journal coverJames Sallee (’01), Sarah West, and Wei Fan, “Do consumers recognize the value of fuel economy? Evidence from used car prices and gasoline price fluctuations,” Journal of Public Economics (2016) 135, 61-73. Debate about the appropriate design of energy policy hinges critically on whether consumers might undervalue energy efficiency, due to myopia or some other manifestation of limited rationality. We contribute to this debate by measuring consumers’ willingness to pay for fuel economy using a novel identification strategy and high quality microdata from wholesale used car auctions. We leverage differences in future fuel costs across otherwise identical vehicles that have different current mileage, and therefore different remaining lifetimes. By seeing how price differences across high and low mileage vehicles of different fuel economies change in response to shocks to the price of gasoline, we estimate the relationship between vehicle prices and future fuel costs. Our data suggest that used automobile prices move one for one with changes in present discounted future fuel costs, which implies that consumers fully value fuel economy.

Professor Pete Ferderer, Professor Karine Moe and Disa Hynsjo fall ’14 (Gothenburg, Sweden) worked on a research paper to investigate the effect of exposure to sexism on the differentials in willingness to compete by gender. Professor Sarah West and Soren Dudley ’16 (New York, N.Y.) collaborated with Michigan State economics professor Soren Anderson ’01 on a project that aims to uncover the conditions under which legislators approve changes in gasoline taxes. Professor Mario Solis-Garcia and Annie Yingtong Xie ’15 (Chengdu, China) worked on a research project to understand the connection between the informal sector and business cycle fluctuations in Latin America. Professor Amy Damon and Vincent Siegerink ’14 (Leusden, Netherlands) worked on a study investigating the effects of polygamy on agricultural production decisions in Tanzania. Professor Amy Damon and Disa Hynsjo fall ’14 (Gothenburg, Sweden) worked on estimating the effects of livestock ownership on bushmeat consumption in Tanzania.

Davide Gandolfi ’13, Timothy Halliday and Raymond Robertson, “Trade, FDI, migration, and the place premium: Mexico and the United States,” Review of World Economics (February 2017), Vol. 153, 1-37. Large wage differences between countries (“place premiums”) are well documented. Theory suggests that factor price convergence should follow increased migration, capital flows, and commercial integration. All three have increased between the United States and Mexico over the last 25 years. This paper evaluates the degree of wage convergence between these countries during the period 1988 and 2011. We match survey and census data from Mexico and the United States to estimate the change in wage differentials for observationally identical workers over time. We find very little evidence of convergence. What evidence we do find is most likely due to factors unrelated to US–Mexico integration. While migration, trade, and FDI may reduce the US–Mexico wage differential, these effects are small when compared to the overall wage gap.

journal coverAmy Damon and Devon Kristiansen (’12), “Childhood Obesity in Mexico: The Effect of International Migration,” Agricultural Economics 45 (2014), 1-17. This article estimates the effect of international migration from Mexico to the United States on the obesity status of children who remain in Mexico. Theory suggests that increased liquidity as well as changing time allocations resulting from migration may influence obesity outcomes. Natural disasters are used as an identification strategy. Results suggest that older boys in urban areas are more likely to become obese when either a male or female migrates from the household, while girls in urban areas are less likely to become obese. Both changes in food expenditure patterns and time use changes after migration are likely pathways that affect childhood obesity. While there are some changes in food expenditures, we find more importantly that urban girls engage in more housework and screen time after migration, whereas urban teen boys do not substitute for adult work as much as girls. These changes in strenuous activities, particularly for girls, likely explain the differential effect that migration has on boys’ and girls’ obesity outcomes in Mexico.

journal coverNeedham Hurst (’11) and Sarah E. West, “Public Transit and Urban Redevelopment: The Effect of Light R ail Transit on Land Use in Minneapolis, Minnesota,” Regional Science and Urban Economics 46 (2014) 57-72. This study uses a unique data set derived from parcel data and aerial photographs to estimate the effect of the introduction of light rail transit (LRT) on land use in Minneapolis, Minnesota. We measure detailed changes in land use before and after construction of the METRO Blue Line and exploit heterogeneity in starting land use type and neighborhood characteristics to examine the differential effects of proximity to light rail across space. Results show that properties within ½ mile of operational LRT stations experience a small increase in the likelihood of land use change relative to when the LRT is under construction, but neither construction nor operation of the line appears to affect land use change relative to the time before construction. Within the corridor, proximity to LRT increases the likelihood of land use change on single-family and industrial properties, but appears to have no effect on vacant land, commercial properties, and multi-family properties. (This paper began as Needham’s Honors Thesis.)

journal coverLiang Ding, Hao Zou (10), and Vittorio Addona. “Semi-transparency, Dealership Market, and Foreign Exchange Market Quality,” Review of Financial Economics 21 (2012), 1-13. This paper examines the effects of a semi-transparency event, the introduction of the electronic trading system (EBS), on the market quality of a typical dealership market – the FX market. We find that increasing transparency leads to smaller quote disagreement among dealers and higher trading volume, but the beneficial effects are bigger for uninformed dealers than informed dealers. We also find that information efficiency improves overall in the semi-transparent system; however, informed dealers are found to quote less aggressively in the more transparent market. We conclude that semi-transparency raises market quality in general, but that it is the uninformed dealers who benefit more from this increased quality.

journal coverLiang Ding, Hiro Miyaki (’09) and Hao Zou (’10), “Asymmetric Correlations in Equity Returns: A Fundamental-based Explanation,” Applied Financial Economics, March 2011, pages 389 – 399. This paper provides a fundamental-based explanation for the pattern that stock returns are more correlated in bear markets than bull markets. Started as Hiro’s honors thesis and finished by Hao in his summer research project with Professor Ding.

journal coverLiang Ding and Jonas Hiltrop (‘08), “The Electronic Trading Systems and Bid-ask Spreads in the Foreign Exchange Market”, Journal of International Financial Markets, Institutions & Money, October 2010, 323-345. This paper examines the impact of electronic trading systems on the liquidity of the foreign exchange market. The paper finds that the new systems significantly increase market liquidity but the effect is bigger for uninformed dealers than informed dealers. Started as Jonas’ independent study project with professor Ding at Macalester.

Liang Ding and Linh To (‘07), “The Forward Premium Puzzle across Maturities”, Economics Bulletin, 2010, Vol. 30 no.2, 1113-1119.

This paper tests the forward premium puzzle in a wide range of maturities from 1-day to 5-year. It finds that the forward premium puzzle appears to be most significant for medium maturities, while disappearing for both very short and long maturities. Started as Linh’s honors thesis at Macalester.

regional science coverAnderson, Soren (‘01) and Sarah E. West, “Open Space, Residential Property Values, and Spatial Context,” Regional Science and Urban Economics 36 (2006) 773-789. This paper estimates the effect of parks, lakes, rivers, and other open spaces on residential property values in the Twin Cities. It finds that the value of open space depends critically on neighborhood context, and has important implications for urban planning. Begun as Soren Anderson’s honors thesis at Macalester, it is now one of the top ten most-cited RSUE articles published since 2005.

Summer research:


  • Professor Raymond Robertson worked with Vidarith Chan ’14 on a data collection project at the International Labor Organization’s Better Factories Cambodia (BFC). The data was a vital component of Vidarith’s Honors Thesis.


  • Professor Liang Ding worked with Yinong Ding ’14, on the project “Nonlinear and Asymmetric Effect of Monetary Announcement on Foreign Exchange Market.” This empirical study used high-frequency exchange rate data to test whether market responses to the monetary announcement are asymmetric and time-varying. The research also explored potential causes for such asymmetry and time-variation.


  • Professor Liang Ding and Nikhil Gupta ‘11 (Minneapolis, MN), with the support of a Keck grant, tested whether the predictability of technical indicators used in financial trading can be attributed to self-fulfilling behavior.
  • Professor Raymond Robertson and Gayatri Sarin ‘11 (India), with the support of a Keck grant, investigated the effect of export-oriented growth on the female wage penalty in Sri Lanka


  • Professor Amy Damon worked with Zach McDade ’10 (Boulder, Colo.) to collect preliminary data in Nicaragua during summer 2009. Zach investigated the effect of solar lights on household production activities and educational outcomes in communities that did not have access to electricity.
  • Professor Raymond Robertson worked with Cael Warren ’09 (Stevens Point, Wis.) researching working conditions in Cambodian garment factories. Professor Liang Ding and Manoj Vemula ’10 (Bangalore, India), with the support of a Keck grant, explored how electronic trading systems affect market liquidity in the foreign exchange market.
  • Professor Liang Ding and Hao Zou ’10 (Suzhou, China), with the support of a Keck grant, examined the impact of increasing market transparency on the price efficiency in the foreign exchange market.
  • Professor Pete Ferderer and Stamo Hadjiyski ’10 (Sofia, Bulgaria), with the support of a Keck grant, explored the herding behavior and biases of macroeconomic forecasters in the years leading up to the current economic crisis.
  • Professor Sarah West ’91 and Aleksander Azarnov ’10 (Johvi, Estonia), with the support of a Keck grant, studied the degree to which vehicle purchase decisions are affected by changes in gasoline prices. They analyzed a data set with over 90 million observations of used vehicle sale transactions in order to estimate the degree to which used car prices vary according to operating costs, which are a function of gasoline prices and fuel economy. While we might expect households to increase demand for fuel efficient vehicles in response to higher gasoline prices, their preliminary estimates suggest that households are far less responsive than expected. This work is part of a larger project that Professor West is undertaking with University of Chicago professor Jim Sallee ’01.