This dissertation consists of three essays on economic theories of signaling and behavior. The first essay presents a model of indirect speech as a costly signal of quality. The model explains the tendency of people to use language that is more confusing that necessary by showing that indirect speech is rational when outside options are invisible and related to quality in a matching environment. The second essay explores the relationship between conspicuous consumption and population density. The returns to conspicuous consumption are higher in denser areas for several reasons, and the returns to high-quality agents of signaling visibly can support the existence of dense cities by themselves. The third essay develops a model of “semi-conspicuous” consumption. Wealthy agents who are also socially well-connected signal discreetly, credibly signaling both quality and connectedness. Wealthy agents who are not well-connected signal more conspicuously, and poor agents do not signal.
Theoretical and empirical analysis of common factors in a term structure model
This paper studies dynamical and cross-sectional structures of bonds, typically used as risk-free assets in mathematical finance. After reviewing a mathematical theory on common factors, also known as principal components, we compute empirical common factors for 10 US government bonds (3month, 6month, 1year, 2year, 3year, 5year, 7year, 10year, 20year, and 30year) from the daily data for the period 1993-2006 (data for earlier period is not complete) obtained from the official web site www treas.gov. We find that the principal common factor contains 91% of total variance and the first two common-factors contain 99.4% of total variance. Regarding the first three common factors as stochastic processes, we find that the simple AR(1) models produce sample paths that look almost indistinguishable (in characteristic) from the empirical ones, although the AR(1) models do not seem to pass the normality based Portmanteau statistical test. Slightly more complicated ARMA(1,1) models pass the test. To see the independence of the first two common factors, we calculate the empirical copula (the joint distribution of transformed random variables by their marginal distribution functions) of the first two common-factors. Among many commonly used copulas (Gaussian, Frank, Clayton, FGM, Gumbel), the copula that corresponds to independent random variables is found to fit the best to our empirical copula. Loading coefficients (that of the linear combinations of common factors for various individual bonds) are briefly discussed. We conclude from our empirical analysis that yield-to-maturity curves of US government bonds from 1993 to 2006 can be simply modelled by two independent common factors which, in turn, can be modelled by ARMA(1,1) processes.
Essays on the political economy of redistribution
Taxation and spending on public goods, services and income transfers are among the most obvious and most frequent interactions that individual citizens have with their governments in advanced industrial countries. The variation across countries in the efforts made by governments to redistribute across different groups in society is one of the most fundamental questions of democratic capitalism. Despite a long-standing research literature, there remain important unresolved questions about how to explain such variation across countries. This dissertation presents three essays that examine possible causes of variation across countries. The first essay examines variation in preferences over government redistribution at the individual level. Using survey data from fourteen countries I show that working time has a systematic effect on preferences over redistribution: those who work longer hours prefer lower levels of government intervention. This result is robust to the inclusion of a number of controls that might undermine claims of a direct effect of hours on preferences, including measures of work ethic and attitudes towards work and rewards. The second essay examines how political participation may structure whose preferences matter in determining government redistributive policies. In a time-series cross-sectional analysis of the American states from 1978 to 2002 I employ direct measures of the income of the median voter to investigate the individual level logic underpinning expectations about the effects of inequality and turnout on spending. I find no support for the contention that turnout affects government spending via increasing the political representation of the poor. Neither is the argument that inequality leads to higher redistribution via its effects on the preferences of the median voter corroborated by the data. The third essay considers the impact of political institutions on redistributive policy outcomes by examining the asymmetric effect that multiparty competition has on the spending and revenue sides of government policy at the outset of the modern tax state. While fragmented party systems may expand spending, they tend to reduce the ability of governments to enact progressive reforms of direct taxation, thus leading to a paradoxical association between generous spending policies and regressive tax systems. Overall, the dissertation highlights how particular economic and political structures impact types and levels of redistribution across political jurisdictions in ways which have not previously been examined.
Post-communist capitalism: The politics of institutional development
This dissertation contains three essays on economic transition and institutional change in Central and Eastern Europe. The first paper analyzes patterns of economic coordination in Estonia and Slovenia, two post-socialist countries in Central and Eastern Europe, and argues that Estonia and Slovenia are good examples of liberal and coordinated market economies as defined in the Varieties of Capitalism literature. The main focus is on industrial relations and wage bargaining, but other areas studied by this literature are considered as well. The paper also explores the origins of these institutions by examining the interaction of inherited institutions and strategic policy choices, esp. the effects of privatization and monetary policy on formalizing coordination. The chapter also considers some general implications of this analysis for the study of post-socialist transition and comparative capitalism. The second paper seeks to explain the diversity in economic governance and industrial relations across the eight transition countries that became members of the EU in 2004. It argues that three different models of economic governance emerged in the 1990s—a liberal market economy model associated with pluralist interest representation), a coordinated model associated with corporatist interest representation) and a mixed model, in which social pacts played a significant role. The paper accounts for this variation by developing a theory based on networks. It seeks to demonstrate that two factors—the degree to which the communist system fostered horizontal network ties and the degree to which ownership reform preserved and promoted network ties—can account for the type of economic governance prevalent in each country. The four case studies of Slovenia, Hungary, the Czech Republic and Estonia are used to explore the causal mechanisms. The third paper examines the development of trade policy in Poland and Estonia from the early 1990s until EU accession in 2004. The paper also develops a typology of historical sequences based on two dimensions—extraordinary politics and path breaking—to categorize the policy evolution and processes of change in these countries. It examines why both countries liberalized trade during a period of extraordinary politics at the outset of the transition process, but why this only led to a critical juncture and sustained liberalization in Estonia. The paper suggests that policy change during periods of extraordinary politics are best understood by examining the structure of executive politics and the process of preference formation, whereas the sustainability of trade policy reform is best understood by analyzing interests and institutions.
Object lessons in American culture
An “object lesson” is more than a timeworn metaphor used to describe a way of reasoning from the concrete to the abstract. From the 1860s onward, object lessons were classroom exercises organized around the study of material things and were popular across the United States. Using items like penknives and whalebone, teachers employed this methodology to teach children how to perceive their material worlds and to use their heightened observational skills to reason, both critically and morally. “Object Lessons in American Culture” links this historic classroom practice to the ways nineteenth-century Americans came to understand the matter that surrounded them. It argues that the systematic study of material things via object lessons shaped the ways adults and children found meaning in their possessions, considered the connections between objects and pictures, and viewed and talked about race and citizenship. Furthermore, this dissertation establishes object lessons as a historical way of learning from and engaging with objects and pictures. The practice of object lessons parallels and prefigures certain aspects of current material culture scholarship, a connection that historicizes material culture methodologies. The dissertation is divided into five chapters. “Through a Window” I) introduces the practice that would become object lesson pedagogy moving from Johann Heinrich Pestalozzis Swiss schoolroom to the antebellum United States. “Thinking with Things at School” II) examines Civil War-era reforms that crystallized European ideas about object teaching into classroom-ready object lesson pedagogy. “Picture Lessons” III) looks at what object lessons on pictures may reveal about nineteenth-century visual culture. “Object Lessons in Race and Citizenship” IV) considers how African American and Native American students were taught via object lessons and simultaneously described and represented as living object lessons. Finally, “Objects and Ideas” V) investigates the ways politicians, advertisers, and authors employed the concept of the object lesson and what their projects may reveal about object-based epistemology at the end of the century. This dissertation explains how object lessons, as pedagogy and metaphor, patterned the ways many nineteenth-century Americans thought about their material worlds.
Ordering knowledge, re-ordering empire: Science and state formation in the English Atlantic world, 1650-1688
The central argument of this dissertation is that the early modern English state and its dependent empire were significantly shaped by contemporary science. It identifies a particular mode of natural knowledge production, rooted in the centralized management of empirical information, that was commonly practiced by elite medical practitioners and other men of science in the later seventeenth century. It then examines the ways in which those practices of information management became the foundation of other projects pursued by the same personnel—projects that have not heretofore been considered by historians to have much to do with medicine, or even science generally, and which were central to the formation of the modern English state: the Royal Society’s program to reform the practices of artisans, Samuel Pepys’s reorganization of the Royal Navy, and the establishment of new organs of state to centrally manage colonial development and coordinate the conduct of commerce in the English Atlantic empire.
Product differentiation and firm heterogeneity in international trade
This dissertation consists of three essays that study a key source of heterogeneity between firms engaged in international trade: product differentiation. In the first essay, I compare various ways of measuring the gains from importing new differentiated products. Previous research has relied on aggregated data and avoided complex demand estimation. In contrast, I use a detailed data set on computer printers in India that records the sales of individual models. Furthermore, I estimate two different demand systems: the constant elasticity of substitution CES) model and the random coefficients logit. The CES model, because of its restrictive substitution structure, places larger weight on the gains from increased variety relative to the random coefficients logit. In the second essay, which is joint work with Eduardo Morales, we use product-level data on computer printers to study the cross-country behavior of differentiated multi-product firms. We find that demand patterns are more similar in countries with more similar GDP per capita and of closer geographic location. Furthermore, firms offer more of the same printer models in these markets, leading to variation in product quality as indicated by print speeds. These results suggest that models of multi-product firms and product quality in trade should be combined to better understand the patterns in firm- and product-level data across countries. The third essay, which is joint with Eduardo Morales and Andres Zahler, examines the determinants of where a differentiated products manufacturer decides to export. We allow the profits from each possible destination to depend on how similar this country is to the firms home country “gravity”) and on how similar it is to other destinations the firm has previously exported to “extended gravity”). In order to estimate our model, we use a method based on moment inequalities. We find that the sunk costs of operating in different export destinations are quite small. This reflects the fact that although there is a great deal of hysteresis in firms overall status as exporters, changes in the portfolio of destinations served are common.
Archaeological Investigations at Pataraya: A Wari Outpost in the Nasca Valley of Southern Peru
This dissertation reports on findings from three seasons of archaeological fieldwork at Pataraya, a mid-elevation site located on the western slope of the Andes in southern Peru, and its environs. These investigations began with large-scale excavations at Pataraya that were undertaken in 2007. While small, the site is an excellent example of the planned architectural style associated with the imperial expansion of the Wari state that emerged near modern-day Ayacucho during the Middle Horizon AD 750 – 1000). Intensive archaeological survey in the upland headwater valleys of the Nasca drainage was undertaken in 2008 and 2009. Two Middle Horizon sites, including another Wari compound known as Incawasi, were documented in the upper Aja river valley during these efforts and subsequent test excavations were undertaken at each of them in 2009. These surveys also collected data on a prehispanic road that connects the Nasca valley to the sierra. The road has been found to enter the Nasca drainage near modern-day Uchuymarca and travel past Incawasi and Pataraya on its route to the coastal plain below. These data strongly suggest that construction of the road dates to the Middle Horizon and that linkage of important Wari political installations was its primary function. Evidence from the excavations at Pataraya, especially when considered in light of this wider regional system, illuminate the organization and political economy of the Wari empire specifically, as well as the archaeological study of empires more broadly. The evidence from Pataraya suggests that activities related to textile manufacturing was a major part of daily life at the site. Given the importance of cotton in Wari textile technology and the Nasca valleys suitability for cultivation of the fiber, these data suggest that acquisition of coastal cotton and transshipment of the product to the sierra may have been one of the goals of the Wari state in establishing a colony at Pataraya. Wari control of the connection between the south coast and the sierra evidenced by both Pataraya and the newly discovered site of Incawasi also illuminates our understanding of the factors that direct investment in infrastructure by empires generally by demonstrating that many factors, some of which remain unknown, drove such heavy Wari investment in building a secure route to Nasca. Why empires invest heavily in one area and little or not at all in another is thus always an empirical question, one that must be evaluated and explained by real economic, environmental, political, and cultural conditions in the past.
Essays on Learning with Bounded Memory
I study single-agent learning problems under memory constraints. The first chapter studies time consistency issues in a general class of stationary dynamic environments called Markov Decision Processes with Partial Observation. The agent is restricted to use plans with a fixed memory size, that is, strategies that can be implemented by a finite automaton of fixed size. As this induces a game with absent-mindedness, the ex-ante optimal strategy may not be time-consistent. I find that any ex-ante optimal bounded memory strategy satisfies a weaker form of time consistency, multi-self consistency, a la Piccione & Rubinstein 1997). This means that the agent would not want to deviate from the ex-ante optimal strategy for the current period, assuming he will follow the original strategy from tomorrow on. In the second chapter, I analyze the effects of memory limitations on the endogenous learning behavior of an agent in a standard two-armed bandit problem. I find that under memory constraints, the inclination to choose the currently better alternative does not constrain learning: there is no exploitation/exploration trade-off. Optimally, the memory states reflect the magnitude of the relative ranking of alternatives. After a high payoff from one of the alternatives, the agent optimally moves to a memory state with more pessimistic beliefs on the other, even though no information about the latter alternative is received. For the case where one alternative is substantially more informative than the other, he chooses the latter only for myopic exploitation purposes, and ignores any information about it, suggesting specialization in learning. For the special case with one known safe) alternative, a sufficiently patient agent never ceases experimentation and tries the unknown alternative at least occasionally after any historyï¼› this is counter to what theory predicts with unbounded memory, but in agreement with experimental findings. Furthermore, he chooses the safe alternative with more optimistic beliefs than the optimal unbounded memory) cutoff belief, again in conformity with experimental evidence.
Resurrecting the past, constructing the future: A historical investigation on the formation of a Greek national identity in schools, 1834–1913
This dissertation research combines archival data and historical methods and analyzes how schooling and education in Greece between 1834 and 1913 sought to shape a Greek national identity. The goal of this project is to present a historical analysis, that has thus far been absent from scholarship on the subject, and to convey how the adoption of a common national history in Greece, with roots to ancient Greece, assisted in the shaping of a Greek national identity. The timeframe this project examines is significant because it covers an important portion of Modern Greek history. The beginning of the modern state of Greece and the opening of the first Greek schools occurred in 1834, while 1913 represents the end of the Balkan Wars and the expansion of Greek schools and a Greek identity into newly claimed parts of Greece. The years between 1834 and 1913 were a time of major social, political, and cultural changes in the state of Greece that helped to facilitate the formation of a Modern Greek national identity. Greek government legislation, textbooks, teachers manuals, curriculum guidelines, opinions, and other writings from and about this time period, provide the historical, social and cultural contexts analyzed in this dissertation. By focusing on these archival materials, this project contributes to the history of education, cultural and educational policy studies, comparative and international education, national identity formation, Modern Greek history and more broadly, European history.