Portfolio Design for Investors
Abstract:
In this paper, I examine how to design portfolios that help investors reach their financial goals comparing two approaches: the mean–variance portfolio theory and the behavioral portfolio theory of investments. I find that for about 61% of investors in my sample, be- havioral portfolio theory produces a better risk-return tradeoff (benefit) compared to the mean-variance portfolio theory. I also find that highly overconfident as well as highly risk- averse investors are less likely to benefit from the behavioral portfolio theory approach. No other demographic or behavioral characteristics surveyed were successful predictors of the benefit of behavioral portfolio theory to an investor.
Self-Employment & Economic Well-Being Amidst Economic Distress: The Impact of a Pandemic Economy on the Economic Outcomes of US Households
Abstract:
The onset of the COVID-19 pandemic serves as the event sparking a supposed surge in the labor supply in the self-employed labor market as individuals seek refuge in tempo- rary arrangements. With the labor market suffering a sudden and acute downturn due to country-wide lockdowns, the newly laid-off have flocked towards the freelance/gig economy as a haven for immediate and adequately stable work. Some articles have suggested that this surge in supply has resulted in overall earnings falling, raising a natural curiosity as to whether this sort of downturn is more distressing than the one that has been exhibited by the general labor market. The study utilizes the Federal Reserve Board’s Survey on Household Economics and Decisionmaking (SHED), the study builds upon basic data analysis techniques and Multiple Linear Regression to find that during the given time period it is difficult to conclude that self-employed groups for the most part seem to face drastically more difficulties than those of traditionally employed workers, although there are signs that self-employed workers face moderately difficult outcomes. Results of the study are closely tied to implications in policy-making for an unprecedentedly growing subset of the economy which has faced recent struggles in defining how to regulate this novel form of work.
The impact of the World Bank’s Social Safety Net for the Poorest Project on short-term welfare in rural Bangladesh
Abstract:
In this paper, I analyze the welfare effects of the World Bank’s Social Safety Net for the Poorest Project in Bangladesh, which was implemented from 2013 till 2017. The project loaned money to 5 social safety net programs and was attached with conditions to make such programs more efficient and cost-effective. I look at granular-level survey data and then aggregate across districts to investigate how truly effective the World Bank loan was. In particular, I observe how consumption, in monetary amounts, changes across districts in Bangladesh over 3 time periods- 2011, 2015, and 2019. I examine the treated and control districts (counties), through 2 different models and find that the project has links to increased welfare in targeted districts through increased consumption.
What Changes Inflation Expectations: A VAR Approach
Abstract:
Inflation expectations have become an essential factor to consider in the era of uncon- ventional monetary policy and have gained a critical role in policymaking. Inflation expectations are normally measured through survey data of professional forecasters. However, this measure omits the shocks perceived by ordinary consumers. Based on two models using both SVAR and Bayesian VAR framework with consumer expectations as a parameter, I find significant evidence that consumer inflation expectations react to inflation shocks and oil price shocks in the economy, similar to professional forecasters based on impulse-response functions. I also find that policy uncertainty shocks from the news do not seem to significantly impact consumer inflation expectations, contrary to current theory.
The Effectiveness of Monetary Policy Against Imported Inflation: A Comparative Analysis of Kazakhstan, Russia, China, and Germany
Abstract:
This research paper examines the effectiveness of monetary policy implemented by the central banks of Kazakhstan, Russia, China, and Germany to control inflation in the 2000–2022 period. The paper investigates the relationship between key economic vari- ables such as interest rates, money supply, GDP, share of imports, and inflation rates in both import dependent and export-oriented countries. The study employs a two-way fixed effects and one-two-period lagged effects model, adjusted for panel-specific heteroskedasticity and autocorrelation of standard errors, to determine the causal effect of monetary policy instruments on inflation rates. The findings suggest that the central bank’s monetary policy tools, namely the interest rate and M2 money supply, lose their effectiveness in controlling inflation when imported inflation is introduced into the economy. The study also reveals that structural reforms such as reducing reliance on imports by developing the manufacturing base may be necessary to complement monetary policy strategies. By comparing the experiences of Kazakhstan, Russia, China, and Germany in addressing inflation, the study provides valuable insights into the com- plexities of the inflation process and the role of central banks in combating inflation. The findings can help policymakers and economists make better-informed decisions to effectively manage inflationary risks in their respective countries.