglo-Saxon countries the direction of the effect (positive vs. negative) remains somewhat ambiguous. Inequality is found to have an effect national savings only in the Nordic countries, where it is positive.

Performance issues of distance relays for shunt FACTS compensated transmission lines

In this paper, the performance of distance relays when applied to transmission system equipped with shunt FACTS device, Static Synchronous Compensator (STATCOM) is described. The aim of the proposed study is to evaluate the performance of distance relays when STATCOM is incorporated at the mid point of transmission lines for voltage control. A detailed model of STATCOM and its control strategy is presented. The presence of these devices significantly affects apparent impedance seen by the distance relays due to their rapid response to different power system configurations. The distance relay is evaluated for different loading conditions and for different fault locations. The faults are created during various pre-fault loading conditions. The studies are performed on 400KV and 132KV systems and the results are presented. Simulation studies are carried out using transient simulation software, PSCAD/EMTDC.

An Empirical Model of the Process of Synthesis of Multiple State Mechanical Devices

Automated synthesis of mechanical designs is an important step towards the development of an intelligent CAD system. Research into methods for supporting conceptual design using automated synthesis has attracted much attention in the past decades. The research work presented here is based on the processes of synthesizing multiple state mechanical devices carried out individually by ten engineering designers. The designers are asked to think aloud, while carrying out the synthesis. The ten design synthesis processes are video recorded, and the records are transcribed and coded for identifying activities occurring in the synthesis processes, as well as for identifying the inputs to and outputs from the activities. A mathematical representation for specifying multi-state design task is proposed. Further, a descriptive model capturing all the ten synthesis processes is developed and presented in this paper. This will be used to identify the outstanding issues to be resolved before a system for supporting design synthesis of multiple state mechanical devices that is capable of creating a comprehensive variety of solution alternatives could be developed.

An Empirical Evaluation of Novelty-SAPPhIRE Relationship

The research shown in this paper is to check whether a framework for designing: GEMS of SAPPhIRE as req-sol, developed earlier, can support in the designing of novel concepts. This is done by asking the questions: (a) Is there a relationship between the constructs of the framework and novelty? (b) If there is a relationship, what is the degree of this relationship? A hypothesis — an increase in the size and variety of ideas used while designing should enhance the variety of concepts produced, leading to an increase in the novelty of the concept space — is developed to explain the relationship between novelty and the constructs. Eight existing observational studies of designing sessions, each involving an individual designer solving a conceptual design problem by following a think aloud protocol are used for the analysis. The hypothesis is verified empirically using the observational studies. Results also show a strong correlation between novelty and the constructs of the framework; correlation value decreases as the abstraction level of the constructs reduces, signifying the importance of using constructs at higher abstraction levels especially for novelty.