topics.rst

Research Topics

The following research topics have been proposed by various faculty members of the RSE.

Note

During the first two weeks of the semester I will try to match up students with supervisors. Note that this process will be double-blind. You do not know which supervisor proposed which topic, the supervisor does not know which student chooses her/his topic. You and the supervisor will only find out after the match is made.

Further rules of the game:

• Each topic will be assigned at most once.
• Some faculty members have submitted two topics but are required to only supervise one of these.
• Only students enrolled in EMET8002 will be considered.
• First deadline for submitting your topic preferences: Friday 25 July, 12pm. Those of you who submit their preferences by that deadline will get matched in the first round.
• Second deadline for submitting your topic preferences: Wednesday 30 July, 4pm. You can only submit preferences for those topics that are left over after the first round (see previous bullet point).
• If there are more students than available topics, then a random device will exclude students from participation in the course.
• If necessary, Masters students may get priority over PhD students.
• How do you submit your topic preferences? By e-mailing juergen.meinecke@anu.edu.au a ranking of at least 5 topics. Make sure you confirm that you are enrolled for the course and mention your degree (Masters, PhD, other).
• What happens after matches are made? I will let you know which topic you got and then will reveal to you the name of the supervising faculty member. You will then need to contact the faculty member within 24 hours and start working on the project as soon as possible.
• Once a topic has been assigned to you, you cannot choose a different topic.

Topic 1

Title: Do bequest motives explain the annuity puzzle?

Summary: There is a vast literature that tries to explain why annuities markets are thin. One natural explanation is a bequest motive. Most of the literature shows that the existence of bequest motives decrease demand for the annuities. Yet, we also observe that most people do not annuitize any wealth at all. In a recent paper, Lockwood (2012, RED) shows that, with plausible bequest motive, people can be better off not annuitizing any wealth at available rates. His model is capable of generating the stylized facts regarding annuities market in the US. Similar to the US, Australia has also very thin annuities market. In this project we will replicate Lockwood’s model first to generate a similar set of results. Afterwards, we will calibrate model to the Australian economy to provide another explanation of the annuity puzzle.

Description of numerical analysis: We use a simple life-cycle model with a twist: a bequest motive and use standard numerical dynamic programming methods such as value function iteration to solve the maximization model. Most parts of the code will be provided. Students are expected to extend the coded in a sensible manner.

Related literature:

• Lockwood, L., 2012. Bequest motives and the annuity puzzle. Review of Economic Dynamics (15), 226-243.
• Davidoff, T., Brown, J.R., Diamond, P.A., 2005. Annuities and individual welfare. American Economic Review.

Software used: Matlab. While an interest by the student in numerical analysis is desirable, this project does NOT expect/require any previous experience with Matlab programming. The student will learn the necessary programming skills under the guidance of the supervisor. Learning to perform the required numerical simulations therefore constitutes an integral part of the project.

Required background: Basic understanding of numerical methods in Economics and a basic experience in Matlab coding.

Topic 2

Project title: How Well Does the Means-tested Social Insurance System Provide Insurance?

Summary: Macroeconomic and welfare implications of various type of social insurance programs, including old age pension, public health insurance, and unemployment insurance programs are widely analyzed in the literature. Yet, only a small set of papers, actually, analyze how well does these insurance programs provide insurance. For instance, Huggett and Parra (2010, JPE) analyze the insurance provided by the US Pay As You Go (PAYG) social security by using a dynamic-stochastic model. Australia has a distinct social pension program: means-tested pension program. It differs from the PAYG system in many dimensions including financing structure and calculations of benefits. In this project we will ask the following question: How well does the means-tested socials insurance system provide insurance? Our model will mimic that of Huggett and Parra closely and compare social insurance power of means-tested pension program with that of PAYG.

Description of numerical analysis: We use a simple life-cycle model and use standard numerical dynamic programming methods such as value function iteration to solve the maximization model. Most parts of the code will be provided. Students are expected to extend the coded in a sensible manner.

Related literature:

• Huggett, M., and Parra, J.C., 2010. How well does the US social insurance system provide social insurance? The Journal of Political Economy (118), 76-112.
• Golosov, M., and Tsyvinski, A., 2006. “Designing optimal disability insurance: A case for asset testing. The Journal of Political Economy (114), 257-269.

Software used: Fortran. While an interest by the student in numerical analysis is desirable, this project does NOT expect/require any previous experience with Fortran programming. The student will learn the necessary programming skills under the guidance of the supervisor. Learning to perform the required numerical simulations therefore constitutes an integral part of the project.

Required background: Basic understanding of numerical methods in Economics and a basic experience in FORTRAN coding.

Topic 3

Title: Are cognitive development tests biased against bi-lingual children?

Summary: A number of studies have hypothesised that vocabulary tests used for assessing the cognitive development of children are negatively biased for children who speak languages other than English at home. While standardisation of test results attempts to account for this, it is acknowledged to work to a limited degree. Using data from the Millennium Cohort Study determine whether children from ethnic minority backgrounds (who speak a language other than English at home) have different patterns of achievement compared to children who only speak English at home.

Data: The data set available is the Millennium Cohort Study (MCS). This is a panel data set of approximately 13 000 British children born in 2000/01. Regression analysis can be run to determine differences in results between English only versus not only English speakers across a range of different tests at a variety of ages.

Related literature:

• Hill, V., 2005, ‘Through the Past Darkly: A Review of the British Ability Scales Second Edition’, in Child and Adolescent Mental Health, Vol. 10, No., 2, 2005, pp.87-89.
• Burchinal, M.R, E. Peisner-Feinberg, D.M Bryant, R. Clifford, 2000, ‘Children’s Social and Cognitive Development and Childcare Quality - Testing for Differential Associations Related to Poverty, Gender or Ethnicity, Applied Developmental Science, Vol. 4, No., 3, pp. 149-165.

Software used: STATA

Student prerequisites: Applied (micro) econometrics

Topic 4

Title: Does the gender of your siblings matter for your cognitive ability?

Summary: A number of studies the US have hypothesised that different sex compositions of families can influence the educational outcomes of the children in the family. Some studies (such as Butcher and Case 1994) find that women’s educational achievement is influenced by the sex composition of her siblings, while a man’s is not. In particular, having brothers has a positive influence on a woman’s level of educational achievement. However, Conley (2000) posits that an increase in the number of opposite sex siblings is detrimental for the sex minority children.

Data: Using data from the British Millennium Cohort Study (MCS), assess whether there is evidence of sibship sex composition influencing the cognitive ability of the cohort children. The MCS is a panel data set of approximately 13 000 British children born in 2000/01.

Related literature:

• Conley, D., 2000, ‘Sibship Sex Composition: Effects on Educational Attainment, Social Science Research, Vol. 29, pp. 441-457.
• Butcher, K.F, and A. Case, 1994, ‘The Effect of Sibling Sex Composition on Women’s Educational and Earnings’, The Quarterly Journal of Economics, Vol. 109, No. 3, pp. 531-563.

Software used: STATA

Student prerequisites: Applied (micro) econometrics

Topic 5

Project Title: Wealth Distribution in Australia

Summary: Wealth is enormously important for individual households as well as the overall economy. Wealth provides security to households, ability to deal with economic uncertainty and plan for future. It can also generate income directly. In this project the student will study the Wealth distribution in Australia. The Household, Income and Labor Dynamics in Australia (or HILDA) survey is a panel data set in which we have detailed information on household wealth for three years-2002, 2006 and 2010. Students will study the overall composition of household wealth and if there have been any significant changes in its distribution between the years 2002-2010. They will also analyze distribution of wealth as we go across the households in different stages of their life cycle. If time permits, students can also investigate if there are any household characteristics like health, spells of unemployment etc. which can significantly explain changes in a household’s wealth.

Description of numerical analysis: Students will use wealth information available in three rounds of Household, Income and Labor Dynamics in Australia (or HILDA) survey. The data from this survey is made available by Melbourne Institute of Applied Economic Research on submission of a research proposal. Use of least squares, IV estimation will be required.

Related literature:

• Headey, B., Marks, G. and Wooden, M. (2005) “The Structure and Distribution of Household Wealth in Australia”, The Australian Economic Review vol. 38, no. 2, pp. 159-75.

Software used: STATA

Student prerequisites: Basic econometrics, familiarity with STATA

Topic 6

Project Title: Savings Behavior in Australia

Summary: Do households with higher lifetime income have better saving habits? If true it can partly explain the high degree of inequality in wealth distribution and prove extremely useful for design of tax and macroeconomic policies. In this project the student will investigate the determinants of savings behaviour in Australia and conduct tests on whether there are significant differences in savings behaviour for different socio-economic groups. The Household, Income and Labor Dynamics in Australia (or HILDA) survey will be used for this study. HILDA is a panel data set in which we have detailed information on income, education and other household characteristics such as attitude towards savings. There is also information on wealth for three years 2002, 2006 and 2010 which can be used to construct a proxy for savings behavior. Students will study if there is a significant difference in the savings behavior of households as we move from low to high permanent income groups.

Description of numerical analysis: Students will use Household, Income and Labor Dynamics in Australia (or HILDA) survey. The data from this survey is made available by Melbourne Institute of Applied Economic Research on submission of a research proposal. Use of median regression, estimation of probit/logit model estimation will be required.

Related literature:

• Dynan, K.E., Skinner, J. and Zeldes, S.P. (2004) “Do the Rich Save More?”, Journal of Political Economy vol. 112, no. 2, pp. 397-444.

Software used: STATA Student

Student prerequisites: Basic econometrics, familiarity with STATA

Topic 7

Title: Economic benefits from transport infrastructure

Summary: Transportation infrastructure is considered essential for raising economic activity and growth potential, but quantifying the benefits relies on counterfactual comparisons. This project will compare static welfare gains from investment in transportation infrastructure (eg, railroads) to those estimated from realized economic outcomes (eg, commodity prices), based on official economic data. The static component will be a counterfactual comparison based on social savings techniques, while estimates of realized economic outcomes will utilize a reduced form model found in the applied microeconomic literatures (eg, development, trade, labor). The student will identify a suitable country and time period for analysis, collect data for both counterfactual and realized economic outcomes, and perform the analyses to demonstrate the benefits of infrastructure investment.

Analysis description: Linear and non-linear regression estimation.

Related literature:

• Fogel, Robert (1964). Railroads and American Economic Growth: Essays in Econometric History. Baltimore, Maryland: Hohns Hopkins Press.
• Donaldson, David (forthcoming). "Railroads of the Raj: estimating the impact of transportation infrastructure." American Economic Review.
• Atack, Jeremy, Fred Bateman, Michael Haines, Robert Margo (2010). "Did railroads induce or follow economic growth? Urbanization and population growth in the American Midwest, 1850-1860." Social Science History 34 (Summer): 171-197.

Software: Stata, Excel, ArcGIS (or equivalent)

Prerequisites: basic econometrics, GIS mapping data manipulation. Note: this project requires significant data collection

Topic 8

Title: Identifying long-run patterns in industrial change

Summary: Economic development typically follows a standard trajectory, with economies shifting from agriculture and primary production to manufacturing. Less obvious are the mechanisms underlying this process and variations between countries, particularly the composition of industries over time. This project will identify factors that are associated with industrial change from a panel of countries using official economic data, and estimate their relative contributions using standard reduced form regression models. The student will identify a set of countries starting in the late nineteenth century, collect data for these countries, and perform analyses to compare relative performance over time.

Analysis description: Linear and non-linear regression estimation.

Related literature:

• Lewis, W. Arthur (1954). "Economic development with unlimited supplies of labor." Manchester School of Economic and Social Studies 22: 139-191.
• Comin, Diego, Bart Hobijn (2004). "Cross-country technology adoption: making the theories face the facts." Journal of Monetary Economics 51: 39-83.
• Benetrix, Agustin, Kevin O'Rourke, Jeffrey Williamson (2012). "The spread of manufacturing to the poor periphery, 1870-2007." NBER Working Paper 18221.

Software: Stata, Excel Prerequisites: basic econometrics.

Note: this project requires significant data collection

Topic 9

Title: The Market for Status Goods

Summary: a status good provides not only intrinsic utility to its owner, but it also enhances the social status of the consumer who uses it. In Mazali and Rodrigues-Neto GEB 2013, we developed the economic theory for the market of pure status goods as well as their optimal taxation using some assumption on functional forms. This interesting and challenging project investigates the robustness of results when some alternative functional forms are introduced. The project has a strong theoretical component and a numerical component. It applies elements of Industrial Organization and Public Economics.

Description of numerical analysis: In this project the student will explore other functional forms for utility functions and benefits of status goods. Simulations of the model’s results under the alternative specifications will be produced. The study will start with (and go well beyond) the analysis of the numerical examples in the main reference.

Software used: MS Excel (essential), Matlab (desirable).

Related literature:

• Mazali, R. and Rodrigues-Neto, J.A., “Dress to Impress: Brands as Status Symbols,” Games and Economic Behavior 82 (2013), 103-131. Available at (to download it, you must use a computer at ANU): <http://www.sciencedirect.com/science/article/pii/S0899825613000912#>

Required background: Game Theory (Strategic Thinking), Intermediate Microeconomics (Diploma Microeconomics or Microeconomics 3), and working knowledge of MS Excel. It is desirable (but not essential) that the student has some knowledge of Industrial Organization and Public Economics.

Topic 6

Title: Corruption with Two Forms of Payment

Summary: non-monetary forms of payment might be used to conceal corruption activities. Such activities are risky in the sense that if detected, agents may be punished hardly for engaging in corruption activities. In many cases there is a tradeoff between the safety of bribe payments and its efficiency. Non-monetary payments are typically harder to detect and punish but generate some inefficiency. In Rodrigues-Neto EM (2014) this tradeoff is analyzed under simplified assumptions on functional forms.

Description of numerical analysis: In this project the student will explore alternative functional forms to check for the robustness of the results. Simulations of the model’s results under the alternative specifications will be produced.

Software used: MS Excel (essential), Matlab (desirable).

Related literature:

• Rodrigues-Neto, J.A., “On Corruption, Bribes and the Exchange of Favors,” Economic Modelling (forthcoming). The paper is available at (to download it, you must use a computer at ANU): <www.sciencedirect.com/science/article/pii/S0264999313005592#>

Required background: basics of public economics, solid knowledge of microeconomics (Diploma Microeconomics or Microeconomics 3), and working knowledge of MS Excel. It is desirable (but not essential) that the student has some knowledge of the economics of crime and punishment and the basics of corruption. Pareto optimality, graphic analysis and solid multivariable calculus and linear algebra skills are essential.

Topic 11

Title: Structural instabilities in the inflation-inflation uncertainty relationship

Summary: There is a large empirical literature on understanding the relationship between inflation and inflation uncertainty. Empirical work generally supports the claim that higher inflation generates higher inflation uncertainty, whereas there is mixed support in the reverse direction—i.e., higher inflation uncertainty generates higher inflation. This project investigates if this mixed evidence is caused by structural instabilities, in particular due to the adoption of inflation targeting by the central bank.

Description of numerical analysis: The student will collect inflation data of Australia, New Zealand and the G7 countries (which are all publicly available) for analysis. GARCH models will be used to generate a measure of inflation uncertainty.

Reference:

• Grier, K.B. and Perry, M J. (1998). On inflation and inflation uncertainty in the G7 countries. Journal of International Money and Finance, 17(4), 671-689.

Software used: Eviews, Matlab or R

Required background: Basic econometrics, knowledge of maximum likelihood estimation and basic programming

Topic 12

Title: Macroeconomic forecasting using factors

Summary: Recent advances in information technology make it possible to access thousands of economic time series. How to make use of this abundance of data to improve macroeconomic forecasts becomes an important area of research. Stock and Watson (2002) study forecasting a macroeconomic time series variable using a large number of predictors, where they are summarized using a small number of indexes or factors. In their paper, the number of factors is fixed. This project investigates if choosing time-varying number of factors judiciously would improve forecast performance.

Description of numerical analysis: The student will use a famous Stock and Watson dataset that is publicly available. Principal component analysis will be used in forecasting.

References:

• Stock, J.H. and Watson, M.W. (2002). Macroeconomic forecasting using diffusion indexes. Journal of Business & Economic Statistics, 20(2), 147-162.
• Bai, J., & Ng, S. (2002). Determining the number of factors in approximate factor models. Econometrica, 70(1), 191-221.

Software used: Matlab or R

Required background: Basic econometrics, knowledge of forecasting and basic programming

Topic 13

Title: Honesty and disclosure: an experiment

Summary: Cain, Loewenstein and Moore (2005, 2011) report on experiments designed to illuminate the effects on the honesty of advice when remuneration contracts of advisers are disclosed to clients. They demonstrate perverse outcomes: when these contracts are disclosed prior to the advisory relationship advisers tend to exaggerate their advice in their own favour even more than previously. Given proposed Future of Financial Advice (FOFA) reforms in Australia, this is a topical issue here and the proposal is to conduct and analyse an experiment along the lines of Cain, Loewenstein and Moore. The idea would be to replicate their experiment – at least, as conducted by Dan Ariely – but adapted slightly to see any impacts of requiring advisers to act in the interests of the client, as in the Australian case.

Numerical analysis: This is an experiment. It will involve designing and conducting an experiment and analyzing the collected data. I would hope for maybe 60 subjects, reaped from first-year Econ classes, in order to provide 2 or 3 different treatments. Each subject would pair with another in an exercise that would take no more than 10 minutes.

Related literature:

• Ariely, Dan (2014) online video (copy will be provided)
• Cain, Loewenstein and Moore, 2005, The dirt on coming clean: perverse effects of disclosing conflicts of interest. Journal of Legal Studies 34#1, 1 25.
• Cain, Loewenstein and Moore, 2011, When sunlight fails to disinfect: understanding the perverse effects of disclosing conflicts of interest. Journal of Consumer Research 37#5, 836 857

Software used: Excel

Student prerequisites: Ideally some familiarity with behavioural economics or psychological experimental design.

Topic 14

Title: The Gregory thesis: a simulation

Summary: The Gregory thesis (or “Dutch disease” or “Malaise Hollandaise”) argues that an export boom can be de-industrialising. A simple yet elegant model of the phenomenon can be found in Corden and Neary (1982) and they demonstrate, in a Ricardo-Viner (specific factors) setting, that, while an exogenous export price will raise wages for sure and contract the import-competing sector, its consequences for many other variables of interest – the sizes of the nontradeables and aggregate tradeables sectors, the return to capital in the export sector etc. – are ambiguous. The proposal is that a student construct a numerical version of this model and simulate it to illustrate how conclusions depend on the size of income effects, labour demand elasticities and so forth.

Numerical analysis: This is a simulation exercise. It would be nice to use numbers based on some idea of reality, but not essential. It involves constructing a very low-dimensional (n goods, n+1 factors, where n is at least 3) general equilibrium model and simulating it.

Related literature W.M.

• Corden and J.P. Neary, 1982, Booming sector and de industrialisation in a small open economy, Economic Journal 92#368, 825 848.

Software used: Up to the student. My own experience with numerical simulations – albeit pretty limited – is with GAUSS but the model is sufficiently simple that it might even be feasible in MS Excel.

Student prerequisites: Ideally some familiarity with trade theory, particularly the specific factors model, would be nice, but it’s not essential. What is essential is some facility with appropriate software for setting up the simulation.

Topic 15

Title: Real Exchange Rates in Developed Countries: Does the Balassa-Samuelson Hypothesis Hold?

Summary: Balassa (1964) and Samuelson (1964) (BS) provide a well-known explanation of long-run real exchange rate behaviour based on productivity differentials between traded and non-traded sectors in economies with freely adjusting wages and prices. The argument is that higher productivity growth in the traded sector at home than in foreign countries (given the productivity improvement in the non-traded sector is slow) is associated with higher relative price of non-traded goods, leading to a real appreciation of the domestic currency. However, the existing literature has so far provided mixed evidence on the BS hypothesis. This project asks you to examine whether the BS hypothesis has played an important role in explaining long-run real exchange rate movements in developed countries.

Description of numerical analysis: Student will use a suitable data set (will be provided), including sectoral prices and productivities constructed by a novel approach for classifying traded and non-traded industries. Student will apply panel and time series estimation techniques to estimate the model, and explain the results within an appropriate macro framework.

Software used: Eviews and Stata

Reference:

• Choudhri, E. U., & Khan, M. S. (2005). Real Exchange Rates in Developing Countries: Are Balassa-Samuelson Effects Present? IMF Staff Papers, 52(3), 387-409.
• Dumrongrittikul, T. (2012). Real Exchange Rate Movements in Developed and Developing Economies: A Reinterpretation of the Balassa-Samuelson Hypothesis. The Economic Record, 88(283), 537-553.

Prerequisite: Some background and knowledge on exchange rate theory, time series and panel econometrics are desirable.

Topic 16

Title: Which Method is the Best for Forecasting Economic Activity in Australia?

Summary: Prediction of the future state of economic activity is of importance to a wide number of sectors and policy makers. Several researchers have developed a large number of forecasting methods. Traditional forecasting methods rely on a small set of variables as it is difficult to include a large number of leading indicators into one equation. Recent research shows that including more leading indicators can help enhance the forecasting accuracy. There exists a large variety of approaches for the estimation of data-rich prediction methods. This project aims to identify the best method to forecast the economic activity in Australia by investigating several econometric methods such as the univariate autoregressive model, forecasting with the best in-sample predictor, combining forecasts based on different predictors, the principal component factor model, and the partial least squares regression model.

Description of numerical analysis: Student will use time series data (will be provided) including a large set of leading economic indicators to develop time series forecasting models with partial least squares and principal components analysis.

Software used: Gauss or Matlab

Reference:

• Smith, - “What Economic Indicators Have Led Australian GDP Over the Past Decade?”, Quarterly Bulletin of Economic Trends 3.05, Melbourne Institute of Applied Economic and Social Research.
• D’Agostino, A., D. Giannone, and P. Surico (2006), “(Un)Predictability and Macroeconomic Stability”, Working Paper Series 605, European Central Bank.

Prerequisite: Knowledge of time series econometrics and forecasting is necessary.

Topic 17

Title: A comparison of Citation counts of the original statements of the Solow and Swan Neoclassical Growth Models

Summary: In 1956 two statements of the ‘neoclassical growth model’ appeared within in a few months of each other, and apparently independently.

• Solow, Robert M. 1956, "A Contribution to the Theory of Economic Growth" Quarterly Journal of Economics 70 (1) 65–9
• Swan, T.W. 1956, ‘Economic Growth and Capital Accumulation’ Economic Record 32(63) 334–361

Solow’s presentation of the growth model has taken the lion’s share of the profession’s attention. It would be interesting to make this impression more exact by undertaking an analysis of the citation counts of the two papers. This would consist of constructing time profiles of the citations of the two papers, and making a comparison. Such an analysis would also seek differences ‘in space’ (i.e. comparisons of the extent of citations Australian with non-Australian journals). Common citations -- where the two papers are cited in the same document -- could also be investigated.

The investigator would need to take care in choosing amongst the several rival sources of citations:

• Thomson-Reuters ISI (‘Web of Science’)
• Scopus
• Google Scholar
• JSTOR

These have various merits and demerits: the Web of Science is natural sciences biased; Google Scholar is biased to recent years; JSTOR has almost no Australian journals.

The investigator will find guidance in are papers on citations of journals and individual authors:

• William M. Landes, Richard A. Posner 2000 , “Citations, Age, Fame, and the Web” The Journal of Legal Studies, 29, S1
• Alex Millmow and Jacqueline Tuck 2013, ‘The Audit We Had to Have: The Economic Record, 1960–2009’ Economic Record, 89 12–128

More guides on citations can be found at:

• <http://libguides.asu.edu/content.php?pid=11186&sid=74734>
• <http://blogs.lse.ac.uk/impactofsocialsciences/2013/09/26/citations-caution-context-common-sense/>

Topic 18

Topic: Ronald Max Hartwell: A Chronological (and Briefly Annotated) Bibliography

Summary: R.M Hartwell (1921-2009) was an Australian-born economic historian who was a pioneer of the post-war “quantitative revolution” in economic history. He is best known for his paper “The rising standard of living in England, 1800-1850" which put him at odds with Marxist historians by arguing that Britain's industrialisation had improved the lot of the poor.

Hartwell is made especially interesting to ANU researchers as his extensive papers have been deposited in the National Library of Australia.

It would be valuable to construct a bibliography of his 60 year career of research. This would extend beyond academic journals and books to include items in his papers at the NLA (excluding personal letters etc, but including unpublished publications of scholarly interest: lectures notes, correspondence with economists on economics and economic history).

The items would be listed in chronological order. Items would also be occasionally explained (or ‘annotated’); so letters, for example, would have their content briefly recorded. (Thus: ‘2 May 1959 Letter to Milton Friedman’ is not be very helpful ‘but ‘2 May 1959 Letter to Milton Friedman: RMH requests data on US fixed deposits held in the UK’ is more so).

The bibliography would be prefaced by a statement explaining any particular methodology used and challenges faced. It would also attempt to trace in the chronology the paths taken by various strands of Hartwell’s interests.

Related literature: The paper that would serve the investigator best as a model (but still lacking annotations) is;

• White, Michael V. 2010, ‘A Revised Bibliography of Publications by W. Stanley Jevons’ History of Economics Review 51,http://search.proquest.com/assets/r20141.1.1-2/core/spacer.gif106-128.
• Walker, Donald A. 1987, ‘Bibliography of the Writings of Leon Walras’ History of Political Economyhttp://search.proquest.com/assets/r20141.1.1-2/core/spacer.gif19 (4http://search.proquest.com/assets/r20141.1.1-2/core/spacer.gif) 667-702.

A good example of an ambitiously annotated bibliography is Henry Kissinger’s A world restored; Metternich, Castlereagh and the problems of peace, 1812-22, London, Weidenfeld and Nicolson 1957. Some information on bibliographies is at https://student.unsw.edu.au/annotated-bibliography

Topic 19

Project Title: The Responsiveness of Monetary and Fiscal Policy to Economic Downturns

Summary: Most governments try to smooth the business cycle. In particular, monetary and fiscal policy becomes more expansionary during an economic downturn. In this empirical exercise, the student will study the properties of discretionary fiscal and monetary responses to downturns.

The properties to be investigated are the timeliness, duration, strength and symmetry of policies, with comparisons made between fiscal and monetary policy and across countries. The paper on which this study is based conducts such an exercise for the G7 countries. The student is encouraged to widen the study to include other countries, in particular Australia, to use more recent data and to consider alternative VAR specifications for the estimation.

While there have been numerous studies looking at the effects of fiscal and monetary policy on the business cycle, little has been done analysing the response of fiscal and monetary policy to changes in the business cycle. A deeper understanding of this process will help inform policy makers at treasuries and central banks.

Description of Numerical Analysis: The student will need to run vector autoregressions (VARs) and diagnostics using publicly available macroeconomic data on various countries, including Australia.

Related Literature:

• “Fiscal and Monetary Policy During Downturns: Evidence from the G7” by Daniel Leigh and Sven Jari Stehn, IMF Working Paper WP/09/50, Washington D.C., March 2009.

Software Used: Most econometric software capable of VARs, e.g. EViews, Stata, etc.

Required Background: Basic macroeconomics, basic time series econometrics.

Topic 20

Project Title: Do Asset Price Booms Reduce Economic Stability? Evidence from a Panel of OECD Countries

Summary: There is still considerable disagreement about the economic effects of asset prices, especially when they appear to be unjustified by fundamentals. This study asks whether asset prices affect not only the means, but also higher order moments of macroeconomic variables such as inflation and output. In particular, a panel probit regression is used to test whether asset price booms in various asset markets (equity and housing) significantly raise the probability at the margin that the output gap will be in the left tail of its distribution or that the price-level gap will be in the right tail of its distribution. The results are checked for robustness and tested for symmetry.

Existing work on a panel of East Asian countries has found that asset price booms indeed (asymmetrically) fatten the tails of the distributions of the output gap and the price-level gap; however, no such work has been done for industrialized OECD countries, including Australia.

Description of Numerical Analysis: The student will need to run panel probit regressions, quantile regressions, and diagnostics using publicly available macroeconomic and finance data on various OECD countries, including Australia.

Related Literature:

• Gochoco-Bautista, Maria S., "Asset prices and monetary policy: booms and fat tails in East Asia," BIS Working Paper No. 243, January 2008.

Software Used: Most econometric software capable of panel probit regressions (Stata recommended).

Required Background: Basic macroeconomics and finance; some knowledge of limited dependent variable and time series econometrics.

Topic 21

Project Title: Polyarchies and Hierarchies

Summary: If the signals agents receive about a project are not identical then the organizational structure and decision rules employed will have a significant impact on the disruption of projects accepted and rejected. The two most obvious arrangements are parallel and sequential (oversight).

This project will examine the performance of different organizational structures and rules, in different decision contexts through numerical simulation. The simulations will identify which rules/structures are optimal in which situations. This is important for the design of decision-making processes in both public and private settings.

Description of Related Literature:

• SAH, RAAJ KUMAR, and JOSEPH E. STIGLITZ. "The Architecture of Economic Systems: Hierarchies and Polyarchies." The American Economic Review 76.4 (1986): 716-727.
• Sah, Raaj Kumar, and Joseph E. Stiglitz. "Committees, hierarchies and polyarchies." The Economic Journal (1988): 451-470.

Software Used: Python. This project will involve developing numerical simulations from scratch using standard libraries. While an interest by the student in numerical analysis is desirable, this project does NOT expect/require any previous experience with Python programming. The student will learn the necessary programming skills under the guidance of the supervisor. Learning to perform the required numerical simulations therefore constitutes an integral part of the project

Required Background: Basic statistics and maths, microeconomics and an interest in programming.

Topic 22

Project Title: Viscous Demand

Summary: In reality consumers do not always pay perfect attention to the prices of the products they consume and may not be instantly aware of price changes. This may change the nature of competition in a market.

This project will use agent based numerical simulation to build up a market from individual consumer behaviour under imperfect attention and will then characterize optimal pricing behaviour.

Description of Related Literature:

• Spiegler, Ran (2011) , Bounded Rationality and Industrial Organization, Oxford University Press.
• Radner, Roy. "Viscous demand." Journal of Economic Theory 112.2 (2003): 189- 231.

Software Used: Python. This project will involve developing numerical simulations from scratch using standard libraries. While an interest by the student in numerical analysis is desirable, this project does NOT expect/require any previous experience with Python programming. The student will learn the necessary programming skills under the guidance of the supervisor. Learning to perform the required numerical simulations therefore constitutes an integral part of the project

Required Background: Basic statistics and maths, microeconomics, industrial organization and an interest in programming.

Topic 23

Project title: The role and implications of tuition discrimination in higher education

Summary: A controversial issue in higher education is who should bear the cost: taxpayers or students. In the last decades there has been a worldwide decline in public support that has led universities to charge higher tuition fees, and also often to employ discriminatory tuition policies to raise more revenue. In Australia, for example, international and domestic students are subject to different fee schedules. Moreover, domestic students have access to income-contingent loans that attract a zero real interest rate and provide, hence, an additional implicit subsidy. Fethke (2011) proposes a simple theoretical model to analyse the implications of tuition discrimination on enrolment and student welfare in a setting where government and universities have different objectives and act strategically. The aim of this project is to explore further the role and implications of tuition discrimination.

Description of numerical analysis: Fethke (2011) proposes a relatively simple model with specific functional assumptions. We will replicate the results, both analytically and numerically, and explore the implications of changes in relevant parameters and functional forms on the results.

Related literature:

• Epple, D., Romano, R. and Sieg, H. (2006). Admission, tuition, and financial aid policies in the market for higher education, Econometrica 74(4), 885-928.
• Fethke, G. (2011). A low-subsidy problem in higher education, Economics of Education Review 30, 617-626.

Software used: Mathematica. While an interest by the student in numerical analysis is desirable, this project does NOT expect/require any previous experience with Mathematica programming. The student will learn the necessary programming skills under the guidance of the supervisor. Learning to perform the required numerical simulations therefore constitutes an integral part of the project.

Required background: Basic understanding of numerical methods in economics.

Topic 24

Project title: The effect of taxes and public expenditures on time use in Australia

Summary: There is an extensive literature on the importance of taxes for explaining market work across countries and over time. Ragan (2013) shows that differences in tax policy also have implications for the allocation of non-market time. For a group of 13 OECD countries she finds that differences in tax rates explain much of the variation in both market and non- market work. Accounting for public expenditures however further improves the fit, particularly for Scandinavian countries. The purpose of the project is to analyse the effects of taxes and public expenditures on market and non-market time use in Australia using Ragan’s theoretical model and numerical simulations as a benchmark. Description of numerical analysis: Ragan (2013) proposes a theoretical model and provides numerical results for a group of 13 OECD countries. We will replicate the results for a few relevant countries and extend the analysis to Australia.

Related literature:

• Ngai, L.R. and Pissarides, C.A. (2011). Taxes, social subsidies, and the allocation of work time, American Economic Journal: Macroeconomics 3(4), 1–26.
• Ragan, K. (2013). Taxes, transfers and time use: fiscal policy in a household production model. American Economic Journal: Macroeconomics 5(1), 168-192.

Software used: Mathematica. While an interest by the student in numerical analysis is desirable, this project does NOT expect/require any previous experience with Mathematica programming. The student will learn the necessary programming skills under the guidance of the supervisor. Learning to perform the required numerical simulations therefore constitutes an integral part of the project.

Required background: Basic understanding of numerical methods in economics.

Topic 25

Project Title: A Reexamination of Card, et al. “Inequality at Work”

Summary: A number of empirical studies indicate that job satisfaction is correlated with relative pay. Card, et al. (2012) advances that literature by randomising access to information on co-worker salaries and thus providing a strategy to identify the impact of relative pay comparisons. In particular, an information treatment group was informed where salary information for their co- workers could be accessed while a control group was not. The study finds that with regards to job satisfaction and job search intentions, the information treatment had a negative effect for workers earning less than the median but no effect for workers paid above the median. With this Case Studies project, students will reexamine the assumptions or robustness of the results for this published paper using the data provided by the authors on the journal’s website. The particular focus of the reexamination will be determined by the student subject to the supervisor’s approval.

Description of numerical analysis: linear probability model and ordinary least squares regression

Related literature:

• David Card, et al., 2012, “Inequality at Work: The Effect of Peer Salaries on Job Satisfaction,” American Economic Review, 102(6), pp. 2981-3003.

Software used: any econometrics package student is comfortable with

Required background: graduate-level econometrics, understanding of treatment effects

Topic 26

Project Title: Union Wages Effects in Australia

Summary: Wooden [2001] finds that the union-nonunion wage difference depends jointly on the extent of union membership ("union density") among workers and the presence of an "active union" at the workplace. This wage difference is not important within a workplace but is sizable across workplaces. For his analysis, Wooden uses the 1995 Australian Industrial Relations Survey (AWIRS A) which provides a matched employer-employee data set. Work from two earlier Case Studies projects and using the same AWIRS 95 data question Wooden’s conclusions. Carter [2008] finds a strong union wage effect at workplaces with agreements made before 1994 but not at those with agreements made after this time. Using a more direct measure of union involvement in negotiating agreements, McDonald [2012] finds inconclusive evidence of a union wage impact. This proposed Case Study will further probe the robustness of Wooden’s results.

Description of numerical analysis: Panel data estimation

Related literature:

• Louise Carter, 2008, “A Closer Look at Union Wage Effects in the Presence of Enterprise Bargaining: Evidence from Australian Workplaces in 1995,” mimeo.
• Tony McDonald, 2012, “Union Wage Effects and Enterprise Bargaining: A Reappraisal,” mimeo.
• Mark Wooden, 2001, “Union Wage Effects in the Presence of Enterprise Bargaining,“ Economic Record, 77:236, pp. 1-18.

Software used: any econometrics package student is comfortable with

Required background: graduate-level econometrics