Senior Theses 2017

Christopher Adams (Adviser: Prof. Jing Li)

“Can Risk Premium Explain the Uncovered Interest Parity Puzzle?”

Abstract: Fama (1984) suggests that the uncovered interest parity puzzle may be
explained by the bias of omitting the unobserved risk premium. This paper applies the Hodrick-
Prescott (HP) filter and band-pass (BP) filter to the composite error term in the uncovered
interest rate parity, and directly estimates the risk premium as the slow-evolving trend
component. We find evidence that the risk premium and interest differential are negatively
correlated, but contrary to Fama (1984), that covariance is not less than negative variance of the
interest differential.

Andrew Burnett (Adviser: Prof. Charles Moul)

“Come Shale Away: Estimating Short-run Supply Elasticity of Shale Natural Gas”

Abstract: The existing literature generally fails to reject that natural gas producers are
perfectly inelastic in the short-run, consistent with common conservationist concerns regarding
nonrenewable resources. To investigate if there is evidence of such perfectly inelastic behavior in
the case of shale natural gas, I develop a model for the short-run own-price elasticity of supply
for natural gas from unconventional shale reservoirs. I find statistically significant elasticity
estimates with respect to both the Henry Hub Spot Price (0.14) and Henry Hub One-month
Futures Contract (-0.13), suggesting that production of shale gas is at least somewhat responsive
to present and future market conditions.

Jackie Craig (Adviser: Prof. Gregory Niemesh)

“Intergenerational Mobility of Men and Women 1880-1910”

Abstract: Previous research shows a notably higher degree of economic mobility for men
in the 19 th century in comparison to today, but lacks an estimate for women. I study
intergenerational income mobility of both men and women during the end of the 19th century to
the early 20th century, providing the first direct estimate for female mobility during this time
period. Using a set of marriage certificates from Massachusetts over the period of 1880-1910,
men and women are linked to their 1880 and 1910 census records to obtain a measure of
occupational standing for two generations. I measure intergenerational mobility for men by
regressing the son's occupational income score on that of the father. Due to the absence of
women in the work force during this time period, intergenerational mobility for women is
measured by the correlation in husband's occupational income score and the wife's father's
occupational income score. The intergenerational elasticity of income for women is lower than
for men, meaning that mobility for women is higher than mobility for men during this time
period. I additionally find that internal migrants and children of immigrants have higher mobility
levels. First born children and individuals with a smaller family size have lower mobility. I find
an overall higher mobility level during this time period as compared with the modern period,
which is consistent with previous literature.

Harrison Fox (Adviser: Prof. John Bowblis)

“Does Variation in the Nursing Home Inspection Process Explain Disparity in Regulatory

Abstract: This study addresses the variation in nursing home inspection teams and its
effect on minority disparity in regulatory outcomes at facilities. It first addresses how team size
varies for nursing homes with different minority concentrations. This study then looks at how
reported disparities in nursing home quality changes when accounting for variations in inspection
team. Consequently, this paper finds that inspection teams grow as a nursing home increases in
minority concentration. Likewise, disparities in regulatory outcomes persist even in the presence
of larger teams, but it is not as large as previous studies have suggested.

Brandon Miller (Advisers: Profs. James Brock and Charles Moul)

“Gouging in the Midwest? An Analysis of the Propane Market”

Abstract: The Midwestern United States in the winter of 2013-14 experienced a 42%
increase in the price of propane from the previous year’s winter. I explore whether this increase
may have been partially attributable to firms opportunistically exporting to Japan. After
developing a novel theoretical competitive model of supply, I use instrumental variables to
estimate supply and demand for the Midwestern propane market. I then perform a residual
analysis that strongly suggests that competitive market factors are most likely the cause of the
increase in prices rather than any power exerted on the market by producers.

Steve Ramos (Adviser: Prof. Charles Moul)

“Aid and Honor: The Impact of Financial Constraints on Student Performance, Retention, and
Degree Attainment”

Abstract: The high expense of college introduces the possibility that financial constraints
may affect outcomes through mechanisms such as time spent at jobs and the stress of student
debt. Using data on Miami University's Fall 2005 through Fall 2010 entering cohorts, I look at
the impact of these financial constraints on academic performance, retention to the second year,
and college completion. I find that a students' level of financial need, without conditioning on
financial aid, is associated with a decrease in student outcomes. To isolate the impact of financial
constraints, I implement a difference-in- differences strategy, but results are imprecise. I conclude
that there is no clear evidence that financial constraints impact academic performance,
completion, and retention.