Department of Economics

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Work by the faculty and students of the Department of Economics

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  • Publication
    On the Causal Link between Financial Development and Economic Growth: Case of Jordan
    (Virtus Interpress, 2016) AbuAl-Foul, Bassam; Genc, Ismail; Darayseh, Musa
    This paper empirically examines the causal relation between financial development and economic growth in the case of Jordan for the period 1965 to 2004. That is, the paper attempts to provide answers to the following questions: a) Does financial development promotes economic growth? Or b) Does economic growth promotes financial development? Using Toda and Yamamoto (1995) Granger-no-causality model, the results reveal that there is a uni-directional Granger causality from economic growth to financial development (as defined by log (DC/GDP)).
  • Publication
    The Impact of Technology on Regional Price Dispersion in the US
    (VGTU, 2021) Genc, Ismail
    We analyze the behavior of inflation in the era of fast pace information thanks to technological advances, especially internet. Owing to readily available information, prices/inflation should quickly converge under perfect competition. To this end, we explore the possibility of price convergence in regional inflation in the USA including the permanency of such a phenomenon if observed, a concern for monetary policy makers. Empirically, we analyze standard deviation of regional inflation with special attention to technology. We show that standard deviation of inflation is not constant over time, but not necessarily ever-declining. Technology seems to help reduce price dispersion across regions.
  • Publication
    Attitudes towards climate change and energy sources in oil exporters
    (Elsevier, 2021) Contu, Davide; Kaya, Ozgur; Kaya, Ilker
    Switching to energy mixes that use more non-fossil fuels is critical to reduce greenhouse gas emissions to tackle climate change. Climate change poses a major challenge to oil exporting Gulf countries, like the rest of the world, but research on human views on energy and climate change is limited. We aim to fill this gap by focusing on the UAE, a nation with a peculiar demographic composition that includes an overwhelming proportion of expatriates and transitions towards green and nuclear resources. We examine whether transiency of residence and life satisfaction play a role in influencing perceptions about climate change and energy sources. We also analyze how expatriates' opinions differ from UAE citizens who have significantly higher income and welfare benefits.
  • Publication
    Groundnut spread likability, sensory properties, and intent to pay for quality certification
    (Swedish Nutrition Foundation, 2020) Kaya, Ozgur; Florkowski, Wojciech J.; Sarpong, Daniel; Chinnan, Manjeet S.; Ressurrecion, Anna V. A.
    Quality-certified, nutritious novel groundnut spread has great commercialization possibilities due to evolving urban lifestyles in Africa, but lack of information about likability, sensory attributes, and consumer safety awareness is a severe barrier for small enterprises. This paper examines a novel groundnut spread, made of sorted kernels deemed free of aflatoxin, intended for use on bread in a fashion similar to groundnut paste or groundnut butter, but with modified sensory characteristics. In particular, it seeks to measure the effects of sensory attributes of the novel spread on the intent to pay for safety certification and the role of consumer awareness of aflatoxin. A novel spread was prepared with groundnut paste from sorted kernels (to eliminate the risk of aflatoxin contamination) and cocoa. Adults intercepted at Ghana’s International Fair in 2012 volunteered to sample the spread and complete a questionnaire. Results from a tasting panel of untrained participants established that sensory attributes and panellist characteristics are relevant to the intent to pay for quality certification. Spread likability, aroma, education, knowledge about aflatoxin, packaging and being married were identified as major factors increasing the probability of intent to pay for quality certification whereas young age and the presence of children in a household lowered the probability. Results also identified income, education level, and having young children at home as increasing the chances of knowing about aflatoxin. Groundnut paste available in Ghana is often contaminated by aflatoxin as it is in other countries in the region and consumers cannot visually assess paste quality. Under the circumstances, quality certification is necessary.
  • Publication
    Does Property Ownership by Women Reduce Domestic Violence? A Case of Latin America
    (American University of Sharjah, 2020-06-01) Gahramanov, Emin; Gaibulloev, Khusrav; Younas, Javed
    It is widely believed that empowering women via various material means increases women’s outside options and, thereby, makes them less vulnerable to intimate partner violence. However, the effect of such empowerment on domestic violence could be subtle particularly in countries with pre-existing high tolerance to violence, weak law enforcement and male institutional domination. Using cross-sectional household-level survey data for Latin American countries, we test the effect of property ownership by women on domestic violence. The results show that a woman’s sole property ownership is not associated with less domestic violence against her; sometimes the correlation is even positive. However, married women who co-own the property are less likely to face domestic abuse by husbands.
  • Publication
    What We Have Learned about Terrorism since 9/11
    (American Economic Association, 2019) Gaibulloev, Khusrav; Sandler, Todd
    This overview examines critically the post-9/11 empirical literature on terrorism. Major contributions by both economists and political scientists are included. We focus on five main themes: the changing nature of terrorism, the organization of terrorist groups, the effectiveness of counterterrorism policies, modern drivers or causes of terrorism, and the economic consequences of terrorism. In so doing, we investigate a host of questions that include: How do terrorist groups attract and retain members? What determines the survival of terrorist groups? Is poverty a root cause of terrorism? What counterterrorism measures work best? In the latter regard, we find that many counterterrorism policies have unintended negative consequences owing to attack transference and terrorist backlash. This suggests the need for novel policies such as service provision to counter some terrorist groups' efforts to provide such services. Despite terrorists' concerted efforts to damage targeted countries' economies, the empirical literature shows that terrorism has had little or no effect on economic growth or GDP except in small terrorism-plagued countries. At the sectoral level, terrorism can adversely affect tourism and foreign direct investment, but these effects are rather transient and create transference of activities to other sectors, thus cushioning the consequences.
  • Publication
    Introducing Extended Data on Terrorist Groups (EDTG), 1970 to 2016
    (Sage Publishing, 2020) Hou, Dongfang; Gaibulloev, Khusrav; Sandler, Todd
    This article introduces an extended data set of 760 terrorist groups that engaged in attacks during 1970 to 2016. Unlike most extant group data sets, the extended data on terrorist groups (EDTG) is not tied to terrorist groups and attacks listed in the RAND terrorism data; rather, EDTG is linked to terrorist groups and attacks given in the Global Terrorism Database. Terrorist groups’ variables in EDTG include ideology, main goals, start date, duration, base country, attack diversity, peak size, alternative endings (if relevant), and others. We display interesting features of EDTG through a series of tables and figures. Our EDTG-based survival analysis is at odds with some of the literature: for example, the demise of a leader and a larger share of transnational terrorist attacks increase the group’s odds of failure. After 2001, religious terrorist groups are more resilient than those with other ideologies. We also analyze terrorist group lethality and productivity.
  • Publication
    Transnational Links in Rhino Poaching and the Black Market Price of Rhino Horns
    (Wiley Online Library, 2019) Lopes, Adrian
    The trends of rhino poaching in South Africa and India – major range states – have been remarkably similar over time. Organized criminal syndicates manage an illegal supply chain of rhino horns from poachers, middlemen, and corrupt authorities, to East Asian black-markets. In this paper, we use rhino poaching data from South Africa and India to examine the plausibility of transnational links and coordination in their supplies of rhino horns. We develop an innovative model of oligopolistic collusion in supply and find empirical evidence to support the theory, while controlling for rhino horn demand features, corruption, governance quality, and conservation policy. Furthermore, we propose an inventory management model of a criminal syndicate that controls the horn supply chain. The method retraces and forecasts black-market prices, and has potential applicability in estimating supply or demand elasticities. This paper is a first to suggest an oligopolistic feature of the poaching industry. It highlights the need to reorient conservation policy to account for possible coordination of rhino horn supplies between range states.
  • Publication
    Honesty, ability, norm, and socioeconomic status: experimental evidence from Bangladesh
    (American University of Sharjah, 2019) Mahmud, Minhaj; Tasneem, Dina
    In a real effort task experiment, we study the (dis)honesty of undergraduate students in Bangladesh. Consistent with earlier studies, when they self-report their performance, a significant fraction of students cheats to varying degrees. We find that an individual's own ability, as well as social norms in terms of beliefs about peers' behavior, are the two most important factors influencing (dis)honesty in our experiment. In particular, a higher actual performance in the real effort task reduces both the likelihood and extent of cheating, while the belief that peers are cheating increases both the likelihood and extent of cheating. Additionally, a lower perceived fear of detection increases the extent of cheating, but does not increase the likelihood of cheating. Among the two most important indicators of socioeconomic status that we considered, such as parents' education and income, only mother's level of education shows a significant negative effect on the likelihood of cheating.
  • Publication
    Information disclosure in dynamic research contests
    (American University of Sharjah, 2019-09) Chen, Bo; Knyazev, Dmitriy; Chen, Bo
    We study the design of information disclosure in a dynamic multi-agent research contest, where each agent privately searches for innovations and submits his best to compete for a winner-takes-all prize. We find that although submission is a one-time event for each agent, different disclosure policies on the agents' submissions induce different equilibrium behavior, making the design of disclosure a useful instrument for the contest sponsor. We characterize equilibrium behavior in a public contest where submissions are revealed and in a hidden contest where no submission information is revealed. In addition, for contests with indefinite duration, the public disclosure policy is an optimal policy among a natural set of disclosure policies.
  • Publication
    Prize-Linked Savings Games: Theory and Experiment
    (American University of Sharjah, 2018) Jindapon, Paan; Sujarittanonta, Pacharasut; Viriyavipart, Ajalavat
    We introduce a game in which each player can allocate her endowment in a prize-linked savings (PLS) account, which awards a fixed prize only to a randomly chosen winner. Like Tullock's rent-seeking contest, the probability for each player of winning the prize is the ratio of her PLS deposit to the total deposits made by all participating players. We derive a unique equilibrium and further examine the effects of introducing PLS as an alternative savings option to traditional savings (TS), which yields a fixed rate of return. Our theory predicts that, while inducing the group with low TS deposits to save more, PLS will cannibalize TS and reduce total savings in the group with high TS deposits. However, in contrast to the theory, our experimental results show that PLS significantly increases total savings in both groups.
  • Publication
    Parental Involvement and Children's Development: Can There Be Positive Side Effects?
    (American University of Sharjah, 2018) Gahramanov, Emin; Hasanov, Rashad; Tang, Xueli
    A growing body of literature indicates that meaningful time spent with parents has a significant influence on early childhood development, a future accumulation of a wide array of cognitive and non-cognitive skills, and the ultimate success of a child. The theoretical model presented in this article features endogenous fertility and labor supply while distinguishing between various types of parental time spent with children. In this model, parents are subsidized for spending publicly verifiable productive time with their children. It is shown that there are low tax-subsidy rates that would allow policymakers to stimulate the labor supply of the primary caretaker in addition to significantly enhancing children's skills. These unique by-products of human capital accumulation can have important implications both in developed countries with an ageing population and in developing countries with low female labor force participation.
  • Publication
    Does Foreign Direct Investment Promote Economic Growth: An Empirical Analysis
    (American University of Sharjah, 2018) AbuAl-Foul, Bassam
    This paper used time-series data to investigate the causal relation between foreign direct investment and economic growth in two MENA countries, namely Egypt and Jordan. The methodology used in this study follows Toda and Yamamoto (1995) procedure in order to test the Granger causality between economic growth and foreign direct investment. The empirical results reveal that only the FDI-led growth hypothesis exists in the case of both Egypt and Jordan.
  • Publication
    Forecasting Energy Demand: The Case of United Arab Emirates
    (American University of Sharjah, 2018) AbuAl-Foul, Bassam
    The purpose of this study is to forecast energy use in United Arab Emirates (UAE) using annual data over the period 1976-2009. The methodology used in this study follows the artificial neural networks analyses. We use four independent variables, namely, gross domestic product, population, exports, and imports to forecast energy use. Empirical results reveal that the projected energy use in United Arab Emirates will reach 69,000 and 76,900 Kt. of oil equivalent in years 2015 and 2020, respectively. Thus, a better and more realistic energy forecast is necessary for the policy makers when making decisions for the next decade. Therefore, the policy makers need to take this increase in energy use into consideration as it may pose a threat to economic development in the country should energy needs will not be met.
  • Publication
    Stop-Go Monetary Policy
    (American University of Sharjah, 2018) Chappell, Henry; Harris, Mark N.; McGregor, Rob Roy; Spencer, Christopher
    We propose and estimate several discrete choice models of monetary policy decision-making that feature time-varying inertia. The models permit us to account for three stylized facts characterizing monetary policy making in the United States: (1) target interest rates are gradually adjusted in small discrete movements, (2) there are some long stretches of time in which rate are repeatedly moved, and (3) there are other long stretches of time in which the policy rate does not change. The proposed models perform well in predicting in-sample policy choices of the Federal Reserve and can explain the presence of policy inertia without including multiple lagged dependent variables in a monetary policy reaction function.
  • Publication
    Anticipated Discrimination, Choices, and Performance: Experimental evidence
    (American University of Sharjah, 2018) Charness, Gary; Cobo-Reyes, Ramón; Sanches, Ángela
    This paper studies experimentally anticipated discrimination across gender, hiring patterns, and performance in tasks with different stereotypes in a labor-market setting. Participants are assigned to a seven-people group and randomly allocated a role as a firm or worker. In each group, there are five workers and two firms. The only information firms have about each worker is a self-selected avatar (male, female or neutral) representing a worker's gender. Each firm then decides which worker to hire. Female workers anticipate discrimination when they know the task is math-related, but not otherwise. Men choose similar avatar patterns regardless of the task. Surprisingly, we find no evidence whatsoever of discrimination against females in hiring; in fact female avatars are more likely to be hired. Men do perform at much higher levels in the math-related task, but there is no difference in performance in the emotion-recognition task, where there is a strong female stereotype.
  • Publication
    Social Cohesion and Optimal Redistribution in Economies with Long-Run Growth
    (American University of Sharjah, 2018) Bandyopadhyay, Debasis; Tang, Xueli
    We suggest that as social cohesion improves, the macroeconomic gains from progressive redistribution decline. Social interactions facilitate diffusion of nonrival knowledge. The consequent bridging of the knowledge gaps makes learning cheaper for children with limited access to adults with high human capital and thereby lowers the optimal progressivity for a redistributive policy. If social cohesion exceeds a critical threshold then zero progressivity would be optimal. Numerically, a country with greater social cohesion finds smaller gains in growth, efficiency, and welfare from progressive redistribution over and above the gains from a Pigouvian subsidy that eliminates the inefficiency caused by knowledge externalities.
  • Publication
    Parental Transfers and Fertility: Does the Recipient's Gender Matter?
    (American University of Sharjah, 2017-06-02) Gahramanov, Emin; Gaibulloev, Khusrav; Younas, Javed
    This paper examines the role of parental transfers on family size. We introduce a simple theoretical model of fertility decision where preferences towards children may differ between female and male spouses. Parental transfers increase both the household income and the bargaining power of the recipient spouse. Therefore, transfers from wife's and husband's parents may have dissimilar effects on the number of children. We empirically test and confirm this hypothesis using a unique household-level data for Japan. In particular, received transfers from the wife's parents reduce the demand for children. In contrast, both received and expected transfers from the husband's parents increase the demand for children. These results hold important policy implications.
  • Publication
    Endogenous Sanctioning Institutions and Migration Patterns: Experimental Evidence
    (University of Exeter, 2017) Cobo-Reyes, Ramón; Katz, Gabriel; Meraglia, Simone
    We experimentally analyze the effect of the endogenous choice of sanctioning institutions on cooperation and migration patterns across societies. In our experiment, subjects are allocated to one of two groups, are endowed with group-specific preferences, and play a public goods game for 30 periods. Each period, subjects can move between groups and, at fixed intervals, can vote on whether to implement formal (centralized) sanctioning institutions in their group. We compare this environment to one in which only one group is exogenously endowed with sanctioning institutions. We find that subjects' ability to vote on institutions leads to (i) a more efficient partition of subjects between groups, (ii) a lower migration rate, (iii) an increase in overall payoffs, and (iv) a decrease in both inter- and intra-groups (payoff) inequality. Over time, subjects tend to vote for sanctioning institutions and contribute to the public good.
  • Publication
    Does E-Verify Discriminate against Hispanic Citizens?
    (American University of Sharjah, 2015) Amuedo-Dorantes, Catalina; Jin, Xing; Pozo, Susan
    The ratcheting up of immigration enforcement has resulted in a number of unintended consequences featured in the news, such as family separations. We focus on, yet, another potentially unintended consequence -namely the possibility of employment discrimination against Hispanics legally authorized to work following the implementation of employment verification (E-Verify) mandates. Using data from the 2002-2012 National Latino Surveys, we exploit the temporal and spatial variation in the adoption of E-Verify mandates to assess how they have impacted perceptions of discrimination held by U.S.-born and naturalized Hispanics -all clearly authorized to work. While E-Verify mandates should not adversely impact their employment and other opportunities, these individuals could be hurt if some employers avoid hiring them for fear they may be undocumented. We find that E-Verify mandates raise perceptions of discrimination at work among all four groups of Hispanic citizens we distinguish in this research. Our findings point to the complex dynamics surrounding immigration policy.