Department of Economics

Faculty Research




  • ARTICLE: Dong Cheng, Yong Tan & Jian Yu, "Credit Rationing and Firm Exports: Microeconomic Evidence from Small and Medium-Sized Enterprises in China." The World Economy - December 2019
    • Authors: Dong Cheng, Yong Tan, Jian Yu
    • Abstract: This paper examines the effect of credit rationing on export performance by small and medium‐sized firms in China. We use a detailed firm‐level data provided by the Small and Medium‐sized Enterprises Dynamic Survey (SMEDS) during 2015–16 to conduct this analysis. The SMEDS provides firm‐specific measures of credit rationing based directly on firm‐level responses to the survey rather than indirect ones, based on firm‐level financial statements. We find that, at the extensive margin, weak and strong credit rationing reduces export probability of small and medium‐sized enterprises (SMEs) by 15.1% and 39.6%, respectively. At the intensive margin, they decrease SMEs' export values by more than 20.0% and over 28.8%, respectively. Different than existing literature, we construct valid firm‐level instruments, firm‐level housing stock, for credit rationing rather than using province‐level instruments. We also employ county‐industry‐level instruments and obtain consistent estimates. In addition, credit rationing exhibits heterogeneous impacts on firms with different liquidity ratios, product portfolios, external collateral and capital utilisation rates.
    • Article: "Credit Rationing and Firm Exports: Microeconomic Evidence from Small and Medium-Sized Enterprises in China"
  • ARTICLE: Lewis Davis & K.R. White, "Is Justice Blind? Evidence From Federal Corruption Convictions." Public Choice - November 2019

    Authors: Lewis Davis, K.R. White

    Abstract: Are federal prosecutors influenced by partisan political concerns? We examine that question by analyzing 40 years of federal corruption convictions at the state and federal district levels. Our key finding is that state-level federal corruption convictions fall by roughly 9% in years when a state’s governor belongs to the same party as the president who appointed local US Attorneys, a measure of state-federal political alignment. The result is robust to controls for the state political environment, election cycles, party tenure in the executive branch, public sector employment, federal aid to states, a state’s electoral importance, and the changes in Honest Services law, the statutory basis for many federal corruption cases. Our results are consistent with a significant level of partisan prosecutorial bias on the part of US Attorneys. In a placebo test, we find no evidence that state-federal political alignment affects the total number of federal criminal convictions. That finding provides support for the mechanism that we propose, namely the partisan exercise of prosecutorial discretion, rather than the partisan allocation of prosecutorial resources across federal districts.

    Article: "Is Justice Blind? Evidence From Federal Corruption Convictions."

  • ARTICLE: Lewis Davis, Claudia Williamson, "Does Individualism Promote Gender Equality?" World Development - November 2019
    • Authors: Lewis Davis, Claudia Williamson
    • Abstract: We argue that individualism promotes gender equality. Individualist values of autonomy and self-determination transcend gender identities and serve to legitimize women’s goals and choices. In contrast, collectivist values may subordinate women’s personal goals to their social obligations, generating greater acceptance of gender inequality. Using individual level data from World Values Surveys, we find that individualism is significantly associated with support for gender equal attitudes regarding employment, income, education, and political leadership. Individualism is also associated with greater levels of female employment and educational attainment, and lower levels of fertility. These results are robust to controlling for income, education, religion, historical plough use, gendered language, and country-time fixed effects. Our within country analysis allows us to isolate the impact of individualism from other confounding effects. Using historical rainfall variation as an instrument for individualism, we find that the exogenous portion of individualism reduces support for patriarchal attitudes and fertility, and it increases female employment and educational attainment. These effects are economically large. We address concerns over instrumental validity by controlling for a variety of factors, including historical plough use, religious affiliation, religiosity, social trust, average rainfall levels, distance from the equator, cool-water conditions, agricultural suitability, historical political and economic development, and the presence of large animals. This paper contributes to a mounting body of evidence suggesting a key role for highly persistent cultural norms and values in determining gender inequality, the gender division of labor, and economic and social outcomes for women.
    • Article: "Does Individualism Promote Gender Equality?"
  • ARTICLE: Dong Cheng, Xuepeng Shi, Jian Yu & Dayong Zhang, "How Does the Chinese Economy React to Uncertainty in International Crude Oil Prices?" International Review of Economics & Finance - November 2019
    • Authors: Dong Cheng, Xuepeng Shi, Jian Yu, Dayong Zhang
    • Abstract: This paper investigates the dynamic impacts of uncertainty in international crude oil prices on the Chinese economy. We use two measures, sample standard deviation and conditional standard deviation estimated from a GARCH (1,1) model, to calculate uncertainty in oil prices. We find that an increase in volatility in oil prices tends to reduce the real gross domestic product (GDP) and investment, which in turn encourages the Chinese government to stabilize the economy through expansionary fiscal and monetary policy. Furthermore, when we differentiate the impacts of increases and decreases in oil price uncertainty, we obtain a symmetric result. An increase in oil price uncentainty reduces real GDP and investment, while a decrease boosts the macroeconomy. We attribute the effect of decreasing uncertainty to the combined factor of falling uncertainty and an expansionary monetary and fiscal policy. A cross-sectional check related to economic geography indicates that uncertainty shocks to oil prices has a significantly greater negative impact on real GDP and investment in eastern China, where the economy is more industrialized and depends more heavily on oil than other regions.
    • Article: "How Does the Chinese Economy React to Uncertainty in International Crude Oil Prices?"
  • ARTICLE: Dong Cheng, Mario Crucini, Hyunseung Oh & Hakan Yilmazkuday, "Early 20th Century American Exceptionalism: Production, Trade and Diffusion of the Automobile." National Bureau of Economic Research Working Paper Series - November 2019
    • Authors: Dong Cheng, Mario Crucini, Hyunseung Oh, Hakan Yilmazkuday
    • Abstract: The beginning of the twentieth century provides a unique opportunity to explore the interaction of rapid technological progress and trade barriers in shaping the worldwide diffusion of a new, highly traded good: the automobile. We scrape historical data on the quantity and value of passenger vehicles exported from the United States to other destination countries, annually from 1913 to 1940. We model the rise of US automobile from global obscurity toward a level dependent upon the extent of long-run pass-through of US prices into destination markets and destination GDP per capita. The results based on a diffusion model with CES preferences and non-unitary income elasticity shows that 62% of the gap in diffusion levels between the U.S. and the rest of the world is due to price frictions such as markups, tariffs, and trade costs, while the remaining 38% is due to income effects.
    • Article: "Early 20th Century American Exceptionalism: Production, Trade and Diffusion of the Automobile"
  • ARTICLE: Tomas Dvorak, Simon Halliday, Michael O'Hara & Aaron Swoboda, "Efficient Empiricism: Streamlining Teaching, Research, and Learning in Empirical Courses." Journal of Economic Education - June 2019
    • Authors: Tomas Dvorak, Simon Halliday, Michael O'Hara, Aaron Swoboda
    • Abstract: The increasing importance of empirical analysis in economics highlights the need for efficient ways to bring these skills to the classroom. R Markdown is a new technology that provides a solution by integrating writing, statistical work and computation into a single document. R Markdown benefits students and instructors by streamlining teaching, research, and collaboration. The authors report on their use of R Markdown in undergraduate teaching, including core courses, electives, and senior theses. They discuss the costs and benefits of adoption, and explain the advantages of R Markdown in teaching reproducibility of empirical work, avoiding time-consuming and error-prone “cut and paste,” and facilitating a one-stop solution for importing, cleaning, manipulating, visualizing, and communicating with data.
    • "Efficient Empiricism: Streamlining Teaching, Research, and Learning in Empirical Courses"
  • ARTICLE: Stephen Schmidt, "Resources and the Acceptability of the Repugnant Conclusion." Thoeria. An International Journal for Theory, History and Foundations of Science - April 2019
    • Author: Stephen Schmidt
    • Abstract: Parfit's Repugnant Conclusion argues, against intuition, that for any world A, another world Z with higher population and minimal well-being is better. That intuition is incorrect because the argument has not considered resources that support well-being. Z must have many more resources supporting well-being than A does. Z is repugnant because it spreads those resources among too many people; another world with Z's resources and fewer people, if available, would be far superior. But Z is still better than A; it is worth accepting its very large population to get the resources needed to support their well-being.
    • Article: "Resources and the Acceptability of the Repugnant Conclusion"
  • ARTICLE: Lewis Davis, "Growth, Inequality and Tunnel Effects: A Formal Mode." Journal of Happiness Studies - April 2019
    • Author: Lewis Davis
    • Abstract: Hirschman and Rothschild’s (Q J Econ 87(4):544–566, 1973) tunnel effect refers to the propensity for individuals to be pleased by the success of others if they believe this signals an improvement in their own prospects. According to the current literature, tunnel effects may offset the utility losses from increases in peer income levels and income inequality. I develop a simple model of tunnel effects to evaluate these two channels of influence. The analysis confirms that tunnel effects create a positive link between happiness and economic growth. In contrast, rising income inequality generates a tunnel effect that increases the happiness of the rich but decreases happiness among the poor. The analysis confirms Hirschman and Rothschild’s informal analysis indicating that tunnel effects may increase the happiness of the poor in the case of uneven development that involves both growth and rising income inequality. The model also highlights the differential impact of tunnel effects across age and income groups within the population. I close by discussing the model’s implications for empirical investigations of tunnel effects.
    • Article: "Growth, Inequality and Tunnel Effects: A Formal Mode"



  • ARTICLE: Younghwan Song, "Rotation Group Bias in Current Smoking Prevalence Estimates Using TUS-CPS." Journal of the European Survey Research Association - December 2017
    • Author: Younghwan Song
    • Abstract: This paper examined whether the sample rotation scheme of the Current Population Survey (CPS) results in an underestimation of current smoking prevalence in the Tobacco Use Supplement to the Current Population Survey (TUS-CPS). The TUS-CPS has been administered as part of the CPS, which has eight rotation groups of households in each month that are repeatedly interviewed based on a sample rotation scheme. Previous research has found that even though all eight rotation groups in the CPS are independent random samples of the population, some estimates, such as unemployment rates, tend to be significantly higher in the first rotation group than among other rotation groups. The probit regression results of this paper showed that although current smokers are more likely to attrite than nonsmokers in all years of the TUS-CPS, for the six waves of TUS-CPS before 2003 there is no evidence that current smoking prevalence estimates were significantly affected by the rotation scheme of the CPS. For the three waves of TUS-CPS since 2003, however, the results showed that current smoking prevalence has been underestimated likely due to panel attrition. It appears that rotation group bias in these waves was caused by the substantially increased number of additional questions smokers had to answer.
    • Article: "Rotation Group Bias in Current Smoking Prevalence Estimates Using TUS-CPS"
  • ARTICLE: Mehmet Sener & Wolf-Heimo Grieben, "Wage Bargaining, Trade and Growth." Research in Economics - September 2017
    • Authors: Mehmet Sener, Wolf-Heimo Grieben
    • Abstract: We construct a North-South product-cycle model of trade with fully-endogenous growth and union wage bargaining. Economic growth is driven by Northern entrepreneurs who conduct R&D to innovate higher quality products. Northern production technologies can leak to the South upon successful imitation. The North has two sectors: a tradable industrial goods sector (manufacturing) where wages are determined via a bargaining process and a non-tradable sector (services) where wages are flexible. The South has only a tradable industrial goods sector where wages are flexible.We find that unilateral Northern trade liberalization, in the form of lower Northern tariffs on industrial goods, increases the rate of innovation but decreases both the bargained wage in the industrial sector and the flexible wage in the service sector. The wage effects are relative to the Southern wage rate. We also consider a variant of the model with Northern unemployment, driven by a binding minimum wage in the non-tradable service sector. In this case, Northern tariff cuts decrease the innovation rate and the bargained wage rate. In addition, the Northern unemployment rate increases. The model thus highlights the role of labor market institutions in determining the growth and labor market effects of tariff reductions. We also study the effects of unilateral Southern trade liberalization.
    • Article: "Wage Bargaining, Trade and Growth"
  • ARTICLE: Younghwan Song, "A Cross-State Comparison of Measures of Selective Wellbeing." International Journal of Wellbeing - June 2017
    • Author: Younghwan Song
    • Abstract: Using data drawn from the 2010 American Time Use Survey Well-Being Module, this study examines the relationship between three measures of subjective wellbeing based on time-use data and an objective measure of wellbeing. Whereas the measures of affect—net affect and the U-index—are uncorrelated with the objective quality-of-life ranking of the 50 states in the United States, the measure of meaningfulness shows a significant correlation with objective ranking. The reason for the significant correlation between the measure of meaningfulness and the objective measure of wellbeing is because, when engaged in similar activities, people living in states with better quality of life felt, after controlling for their individual characteristics, their lives to be more meaningful than those living in states with poor amenities, not because time use varies substantially by state.
    • Article: "A Cross-State Comparison of Measures of Selective Wellbeing"



  • ARTICLE: Stephen Schmidt, "Examining Theories of Distributive Justice with an Asymmetric Public Goods Game." The Journal of Economic Education - June 2015
    • Author: Stephen Schmidt
    • Abstract: In this article, the author presents an asymmetric version of the familiar public goods classroom experiment, in which some players are given more tokens to invest than others, and players collectively decide whether to divide the return to the group investment asymmetrically as well. The asymmetry between players raises normative issues about fairness, rights, and equality that are not present in the symmetric game, where efficiency is the major relevant normative concept. Playing the game in class requires students to confront the distributional question and shows how issues of efficiency can become entangled with other moral issues when solving economic policy problems. The game allows instructors to incorporate theories of distributive justice into economic reasoning in the classroom, as has been widely suggested recently.
    • Article: "Examining Theories of Distributive Justice with an Asymmetric Public Goods Game"
  • ARTICLE: Tomas Dvorak, "Do 401k Plan Advisors Take Their Own Advice?" Journal of Pension Economics and Finance - 2015
    • Author: Tomas Dvorak
    • Abstract: Sponsors of defined contribution plans often hire financial advisors to help them design and monitor their plans. I find that advisors have a significant impact on the menu of investment options of their clients’ plans. Clients of the same advisor tend to hold the same funds and fund families. They also tend to delete and add the same funds. Advisors’ plans are similar to their clients’ plans in that they tend to hold identical funds, use the same fund families, and fund categories. Thus, to a large extent, advisors take their own advice. However, funds that are in clients’ plans but not in their advisors’ plans have higher expense ratios than the funds held by advisors. Since advisors’ compensation is often tied to the expense ratio of their clients’ funds, this pattern is consistent with misaligned incentives on the part of advisors and their clients.
    • Article: "Do 401k Plan Advisors Take Their Own Advice?"


  • ARTICLE: Lewis Davis, "How to Generate Good Profit Maximization Problems." The Journal of Economic Education - July 2014
    • Author: Lewis Davis
    • Abstract: In this article, the author considers the merits of two classes of profit maximization problems: those involving perfectly competitive firms with quadratic and cubic cost functions. While relatively easy to develop and solve, problems based on quadratic cost functions are too simple to address a number of important issues, such as the use of second-order conditions and the short-run shutdown condition. Problems based on cubic cost functions are mathematically richer but often involve messy arithmetic; furthermore, many are not plausible representations of a firm's costs. Finding cubic functions that do not suffer from these drawbacks can be a time-consuming process. The author addresses this issue by providing a procedure to generate profit maximization problems that are theoretically interesting, economically plausible, and computationally simple.
    • Article: "How to Generate Good Profit Maximization Problems"
  • ARTICLE: Claudia Canals & Mehment Sener, "Offshoring and Intellectual Property Rights Reform." Journal of Development Economics - May 2014
    • Authors: Claudia Canals, Mehment Sener
    • Abstract: This paper empirically assesses the responsiveness of US offshoring to intellectual property rights (IPR) reforms in 16 countries. We construct a measure of US offshoring at the industry level based on trade in intermediate goods, covering 23 industries for the period 1973–2006. For each industry, we differentiate between broad offshoring and intra-industry offshoring activities. We conduct a difference-in-difference analysis using the IPR reform years proposed in Branstetter et al. (2006, Quarterly Journal of Economics). We find that following IPR reform, neither broad nor intra-industry offshoring intensities change for the typical US industry at conventional levels of significance. However, high-tech (patent-sensitive) industries substantially expand their intra-industry offshoring activities, whereas low-tech (patent-insensitive) industries do not change their intra-industry offshoring activities in a statistically significant way. In addition, high-tech industries increase their broad offshoring relative to low-tech industries, but the effects are smaller and less robust than those estimated for intra-industry offshoring.
    • Article: "Offshoring and Intellectual Property Rights Reform"
  • ARTICLE: Lewis Davis & Stephen Wu, "Social Comparisons and Life Satisfaction Across Racial and Ethnic Groups: The Effects of Status, Information and Solidarity." Social Indicators Research - July 2014
    • Authors: Lewis Davis, Stephen Wu
    • Abstract: This paper explores the role of within group social comparisons on the life satisfaction of different racial and ethnic groups in the US. For Whites, we find that higher group income levels are associated with lower levels of life satisfaction, a result that is consistent with a preference for within group status. In contrast, life satisfaction is increasing in group income for Blacks. This result is consistent with the existence of social norms that emphasize Black solidarity. It is also consistent with an information effect in which Blacks rely on peer income levels to form expectations regarding their future prospects. We introduce a theoretical framework to help to distinguish between solidarity and information effects. Our empirical results provide strong support for the hypothesis that solidarity rather than information accounts for the positive relationship between average Black income and the subjective wellbeing of US Blacks. Finally, we consider two theories of social solidarity and find support for social salience but not social density in determining the strength of solidarity effects.
    • Article: "Social Comparisons and Life Satisfaction Across Racial and Ethnic Groups: The Effects of Status, Information and Solidarity"


  • ARTICLE: Younghwan Song & Sabrina Pabilonia, "Single Mothers' Time Preference, Smoking, and Enriching Childcare: Evidence from Time Diaries." Eastern Economic Journal - April 2013
    • Authors: Younghwan Song, Sabrina Pabilonia
    • Abstract: Previous research has shown that time preference affects individuals’ market time allocation and own human capital investments. This paper uses data from the CPS Tobacco Use Supplements, the American Time Use Survey, and the PSID-Child Development Supplement to examine how time preference, as measured by smoking behavior, affects mothers’ time investments in their children under age 13 and children’s future test scores. Results indicate that single mothers who smoke spend significantly less time with their children in educational activities, such as reading and homework, and sharing meals with their children than non-smokers. Their children also have lower reading test scores.
    • Article: "Single Mothers' Time Preference, Smoking, and Enriching Childcare: Evidence from Time Diaries"
  • ARTICLE: Lewis Davis & Matthew Knauss, "The Moral Consequences of Economic Growth: An Empirical Investigation." The Journal of Socio-Economics - February 2013
    • Authors: Lewis Davis, Matthew Knauss
    • Abstract: In The Moral Consequences of Economic Growth, Benjamin Friedman argues that growth reduces the strength of interpersonal income comparisons, and thereby tends to increases the desire for pro-social legislation, a position he supports by drawing on the historical records of the US and several Western European countries. We test this hypothesis using a variable from the World Values Survey that measures an individual's taste for government responsibility, which we interpret as a measure of the demand for egalitarian social policy. Our results provide support for a modified version of Friedman's hypothesis. In particular, we find that the taste for government responsibility is positively related to the recent change in the growth rate and negatively related to the change in income inequality. We conclude by discussing the implications of these findings for attempts to further the egalitarian social goals.
    • Article: "The Moral Consequences of Economic Growth: An Empirical Investigation"
  • ARTICLE: Tomas Dvorak & Jigme Norbu, "Do Mutual Fund Companies Eat Their Own Cooking?" Journal of Retirement - 2013
    • Authors: Tomas Dvorak, Jigme Norbu
    • Abstract: The authors find that mutual fund companies offer mostly their own mutual funds in the 401(k) plans for their own employees. However, there are systematic differences between companies that rely on their own funds and companies that include outside funds. The companies that include outside funds tend to operate funds with high expense ratios. Outside funds in the 401(k) plans of mutual fund companies have significantly lower expense ratios and better governance scores than company’s own funds. This evidence supports the claim that the interests of mutual fund companies are not perfectly aligned with the interests of their funds’ shareholders. The authors also find that among the company’s own funds, the funds selected for the company’s 401(k) plan are almost indistinguishable from the rest of the funds offered by the mutual fund companies. Thus, it is not the case that, within their own funds, mutual fund companies favor their inexpensive funds. In fact, within the companies’ own funds, participants (mutual fund company employees) gravitate towards higher-cost and more actively managed funds. Thus, in one context (choosing to use outside funds) mutual fund companies favor cheap and better governed funds, in another context (choosing among its own funds) mutual fund companies favor actively managed, expensive funds.
    • Article: "Do Mutual Fund Companies Eat Their Own Cooking?"
  • ARTICLE: Tomas Dvorak & Shayna Toubman, "Are Women More Generous than Men? Evidence from Alumni Donations." Eastern Economic Journal - 2013
    • Authors: Tomas Dvorak, Shayna Toubman
    • Abstract: The explicit hierarchy of recognition in alumni giving offers a useful context in which to examine the nature of gender differences regarding charitable giving. Using 31 years of alumni-giving records at a small liberal arts college, we find that women are more likely to be donors. Among donors, women tend to give more frequently but generally make smaller donations than men. These results hold even after controlling for age, income, and participation in Greek organizations. The results are consistent with the hypotheses that the drive for recognition of charitable giving is stronger in men than women, and that women are more reciprocal than men.
    • Article: "Are Women More Generous than Men? Evidence from Alumni Donations"



2005 - 2010

2000 - 2005