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Three Essays in Applied Economics
AuthorHuynh, Dat Tien
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This dissertation consists of three essays on the theory of interest rate via the overlapping generation model, developmental economics, and behavioral response to taxation. The first essay aims to investigate how a shift in income from young age to old age would change the equilibrium path for the economy. The second essay explores and estimates the connections between international remittances and the level of household poverty in Vietnam using the Vietnamese Household living Standard Survey from 2004 to 2016. In the third essay, we conduct the first meta-analysis of the literature estimating tax elasticity of border sales. In the first chapter, the model of Banerjee and Pingle (2023) is extended here in the same way Gale (1973) extended the Samuelson (1958) model. Rather than all income being earned in young age, the allocation of labor time is parameterized, so a fraction of labor allocated to young age versus old age can be varied. We find that shifting income from young age to old age does not impact the path of capital, which implies it does not affect the paths for output, the real wage, the capital rental rate nor real interest rate. The shift does decrease saving and decrease the share of saving allocated to the bubble asset. The steady state utility level of consumers is maximized when all income is earned in young age. In the second chapter, I investigate the relationship between international remittances and poverty in Vietnamese households. Utilizing the Vietnamese Households Living Standard Surveys from 2004 to 2016, our probit models indicate that international remittances reduce the likelihood of a household being in poverty by 11 to 14 percentage points. Furthermore, using instrumental variables, a bivariate analysis estimates confirm that the impact on poverty reduction is more pronounced for remittances originating from oversea compared to domestic remittances. This finding holds significant implications for policymakers, providing insights into the effective use of remittances and foreign labor migration as strategies to alleviate poverty in Vietnam. In the third essay, we conduct the first meta-analysis of the literature estimating tax elasticity of border sales. When nearby regions have different tax rates, residents may travel to shop in the lower tax rate region. The extent of this activity is captured by the tax elasticity of border sales (TEBS). We collect 749 estimates of TEBS reported in 60 studies, and conduct the first meta-analysis of this literature. We show that the literature is prone to selective reporting: positive estimates are systematically discarded. Sales of food, retail and fuel are more elastic compared to sales of tobacco and other individual `sin' products. Cross-border shopping is more prominent in the US - compared to Europe and other countries.