Browsing by master's degree program "Magisterprogrammet i ekonomi"
Now showing items 1-20 of 153
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(2021)The purpose of the thesis is to explore the link between labour markets and transportation accessibility. Accessibility has been estimated with logsum and travel times of public and private transportation. Logsum as a concept has been used in the transportation system estimation, all though all in all logsum as a measure of accessibility is not as established as travel times. This way the overview of the effects of accessibility to employment is thorough. I also evaluate how impact assessment of transportation is done historically and how wider economic impacts are considered in the framework. Cost-benefit analysis is widely used, but the framework should be improved on how to include wider economic impacts. The methods section goes through how transportation system estimation is done. The used data in the estimation is collected from three dependencies. These are the interview-based traveling habits from Helsingin Seudun Liikenne, Statistics Finland metropolitan regional employment statistics and travel times of public and private transportation from Helsinki Region Travel Time Matrix. In the results I go through the empirical model. Travel time, logsum and employment are all viewed as an elasticity measure. The results of the model are reasonable and in line with the previous literature, but the coefficient of determination ends up quite low. This means that the results still need confirmation, either through better data or better estimation model. My results can be viewed as a preliminary result on the link between employment and accessibility.
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(2023)This thesis focuses on the investigation of adverse selection and moral hazard in the Finnish entrepreneurial insurance system. The thesis builds upon previous research on moral hazard and adverse selection in insurance markets, but focuses specifically on the social insurance market for entrepreneurs within sickness and parental allowances. This topic is of interest as mandating social insurance for entrepreneurs is vital, but often lacking due to the flexible nature of entrepreneurial activity. As a result, the social insurance systems may be subject to adverse selection and moral hazard. Rich panel data on insurance contributions of entrepreneurs in Finland allows me to measure the extent of asymmetric information both overall and dynamically. To test the former, I use a positive correlation test. In particular, the test looks at the probability of sickness or having a child in relation to insurance contributions. The results indicate a slight positive correlation between sickness risk and insurance contributions as well as the probability of having a child and insurance contributions. A more significant result is found for the risk of having children in a dynamic sense, showing a strong indication of a rise in insurance contributions around the time of receiving parental allowance. However, the results are more ambiguous in the case of sick pay. These results are robust to several controls as well as two separate identification strategies. Due to the endogeneity of illness or choosing to have children, causal conclusions cannot be drawn from the results.
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(2021)Hinnoittelualgoritmien käyttö on yleistynyt viimeisen vuosikymmenien aikana. Tähän on vaikuttanut erityisesti sähköisten markkinapaikkojen eli verkkokauppojen suosion kasvu. Lisäksi algoritmeihin liittyvä teknologia on kehittynyt ja hinnoittelualgoritmeihin liittyviä palveluita on yhä helpommin yritysten saatavilla. Tässä tutkielmassa tarkastellaan hinnoittelupäätöksissä käytettävien algoritmien vaikutuksia markkinakäyttäytymiseen, missä useat yritykset koordinoivat toimiaan saadakseen kilpailullista markkinatilannetta korkeampia voittoja. Tällainen yritysten välinen kilpailun vastainen yhteistyö, eli kolluusio, on usein kuluttajien ja kilpailun kannalta haitallista. Siksi myös hinnoittelualgoritmien käytön vaikutuksia kolluusion on syytä tarkastella. Tämän tutkielman tavoitteena on tarkastella hinnoittelualgoritmien vaikutuksia erityisesti hiljaiseen kolluusioon. Tarkastelun kohteena on myös se, kykenevätkö tekoälyyn perustuvat algoritmit kolluusion autonomisesti eli täysin ilman ihmisten ohjausta. Tutkielman kirjallisuuskatsauksessa syvennytään tekoälyyn perustuviin algoritmeihin ja hiljaiseen kolluusioon teoriatasolla. Hinnoittelualgoritmien vaikutuksia hiljaiseen kolluusion on vaikea tutkia empiirisin menetelmin, koska hiljaista kolluusiota voi olla vaikeaa havaita markkinoilta ja yritykset harvoin paljastavat hinnoittelussaan käyttämiään algoritmeja. Tästä syystä tutkielman toisena tutkimusmenetelmänä on kokeellinen tietokonesimulaatio, jonka avulla tarkastellaan hinnoittelualgoritmien vaikutuksia hiljaiseen kolluusion. Simulaation avulla pyritään kokeellisesti selvittämään, kykenevätkö tekoälyyn perustuvat hinnoittelualgoritmit kolluusioon autonomisesti. Tutkielman tulosten mukaan hinnoittelualgoritmien käytöllä voi olla vaikutuksia hiljaiseen kolluusioon. Hinnoittelualgoritmien käyttö voi muuttaa markkinarakenteita vaikuttaen hiljaiseen kolluusioon. Vaikutukset markkinarakenteisiin ovat kuitenkin hieman epäselvät ja vaikutukset hiljaiseen kolluusioon voivat olla joko lisääviä tai vähentäviä. Lisäksi hinnoittelualgoritmit voivat toimia myös välillisesti hiljaisen kolluusion fasilitaattorina. Tutkielman tuloksista erityisen mielenkiintoinen on tekoälyyn perustuvien hinnoittelualgoritmien kyky oppia kolluusio autonomisesti. Tätä tulosta tuki aiempaan kirjallisuuteen perustuva kirjallisuuskatsaus sekä tässä tutkielmassa toteutettu tietokonesimulaatio. Yleistyvä hinnoittelualgoritmien käyttö ja niiden kehittyminen voivat aiheuttaa täysin uudenlaisia ongelmia kilpailun tehokkuuden turvaamisessa ja sääntelyssä. Kokeelliseen tutkimukseen perustuvien tuloksien mukaan tekoälyyn perustuvat algoritmit näyttäisivät kykenevän autonomisesti kolluusioon. Jatkossa tutkimusta hinnoittelualgoritmien vaikutuksista kolluusioon olisi syytä laajentaa. Haasteeksi voi kuitenkin muodostua se, miten tutkimusta voidaan toteuttaa sellaisessa taloudellisessa ympäristössä, joka vastaa riittävän tarkasti todellista markkinatilannetta.
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(2021)This thesis investigates the tax base and allocation choices in international corporate income tax architecture and provides an evaluation of the effects of the choices made in three different systems: the current system, residual profit allocation, and OECD Pillar One. International corporate income tax design has a significant effect on the functioning of the international economy and on the welfare of individuals. Thus, making the correct design choices is extremely important. This thesis argues that the international corporate income tax system should be designed following certain important principles of taxation: 1) fairness, 2) economic efficiency, 3) robustness to avoidance, 4) administrative ease, and 5) incentive compatibility. The different systems are then introduced in turn and evaluated against these criteria. The thesis finds that the current system suffers from certain conceptual weaknesses that leave significant room for improvement with regards to the set criteria. It is further argued that a reform is required for the continued functioning of the international system. Such a reform could be introduced in the form of residual profit allocation. OECD Pillar One proposal involves elements of residual profit allocation, but in comparing the different systems with each other, this thesis argues that the OECD proposal is too narrow in scope to gain the full benefits of a residual profit allocation system.
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(2022)Tiivistelmä Tiedekunta: Valtiotieteellinen tiedekunta Koulutusohjelma: Taloustieteen maisteriohjelma Opintosuunta: Taloustieteen yleinen opintosuunta Tekijä: Kimmo Nevanlinna Työn nimi: Älysopimusalustojen hinnoittelun tehokkuus Työn laji: Maisterintutkielma Kuukausi ja vuosi: 11/2022 Sivumäärä: 48 Avainsanat: Lohkoketju, satunnaiskävely, kryptovaluutta, älysopimus Ohjaaja tai ohjaajat: Jani Luoto Säilytyspaikka: Helsingin yliopiston kirjasto Muita tietoja: Tiivistelmä: Maisterintutkielma tutkii kolmen älysopimuksiin erikoistuneen kryptovaluutan Ethereumin, Cosmoksen ja Tezosksen hinnan satunnaiskävelyn hypoteesia. Kryptovaluutat ja lohkoketjut ovat nousseet julkiseen keskusteluun viime vuosina, kun niiden hinnat ovat vaihdelleet villisti ja niiden hintojen muutoksia seurataan nykyään suurissa kansainvälisissä ja kotimaisissa talousuutisissa, mutta ymmärrys hintojen muutosten takana on vajavaista. Kryptovaluutoista tunnetuin Bitcoin sai alkunsa vuonna 2009, mutta viimeisen viiden vuoden aikana älysopimukset ovat nousseet myös julkiseen keskusteluun. Kryptovaluuttoja pidetään kuitenkin yleisessä keskustelussa keskenään samanlaisina eikä niiden eroja ymmärretä tarpeeksi hyvin. Kiinnostukseni älysopimuksiin ja niiden mahdollisuuksiin syttyi vuonna 2018 ja se kiinnostus sai minut tutkimaan asiaa taloustieteen näkökulmasta maisterintutkielman verran. Tämä maisterintutkielma selittää mitä älysopimukset ovat ja miten niiden käyttö lisää sen kryptovaluutan kysyntää, jonka päällä älysopimus suoritetaan. Tutkielmassa käydään myös läpi mitä lohkoketjut ovat. Empiirisessä osuudessa käytetään metodina autokorrelaation tutkimista tuottoaikasarjasta. Tehokkaassa hinnan muodostuksessa ei pitäisi löytyä autokorrelaatiota. Autokorrelaatio mitataan Ljung-Boxin menetelmällä päivittäisistä tuotoista 1.1.2019-31.6.2021. Toisena menetelmänä käytetään yksikköjuuren estimointia. Tämä tutkitaan Dick-Fullerin testillä. Yksikköjuuri löydetään kahdesta suuremmasta kryptovaluutasta Ethereumista ja Cosmoksesta, mutta ei pienemmästä Tezosksesta. Lopputuloksena todetaan, että isommat kryptovaluutat vaikuttavat olevan jotakuinkin tehokkaat satunnaiskävelyn osalta, mutta kaikki kolme kryptovaluuttojen tuottoaikasarjaa sisältävät autokorrelaatiota.
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(2021)Työvoiman riittävyys on yksi tulevaisuuden suurimmista poliittisista kysymyksistä länsimaissa. Tähän pyritään löytämään ratkaisuja muun muassa pidentämällä nykyisten työntekijöiden työuria, kuitenkaan lisäämättä työkyvyttömyyseläkkeiden aiheuttamia kustannuksia. Yhtenä mahdollisena ratkaisuna pidetään ammatillisen kuntoutuksen tarjoamia työhön paluu mahdollisuuksia työkokeilun tai uudelleen kouluttautumisen avulla terveydentilalle sopivampaan ammattiin. Tutkimuksen alussa käydään tarkemmin läpi ammatillista kuntoutusta, sen prosessia, kohderyhmää sekä mahdollisia kuntoutuskeinoja. Tavoitteena on selvittää henkilötasoisten muuttujien vaikutusta ammatilliseen kuntoutukseen osallistumiseen. Lisäksi on tarkoitus selvittää, onko osallistumista mahdollista ennustaa jo hakemusvaiheessa. Aiemmat tutkimukset ovat osoittaneet iän, sukupuolen, koulutustausta ja sairauspoissaolojen lukumäärän olevan merkittäviä muuttujia tätä tutkittaessa. Tutkimuksen aineistona on yhden eläkelaitoksen vuosina 2016-2019 antamat ammatillisen kuntoutuksen ennakkopäätökset. Tutkimusmenetelminä käytetään khiin-neliötestiä, logistista regressiota sekä satunnaismetsää. Logistisen regression tuloksien mukaan tärkeimpiä ammatilliseen kuntoutukseen osallistumiseen vaikuttavia muuttujia ovat henkilön sukupuoli, kuntoutusrahan määrä, tietyt ammatit sekä vuosiansioiden määrä viimeisen viiden vuoden aikana ennen kuntoutusoikeuspäätöksen saamista. Ennustemalliksi luodun satunnaismetsän tulosten perusteella ammatilliseen kuntoutukseen osallistumista on mahdollista ennustaa. Positiivisen luokan ennustustarkkuus on selvästi parempi kuin negatiivisen luokan. Khiin-neliötestin, logistisen regression ja satunnaismetsän tuloksissa on kuitenkin myös toisistaan eroavia tuloksia.
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(2022)Regret is the value lost by playing an action on the current round of a iterative game. The idea of regret matching is to generate strategies that minimize regret, since it is guaranteed by folk theorem to converge to Nash Equilibrium in a two-player zero-sum game. Storing cumulative regrets after each iteration enables to use of regret matching. It is an algorithm that chooses next iteration strategy based on the cumulative regrets of the actions. This procedure itself would converge to Nash Equilibrium in a normal form game zero-sum game. For extensive form game the data storing will become too resource demanding, when the game size is even moderate. However, it's possible to minimize regret on each information set separately using counterfactual regret. Counterfactual regret is calculated by using counterfactual values. Counterfactual value calculates expected value given that player tries to get to an information set and play a certain action in it. The difference between the action and expected value of the information set is counterfactual regret. Similarly minimizing regrets converges toward Nash Equilibrium. Using counterfactual regret minimization framework I create an iterative self-play algorithm to solve two-player zero-sum imperfect information games. In this thesis I work with last betting round of limit Hold'Em. CFR+ uses improved strategy averaging, does not store negative regrets and alternates between strategy updating player. I did eventually manage to construct CFR+ algorithm, and it seems extremely effective compared to earlier versions of the algorithm.
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(2023)Taxation is a critical tool for development, as well-designed tax systems can generate greater revenues to fund public goods and investments that drive productivity. However, lower-income countries often raise only a small percentage of their gross domestic product (GDP) in taxes compared to higher-income countries. The gap in revenue is particularly striking for property taxes. This thesis begins with a literature review on taxation in developing countries and property taxation in general, emphasizing the challenges of property taxation in developing countries. It then provides relevant background information on Kenya, discussing inequality, general taxation, and property taxation. Using survey data from the Kenya Integrated Household Budget Survey 2015-2016, the thesis then investigates the distribution of property value and income among Kenyan households. It then explores the potential revenue and distributional effects of two property taxation models while also considering potential revenue loss from taxing households with insufficient income or savings. The trends between household income and property value indicate that higher annual incomes correlate with higher property values and vice versa. However, low-income individuals also owned higher-value properties, leading to liquidity problems. A 2% linear property tax rate model revealed a heavy tax burden on lower-income households and an overall revenue potential of 2.38% of total survey income or 0.94% of 2016 GDP. The study observed significant decreases in revenue potential when adjusting revenue to account for the ability to pay. This research also modeled a property tax rate payable only upon reaching a specific income threshold to address liquidity problems. In this model, the tax burden shifted to higher-income households with an overall potential tax revenue of 1.91% of total survey income or 0.76% of GDP. In conclusion, the observed trends, such as the high prevalence of inability to pay, relatively low revenue potential, and the administrative effort required for property taxation, suggest that reforming property taxation may not be the most practical approach for increasing revenue in Kenya.
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(2021)Asymmetric information in insurance markets is the result of policyholders, the buyers of insurance, having more information about their own risk types and preferences than the insurer. Informational asymmetry between the insurer and policyholders can lead to non-optimal insurance prices and quantities which reduce market efficiency. While the presence of asymmetric information has been widely studied in several insurance markets, it has not been empirically studied in the Finnish automobile insurance market before. This thesis aims to fill this gap in literature. The Finnish automobile insurance market consists of two types of insurance. Motor liability insurance is required by law from all vehicles used for driving in traffic. Also, voluntary automobile insurance can be acquired in addition to the mandatory motor liability insurance. In this thesis, the presence of asymmetric information is studied by comparing the occurrence of motor liability insurance claims, conditioned with the pricing variables used by the insurer, between policyholders who only have a motor liability insurance policy and policyholders with an additional automobile insurance policy. The data set used in this thesis is from a single Finnish insurance company. The data set is from the year 2019 and it contains nearly 105,000 motor liability insurance policies. The data include all variables observed by the insurer. Several regression specifications and the widely used positive correlation test are used in this thesis to study the correlation between insurance coverage and motor liability insurance claims. The results of this thesis suggest that signs of asymmetric information are not present at aggregate level in the Finnish automobile insurance market in question. However, different subgroups of policyholders show signs of asymmetric information: After controlling for the pricing variables, policyholders with an automobile insurance policy with the largest coverage show a positive correlation between buying automobile insurance and motor liability insurance claims whereas policyholders with an automobile insurance policy with the third largest coverage show a negative coverage-claims correlation. However, the results from different regression specifications regarding different automobile insurance coverages were not unanimous and thus the results are left ambiguous. In addition, new policyholders considered as experienced drivers show a negative correlation between motor liability insurance claims and having automobile insurance coverage. On the contrary, policyholders considered as experienced drivers with 1–2 years of company experience do not show signs of asymmetric information. The result suggests that the insurer learns from its repeat customers as signs of informational asymmetry disappear over time. Moreover, policyholders considered as unexperienced drivers do not show signs of asymmetric information regardless of the length of their customership in the firm. The results are in line with previous research.
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(2023)Personalized pricing as a pricing strategy has become possible as a result of technological advancement. Personalized pricing uses data to determine prices that differ from uniform pricing and as a result, welfare effects change. This master thesis uses a two period oligopoly model to analyze welfare effects of personalized pricing and then applies modifications to the model to account for EU Regulations. The model finds that regulation helps mitigate negative welfare effects by reducing the amount of inefficient switching and a price ceiling helps to reduce the appropriation effect for a consumer with a high willingness to pay. A case study is used to illustrate a use case for an oligopolistic market to bring real-world context to the theoretical model. The research question is important, because it increases awareness about the effects of regulation on personalized pricing in the European union internal market.
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(2022)The opportunity costs of defence and the impact of defence spending on economic growth aroused the interest of researchers during the Cold War. The question is topical again, as the war in Ukraine has accelerated international armaments and increased investments in defence. For Finland and Sweden, the issue is also important in terms of future NATO membership, because NATO recommends that its member countries spend at least 2% of GDP on defence. Achieving the limit requires an increase in defence spending from both countries. No case studies on the impact of defence spending on economic growth have been published about Finland and Sweden, but the countries have been discussed as part of broader panel materials. This thesis fills the gap. The thesis applies structural vector autoregressive methods to analyse the period from 1960 to 2021. Granger causality is included in the analysis, because–despite its problematic nature–the concept has a central position in the history of the research topic. Previous literature has considered the identification of a structural model challenging because the determination of bidirectional causality would require a suitable exogenous variable, which is almost impossible to find in this context. The view is challenged by suggesting that a partial identification can be accepted when the interest is focused only on the defence spending shock. The alternative analysis concerning a shorter time period tests the sensitivity of results to a time period. The impulse response analysis suggests that the impact of defence spending on GDP is slightly positive for both countries, but statistically significant only for Sweden. Granger causality is not observed in either direction for either country. Finland's neutral result is in line with expectations and previous literature, but Sweden's positive result is contrary to expectations. The alternative analysis concerning the post-Cold War era confirms that the Finnish result is robust regardless of the time period. The inconsistency with previous literature and the challenges caused by conditional heteroskedasticity raise doubts about the reliability of the Swedish result. The thesis indicates that increases in defence spending will not harm economic growth in Finland and Sweden. The result is surprising, as it has been suggested that previous studies have underestimated the negative impact of defence spending and most of the recent literature supports a negative or neutral impact. Further research is needed, especially on the impact mechanisms and the causes of heterogeneity. Decomposing defence spending could provide answers to unresolved questions.
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(2019)The regulatory framework for financial regulation has developed much in the Europe after the financial crisis. The use of borrower based macroprudential instruments as regulatory tools has become popular among the European Economic Area -countries. Already 21 out of 31 EEA-countries have at least one borrower based macroprudential instrument in use. The most commonly used borrower based instruments are Loan to Value (LTV) limit, Loan to Income (LTI) limit, Debt to Income (DTI) limit, Loan Service to Income (LSTI) limit, Debt Service to Income (DSTI) limit, amortisation requirement and maturity limit. As these instruments are only recently introduced as regulatory tools in Europe, their effectiveness and transmission channels are still under discussion. The aim of this master's thesis is to contribute to the ongoing discussion of the effectiveness of the instruments. This thesis provides a broad literature review in order to understand the transmission of each of the borrower based instruments and to explore previous findings of the impacts of the instruments. Further, an empirical analysis is formed by using a panel vector autoregression (PVAR) model in order to study whether borrower based macroprudential instruments have any effect on housing market stability and real economy in the Europe. The data that is used to answer this question consists of growth rates of mortgage stock, house price index, construction index, household consumption and GDP. According to the literature review, the borrower based macroprudential instruments function through four different transmission channels. These are the credit demand channel, expectations channel, resilience channel and anti-default channel. The empirical analysis provides evidence that tightening the borrower based instruments reduces mortgage growth. House prices react negatively to a policy shock in the short run but positively in the long run. Construction reacts negatively to a policy shock. Household consumption on its behalf responds to a policy shock positively in the short run but negatively in the long run. Finally, GDP responds to a policy shock negatively. However, the result concerning construction growth is the only one which is statistically significant in a 95% confidence level and all the other results lack statistical significance. Overall, the empirical results of this thesis provide slight evidence that regulating borrower based macroprudential instruments restrain the growth of mortgage stock, which for its part should enhance the stability of housing markets in Europe. Further, the impact on economic growth is likely negative. However, the results are not statistically significant in a 95% significance level. The difficulties in fitting the model and the lack of significance may implicate that the chosen model might not be the most suitable one for studying the efficiency of borrower based macroprudential instruments.
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(2022)The Finnish productivity growth has been sluggish in the period after the great financial crisis. According to Schumpeterian growth theory, produc- tivity growth depends on innovation and competition between firms. In the United States, the productivity slowdown that has occurred during recent decades has been linked to the simultaneous decline in business dynamism. Therefore, this thesis investigates the Finnish competition and business dy- namism in the period between 2004 and 2018, using dynamic and static competition indicators. The main data sources of this work are two micro-aggregated databases developed by the OECD. Due to their high level of harmonization, a compar- ison between Finland and a benchmark group of countries is possible. The work presents descriptive results and then investigates the relationship be- tween the different indicators with fixed effects regression models. The work finds that, when measured with dynamic indicators (entry rates, up or out dy- namics, and job reallocation rates), the level industry dynamism in Finland is as high, or even higher than in the benchmark. Regarding the static indica- tors of competition, industry concentration appears to be higher than in the benchmark, and has increased in the recent years. However, concentration is not linked to increases in mark-ups or entry rate decline. Instead, it can be linked to the reallocation of resources to more productive firms. Nevertheless, allocative efficiency, as measured with Olley and Pakes covariance, is weaker than in the benchmark group of countries. However, low productivity disper- sion between firms may partly explain this. The results are mostly robust to earlier evidence on Finnish business dynamism. The study concludes that the state of competition and business dynamism in the Finnish private sector is good and thus does not seem to be the scape- goat for the productivity slowdown in Finland. However, the low levels of allocative efficiency and the factors behind it call for further investigation. Regarding markups, the results contract some results acquired earlier, and it would be interesting to compare different markup estimates, and study the relationship between the different estimates and innovation, concentration and productivity growth.
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Catastrophe bond spread pricing in the primary market based on multifactorial models : new evidence (2022)The prevailing volatility of the price/spread related to catastrophe risk around this newly innovative type of instrument, called CAT bond, gave light to this literature. Contrarily to normal type of insurance coverage risks (such as cars, houses, etc...) risk associated to natural and human catastrophes is more unpredictable and costly for (re)insurance companies. Insurance and reinsurance companies found a way to finance this expensive risk by shifting it to investors through Insurance-Linked Securities (ILS), more precisely and successfully, CAT bonds. By cross-checking data and information from multitude of sources, I investigated which are the main determinants capable to influence the price, spread or coupon of a catastrophe bond on the primary market for those instruments. This paper gathers data of 284 catastrophe bonds issued in the market between January 2013 and October 2021 provided by Artemis deal directory. My research contains an introduction part on those innovative type of bonds, an overview on previous research regarding the question and their results, and some empirical data on the main goal of this work, which is defining what variables influence the price of the CAT bond in the primary market. OLS regressions techniques with heteroskedasticity and autocorrelation consistent standard errors are mainly used based on multifactor based models in order to identify the main determinants of the price. The work of Alexander Braun will be the main inspiration for this work, I will apply a couple of same techniques on my work, according to the data available and Stata limitations. The outcome of the larger model including the whole set of variables and crossed variables shows that the expected loss is the major influencers of the catastrophe risk prices for both the in-sample and out-of-sample estimation and across diversified subsamples and models. As per the conclusion from previous researchers, the expected loss variable has shown to impact positively the price of the coupon bond much more than any other variable.
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(2022)The phrase 'central limit theorem' has commonly come to stand for a result where partial sums of random variables converge to a gaussian random variable in the sense of distribution. Theorems of this nature readily yield applications to statistics and econometrics since they form the theoretical basis of approximating the sampling distribution of a given test statistic when the exact distribution may be intractable or otherwise infeasible to be retrieved. Faced with such a situation, a researcher can instead ask whether the test statistic, or a certain transformation of it, converges in distribution as the sample size grows without bound. If the answer is in the affirmative, then one may in a principled manner approximate the distribution of the finite-sample statistics with that of the limit distribution such that the approximation can be made in some sense arbitrarily good by sufficient increases in the sample size. Naturally, similar procedures apply in the case of estimators. These asymptotic normality results for econometric estimators, as they are called, require differing conditions to be satisfied depending on the nature of the data-generating process where the observations are thought to originate from. This thesis examines a selection of foundational central limit theorems in the cases of I.I.D., independent, D.I.D., and dependent data-generating processes and presents examples of their econometric applications, primarily to deduce asymptotic normality for a selection of key econometric estimators.
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(2020)The determinants of FDI have been a topic of interest in economics since the 1980s and this paper aims to contribute to this field. This study aims to measure how associated FDI is with the political risk as well as to see the extent of this relationship in Turkey in the years 1996–2017. The political risk is measured as a change in indexes that are provided by the World Bank, Freedom House, and Transparency International. These political indicators are Political Rights, Civil Liberties, the Corruption Perceptions Index, Regulatory Quality, Voice and Accountability, Rule of Law, Government Effectiveness, Control of Corruption, and Political Stability. The earlier literature on FDI and political risks is mostly empirical and there has not been much theoretical research. Chakrabarti analyzed the past studies on FDI and its determinants in 2001 and found out that in the earlier research, almost every explanatory variable of FDI except the market size was sensitive to small changes in the conditioning information set, casting doubt on the robustness of the results. There have also been conducted studies that address political risk or equivalent concepts. The 2005 research of Busse and Hefeker had the same topic as this paper but their data consisted of many countries and they employed two different panel models. One was a fixed-effects panel analysis while the other utilized a generalized method of moments estimator. I selected three model specifications for the time-series regression analysis. All three specifications have market size as a control variable and the other two also have the economy’s growth rate and trade openness. The third has the inflation rate as the final control variable. The data have a small number of observations which limits the options available for the empirical part of the study. Out of the nine political indicators, Regulatory Quality is the only political indicator that is not associated with FDI, while the results on the Corruption Perceptions Index and Control of Corruption are inconclusive. The rest six are associated with FDI. The Rule of Law index has the highest estimated coefficient value of the World Bank indicators and the Political Rights index has the highest estimated coefficient value of the Freedom House’s indicators.
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(2019)The design of college admissions has been a heatedly discussed topic in Finland, as recent government initiatives have led to a more centralized system. Some argue for letting colleges decide on their admissions procedures, while others believe that a centralized matchmaking procedure with priorities determined by the matriculation examination would be more cost-effective. This thesis aims to characterize various factors that the policy maker must take into account when designing a college admissions procedure, in light of existing theoretical research on both centralized and decentralized matching markets and empirical studies on social determinants of college choice and the capacity of entrance examinations to elicit information on student ability and motivation. The two-sided matching literature is discussed extensively because of its usefulness for designing centralized clearinghouses for matching markets. The student-proposing deferred acceptance algorithm emerges as the best choice for a policy maker who regards strategy-proofness and respecting of priorities as especially important, at least if manipulation by colleges is implausible. However, strategy-proofness is fragile in practical applications, applicants may try to manipulate also strategy-proof mechanisms and reporting the whole preference relation is still only weakly dominant. Consequently, satisfaction of reported preferences should not be taken as evidence of welfare properties of a matching without qualifications. The use of a common entrance examination may be more cost effective than a system based on college-specific entrance examinations, as colleges do not then need to spend resources on organizing the examinations. However, students have then stronger incentives to perform in the common entrance examination, and there is already evidence that more students retake the matriculation examination in Finland. The overall effect on the costs of organizing entrance examinations is an uncertain empirical matter. The importance of preparation courses is likely to decrease, which saves resources and contributes to socioeconomic equity. On the other hand, making students choose on their study paths earlier in life may erode socioeconomic equity. A larger role for the matriculation examination provides stronger incentives for showing effort in high school, which the policy maker may see as beneficial. While a system with a common entrance examination makes it possible for a student to get admitted to a second preference when she is rejected by her first preference, it remains an empirical question to what extent this reduces the propensity to apply again to competitive colleges. The excess demand for certain colleges is a result of student preferences and is not solvable by any mechanism that gives a strong priority to satisfying student preferences.
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(2023)Failures in bargaining, such as strikes or stalled climate change negotiations, are costly for all parties. So why does bargaining fail when mutually beneficial agreements exist? In the thesis, the classical problem of bilateral bargaining is studied by the means of a new laboratory experiment and a literature review of related theoretical and experimental work. The main focus is on the role of commitment tactics as a source of conflict. In the literature, complete information bargaining is often deemed to be efficient whereas incomplete information is considered to be the main driver of delay. However, by simply allowing the negotiators to attempt strategic commitments that are costly to make and uncertain to succeed, unique predictions of inefficient equilibria are obtained even when bargaining under complete information. The main theoretical framework of the thesis is a dynamic bilateral bargaining model of tough negotiations and delayed agreement. In the unique stationary Markov perfect equilibrium of the model, the bargaining takes the form of a war of attrition. Negotiators initially commit themselves to incompatible demands but an agreement is reached once a commitment decays. The rates at which the commitments decay determine the expected duration of the conflict. Moreover, if the negotiators do not differ in patience the one with the stronger commitment receives in expectation a larger share of the contested surplus. The predictions of the model are tested in a new laboratory bargaining experiment. The analysis of the pilot round shows mixed results. We find some conflict and inefficiency in bargaining due to initial incompatible commitments. Furthermore, in line with the theory, more than half of the agreed offers have a different outcome than the prevalent equal sharing of much of the experimental bargaining literature. However, it cannot be concluded that the data would be completely in line with the hypotheses. The different rates at which the commitments decay do not always determine the bargaining outcome and length of the delay. Slight modifications to the experimental design, which may solve the issues detected, are discussed. The different delay patterns observed in various real-life bargaining contexts suggest that there is not a single approach which could explain all the inefficiencies. The approach emphasizing the role of strategic commitments provides an alternative to the incomplete information explanation. However, despite the rich theoretical literature, only a few experimental studies testing the commitment models exist. The pilot round of our experiment is an important contribution to this branch of bargaining literature. Certainly, further empirical research is required in order to better understand the exact role that strategic commitments have in different conflicts.
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(2021)Abstract Faculty: Faculty of Social Sciences Program: Economics Study track: General Track Author: Julius Vili Henrik Rissanen Title: Comparing cost-effectiveness of short-term and long-term psychodynamic psychotherapies focusing on patients with depressive disorder and their work ability during a 5-year follow-up. Level: Master’s Thesis Month and Year: November 2021 Number of Pages: Keywords: Psychotherapy; cost-effectiveness; Work Ability; psychodynamic; randomized trial; Instructors: Roope Uusitalo, Lauri Sääksvuori, Costanza Biavaschi, Olavi Lindfors Deposited at: Helsingin Yliopiston kirjasto Other information: Abstract: Background: Mental health disorders pose significant burden to the society, for example, because of decreased work ability. Psychotherapy as one of the most important treatment methods also causes significant costs for the healthcare system. Putting effort into cost-effectiveness between the different therapy types can help promote better targeting of treatments and economic efficiency in society. Aims: Explore cost-effectiveness in improving work ability between short-term and long-term psychodynamic psychotherapy in patients with depression. Methods: The 192 depressive patients randomized to two psychotherapies of different lengths in the Helsinki Psychotherapy Study were measured in baseline and annually for five years. Work Ability Index (WAI) and Global Assessment of Functioning (GAF) as an effectiveness outcome measures were compared to the total direct costs with incremental cost-effectiveness ratios (ICER) between the treatments. Results: The total direct cost of short-term psychodynamic psychotherapy (SPP; €7,087) was significantly lower than for long-term psychodynamic psychotherapy (LPP; €19,959). The biggest explanatory factor between the cost of the treatments was protocol study therapy costs (SPP €1304; LPP €16,715). In addition, those randomized to the SPP had significant costs during the follow-up from the non-protocol auxiliary psychotherapy treatments (€5142) which were more than fives times compared to the LPP. All of these cost differences between the treatment groups were statistically significant. Psychotropic medication and outpatient care each averaged below €2000, and the differences weren’t statistically significant. Psychiatric hospitalization during the follow-up was rare but yielded significant costs to the associated patients. Differences of effectiveness between the treatment groups on the work ability were not statistically significant. The incremental cost-effectiveness ratio was highly unstable due to small differences in efficiency, but large differences in cost. Conclusions: The study found a clear difference in cost in favour of SPP without losing in the effectiveness of the treatment. However, patients in the SPP used a significant amount of non-protocol auxiliary psychotherapy treatments which may be an indication of insufficient therapy treatment. The absence of difference in the effectiveness can be thus attributed to the widespread utilization of additional treatments in the SPP. Going forward, expanding the study to account for the impact of patient’s suitability to the treatment, particularly in understanding SPP cost-effectiveness, would be worthwhile.
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(2020)This thesis evaluates the effects of entry on incumbent firms' prices and procedures volume in dental care markets using difference-in-differences regression and administrative data on private dental care visits reimbursed by the Social Insurance Institution of Finland. The entry is considered as a competition increasing shock. The entrant's prices were remarkably low at the time of the entry and the firm was able to acquire a large share of volume in common procedures performed at the market. Thus, the entrant offered a real low-cost alternative to the residents of the Capital Region. I focus on examinations and fillings, which are two of the most common procedures. Patients face switching costs when changing their dental care provider. This means that incumbent firms with locked-in customers might be able to accommodate the entry easier, than without the switching costs. The results show that incumbent firms do not lower their prices in response to the entry by economically significant amount. However, the results suggest that incumbent firms perform less fillings after the entry. The effect is driven by summer months. The pattern where the incumbent firms do not change their prices and lose a share of their turnover to the entrant is consistent with the theoretical switching costs literature.
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