Dissertation
Essays in economics
University of Iowa
Doctor of Philosophy (PhD), University of Iowa
Summer 2020
DOI: 10.17077/etd.005577
Abstract
This dissertation is concerned with how groups, be they groups of individuals or groups of nations, develop and interact.
In Chapter 1, I propose a tractable model of sovereign default and the inter-state spillovers emanating from default. A coalition of nations may choose to insure against default, and the behavior of the coalition is used to examine the magnitude of the international spillovers. A voting structure for the coalition is proposed to examine idiosyncratic spillovers. Finally, the model is calibrated to the recent Greek Debt crisis to understand the spillovers from a default, and the moral hazard effect of the Troika. I find that spillover effects are large. If the rest of the world defaulted, this would create a loss equivalent to a permanent 9% decrease in government spending. Counterfactual experiments reveal that default would be prevalent without the IMF, suggesting that the own-penalty to defaulting has decreased since the IMF's creation.
In Chapter 2, I examine a dynamic model of search by committee in which homophilic committee members vote to induct a candidate after observing the candidate's type and quality. A newly hired candidate joins the committee and votes in future elections. I study a new form of homophily that arises in this environment due to committee members' considerations of future elections, and call this "Dynamic Homophily". Dynamic Homophily is characterized across variables such as committee size and composition, and the separation rate. I then estimate this model using a novel data set on the faculty of top public Economics departments in the US from 1994 to 2017. Researchers are clustered into types using JEL codes found in their publication histories, and their quality is measured using their citation counts. Estimation results suggest that to set a committee member indifferent between a same-type and a cross-type applicant, the cross-type applicant must have 80% more citations than the same-type applicant. Dynamic Homophily is responsible for up to an additional 20% of the difference between same- and cross-type reservation values. In counterfactual experiments, I find that for high values of homophily, agents prefer a dictator, even of the other type, rather than voting, as the dictator solves the externality caused by Dynamic Homophily.
Details
- Title: Subtitle
- Essays in economics
- Creators
- Ryan Rudderham
- Contributors
- Anne Villamil (Advisor)Rabah Amir (Committee Member)Luciano de Castro (Committee Member)Suyong Song (Committee Member)Nicholas Yannelis (Committee Member)
- Resource Type
- Dissertation
- Degree Awarded
- Doctor of Philosophy (PhD), University of Iowa
- Degree in
- Economics
- Date degree season
- Summer 2020
- DOI
- 10.17077/etd.005577
- Publisher
- University of Iowa
- Number of pages
- x, 103 pages
- Copyright
- Copyright 2020 Ryan Rudderham
- Language
- English
- Description illustrations
- color illustrations
- Description bibliographic
- Includes bibliographical references (pages 100-103).
- Public Abstract (ETD)
This dissertation is concerned with how groups, be they groups of individuals or groups of nations, develop and interact. In the first chapter I study the impact that one nation’s decision to default on its sovereign debt has on the welfare of another other nation. To understand this effect, I consider the behavior of an international coalition such as the International Monetary Fund which is tasked with preventing sovereign default. I find that the negative externality created by sovereign default is large. In the second chapter, I consider the hiring decisions of an economics department. I assume the members of the department have own-type preference, and new hires will vote in future elections. This dynamic aspect increases the own-type preference and creates an effect I call “Dynamic Homophily”. Taken together, these chapters examine important incentives which govern the behavior of groups. Inside these groups, the behavior of one individual often affects the outcomes of another. In an increasingly connected and global society, awareness of our interconnectedness becomes all the more important.
- Academic Unit
- Economics
- Record Identifier
- 9983988196902771
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