Senior Project Abstracts 2009

Name: Atlas, Stephanie

Date: Spring 2009
Major(s): Economics
Thesis Committee: A. Baskan, K. Wick

TitleDeterminants of Foreign Direct Investment: The Celtic Tiger

ABSTRACT:  With the advent of globalization and open market economies more companies are deciding to pursue foreign direct investment. The purpose of this paper is to examine the determinants of foreign direct investment by multinational corporations in Ireland. These multinational corporations are responsible for the transformation of the Irish economy to the success of the Celtic Tiger. The Celtic Tiger is a product of foreign direct investment increasing Ireland’s output, exports, employment, capital infrastructure and GDP.

Name: Barker, Andrew

Date: Spring 2009
Major(s): 
Economics
Thesis Committee: 
T. Nonnenmacher, A. Afrasiabi

Title: An Overview of Residential Mortgage Lending

ABSTRACT: The mortgage industry has become a crucial part of the U.S. economy over the past century. This paper gives a brief historical overview of the mortgage market and explains the popular options offered by lenders. From these various options I explain the risks involved in participating in the mortgage market. The major problem that both borrowers and lenders face is asymmetric information, which increases the overall risk of lending. This increased risk effects the risk preferences of both parties involved and filters up through into the secondary market. Through research and empirical work I describe each parties risk preference. This description is broken down into the risk preferences of the lender and borrower in the subprime and prime market, and finish up with the preferences of the secondary market.

Name: Bishop, Caldwell

Date: Spring 2009
Major(s): 
Economics
Thesis Committee: 
A. Moskwa, S. Casler

TitleChina and the World Trade Organization: A Costs and Benefits Analysis

ABSTRACT:China has been in the world spotlight for at least the past decade as its economy has grown at an amazing pace. The World Trade Organization (WTO), one of the most, if not the most authoritative multinational organization on international trade is touted as creating all types of benefits for member nations. With China’s accession into the WTO in December of 2001, it was thought that China would be forced to undergo many reforms to conform to WTO regulations. China is still in the process of implementing these reforms which caused me to question, what are the costs and benefits of WTO membership for China? In other words how has membership in the WTO helped China? To answer this question, I examined China’s GDP per capita, exports, imports of high-technology goods, patent filings, and used a regression analysis of the gravity model of trade. I used this information in the context of intellectual property rights concepts and basic economic concepts. The results of the regression analysis indicated that the WTO had little or no bearing on China’s bilateral trade flows, while the other statistics showed some correlation between the years China has been a WTO member and its sustained rate of growth. There is not particularly strong evidence that the WTO had made a significant impact. My conclusions are that the WTO had had no significant effect on China’s economy, and that right now the only real effects are the costs of reforming the various policies and any potential political benefits from membership. I also found implications through the patent filings and intellectual property rights concepts that China’s incentives to enforce intellectual property rights will only grow stronger with time if their number of patent filings continue to increase as they have the past 8 years.

Name: Briggs, Anthony

Date: Spring 2009
Major(s): 
Economics
Thesis Committee: 
S. Casler

Title - The Determinants of Stock Price and the Theory of of Profit Maximization

ABSTRACT: The current recession has put the economy to the forefront of conversation not only for economists and policy makers, but also for Americans who must save for retirement and young adults entering the workforce. This study investigates how the growth of the Dow Jones Industrial Average is affected by input costs to the firm and real Gross Domestic Product over different phases of the business cycle. Using the theory of profit maximization, I discuss how changing input costs and revenues affect profits, which subsequently affect stock price.
Chapter I introduces the study and gives a historical background of Charles Dow, the founder of the Wall Street Journal and the Dow Jones Industrial Average. Chapter II gives an in depth explanation of the theory of profit maximization and introduces the independent variables in my model. Chapter III describes both of the multiple regression models in the study, introduces my dependent variable, and provides an interpretation of my regression results.
The final draws conclusions from my findings and comments on how my independent variables affect The Dow differently over the expansion, peak and recession phases of the business cycle. Findings show that an increase in input costs to the firm do not necessarily negatively affect firm’s profits and stock price during the expansion phase of the cycle. Other findings show that an increase in transportation costs may be indicative of the start of the expansion phase and consequently a rise in the dependent variable, the Dow Jones Industrial Average.

Name: Cantwell, Christopher

Date: Spring 2009
Major(s): 
Economics
Thesis Committee: 
S. Martin, J. Sickafuse

Title - Major League Soccer: An Economic Analysis of Location, Expansion, and Factors of Team Value

ABSTRACT: Major League Soccer is currently expanding at an increasingly rapid rate and could possibly become one of the largest soccer leagues in the world by 2012. The location decisions made during this time period and the expansion decisions of the future could turn the league into a stable American sports league, or a multi-million dollar failure. Expanding to the correct markets is vital to the success of Major League Soccer in both the United States sports market and the global soccer market. This paper is an examination into the factors of team value in Major League Soccer. It is an economic analysis of the attributes and determinants of firm value in MLS. By determining the attributes that increase team value, this paper discusses the factors that can be used to determine viable markets for expansion in Major League Soccer. The results can also be used as suggestions for current teams to become a more highly valued firm. This paper further examines the newest teams of Major League Soccer and examines the characteristics of markets being considered for possible expansion in 2011.

Name: Conrad, Jacqueline

Date: Spring 2009
Major(s):
Political Science, Economics
Thesis Committee: M. Comber, A. Baskan

Title - The Effects of Charter Schools on Traditional Public School Student Achievement

ABSTRACT: Currently in the United States, there is much criticism surrounding the number of schools which are performing below the preferred levels. Despite the growing number of students entering college, there continues to be a significant number of students who either do not make it through school at all, or barely succeed. When schools do not meet the needs of students and parents, it creates for a hostile environment, and parents seek alternative forms of education for their children. One of the most recent alternatives to traditional public schools, are known as “charter schools.” In short, a charter school is a publicly funded, but privately run school. Given the innovative teaching and specialized curriculum of charter schools, it is typically the case that charter schools are very beneficial for the students who choose to attend. However, it is questionable as to whether or not these charter schools benefit the entire education system as a whole. Is more competition the answer to solving the nation’s education crisis?

Given the current economic climate, it is crucial that the money we spend on trying to fix the problems with our educational system is spent wisely. The education of our young people is essential for us to remain a top competitor in the world markets. Although the competitive model for schooling suggests that more competition will eventually lead all publicly educated students to higher achievement, the idea of what constitutes “student achievement” is debatable. It is the purpose of this paper, to examine how charter schools, when placed in a school district, affect the student achievement levels for those students who remain in the traditional public schools. I have noted that student achievement can be defined in a number of different ways. Using a sample of high schools from the City of Philadelphia, an area highly populated with charter schools, I have conducted an analysis which attempts to make observations regarding the ability of charter schools to better individual traditional public schools as well as the entire district’s educational system. Philadelphia is densely populated with charter schools, and therefore a high amount of competitive pressure should be expected upon the neighboring traditional public schools.

Name: Cope, Andrew

Date: Spring 2009
Major(s): 
Economics
Thesis Committee:
 S. Onyeiwu, D. Goldstein

Title
Corporate Strategy and its Effects on Competitive Advantage: An Illustration of Apple Computers

ABSTRACT: Many economists have offered their opinions on corporate strategy; however, no one is more prominent than Michael Porter. His most basic definition of strategy is, “Performing different activities from rivals or performing similar activities in different ways.” He expands this concept to include three generic strategies as well as three strategic positions that firms may implement: needs-based, variety based, and access-based positioning. An examination of Apple’s strategy and their performance will determine what strategies it has adopted.

Apple is a company that was founded in 1977 by Steve Jobs, Steve Wozniak and Ron Wayne. After decades of volatile performance, Apple has recently experienced an impressive performance through nearly all aspects of its income statements as well as provided above-average returns to its shareholders. Through an examination of Apple’s recent financial performance and a review of results of a survey that I administered, the purpose of this project is to determine if Apple’s success can be attributed to the implementation of an effective strategy. Interpretation of these results supports the hypothesis that Apple’s success is, in fact, due to a strategy, not simply operational effectiveness.

Name: Crusse, Shannon

Date: Spring 2009
Major(s): 
Economics
Thesis Committee:
 S. Martin, J. Sickafuse

Title -Fan Attendance in the National Football League

ABSTRACT: The intent of this study is to understand how the implementation of the Cleveland Browns Kids Club and Browns Backers Worldwide fan programs have impacted fan attendance for Cleveland’s professional football club. Studying metropolitan population and income, win-loss percentage and age of the facility through previous multiple regressions and completing a difference in difference equation between The Cleveland Browns and then again with The Kansas City Chiefs and Cincinnati Bengals as controls will be the basis of this study. The goal is to look at the impact, if any, that the implementation of fan-oriented programs have had on maintaining attendance rates during seasons of poor performance.

The results of the empirical study suggest that fan based programs may be a positive factor in maintaining attendance rates in the National Football League as the control group for this study had similar poor records and strong fan bases but saw much larger drops in attendance rates than the Cleveland Browns.

Name: Davis, Sarah

Date: Spring 2009
Major(s): 
Economics
Thesis Committee: 
 S. Martin, A. Baskan

Title - Employment Based Health Insurance and Job Mobility: Job Lock

ABSTRACT: The health care system and health insurance are currently major issues in the United States, because health insurance is tied to employment. Because health insurance is tied to employment, a phenomenon has recently surfaced in the labor market and it has been termed job lock. Job lock is defined as the reduction in worker mobility that arises from the risk of losing current employer provided health insurance. Job lock causes many workers to stay at jobs where their skills are not fully utilized. Thus job lock may cause the efficiency of the labor market to suffer. The purpose of this study is to determine whether Americans, more specifically married and single women, make themselves less mobile due to employer provided health insurance.

The theory of consumer tastes and preferences suggests that mobility decisions are negatively affected when health care benefits are offered at the current job and when there is uncertainty about the price of health insurance at a new job opportunity. Thus, it is hypothesized that married women, as well as single women are victims of health insurance related job lock. In order to test this hypothesis, data was collected from the 2001 Survey of Income and Program Participation (SIPP). The data was then applied to a proper probit model. Probit regressions suggest that women with employer provided health insurance are 67.76% less likely to leave their jobs than women without employer provided health insurance. The probit regressions also suggest that single women with employer provided health insurance experience 73.37% job lock, and married women with employer provided health insurance experience 59.39% job lock. These results conform to the hypothesis that all women, both married and single, suffer from health insurance related job lock.

Name:  Deems, Ronald

Date: Spring 2009
Major(s): 
Economics
Thesis Committee: 
 S. Onyeiwu, A. Baskan

Title
 - An Exploration of Ownership Structure, Managerial Decision-Making and Hospital Performance in the Medical Industry

Abstract: Healthcare in the United States is a distinctive industry. Asymmetric information, vague performance measures, and competition among hospitals of different ownership structures create a unique area of study. Ownership structure, in particular, has been a heavily disputed topic. Although non-profit hospitals have traditionally been the primary means of providing healthcare in the U.S., over the past two decades for-profit hospitals have become quite prevalent. The reasons for this phenomenon are widely disputed, and there is no other industry where non-profit and for-profit companies compete on such a large scale. Michael Porter emphasizes the importance of developing strategic fit among the core competencies of a firm; this study aims to characterize the strategic concerns addressed by for-profit and non-profit hospitals. From an economics perspective, this paper will aim to compare the strategies, characteristics, and performance of each ownership structure respectively and try to highlight a superior ownership structure.

Name:  DeStefano, Matthew

Date: Spring 2009
Major(s): 
Economics
Thesis Committee:
S. Onyeiwu, D. Goldstein

Title - An Evaluation of How Profitable and Lucrative Knowledge-Based Firms are in the Economy

ABSTRACT: In today’s society and economy, knowledge plays an increasingly important role. As a result, firms are beginning to adapt by implementing knowledge management systems. Designed to create, transfer, and retain explicit and tacit knowledge, these systems are generally categorized as codified, personalized, or exist as a hybrid of each.

The goal of this research is to identify if knowledge-based firms (those which use knowledge management as a strategy and competitive advantage) have distinguishably superior performance and profitability to other firms and industries. In order to do so, knowledge-based firms, represented by the consulting industry, have been analyzed to determine how their strategies and competitive advantages differ from non-knowledge-based firms.

Having identified the competitive advantages and strategies unique to these knowledge-based firms, an empirical analysis of performance indicators is undertaken to determine whether knowledge management strategies lead to superior performance and profitability. The empirical analysis consists of a sample of 31 consulting firms. FTI Consulting, Inc. and Watson Wyatt Worldwide, Inc. are specifically analyzed as a basis for comparison. The sample of consulting firms is then compared to the Rate of Return averages for all industries, as well as Volkswagen AG and Aéropostale, Inc., representing non-knowledge-based firms.

From this research, mixed results were found that identified knowledge-based firms as having superior performance and profitability in some instances, but not in others. This research concludes that knowledge-based strategies are necessary for the evolving application of knowledge. However, knowledge-based firms do not have distinctly superior performance.

Name:  Doherty, Patrick

Date: Spring 2009
Major(s): 
Economics
Thesis Committee:
S. Casler, J. Golden

Title - The Determinants of the Unemployment Rate-Changes in the Response of the Rate to Exogenous Shocks Over Time

ABSTRACT: The unemployment rate has always been viewed as a key economic determinant of the current state of the economy. However, the unemployment rate has been changing over the past fifty and does not capture the same effects that it used to in the 1960s. Many important factors including a structural shift in the United States economy, jobless recoveries, increased labor force participation rate of women, lower wages for men with lower-skilled jobs, longer spells of unemployment, and higher non-participation rate among men have contributed to the changing unemployment rate. This paper analyzes the determinants of the unemployment rate that were most responsible for how the unemployment rate responded to exogenous shocks from one period (1965-1983) to a second period (1984-2006). In order to study how these determinants affected the unemployment rate over these two periods, I first constructed the employment theory model. This model includes building the labor supply and demand curves to show how unemployment arises within the framework of the model. Next, I build a trend growth model in which I examine how my independent variable’s variations from their trend lines have affected the unemployment rates deviations from its trend line. After evaluating at the results, I can conclude that the real GDP, the labor force participation rate of men and women, and the real interest rate are most responsible for the changes in the unemployment rate across the two periods. Therefore, comparing the determinants of the unemployment rate in the 1960s and the unemployment rate of the 2000s is not effective measure in comparing the two economies.

Name: Feldhaus, Matthew

Date: Spring 2009
Major(s): 
Economics
Thesis Committee:  
A. Moskwa, J. Sickafuse

Title - The Economic Evolution and Market Structure of the United States’ Film Industry

ABSTRACT:My project spans the entire life of the United States’ Film Industry, including the very beginning and continues to make projections for the future. First I looked at the film industry and see how it has evolved from an economic standpoint. Noting key developments and changes that have impacted and created the market place and environment that we have today. Once I have developed the evolution, the current market structure is described and key characteristics are noted. Using the information based upon the clear Oligopoly market structure, I note the components of the US Film Industry that match these. Given the market structure and the important characteristics of the market structure we see the areas of marketing and distribution becoming most important for the film industry. The technological shifts are discussed as the prevalence of the Internet and new technologies will create new opportunities and problems in the film industry. I conclude my study with likely projections for the future of the industry based upon past shifts and developments.

Name: Gill, Thomas

Date: Spring 2009
Major(s): 
Economics
Thesis Committee:  
T. Nonnenmacher, A. Afrasiabi

Title - NAFTA: Effects on the American Trucking Industry

ABSTRACT: Freight transport is crucial to the United States and global economies. The American Trucking Association reports that more than 80% of U.S. communities rely solely on truck transport for delivery of goods and commodities, and trucking accounts for 69% of total U.S. freight tonnage. In 2006, trucking was a nearly $646 billion industry that employed one of every 15 American workers. The U.S. trucking industry has undergone several waves of regulation/deregulation, ultimately leading to a highly competitive market structure. The North American Free Trade Agreement (NAFTA) proposed new regulation regarding trucking. The agreement stipulated seamless cross-border trucking, the provision of which was unilaterally blocked by the United States after the agreement was ratified. The trade dispute has continued since 1995, as special interests argue that Mexican trucks pose environmental and safety hazards to U.S. roads and threaten U.S. trucking labor, the prime concern of the powerful Teamsters Union. This debate has intensified recently as Congress further regulated the Mexican border. The purpose of this paper is to analyze the potential costs and benefits to the U.S. trucking industry of seamless borders in an attempt to shed light on this developing situation. The analysis incorporates economic theory, government data, regulatory history, and scholarly research. Focus will be placed on the negative pollution externality. This work concludes that seamless borders could have positive effects on both the U.S. trucking industry and the environment.

Name: Glor, Daniel

Date: Spring 2009
Major(s): 
Economics
Thesis Committee:  
A. Afrasiabi, S. Onyeiwu

Title - The Volatility of Oil Prices: An Historical and Empirical Analysis

ABSTRACT: The focus of this senior research paper is on the recent volatility that has been present within the crude oil market.  The goal of this senior research paper is to identify variables that are responsible for this recent volatility.  To identify variables that may be responsible for this volatility, the paper will include a historical examination of the crude oil market and an examination of an economic framework.  The purpose of this historical examination is to determine what variables were responsible for past periods of volatility.  These variables can then be applied to today’s volatility in order to determine if they are still responsible for market volatility.  The economic framework of the dominant firm model will be applied as well because it has traditionally been the model that best explains the organization of the crude oil market.  Variables that are relevant to the historical background and the economic framework will then be applied in a regression to determine which variables are responsible for the recent volatility in the crude oil market.  It has been widely discussed that speculation within the crude oil commodity market is responsible for this recent volatility in the price of crude oil.  Many feel that traders, that have no interest in owning oil, are buying and trading paper contracts for oil just to increase the price and make a profit.  Therefore, speculation will also be a variable that is included in the regression.  After completing the regression it will be possible to see what variables best explain the volatility.  The paper will then focus on future government policies and actions that must be taken within the industry in order to curb future volatility.  After completing this senior research paper the volatility in the crude oil market should be better explained.

Name:  Glownia, Robert

Date: Spring 2009
Major(s): 
Economics
Thesis Committee: 
S. Casler, J. Sickafuse

Title - A Strategic Walk Down Wall Stret: An Examination of the Theoretical Determinants of Stock Prices

ABSTRACT: Many economists have noted the fundamental problem in identifying the sources of stock price movements. Before 1981, much of the finance literature viewed the present value of dividends to be the principal determinant of stock prices. However, as economist Robert Shiller points out, stock prices have not been consistent with movements in future dividends alone. From theory, analysts assume that stock prices are currently a function of three major factors: expected dividends, the future earnings of the company, as well as the investor’s required rate of return. However, this paper suggests there are other factors influencing the value of equity.

This study builds an understanding of what factors affect stock prices in the United States economy. As economist Myron J. Gordon notes, “The variation in price among common stocks is of considerable interest for the discovery of profitable investment opportunities, for the guidance of corporate financial policy, and for the understanding of the psychology of investment behavior” (Gordon, 99). Therefore, the purpose of this paper is to shed light on the possible reasoning behind such low valuations in the equity market. The paper begins with an analysis of the theoretical determinants of stock prices, as according to the Gordon Model. After discussing this pricing mechanism, the remainder of the paper explains the pros and cons of the model, mainly through quantitative techniques. After reading this piece, the reader should know which factors drive the price of equity. Furthermore, through a regression analysis, the reader should understand the relationship between various independent variables and stock prices.

Name:  Goebel, Adam

Date: Spring 2009
Major(s): 
Economics
Thesis Committee: 
S. Onyeiwu, D. Goldstein

TitleEthics Management: How Hewlett-Packard (HP) Utilized an Ethics Based Strategy to Become a Market Leader

ABSTRACT: The following essay will attempt to look at the role of ethics in business with the goal of studying whether or not it is beneficial to be ethically sound company.  As society has become more concerned with ethical behavior so have large corporations, especially publicly traded ones.  To them, public perception is critical to not only attracting new potential investors but as well as building a strong brand name. But there are those on Wall Street and beyond that question this tactic.  They argue that the reason for the firm’s existence is maximize the profit of its shareholders. There is truth to this argument though.  Will people invest in an ethical firm over a perceived unethical one for a greater return on investment?

To study this, financial data and information from Hewlett-Packard’s website, as well as other sources were gathered in order to determine if it is profitable for a firm to be an ethical company.  And from this data it was summarized that being an ethically driven or guided company is beneficial in the long run.  It helps not only for you to gain a good reputation but also to stave off any major issues if an infraction does occur.  Simply by having these programs, and utilizing them in the event of an ethical lapse, will show that those who chose to engage in unethical behavior are acting of their own accord and not with the will of the company.

Name:  Habay, Alex

Date: Spring 2009
Major(s): 
Economics
Thesis Committee:
S. Martin, D. Goldstein

Title - The Stadium Ownership Issue: Does Private Ownership Increase Franchise Values?

ABSTRACT: This paper investigates the relationship between private ownership of professional sports stadiums and the impact this type of ownership has of franchise values for the 32 teams in the National Football League.The current building boom of professional sports stadiums given the current economic climate makes public finance decisions such as this all the more important, and an alternative method to the reliance on public funds should be examined.The theoretical backings of this research are rooted in profit maximization for a firm, or a sports franchise in theis case.The empirical analysis relied on the results of several regressions designed to test the positive effects of private stadium ownership on stadium values, using data gathered about both the NFL teams themselves and the stadiums they play in.The results show that there may be a positive relationship between private stadium ownership and increased franchise values, but more conclusive research needs to be done not only on the two other major sports leagues in the US (NHL and NBA), but also all stadiums in the country, including major college stadiums.

 Name: Hamilton, Hanna

Date: Spring 2009
Major(s): 
Economics
Thesis Committee:

Title - Offshoring and the Possibility of Factor-Price Equalization: An Empirical Study of the Service Industry in the United States and India

ABSTRACT: Throughout the past thirty years, the offshoring of low-skill manufacturing jobs to countries with relatively lower wages has become the norm.  Only in the past decade have service jobs such as computer programming and accounting become subject to the same threat of offshoring. This new trend has caused much debate in the United States and serves as the foundation of this analysis.  In this study, I attempt to examine the effects of the United State’s offshoring its service jobs to India in light of the Heckscher-Ohlin model and the factor-price equalization theorem.  This theorem states that countries have different factor endowments and are likely to have a comparative advantage in the commodities that require an abundance of those factors.  When trade occurs between two countries with different factor endowments, factor prices converge leading to relative wage convergence and essentially the elimination of the wage differentials that made trade appealing.  I use empirical data to analyze recent trends in the wages of computer programmers and accountants to detect for the emergence of factor price equalization.  I find no conclusive results; however, important implications for future research are established.

Name: Hays, Alexander

Date: Spring 2009
Major(s): 
Economics
Thesis Committee:

Title - Understanding the Marginalized: A Quantitative Analysis of the Economic Issues Facing Latinos in the 21st Century

ABSTRACT: Latinos in the United States, both natural born and immigrants, represent an important and growing segment of the U.S. population and labor force.  However, like many minorities, Latinos suffer from a wage gap when compared with White workers.  This puts them at an economic disadvantage that has seemingly stalled the economic progress of Latinos.  This study attempts to look at the situation through two separate lenses: a quantitative economic analysis and a qualitative cultural study.  Previous work on the Latino wage gap suggest that the Immigration Reform and Control Act of 1986 may be having an adverse affect on the Latino wage in addition to standard labor market forces.  Indeed, the results of the empirical test in this study suggest that human capital deficiencies, discrimination and government issued fines are still having a negative effect on the Latino wage.  Furthermore, it is possible to see the variations in economic outcomes between different nationalities through a cultural study of Mexican-Americans and Cuban-Americans.  While the cultural study provides a more detailed perspective of the economic situation of Latinos, in many ways it also reaffirms the findings of the economic analysis.  The issues brought to light in the economic analysis are seen clearly in the representation of Mexican-American workers who suffer from wages well below the average Latino salary.  In contrast, Cuban-Americans live relatively comfortable lower-middle class lives due to the strong, established Cuban community in the U.S.  Together the two analyses expose some of the serious issues afflicting Latino economic progress; however, a possible solution emerges that involves strengthening the less established communities to help current and future generations of Latinos in the U.S.

Name: Healy, Ashley

Date: Spring 2009
Major(s): 
Economics
Thesis Committee: 
S. Casler, B. Afrasiabi

Title - Determinants of the Interest Rate

ABSTRACT: This paper explores certain determinants of the interest rate through a theoretical and a critical lens. The interest rate is defined as the rate at which people in debt pay the lenders for use of their funds. There are different forms of the interest rate, including, the federal funds rate, the prime rate, the mortgage rate, and the discount rate. The Fed controls the federal funds rate, the rate at which Federal Reserve banks charge other financial institutions for over night loans. Changing this rate puts pressure on the other forms of interest rates. The interest rate used in this study as the dependent variable is the prime rate, the rate at which banks charge people and businesses with good credit to take out a loan. Examining the theoretical relationships between the real interest rate and its determinants creates a good foundation for me to run my regression and compare theory and reality. My regression consists of five independent economic variables and three dummy variables. For the most part, my predictions for each independent variable based on theory are conflicted with the results from my regression. This proves that, in practice, the real interest rate and all economic variables that affect it are a lot harder to predict and control. There is no doubt that in times of a volatile economy the Fed and other controlling powers have much work to do.

Name: Jastromb, Kyle

Date: Spring 2009
Major(s): 
Economics
Thesis Committee: 
S. Onyeiwu, B. Afrasiabi

Title - The Importance of Markets for Technology: A Case Study of Xerox and Qualcomm

ABSTRACT: This paper explores certain determinants of the interest rate through a theoretical and a critical lens. The interest rate is defined as the rate at which people in debt pay the lenders for use of their funds. There are different forms of the interest rate, including, the federal funds rate, the prime rate, the mortgage rate, and the discount rate. The Fed controls the federal funds rate, the rate at which Federal Reserve banks charge other financial institutions for over night loans. Changing this rate puts pressure on the other forms of interest rates. The interest rate used in this study as the dependent variable is the prime rate, the rate at which banks charge people and businesses with good credit to take out a loan. Examining the theoretical relationships between the real interest rate and its determinants creates a good foundation for me to run my regression and compare theory and reality. My regression consists of five independent economic variables and three dummy variables. For the most part, my predictions for each independent variable based on theory are conflicted with the results from my regression. This proves that, in practice, the real interest rate and all economic variables that affect it are a lot harder to predict and control. There is no doubt that in times of a volatile economy the Fed and other controlling powers have much work to do.

Name:  Kahle, Patrick

Date: Spring 2009
Major(s): 
Economics
Thesis Committee: 
S. Casler, K. Wick

Title -  The Determinants of Outstanding Real Mortgage Debt Growth in the United States

ABSTRACT: Currently, the condition of the United States housing market is rather depressing.   As numerous lending institutions collapse due to extremely high home foreclosure rates, many economists and policy makers are struggling to find a solution to the housing crisis in the United Sates.   This study analyzes the determinants of the growth rate of outstanding real mortgage debt in the United States with a specific focus on the factors that led to instability in recent years. Specifically, based on the model of intertemporal consumer choice, the study examines the changing impacts of factors that explain outstanding real mortgage debt in different time periods over the last forty-six years.   An empirical analysis conducted using a least squares regression model, evaluates changes in the stability of the dependent variable.   I present and explain which changes in the independent variables from their trends led to the largest changes in mortgage debt growth from it trend and how these relationships have changed through time.   Based on the theory and empirical results presented in this study, the wealth effect seems to have the greatest impact on real mortgage debt growth in the United States in recent years.

Name:  Merz, Greg

Date: Spring 2009
Major(s): 
Economics
Thesis Committee: 
T. Nonnenmacher, D. Goldstein

Title - Executive Pay and Fraud in Corporate America

ABSTRACT: Over the past decade, there has been a rise in the number of cases of fraud in corporate America. Why do executives at some companies commit fraud, but other companies remain free of fraud, even with se emingly similar economic conditions?  The answer lies with the executives themselves and specifically th e way in which they are paid.  If executives are able to attain managerial power, which is evidenced in th eir compensation package, then they are much more likely to commit fraud than those that are optimally contracted.  To test this hypothesis, case studies are done on six companies, three of which had committed major accounting fraud in the past decade, and three that had a long history of success and stability.  These six companies are Enron,Worldcom, Adelphia, General Electric, Coca Cola, and Disney.  It is found that in companies in which fraud was present, managerial power was also present to a much greater extent than in the three companies that were without fraud.  This implies a strong correlation, but not a c ausal relationship, between the level of managerial power in a company and the likelihood that that company has an executive who commits fraud.

Name: Minerd, Mitchell

Date: Spring 2009
Major(s): 
Economics
Thesis Committee: 
S. Martin, J. Gehring

Title - Theoretical and Empirical Analysis of the Effects of Affirmative Action on the Wage Gap

ABSTRACT: Affirmative action in the United States has been a hotly contested and debated policy since Lyndon B. Johnson signed executive order 11246. The effects that affirmative action policy has had on the eradication of discrimination in the labor market are ambiguous. The purpose of my study is to analyze the potential negative effects affirmative action has on the wage gap and minority workers. The studies’ goal is to decide whether the correct tools are being employed to eliminate the wage gap between white males and minorities. I find that affirmative action policy has succeeded in closing the wage gap but not through the intended consequences of the policy. The emphasis on erasing discrimination through numerical yards has changed the mixture of the labor market but not attacked the obstructions for minorities in the labor market. The implications of my study suggest that discrimination against minorities is overstated in that human capital variations account for much of the wage gap. The study suggests that education is the key to eliminating the wage gap.

Name: Murphy, Katie

Date: Spring 2009
Major(s): 
Economics
Thesis Committee: 
S. Martin, D. Goldstein

Title -  The Effects of Educational Vouchers on Student Achievement

ABSTRACT: This study examines the effects that educational vouchers will have on student achievement. Specifically, the study focuses on the educational vouchers provided by the Opportunity Scholarship Program in the Washington DC are. Students using this voucher transfer from their public school to a participating private school in the Washington DC area. Data was not able to be collected to assess the achievement effects of the students in the private schools. The actual data gathered in the study is from the high schools in the Washington DC public school district from the years 2002 to 2008. Such achievement data collected consists of percentage of students scoring at the proficient level on both math and reading assessment tests, attendance and graduation rates. Demographic information was also gathered to test the achievement data. Regression analyses were conducted on the four achievement data to examine the effects of the public school students remaining in the public high schools. The analyses discovered that a lower percentage of students remaining in the public schools scored at the proficient level on both assessment tests. However, these same students experienced increasing attendance and graduation rates. Also, a cream skimming effect may have been created by the voucher program, with the percentage of students scoring proficient in both assessment tests decreasing after the policy. The paper concludes by suggesting policy implications and errors that could have been present in the analyses.

Name: Myers, Lee

Date:  October 2008
Major(s): Economics
Thesis Committee: 

Title: When You Build It, Why Do They Come? A look at the developmental process of successful technological innovation

Abstract: New and successful product and system innovations are being developed everyday. One only needs to think for a few seconds before coming up with an everyday necessity that no one could have imagined 5 years ago, but where are these new products and ways of doing things coming from? This paper intends to explore the key elements behind successful innovations and look at a more accurate model that can help to understand the pathway of innovation. Many have argued over whether the market demand or new scientific knowledge is the root to innovation. A review of these current theories and others will be discussed in chapter two.

Following this discussion, a new theory will be presented and further examined in a case study on the innovation we all know of as the microwave oven. Finally, the concluding chapter will look at possible implications that the proposed theory could have for a business-world that is constantly seeking the next ‘big thing’ in innovation.

Name: Nafpliotis, Nestoras

Date: Spring 2009
Major(s): 
Economics
Thesis Committee: 
T. Nonnenmacher, A. Baskan

Title - Post 1980′s Shrimp Farming in Asia

ABSTRACT: Rapid growth in the shrimp farming industry during the 1980’s led to the creation of a multibillion dollar industry. Even though this industry is seemingly competitive due to the existence of many producers and easy entry and exit, market failure still occurs. Externalities has been the greatest issue in shrimp aquaculture. Various forces are changing the shrimp farming industry today including sustainable aquaculture, the response to externalities. This senior project will review the structure of the shrimp farming industry as well as the externalities it creates, and contemplate the various forces which are affecting the industry today.

Name: Pagano, Jonathan

Date: Spring 2009
Major(s): 
Economics
Thesis Committee: 
A. Baskan, T. Nonnenmacher

TitleIMF Loan Conditionality and the Implications on the Jamaican Economy

ABSTRACT: Due to the devastating recession the global economy currently faces, there has been a sharp rise in disbursement of loans by the IMF, doubling from 300 million SDR to 600 mill SDR between 2007 and 2008 (IMF, 2009). With such a dramatic increase in the amount of loans given, it is important to understand the implication of these loans.   Strict loan conditions have had dramatic impacts on the borrowing country’s economy in historic cases.   Using the IS/LM model as our theoretical framework and Jamaica as the case study of focus,   this paper aims to analyze the events that surround the 1977 loan agreement as well as the specific terms of that loan in efforts to determine whether the IMF loan conditions had positive or negative impacts on the Jamaican economy.

Name: Ryan, Michael

Date: Spring 2009
Major(s): 
Economics
Thesis Committee: 
T. Nonnenmacher, J. Golden

Title - The Effects of the Firestone Tire Recall of 2000 on the Tire Industry

ABSTRACT: In the summer of 2000, 14.4 million defective tires were recalled after they were determined to be the source of an alarming number of accidents, injuries, and fatalities involving rollovers with the Ford Explorer. The purpose of this paper is to closely examine how such a market failure occurred. An analysis of the government regulation within the tire industry both prior to and following the recall is presented. The theory of asymmetric information is investigated as it applies to the tire recall. Vicarious liability is explored through the relationship that exists between Ford and Firestone. The competitive nature of the tire industry is discussed with the underlying ideas of monopolistic and perfect competition as well as oligopolies. The intention of this paper is to provide an in depth investigation of the recall as well as its causes and effects, and at the same time present the underlying economic principles involved.

Name: Seaman, Justin

Date: Spring 2009
Major(s): 
Economics
Thesis Committee: 
S. Martin, A. Baskan

TitleThe Effects of Mexican Immigration on U.S. Native Wages and Unemployment

ABSTRACT: Mexican immigration has increased exponentially over the past two decades. There are approximately 18.5 million legal and illegal Mexican immigrants that currently reside in the United States, which has sparked a public debate about the real impact an increase in population may have on native residents. The purpose of this study is to determine the labor market effects of these immigrants in regards to the wages and unemployment of U.S. natives. Using labor market supply and demand theory, human capital theory, and dual labor market theory, a prediction is made that an increase in immigration would potentially lead to a decrease in wages and an increase in unemployment. Data has been collected from the Current Population Survey from 2004 to 2008 and restricted to those in the states of California, Arizona, New Mexico, and Texas where the concentration of immigrants is expected to be the highest. Weighted least squares regression analysis is used to evaluate the effects of immigration and a logit model is used for unemployment. These models suggest that an increase in immigration within the southwest could lead to an increase in wages as well as an increase in unemployment. Supplemental tests also suggest the same result within the secondary labor market. These results can be explained through increased competition in the secondary labor market that increases unemployment as well as raises productivity which supports the primary labor market allowing for higher wages.

Name: Siegert, Stephen

Date: Spring 2009
Major(s): 
Economics
Thesis Committee: 
S. Onyeiwu, D. Goldstein

Title - Investigating the Relationaship between Diversification Strategy and Firm Performance

ABSTRACT: For over four decades, the question of which type of diversification strategy, related or unrelated, performs best has drawn the attention of many scholars. The majority of diversification literature and studies have found that related diversifiers are more profitable than unrelated diversifiers. This study examines whether related diversifiers exhibit higher performance than unrelated diversifiers. Additionally, this paper reviews past literature to draw conclusions concerning how different characteristics within each diversification strategy affect performance. My sample comprised 52 firms from the 2008 Fortune 1000 list. This study employs a Rumelt-style (subjective) approach to strategy differentiation instead of the SIC product count (objective) measure. The sample of firms were tested against both accounting based and market based performance measures to enhance findings. In contrast to prior research, the empirical results reveal significant findings in favor of unrelated diversification over related diversification.

Furthermore, a brief case study examines the performance differences of each strategy during a period of market failure to aid in strategy formulation during economic recession. The empirical results indicate that related diversifiers exhibit higher performance during periods of market failure than do unrelated diversifiers. These findings suggest the need for firms to continually examine their strategy and business models in
order to maximize rents.

Name: Skowvron, Zachary

Date: Spring 2009
Major(s): 
Economics
Thesis Committee: 
S. Martin, J. Sickafuse

Title - Is Major League Baseball Immune to Racial/Ethnic Salary Discrimination?

ABSTRACT: Major League Baseball has been desegregated since 1947. However, there is question as to whether or not this is long enough for discrimination to disappear from MLB. Studies as early as 10 years after desegregation showed that integrated teams had better success. Becker’s model suggests that discrimination should diminish over time since non-discriminating firms have a competitive advantage. Major League Baseball is not a competitive market, however, so it is unclear as to whether this idea holds. Using labor demand and supply theory, along with economic discrimination theory, I arrive at the hypothesis that MLB does not see salary discrimination against minority races. I use an OLS regression which includes statistics, race dummies, team dummies, a market size dummy, and a control for year to analyze possible salary discrimination. I also use a panel data regression using Bill James’ statistic, runs created, as the explanatory variable. Finally, I used separate regressions for each race and combine them with each race’s average characteristic to analyze which race sees a higher return to productivity. I find that black, Latino, and Asian players all have higher salaries than do white players when controlling for statistics, team, market size, and year. I also conclude that black and Latino players have higher returns to productivity than do white players.

Name: Somplatsky, Robert

Date: Spring 2009
Major(s): 
Economics
Thesis Committee: 
S. Casler, J. Golden

Title - The Determinants of Labor Productivity

ABSTRACT: Throughout the history of the American economy, labor productivity has been a crucial measurement of efficiency. The purpose of this paper is to analyze the determinants that cause labor productivity growth to increase and decrease. I consider seven major determinants of labor productivity growth over a forty-six year period. This paper describes how labor productivity growth has fluctuated over history, including an examination of the Productivity Slowdown of the 1970’s. More specifically, I narrow my research into three major time periods since 1960, to capture the effects of different events that have influenced business cycles. The theory of the firm is used as a foundation of my study to show how changes in input prices and output influence labor productivity growth. Also, this paper examines how technological changes over history affect labor productivity growth, along with effects of the efficiency wage. My empirical analysis is developed from a least squared regression model. From the regression model, I have determined the consistency with theory for each independent variable. Finally, explanations of the results from the regression model are analyzed and how these results can be applied in real world situations. The major finding in this work is that the real GDP growth and the real interest rate variables are responsible for enhancing labor productivity growth in recent years.

Name: Stolar, Gregory

Date: Spring 2009
Major(s): 
Economics
Thesis Committee: 
S. Martin, J. Sickafuse

Title - The Effects of the 2004-05 NHL Lockout on Attendance

ABSTRACT: In September of 2004, the collective bargaining agreement between National Hockey League players and owners expired, leading to the longest labor dispute in the history of North American professional sports. The entire 2004-05 season was cancelled and a new agreement was not reached until July 22, 2005. The NHL feared that the lockout might cause a reduction in attendance, so rule changes were made to increase scoring. The league’s theory is that fans prefer high scoring games. While this is a popular theory, some scholars suggest that this may have been the wrong course of action. The purpose of this study is to determine the effectiveness of the rule changes and their effect on attendance. Using data from the 2002 through 2008 seasons, I used a least squares regression with fixed effects to determine the effects of variables, including local population, team success, and goals scored on game day attendance.

Name: Theis, Daniel

Date: Spring 2009
Major(s): 
Economics
Thesis Committee:
S. Casler, A. Moskwa
Title
The Mitchell Model and the Determinants of Profits over the Business Cycle

ABSTRACT: Economies all around the world have been going through expansions and contractions for hundreds of years. In 1913, Wesley Mitchell put forth a model that was based on the fluctuation of the profit margin. He created this model to try and help describe the causes of the business cycle fluctuations. He believed the business cycle consisted of four distinct phases, revival, prosperity, crisis, and depression. Each of these phases has individual features, which are described by Mitchell in detail. This study examines the Mitchell Model and the role of business cycles in affecting the profits of firms. This is accomplished by first analyzing Mitchell’s model closely, and then applying his ideas to an applied model which is based on cost minimization. Using the predictions gathered from these two models, regression analysis is used to determine whether or not Mitchell’s model has withstood the test of time and whether or not it provides an accurate description of how profits change over the business cycle. This study of the Mitchell Model may help to shed light on the factors responsible for the current recession and the factors that can help to it. The major empirical finding of this study is that many of the variables involved in the regression matched the predictions of Mitchell, meaning that the theory behind his model can still be used today.

Name: Vangura, Jeffrey

Date: Spring 2009
Major(s): 
Economics
Thesis Committee: 

Title -  Business Ethics: Do They Give a Company a Long-Term Competitive Advantage?

ABSTRACT: This explores the effects of business ethics on the performance of a company. Many businesses in today’s society will do anything they can to achieve their strategic goals, even if that means acting in a way many would consider to be unethical. But does this short-sighted, unethical behavior help the company, or does being ethical actually lead to a long-term competitive advantage? This paper uses multiple regression analysis to investigate the reasons why acting ethically will give a company a competitive advantage, including things such as increased employee retention and productivity, decreased upstream and downstream costs, and consumer loyalty. However, results from the empirical analysis suggest that business ethics do not significantly affect the performance of a business. Yet this does not mean that business ethics are not important, but rather many examples are given as to why business ethics are still a very important part of everyday business operations.

Name: Wisniewski, William

Date: Spring 2009
Major(s): 
Economics
Thesis Committee:  
J. Golden, A. Moskwa
Title
 - Skill Factors: Inequality and Golf Tournament Earnings

ABSTRACT:  The purpose of this study is to measure the distribution of earnings in professional golf tournaments as well as the skill factors that explain these tournament earnings. This composition begins with a brief history of golf in China. Many golf experts believe China is the new frontier for the growth of the game. This chapter was necessary so that I could use data from the Asian and Chinese tours in the latter chapters. To measure the distribution of tournament earnings, I used two economic estimation techniques, the Z-gradient and trapezoidal rules, to estimate Gini coefficients. Using data from the PGA Tour, Asian Tour and Chinese Tour, I found that each tour had a Gini coefficient around 50. In addition, I compared these results to income distributions of countries in which these tours participate in. The main observation I made was that the tournament earnings in each case seem to be less evenly distributed than the income distributions of the countries.

From the regression analysis, three variables proved significant, greens hit in regulation, putting average per green hit in regulation and sand saves. This is interesting in that these three variables all involve hitting golf shots to, or on, the green. Furthermore, the overall fit of my model was good, and showed that the independent variables were significant in explaining changes in tournament earnings. However, they did not explain most of the total variation. These results were encouraging because even the average golfer can apply them to their own golf games to lower their scores. This is because in theory, earning more money in tournaments means that one must shoot lower scores. So if these independent variables were significant in explaining tournament earnings, they will also be important in explaining scores.

Name: Wolfe, Michael

Date: Spring 2009
Major(s): 
Economics
Thesis Committee: 

TitleThe U.S. Mortgage Market Determinants of Outstanding Mortgage Debt Growth

ABSTRACT: Outstanding mortgage debt is believed to be a key contributing factor in the U.S. economic recession beginning in December of 2007.  The intent of this study is to determine the relationship between real GDP, unemployment, real interest rate, the Dow-Jones industrial average, recessions, and the National Homeownership Strategy, with the growth rate,  of outstanding mortgage debt.  By studying the effectsof these various economic factors on outsttanding mortgage debt, we may be able to formulate a course of action to combat the current economic crisis.  The theory of the consumer is stressed highly in this study as it pertains to the demand for home mortgages.  A regression analysis is used to formulate the relationships of economic variables to outstanding mortgage debt using data from 1961 to 2004.

Name: Zervins, Daniel

Date: Spring 2009
Major(s): 
Economics
Thesis Committee:

Title - The Governing Dynamics of Adverse Selection in the Health Insurance Inbdustry

ABSTRACT: The American health insurance markets are considerably important components of the U.S. economy, as most health care services are made available and provided through health insurance contracts. Since the inception of true health insurance in the 1930’s, the lack of transparency regarding personal health and health risk information has plagued the entire health care industry. The problem of imperfect information has continuously presented itself in the forms of adverse selection, which refers to the distortion of healthy and unhealthy individuals among health insurance plans. This study is composed of a comprehensive analysis of professional articles which illustrate the detriments of adverse selection. The purpose of this study is to provide an analysis of how, within the health insurance industry, techniques intended to achieve economic efficiency combined with the incentives generated by market competition create an institutional setting in which adverse selection is present and aggressive. Furthermore, the study details how competition has overpowered the institutional designs that have evolved for the purposes of weakening adverse selection. The intention is to demonstrate the extreme importance for future regulatory policy changes to target the eradication of adverse selection and the reestablishment of appropriate supplier incentives in competitive environments.