Item Open AccessOptimal discretionary monetary policy under persistent-transitory confusion over cost shock(Bilkent University, 2023-07) Taşkan, Hilal; Kara, Ali HakanIn this study, I model the debated statements of Federal Reserve regarding transitory inflation in New Keynesian context and imperfect information about cost shock, where it is formulated as sum of unobserved persistent and transitory components. Specifically, I consider the case, in which policy maker and private agents are uninformed about the components and subject to a gradual recognition from observation using a Kalman filter. Policy maker solves the inference problem to learn the components, and, in turn, private agents rely on central bank speeches to learn policy maker’s inferences. Then, based on policy maker’s estimation, private agent’s problem and, so New Keynesian relations are formulated. The responses with filtered variables incorporate progressive learning. In particular, when the true realization of the shock and its perception is persistent, the increase (decline) in inflation (output), therefore in interest rate is less compared to that of perfect information responses, creating a relatively desirable outcome for the policy maker. If instead shock is perceived as transitory and communicated as such, which was the case in Fed’s statements, the response of inflation, hence the required policy response is significantly more pronounced. This leads me to conclude that it may not be the best response to announce that shock is transitory while it is not the case. Then, I continue studying welfare loss under discretionary policy when the estimation and the actual realization is persistent. I find that loss under imperfect information with an inferred persistent shock is smaller relative to that of perfect information when variance of the noise increases, and shock becomes less persistent. Lastly, I extend the model by introducing a signal on transitory component. Item Open AccessThe effects of working capital channel on monetary policy transmission(Bilkent University, 2023-07) Küçükikiz, Samed; Gürkaynak, Refet SoykanThis thesis examines the effects of the working capital channel on monetary policy transmission under a two-sector new Keynesian model, where one of the sectors has working capital requirements. The model follows the framework presented by Woodford (2003). Introducing working capital into the model brings about two additional monetary policy transmission channels: the working capital channel and the substitution channel, relative to the standard new Keynesian model. The working capital channel reduces the effectiveness of monetary policy in stabilizing inflation within the model while also increasing the sensitivity of the output gap to monetary policy. Simultaneously, the substitution channel helps mitigate the impact of working capital on aggregate inflation. Moreover, the presence of the working capital channel gives rise to the distributional effects of monetary policy on the economy. The substitution channel exacerbates the adverse effect of contractionary policy on firms with working capital requirements, whereas expansionary monetary policy leads to a higher demand for the goods produced by these firms. Item Open AccessIntergenerational transmission of education: A case study of COVID -19(Bilkent University, 2023-06) Arıcı, Dolunay Gülşah; Akyol, Şaziye PelinThe intergenerational transmission of education is a well-established idea theoretically and empirically for developed countries. Yet, we must still understand this phenomenon in a developing country context. In this study, we utilize the exogenous variation induced by the 1997 Compulsory Schooling Law of Turkey to estimate the causal link between mothers' education and their children's online education experience during COVID-19 Online Education Era by using the 2021 Survey on Information and Communication Technology (ICT) Usage in Households and by Individuals. We find that the education reform did not significantly affect the information and communication technologies the children have access to, the probability of participating in online classes at least once, and the total and educational hours spent on the computer or the internet. However, we find that the reform positively and significantly affected using the Internet to do homework. These results indicate that the mother's reform status does not affect the "quantity" of online education, but it affects the "quality" of online education. Item Open AccessA model of delegation in bargaining(Bilkent University, 2023-06) Doğan, Gökçe; Karagözoğlu, EminThis thesis examines delegate selection in bargaining encounters where one side consists of a group. Employing a non-cooperative approach, we propose a three stage bargaining game to analyze the trade-off that arises between the group’s share of the surplus and the distribution within the group when a delegate holds a privileged position in the in-group bargaining stage. We show that there exist multiple equilibria and characterize them. We explore the trade-off by taking into account various delegate selection methods, individuals’ time preferences, and in-group bargaining institutions. Our findings demonstrate that differences in these factors lead to substantial changes in equilibrium strategies. Specifically, under majority rule, granting a delegate the first proposer right in in-group bargaining results in an increase in the number of equilibria in which a weaker group member is elected, whereas a unanimity requirement leads to a stronger group member being preferred as the delegate in most of the equilibria. Furthermore, we illustrate that group members’ discount factors are another important determinant of delegate selection. Item Open AccessThe effects of covid -19 pandemic on employment of older workers(Bilkent University, 2023-06) İplikçi, Çağla; Ökten, ÇağlaTurkey is one of the many countries where the Covid-19 outbreak burst. The Covid-19 pandemic has deeply affected human life in many aspects, including the economy, in the whole world. One of the most affected groups by the pandemic has been the older population due to both health-related concerns and the difficulties of transitioning to the remote working system brought by the pandemic. In this thesis, I analyze the impact of the Covid-19 pandemic on the employment of older workers, using the Turkish Statistical Institute's Labor Force Statistics Micro Data Set for the years 2014 and 2021. In this study, I examine the impact of the Covid-19 pandemic on employment through the retirement, quit, and dismissal variables. The retirement and quit variables represent the labor supply, and the dismissal variable represents the labor demand. While the findings of this study show that the Covid-19 pandemic decreased the employment rate of females and males in 2020, it suggests evidence that this decrease is higher for women than men. I also find evidence suggesting that Covid-19 has heterogeneous effects on employment by education levels and the sector in which the individual works, as well as gender. Item Open AccessMacroeconomic effects of unconventional monetary policy in the United States(Bilkent University, 2022-08) Sümbül, Münip Kutay; Kısacıkoğlu, BurçinThis thesis examines the macroeconomic effects of unconventional policy with smooth local projections in the United States. Unconventional monetary policy is identified using Swanson (2021)’s methodology. I find that the most effective policy tool is the target factor for unemployment and industrial production; however, its effect is not persistent as other tools. For instance, large scale asset purchases (LSAP) induce a significant and persistent impact on industrial production and forward guidance for unemployment. LSAP is the most successful instrument for inflation in the short run, but inflation responds more persistently to forward guidance. Therefore, a mix in which all three tools are used to manage a successful monetary policy can solve short-term and long-term problems for each macroeconomic variable. The findings here are consistent with the previous literature, and they are even supportive. Item Open AccessThe effects of monetary policy shocks on bank loans(Bilkent University, 2022-09) Özçelikkale, Kaan; Gürkaynak, Refet SoykanThis thesis examines the effects of monetary policy shocks on bank loans. I use a vector autoregression (VAR) model with external instrument identification, which is constructed using high-frequency analysis. Gertler and Karadi (2015) methodology is followed. I also consider the information effects and employ the surprises, which are measured by Miranda-Agrippino and Ricco (2021). I find that contractionary monetary policy shocks have significant negative effects on bank loans. The commercial loans growth statistically significantly drops both immediately after the contractionary monetary policy shock and a year after the shock. On the other hand, the consumer and real estate loans growths modestly decrease but it is not statistically significant. Since some of the findings indicate a statistically insignificant decrease in the growth, I also check the response of the credit stocks. There are significant drops in all the credit stocks at least for some periods. Lastly, I show that the findings are robust to the sample period, adding a new variable and the policy indicator. All the findings are consistent with the theory and literature. Item Open AccessDynamic implications of the wealth-leisure nexus(Bilkent University, 2022-06) Skenderaj, Arlindo; Sağlam, Hüseyin ÇağrıThis thesis analyses a one-sector optimal growth model in which wealth affects the utility obtained from leisure. We consider that an increase in wealth increases the propensity to consume leisure goods and services and hence affects how the instantaneous utility depends on leisure time. We prove the existence of the optimal path and characterize the dynamics and the properties of equilibria. We provide the conditions under which the model has unique or multiple steady states. The intensity of wealth in the utility obtained from leisure and the output elasticity of physical capital play an important role in the number of steady states and in the monotonicity of the optimal path of physical capital. We find that the optimal path of physical capital is monotonic and converges to the unique steady state, provided that the output elasticity of capital is higher than the intensity of wealth in the utility obtained from leisure. Item Open AccessForecasting interest rates using shifting endpoints in small open economies: evidence from Canada and the UK(Bilkent University, 2022-06) Ata, İbrahim; Kısacıkoğlu, BurçinThis thesis examines the forecasting performance of widely used interest rate forecasting methods for small open economies such as Canada and the UK. In particular, I run a horse race between standard models and the models using shifting endpoints to see whether results for the US extends to small open economies. In this setup, three time-varying parameters, interpreted as factors corresponding to level, slope and curvature, are allowed to have shifting long-run means rather than a constant mean. The shifting endpoints are introduced by exponential smoothing of factors, and the connection of factors with certain macroeconomic variables and inflation expectations. In comparison to the random walk benchmark, allowing for shifting endpoints in yield curve factors offers significant gains in out-of-sample forecasting accuracy. Moreover, results suggest that there is a strong evidence that the US as a global economy has a spillover effect on the term structure of interest rates of Canada and the UK. Item Open AccessThe impact of Syrian refugees on Turkish child labor market(Bilkent University, 2022-02) Gockaj, Loris; Akyol, Şaziye PelinDuring the last decade, nearly 3.7 million Syrian found refuge in Turkey, making it the largest refugee host country in the world. Different from other refugee-hosting countries, almost all the refugees live in urban areas, which makes it easier for them to benefit from social and economic opportunities. This paper analyzes the impact of Syrian refugees on young (15-17 years) native’s labor mar-ket outcomes using Turkish Household Labor Force Surveys from 2004-2018. We employ a difference-in-difference IV methodology, using the variation in refugees to native ratio and a distance instrument. We find a positive effect on native boys’ employment and no effect on native girls. In addition, there is no effect on child labor and working hours for both males and females, while there is a positive effect on boys’ labor force participation only. Controlling for the heterogeneity of refugee’s effect using household head education level, we find a positive effect on native boy’s employment and labor force participation when the household head is less educated. Item Open AccessExporting and productivity: evidence from Turkish automotive sector(Bilkent University, 2021-09) Kola, Halilcan; Taşkın, FatmaThis thesis analyzes the determinants of export performance of the Turkish auto-motive manufacturers by focusing on firm-level productivity changes. We use the dataset obtained from Automotive Manufacturers Association (OSD) for the time period 2001-2019, and we have a panel data of 18 firms that produce motor vehi-cles. We calculate the productivity changes of the firms by applying Malmquist Productivity Change Index, which is commonly used in the literature. Analyz-ing two di˙erent dependent variables, export amounts and the share of exports in production, we find that increase in firm-level productivity leads to higher amounts of exports. Moreover, the impact of productivity on share of exports is relatively weaker for the Turkish automotive manufacturers. Item Open AccessKantian equilibria of a class of nash bargaining games(Bilkent University, 2021-08) Dizarlar, Atakan; Karagözoğlu, EminThis thesis studies Kantian equilibria (Roemer, 2010) of an n-player bargaining game, which is a modified version of the well-known divide-the-dollar game. It starts with introducing the fundamental concepts of Kantian morality and how Kantian moral theory is captured in economic theory. Then, we first show that the Kantian equilibrium exists under fairly minimal assumptions. Second, if the bankruptcy rule used satisfies equal treatment of equals, and is almost nowhere proportional, then only equal division can prevail in any Kantian equilibrium. On the other hand, we show that an ‘anything goes’ type result emerges only under the proportional rule. Furthermore, using hybrid bankruptcy rules that we construct in a novel fashion, we can characterize the whole equilibrium set. Lastly, we analyse what happens to the equilibrium behavior and the axiomatic properties of the bankruptcy rules under the additive definition of Kantian equilibrium. Our results highlight the interactions between institutions (axiomatic properties of division rules) and agents’ equilibrium behavior. Item Open AccessIs internal displacement a burden on women’s human capital accumulation? Evidence from Turkey(Bilkent University, 2021-08) Erikci, Fatma Sıla; Akyol, Şaziye PelinOver the last 35 years, Turkey has been fighting with an outlawed Kurdistan Workers’ Party (PKK) in East and Southeast Anatolia. The increasingly fierce struggle from the mid-80s to the late 90s led to thousands of internally displaced people. Using Turkey Demographic Health Survey, we define displaced women as those who migrated for security reasons from conflict regions between 1984-99 to understand the long-term impact of forced migration on the educational attainment of displaced women. Our results show that internal displacement decreases years of schooling by one year, and the detrimental effect mainly stems from the reduced level of primary and secondary school completion. We also investigate the mechanisms through which internal displacement affects educational outcomes and show that internal displacement increased the probability of working before the age of 15. We also find evidence that internal displacement decreased marriage age and increased the possibility of being in a forced marriage. Item Open AccessVarying information conditions in bargaining: an experiment(Bilkent University, 2021-08) Eroğlu, Nazlıcan; Karagözoğlu, EminWe vary the information regarding the source of bargaining power. In our experiment, there are two potential sources of bargaining power gained through an advantageous disagreement point payoff: (i) effort and (ii) luck. For each one of these, we vary the source information as follows: (i) both agents know and (ii) neither knows. This gives us a 2×2 experimental design varied across subjects. In line with the previous work, we have found that advantageous players in both knows-performance treatment earns significantly more whereas there is no difference between luck based treatments and none knows treatments in agreement conditions. Additionally, there is no difference in disagreement rates among any treatment. Item Open AccessRegional transport infrastructure and trade flows in the EU(Bilkent University, 2021-08) Özcan, Berrin; Taşkın, FatmaHow does regional transport infrastructure affect bilateral trade flows? An extensive literature on infrastructure and trade flows has attempted to answer this question by using country level or regional data. This current thesis focuses on the European Union (EU) and investigates the effect of transport infrastructure on international and intranational trade flows using NUTS 2 (Nomenclature of Territorial Units for Statistics) level data from 200 EU regions between the years 2000-2010. It is the first study to focus on flows and infrastructure at regional level in a multi-country setting. As in the previous studies in the infrastructure literature, the gravity equation is used to explain the relationship between the regional transport infrastructure and trade in the EU. Various alternative estimation methods such as Fixed Effects, PPML, lagged variables, instrumental variables (IV) and Hausman-Taylor IV method are used in order to overcome the issues related to heteroskedasticity, reverse causality and biased estimates that are frequently encountered with gravity equation. In the presence of bilateral and time fixed effects, the results suggest an increase of 0.05 to 0.13 per cent bilateral trade as infrastructure measures increase by 1 per cent. The robustness check follows that the estimates are not sensitive to the choice of unit of measure for the infrastructure variables. Item Open AccessTwo essays in choice theory(Bilkent University, 2021-07) Hoxha, Klajdi; Yıldız, KemalThe thesis is divided into two chapters. The first chapter studies the responsive random choice procedure. There, we show that a weakened version of Luce’s IIA is sufficient to characterize the General Luce Rule (GLR) considered in Echenique and Saito (2019) and Ahumada and Ülkü (2018), with the restriction that all elements from menus of size three are chosen with positive probability. We analyze a special form of the GLR called Responsive Luce Rule (RLR). We characterize Responsive Luce Rules by using stochastic counterparts of the axioms in Chambers and Yenmez (2018) and Eliaz et al. (2011). In the second chapter, we analyze path independent choice rules by looking at choice sets that block an alternative from being chosen. We show that these blocking set collections carry the minimal information needed to represent the choices and are in one-to-one relation with path independent choice rules. In addition, we show that the notion of blocking is a useful tool to minimally represent and characterize certain classes of path independent choice rules. Item Open AccessReflections on recent trends in deposit dollarization in Turkey(Bilkent University, 2021-02) Kesimal, Necmiye Damla; Gürkaynak, Refet S.Deposit dollarization is high in Turkey with more than half of all banking sec-tor deposits denominated in foreign currency. While a rising trend in deposit dollarization has been in place during the last ten years, this has gained further momentum recently. The objective of this study is to analyze the recent trends in deposit dollarization in Turkey within the framework of policies undertaken and investigate its potential drivers that are under the influence of monetary policy. Estimation results obtained using the deposit dollarization shares that are and are not adjusted for the mechanical impact of the exchange rate changes provide di˙erent assessments of the drivers of dollarization in Turkey. In this sense, some estimation results obtained using the unadjusted deposit dollarization share sug-gesting that it has been associated with the exchange rate and exchange rate expectations might be misleading regarding the changes in the demand for for-eign currency over domestic currency deposits to the extent what these results capture is the mechanical impact of exchange rate movements on the deposit dollarization share. Item Open AccessAsymmetric effects of benchmark prices on Iraqi oil: Basrah Light, Basrah Heavy and Kirkuk(Bilkent University, 2021-02) Kahraman, Volkan; Berument, M. HakanThis thesis assesses the asymmetric effects of benchmark oil prices on Basrah Light, Basrah Heavy and Kirkuk crude oil prices. The empirical evidence reveals that a decrease in benchmark prices decreases three Iraqi oil blends more than an increase in benchmark increases for three Iraqi blends. Moreover, as the magnitude of shocks to benchmarks increases, then the degree of asymmetry also increases. Item Open AccessWhat is the role of renewable energy resources in terms of state's acts seeking power or security in international order for China?(Bilkent University, 2021-02) Kurt, Furkan Vefa; Berument, M. HakanThis thesis focuses on renewable energy development in China to examine how China has increased renewable energy production and consumption. Government role in renewable development, supporting policies, and the process of energy transition through the increasing importance of renewable energy resources in the world energy market and China are presented. Chinese renewable firms are also assessed in terms of their roles in renewable energy and related sectors. The findings of the study are discussed according to the basic arguments of realism for future research on whether China’s energy transition increases its power and expands its capabilities in global scale. Item Open AccessAnother characterization of expected Scott-Suppes Utility Representation(Bilkent University, 2021-01) Yıldız, Furkan; Dalkıran, Nuh AygünThis thesis provides a new characterization of Expected Scott-Suppes Utility Representation (ESSUR). ESSUR combines the Expected Utility Repre-sentation with the Scott-Suppes Utility Representation. The latter represents semiorders that formalize preferences with intransitive indi˙erences. Dalkıran, Dokumacı, and Kara (2018) were the first to provide an axiomatic character-ization of ESSUR. In this study, we provide another characterization start-ing with the axioms of Candeal and Indurain (2010). Candeal and Indurain (2010) provide an axiomatic characterization of Scott-Suppes representations for semiorders on uncountably infinite sets. Therefore, we identify the axioms required on top of those of Candeal and Indurain (2010) so that we obtain a linear Scott-Suppes representation, i.e., another characterization of ESSUR.