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Carroll Round Proceedings Carroll Fourth Annual Carroll Round Volume I Volume 1Volume 2006 Carroll Round Proceedings Georgetown University The Carroll Round at Georgetown University Box 571016 Washington, DC 20057 Tel: (202) 687-8488 Fax: (202) 687-1431 [email protected] http://carrollround.georgetown.edu The Fifth Annual Carroll Round Steering Committee Irmak Bademli Stephen A. Brinkmann Héber M. Delgado-Medrano Lucia Franzese Yasmine N. Fulena Jennifer J. Hardy Michael K. Kunkel Marina Lafferriere, Chair Yousif H. Mohammed Maira E. Reimão Tamar L. Tashjian Carroll Round Proceedings Copyright © 2006 The Carroll Round Georgetown University Washington, DC http://carrollround.georgetown.edu All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or an information storage and retrieval system, without the written permission of the contribut- ing authors. The Carroll Round reserves the copyright to the Carroll Round Proceedings volumes. Original works included in this volume are printed by consent of the respective authors as established in the “Non-Exclusive Copyright Agreement.” The Carroll Round has received permission to copy, display, and distribute copies of the contributors’ works through the Carroll Round website (carrollround.georgetown.edu) and through the annual proceedings publication. The contributing authors, however, retain the copyright and all other rights including, without limitation, the right to copy, distribute, publish, display, or modify the copyright work, and to transfer, assign, or grant license of any such rights. Printed in the United States of America. CARROLL ROUND PROCEEDINGS The Fourth Annual Carroll Round An Undergraduate Conference Focusing on Contemporary International Economics Research and Policy VOLUME I Editor-in-Chief: Héber M. Delgado-Medrano Assistant Editors: Jennifer J. Hardy, Maira E. Reimão, Amy M. Osekowsky, and Yasmine N. Fulena A Carroll Round Publication The Fourth and Fifth Annual Carroll Round Steering Committees Georgetown University, Washington, DC April 2006 CONTENTS Acknowledgements vii Introduction: A Brief History of the Carroll Round ix Letter from the Carroll Round xiii A Steady Rain: The Impact of Migrant Remittances on Economic Development 3 JONATHAN KIRSCHNER Georgetown University Evaluating the Effects of Foreign Ownership in the Croatian Financial Sector: A DEA Approach 10 JASMINA BEGANOVIC Georgetown University Unemployment, Inequality, and Terrorism: Another Look at the Relationship Between Economics and Terrorism 18 KEVIN B. GOLDSTEIN Dartmouth College Do Capital Controls Protect Crony Capitalism? 29 EE CHENG ONG Wellesley College The Social Capital Effect on Economic Growth 32 JOSÉ MUSTRE DEL RÍO Ohio State University Effects of Land Titling on Child Nutritional Status: Evidence from Lima, Peru 36 TOM VOGL Princeton University Do Micro-Credit Programs Lead to Female Empowerment? An Empirical Study of Pipelining and Micro-Credit Program Participation 39 LEAH NELSON Georgetown University Technological Catch-Up in the Indian Pharmaceutical Industry, 1970 to 2005: An Explanatory Study 42 MATTHEW PHAN Columbia University iv TABLE OF CONTENTS Trade Liberalization and Highly Regulated Economies: The Mechanism Through Which Government Intervention Influences Growth 45 OLGA TIMOSHENKO University of Western Ontario Taking Bribes: The Politics of Transnational Hostage Negotiations 48 BRIAN LICHTER Washington University in St. Louis Terms of Trade Volatility and Investment: Why Does Volatility Reduce Investment Levels in Developing Countries? 51 MICHAEL HAASE University of Copenhagen Recent Currency Crises in Context: Do Past Indicators Still Apply? 53 ALICE LUO Duke University An Empiric Investigation into the Relationship between Capital Controls and Foreign Direct Investment Inflows 57 DENNIS HUGGINS Georgetown University Revisiting the Effects of Foreign Investment Presence on Productivity: A Study of Growth Dynamics in Czech Manufacturing * 67 BOGDAN TERESHCHENKO Georgetown University Equilibria in Games with “Auction-Like” Discontinuities * 88 KENNETH WARD University of Chicago Appendix A: Fourth Annual Carroll Round Presentation Schedule 114 Appendix B: Past Speakers 116 Appendix C: Former Carroll Round Steering Committees 117 Appendix D: Members of the Advisory Panel 118 Appendix E: Past Participants 119 * Full-length papers v ACKNOWLEDGEMENTS First and foremost, the Carroll Round Proceedings would have never been possible without a grant from the Calvin K. Kazanjian Economics Foundation (www.kazanjian.org). We believe that this publication will help advance the mission of the foundation by promoting undergraduate economics research and education. Additionally, we are grateful for the support of Georgetown University’s Edmund A. Walsh School of Foreign Service, the Department of Economics, the Carroll Fellows Initiative, and the Office of the University Counsel at Georgetown University. We also thank the Federal Reserve Board of Governors for hosting us every year, and Professors Michael Seeborg of Illinois-Wesleyan University and Nancy Marion of Dartmouth College for enthusiastically encouraging their students. We would also like to express spe- cial appreciation to all the faculty members and economists who dedicated precious time to chairing conference sessions: James Albrecht, Georgetown University Arik Levinson, Georgetown University Duncan Austin, World Resources Institute Rodney Ludema, Georgetown University Douglas Brown, Georgetown University Anna Maria Mayda, Georgetown University Adhip Chaudhuri, Georgetown University Paul McNelis, Georgetown University William Collins, Vanderbilt University Anders Olofsgard, Georgetown University Robert Cumby, Georgetown University Ibrahim Oweiss, Georgetown University David Denny, US Trade & Development Agency Brooks Robinson, Bureau of Economic Analysis Robert Hussey, S.J., Georgetown University Susan Vroman, Georgetown University Kristine Kalanges, Georgetown University Holger Wolf, Georgetown University Robin King, Georgetown University Tarik Yousef, Georgetown University We are forever indebted to Christine Smith, James Patti, Elizabeth Franzino, Maria Spangenberg, the Georgetown Development Office, and the generous donors who have contributed to our cause over the last five years, including: The Sallie Mae Fund Mr. and Mrs. Peter Faulkner Mr. Albert Lord Mr. Philip A. Vasta Ms. Marianne Keler Mr. Yunho Song Ms. Susan Porter Mr. and Mrs. John Kelly Ms. Susan Corsine Mr. James E. Moore Joan W. and Philip A. Vasta Fund Mr. Scott E. Pedowitz Dean Gallucci Fund Ms. Kaede Hara Kaneda Mortara Center Fund Mr. Christopher L. Griffin, Jr. BSFS Fund Mr. J. Brendan Mullen Commerzbank The Carroll Round owes its tremendous progress to a history of impressive participants with unique research contributions and all past committee members who invested hours of vii ACKNOWLEDGEMENTS planning and dedication to bring this conference and now this publication to life. Beyond the committee and participants, the following people have advanced the Carroll Round: Dr. John Glavin Tim Schmitz Dr. Bernie Cook Sameer Vasta Daniel Powers Jennifer A. Willis We also could not have achieved the same intellectual forum without incredible speak- ers, so we would like to thank them for believing in the strength and potential of under- graduate international economics students: Ben S. Bernanke John F. Nash, Jr. William Easterly Maurice Obstfeld Roger W. Ferguson Peter R. Orszag R. Glenn Hubbard Edwin M. Truman Donald L. Kohn John Williamson Lawrence B. Lindsey Last but certainly not least, the Carroll Round enjoyed unwavering support from sev- eral outstanding individuals. We would like to thank Dean Robert Gallucci for his con- stant encouragement, Dean Elizabeth Andretta for backing our endeavors, Dean Mitch Kaneda for his enthusiastic support and guidance all these years, and Ms. Meghan Hogge for working her magic. From all of us at the Carroll Round, thank you! viii INTRODUCTION A Brief History of the Carroll Round Whenever I am asked about the history of the Carroll Round, stories about Oxford and the Radcliffe Arms pub usually abound. While there is truth to this aspect of the narrative, the conference’s roots extend firmly and unambiguously to the Georgetown University campus. For it was there that a remarkable team of friends and colleagues assembled and launched the Carroll Round five years ago. During the 1999-2000 academic year, I had the great pleasure of meeting and learning alongside seven outstanding economics classmates. My first meaningful discussions about economics took place that year with fellow students Andrew Hayashi and Ryan Michaels. Andrew and I were both enrolled in Professor Mitch Kaneda’s International Trade class that semester, and Ryan suffered with me through Microeconomic Theory as well as a demanding Introduction to Political Economy. I remember feeling intimidated at first by their ever-expanding knowledge of theory and their boundless enthusiasm for learning. Over time, however, I realized the extent to which I was learning from their unique perspectives; their insights often proved more valuable than the content of weekly lectures. I also became acquainted with a group of talented classmates, including Bill Brady, Josh Harris, Kathryn Magee, Brendan Mullen, and Scott Pedowitz. By the spring, our paths all pointed to Europe: Bill, Kathryn, and Scott to the London School of Economics, Brendan