Abstract This paper examines how, in the last quarter century, the U.S. has experienced a drop in both crime rates and arrest rates and how many criminologists have speculated on the reasons for this drop in crime. It shows how Nobel Prize winner, Gary Becker, in his work, ?Crime and Punishment, An Economic Approach,? was the first economist to explain the theory of deterrence as a function of econometrics and how, according to Becker, if the punishment costs the criminal more than the crime benefits the criminal, then the criminal will rationally be deterred from committing the crime. It looks at how, although the Uniform Crime Report and the National Crime Victims Survey support Becker's economic model of crime, scientists have struggled to prove Becker's model with sound, empirical research.
From the Paper "The deterrence/incapacitation argument is important for legislation such as "three strikes you"re out? in which after three convictions a prisoner receives automatic jail time. If deterrence is not a key factor, the threat of incapacitation does not work. By definition, incapacitation is a by-product of deterrence. Without incapacitation, deterrence would not be a workable theory. Levitt concludes in his paper, that incapacitation may imprison the majority of people who would commit crimes no matter what, however, incapacitation without deterrence may make others more likely to commit crimes, who otherwise may have been deterred (Levitt, 370) increasing rather than decreasing arrest rates."
Abstract This paper reviews three articles that discuss some form of financial risk modeling methodology. The articles discussed are "Model-Based Stress Test: Linking Stress Tests to VaR for Market Risk" by Carol Alexander and Elizabeth Sheedy, "Risk and Probability Measures" by Phelem Boyle, and "Realized Volatility and Correlation" by Anderson, Torben, et al.
Table of Contents:
Abstract
Article Reviews
Alexander, Carol and Elizabeth Sheedy. "Model-Based Stress Test: Linking Stress Tests to VaR for Market Risk".
Boyle, Phelim. "Risk and Probability Measures."
Anderson, Torben, et al. "Realized Volatility and Correlation."
From the Paper "Volatility is the focus of all risk modeling in financial analysis because the greater the volatility the greater the risk of the investment or a portfolio exhibiting a high degree of volatility. Anderson et al, in "Realized Volatility and Correlation" describe how volatility has come to dominate risk modeling literature and that this literature has increasingly focused on "higher-frequency data". Thus begins these researchers' quest to attempt to match actual volatility levels with more accurate forecasting techniques."
Tags: portfolio skewness methodology value-at-risk, binomial tree model
Abstract This research paper develops an appropriate econometric model whereby the primary determinants of profitability of the top five bank holding companies in the United States could be examined and understood. To accomplish this purpose, an econometric model based on internal aspects of the banking organizations as they related to their return on assets and external aspects of the environment in which they compete as measured by growth in GDP was developed based on guidance provided by economists and industry experts to determine the impact of the external national economy of these five leading banks according to their size as measured by total assets. A critical review of the relevant peer-reviewed, scholarly and organizational literature is followed by an analysis of the statistical data for these bank holding companies using the econometric model. A summary of the research and salient conclusions are provided in the concluding chapter. The paper includes several graphs, tables, and charts.
Table of Contents:
Abstract
Statement of the Problem
Purpose of Study
Importance of Study
Scope of Study
Rationale of Study
Overview of Study
Review of Related Literature
Methodology
Description of the Study Approach
Data-gathering Method and Database of Study
Data Analysis
Econometric Model
Summary and Conclusions
Appendix: United States' Largest Bank Holding Companies (as of June 2007)
Appendix: Excel Spreadsheet Results of Data Analysis
From the Paper "Based on the foregoing constraints, a better indicator of profitability was required for the purposes of this investigation. As noted above, the empirical test used in this study is concerned with the determinants profitability of these five leading bank holding companies in the United States as of June 2007. For this purpose, the measure of profitability of each bank was defined as the return on assets (ROA); the ROA is a ratio that is calculated by dividing the net income over total assets. The macro-economic variable GDP per capita growth was also used in the model as estimated by the CIA World Factbook for 2006 and the International Monetary Fund for the years 2004 and 2005.
Tags: relationship keynesian, return on assets, capita income, availability
Abstract This paper examines the soft budget constraint (SBC) as a commitment problem under socialism, presents the Dewatripont and Maskin basic model of the theory behind the SBC, and explains how the SBC can be hardened. Additionally, it closely follows the transition processes in China, as well as several Central and Eastern European Countries by focusing on efficient markets, federalism, demonopolization. The paper ends with a summary of the efficiency outcomes of a hard budget constraint.
From the Paper "The soft budget constraint syndrome is an incentive dilemma that has been primarily observed in socialist centrally planned economies, and has created major problems in their transition to the market. The term "soft budget constraint" was coined by Kornai in 1980, and can be summed up as follows: ?If the firm acts as a price maker, if the tax system it faces is soft, if it can rely on access to free state grants, if it can get credits and external financial investment on soft terms, then the budget constraint is soft; that is it will not bind the ex ante choices of the firm.? Ambrus-Lakatos (1997)"
From the Paper "APPLICATION OF MATHEMATICAL METHODS IN ECONOMIC ANALYSIS
When mathematical methods and statistical techniques are applied to the analysis of economic problems and issues, the term usually applied to the process of applied economics is econometrics (Ekelund & H?bert, 1991, p. 372). The goal of econometrics is the development of valid, reliable, and value free predictive models of economic phenomena.
Alan Greenspan (1991, p. 52), Chairman of the Federal Reserve Board, stressed the importance of econometric models as a means of providing a clear understanding of economic events. He argued that the greatest advantage of a "fully articulated model is that it helps the forecaster keep track of the interrelationships among the primary variables of interest" (Greenspan, 1991, p. 53). Within the context of this argument, he ..."
From the Paper " DEMAND ESTIMATION AND FORECASTING
Introduction
This research estimates the demand for the goods and services offered by the Wal.Mart chain of retail stores. Demand estimation for the firm's products is performed by forecasting the firm's sales. Sales are forecasted through the application of three separate procedures..time series analysis, barometric economic indicator analysis, and econometric analysis.
Economic Developments
Wal.Mart Stores, the world's largest retailer, operates an expanding chain of discount retail stores in 49 of the 50 states of the United States (Tucker, 1994b, p. 1653). The rapid growth strategy followed by the firm is a major factor in the continued growth in the demand for the company's products because the."
From the Paper "Economic forecasting has long been an area of interest because of its connection with high finance, fortunes won and lost and the criticality of economic trends for the social and political welfare of the country. Numerous public and private organizations are devoted to the production of regular economic forecasts, and heavily funded research projects seek more accurate and reliable models on which to base these forecasts. While much attention is focused on the area of economic forecasting, and numerous computerized models have been developed to predict economic performance, the reliability and accuracy of these models has come into question, in large part because of the importance of the economic forecast to everyday activities. This research examines the business cycle, the current basis of economic forecasting, and short and long-term methodologies of..."
A research study using co-integration analysis to study the relationship between the stock index cash and futures market in relation to price discovery.
Abstract Co-integration has come to represent an econometric data analysis method that has been utilized to determine the long-run equilibrium relationships among nonstationary economic variables. This paper uses co-integration analysis to determine the relationship between the stock index cash and futures market in relation to price discovery, market stability, and market efficiency. The data for the study was collected from the Athens Derivatives Exchange S.A. (ADEX), with the main data for the study being the returns of the FTSE/ASE-20 futures and spot index. In order to study the relationship between the ADEX stock index cash and futures market in this paper, daily closing price returns of the FTSE/ASE-20 Index are considered for the period from 3 January 2000 to 27 July 2003. The paper includes several graphs and tables.
Paper Outline:
Data
Methodology
OLS Results
Co-integration Results
References
From the Paper "GARCH modeling represents an important data analyses procedure as it provides a means of further understanding and modeling volatility, taking into account excess kurtosis (i.e., fat tail behavior) and volatility clustering, two important characteristics of financial time series. It provides accurate forecasts of variances and covariances of asset returns through its ability to model time-varying conditional variances. As a consequence, the application of GARCH models has been identified as useful in risk management, portfolio management and asset allocation, option pricing, foreign exchange, and the term structure of interest rates."
Abstract This essay talks about a linear regression model in ordinary least squares regression, the problems that may arise in an OLS model and how it can be fixed through generalised least squares. Generalised Least Squares (GLS) regression is used when problems occur in OLS estimation. The paper includes graphs and formulae supporting the analysis.
From the Paper "Ordinary Least Squares (OLS) regression is a common tool used for economic forecasting when analysing time series and cross-sectional data. It is quite common as it is one of the easiest ways of estimating parameters in a simple or multiple regression model. Generalised Least Squares (GLS) regression is used when problems occur in OLS estimation. Such problems will cause are estimators to no longer be the Best Linear Unbiased Estimate (BLUE) or efficient and so it is necessary to use a transformed model. In this essay I will show how both OLS and GLS are derived through equations and discuss the problems that may occur under OLS estimation and why it is more suitable to use GLS to estimate a linear model when certain problems occur."
Tags: generalised, least, ordinary, economics, formula
Abstract Business statistics can be considered a branch of science that enables one to make the right decisions. This paper shows that business statistics have uses in many areas, including financial analysis, econometrics, auditing, production, and operations, such as the improvement of services and marketing research.
From the Paper "Acquiring skills in Business Statistics enables one to make analysis of data and take decisions using a gamut of statistical analysis packages or programming environments. Business Statistics wields a high level of influence in high-level, strategic analysis of real-world areas of difficulty across the boundaries of disciplines. We see a lot of collective actifity in fields such as risk in financial markets, the modelling of the choice of consumers and behaviour of corporates, and in the creation of indices to measure political risk. Such activities have only enhanced the importance of Business Stattistics. (Welcome to the Discipline of Econometrics and Business Statistics)"
Abstract The purpose of this paper is to survey the available body of research done on the effectiveness of foreign aid as an agent for economic development of recipient countries, most of which come from the third world countries. In particular, it aims to assess how strong the empirical evidence is that aid has been an effective agent for economic growth. In so doing, it attempts to identify areas where future research is required.
Outline
Overview
Introduction
Econometric Models Used In the Literature
The Poverty Trap Model
Anti Aid Literature
Pro Aid Literature
Qualified View
Observed Gaps in Existing Research
Conclusion
From the Paper "Since its birth right after World War II when the United States of America (USA) released billions of money to assist Europe (Sogge, 2002) in reconstructing the latter's economy, foreign aid has been assumed to directly induce or at least influence economic development in a recipient country. Most donor rhetoric perpetuates this association (World Bank, 1998). Many studies have been undertaken to try to assess if aid actually fulfils its main objective, that is, to promote macroeconomic development in developing countries. After half a century characterized by some serious changes in world economy and politics (i.e. breakdown of Communism, globalization, terrorism), the link between foreign aid and economic growth remains at the center of debates on aid effectiveness."
Abstract This paper analyzes a study by Eric Pick called "The Economic Effects of a Salary Cap on a Professional Sports League" that attempts to develop and apply an econometric model to the issue. The study is based on a model that is limited, so the most that could emerge from it is a potentially useful formula to be applied on a broader scale than the two team universe addressed by the author and that may or may not be applicable to a variety of different types of sports leagues.
From the Paper "The study by Eric Pick entitled "The Economic Effects of a Salary Cap on a Professional Sports League" is an attempt to develop and apply an econometric model to the subject at hand. The study is based on a model that is limited, so the most that could emerge from it is a potentially useful formula to be applied on a broader scale than the two team universe addressed by the author and that may or may not be applicable to a variety of different types of sports leagues. The same basic issues do apply to different types of sports leagues, and efforts to apply a salary cap have been part of major sports leagues for some time. In 1994, a threatened basketball strike led to an agreement that involved salary caps, among other provisions. In that case, as an end to the players' union was threatened, the players... "
Abstract This paper reviews the question regarding religion and its correlation to crime. The paper discusses how in terms of economics, the prevalence of crime in a particular geographic area deters fiscal growth and contributes immensely to the decay and deterioration of a community and a society. The paper further discusses how, when it comes to religion, a community of religious inhabitants contributes to the economy since if, it is seen as a haven of peace and order, the resources spent on crime prevention, prosecution and rehabilitation can best be put to more productive means such as recreational and educational facilities for the community.
From the Paper "The question of religion and its correlation to crime, and vice versa, is always and important and interesting topic not only in terms of this economics paper but in other areas of studies as well. Economics wise, the prevalence of crime in a particular geographic area deter fiscal growth and contributes immensely to the decay and deterioration of a community and a society. On the matter of religion, a community of religious inhabitants contributes to the economy since if it is seen as a haven of peace and order, the resources spent on crime prevention, prosecution and rehabilitation can best be put to more productive means such as recreational and educational facilities for the community. A caveat to the previous statement is that the religion being discussed is in general terms considering we have seen religions that promote hatred and violence-this should be considered more an exemption than the rule!"
Abstract This paper discusses whether the death penalty acts as a deterrent to violent crimes. It examines both sides of the debate in order to determine if the death penalty is an effective deterrent to crime or if it is simply a waste of taxpayer money. The paper presents sociological studies supporting both sides of this aspect of the death penalty debate.
Table of Contents:
Comparative Studies
Econometric Studies
How do we Decide Who is Right?
Conclusion
From the Paper "On the other hand, opponents cannot disprove a causal relationship either. However, the burden of proof is not upon them. If they can discredit the argument of the other side by presenting conflicting results and inconclusive evidence, then their argument is supported by default. The original research question was whether the death penalty acts as a deterrent to murder. If one considers the lack of positive proof, then the answer would have to favor those that say it does not. Therefore, one could support the position that due to a lack of substantial evidence that the death penalty deters crime, the practice of the death penalty must be reconsidered in support of less severe punishment. Those that oppose the death penalty do so based on a lack of evidence that it deters crime. This argument is logical, even in light of lack of evidence to the contrary."
