Browsing by Author "Chen, Yu (Sonja)"

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    Divisia Monetary Aggregates, Macroeconomic Shocks, and Economic Fluctuations
    (2022-03) Dery, Cosmas B. D.; Serletis, Apostole; Walls, William David; Tanaka, Atsuko; Chen, Yu (Sonja); Barnett, William A
    This dissertation consists of three chapters. The first chapter examines the relative information content of Divisia measures of money and interest rates in explaining key macroeconomic variations and provides a comparison between narrow and broad Divisia measures of money. Using three classes of empirical models, and monthly data from 1967 to 2018, the chapter shows that broad Divisia money measures are weakly procyclical and relatively more informative for predicting economic activities than the acyclical narrow money measures. Together with a SVAR-GARCH (1,1) analysis, the chapter concludes that broad Divisia monetary aggregates are superior to their narrow counterparts in terms of their ability to predict real economic activities and to transmit shocks within the US economy. The second chapter provides a comparative analysis of the relative importance of uncertainty, monetary policy, and leverage shocks in affecting business cycle fluctuations. According to the information-based monetary misperceptions model, monetary shocks are a principal source of business cycles. Recently, some researchers have alluded to uncertainty shocks as alternative drivers of business cycle fluctuations. This chapter assesses the predictive ability of various risk/uncertainty measures in predicting real economic activities and finds that the macroeconomic uncertainty index and the Chicago Fed national financial conditions risk index have the strongest predictive relationship with the economy. Using a penalty function approach to identify three shocks, the chapter concludes that uncertainty shocks are a relatively more important source of variations in the economy than traditional monetary policy shocks. However, monetary policy shocks still outperform uncertainty shocks in explaining inflation dynamics. The final chapter focuses on the role of money supply and leverage in monetary policy and business cycle analysis. Both leverage and the money supply affect the level of economic activity and the business cycle. Yet these variables are mostly not directly considered as key variables in recent monetary and business cycle analysis. Augmenting the standard Taylor type reaction function of the central bank with measures of money and leverage, this chapter provides a comprehensive comparison of the effects of monetary policy shocks in an economy where the reaction function follows the standard Taylor rule and one that augments it with money and leverage. The identification is based on sign restrictions and other useful prior information of the researcher. This chapter finds that contractionary monetary policy is 2 to 3 times more effective in the augmented model.
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    Essays in the Political Economy of Development and the Family
    (2021-08) Khan, Aisha Arooj A; Magesan, Arvind; Campa, Pamela; Tanaka, Atsuko; Chen, Yu (Sonja)
    This dissertation comprises of three chapters that apply modern econometric tools to explore novel economic questions surrounding the political economy of development and the family. In the first chapter, I build and provide the first analysis of a novel database on marriage contracts in Pakistan. The data was constructed using original administrative records that contain information on variables such as religious identity, the geographical distance between the bride and the groom’s family, and payments from the groom’s family to the bride – the dower. I find that a larger distance between families causes the dower payment to be higher, consistent with the hypothesis that families with lower familiarity require a higher payment in the marriage contract. Interestingly, I find that religious identity plays the most important role in determining the size of the dower. Here, religious identity mimics caste dynamics in other South Asian countries, where a certain religious identity is honoured higher above others. I further use the data to evaluate an interesting policy on marriage expenses and its effects on the dower. The policy established in 2003 in the city of Lahore attempts to restrict expenses on marriages by restricting food options and establishes curfew timings at marriage halls. A simple before and after estimator suggests that this policy has translated in increasing dower payments, yielding positive welfare implications for girls in marriages. The second chapter is a program evaluation exercise that studies an early marriage awareness intervention in a rural district of Pakistan. The intervention used theatrical plays and workshops in public places to help educate women, men and children on the possible consequences of early marriage and child marriage, a significant issue throughout the world. As the intervention was assigned to different locations over time, I employ a difference in differences estimation strategy and show that the intervention caused a decrease in overall probability of marriage and has helped push marriage later past the official legal marriage age of 16. The third chapter, co-authored with Sacha Kapoor and Arvind Magesan, studies how and why the number of candidates in an election affects voter turnout. This is an old question in political science which is difficult to answer given obvious simultaneity issues. To get causal estimates, we use an instrumental variables design generated by India’s system of political reservation for disadvantaged minorities, together with a sharp unexpected change in electoral deposit requirements which differentially and exogenously changed the barriers faced by potential election candidates across space and time. We find that more candidates result in higher voter turnout and that the effect is more pronounced in constituencies that are at a higher level of socioeconomic development, consistent with the idea that candidates are better able to reach voters where there is better road access, media access and literacy.