Thursday, March 29, 2012

Pak Sudarno's Big Family


In chapter 5 of Poor Economics, the idea of population policy was brought forth. Basically, Banerjee and Duflo analyzed what factors determine desired or non-desired family size some developing countries such as, India, Columbia, China, Ethiopia, etc. All of these countries, at some point in time, have attempted to implement a population policy whether it is China’s draconian one-child policy, or India’s mandatory sterilization system in the late 1970’s.

As Banerjee and Duflo dive into the determinants of how many children poor families decide to have, it becomes apparent that contraception may not have as much of a role as one would think in determining family size.

It was clear there was much more than contraception, aspects such as social norms, family dynamics, religious values, and economic status. All of these aspects play a major role, not only in determining family size but also how they will treat each child.

The statistic that I would like to look into more and see how it affects maternal deaths each year would be how well an affect modern contraceptive has on saving mothers lives. I would assume if couples are using modern contraceptives then mothers are at a less risk of dying. The regression would look like this:

Maternal Deaths = a + b1 (Family Income) + b2 (# of Children) + b3 (Education of Mother) + b4 (Use Contraceptives) + e

The dummy variable would be whether or not the couple uses modern contraceptives, I would give an answer “yes=1 and no=0.” I would then analyze the t-statistic and coefficient corresponding to this dummy variable and make a conclusion about how much of an affect modern contraceptives actually have on preventing maternal deaths.

Friday, March 9, 2012

Does OPEC Matter?

I don't think I could have picked a better first article to read pertaining to my thesis other than Robert Kaufmann's "Does OPEC Matter? An Econometric Analysis of Oil Prices." Kaufmann uses the application of ordinary least squares (OLS) to test his hypothesis which is quite similar to mine: An econometric analysis indicates that there is a statistically significant relationship among real oil prices and OPEC production methods.
In this article, Kaufmann sets up an estimation model using a dependent variable, Price, and outcome variables which represent market conditions, such as capacity utilization by OPEC, quotas relating to OPEC production, OECD stocks of crude oil and an interesting variable labeled cheat. The cheat variable represents the amount of production by a particular OPEC member that exceeds there quota set by OPEC. Although Kaufmann's main focus in the article related to OPEC and the power they hold when determining oil prices, he did briefly elaborate on how non-OPEC members had an effect on the price of oil.
Before reading this article, I was uncertain if I would actually be able to find a substantial amount of research relating to my thesis. It seems as if most analysts and economists that conduct research on oil markets tend to focus on OPEC's tendencies rather than non-OPEC members. I believe this could affect my thesis because I may not find enough research relating to non-OPEC members.
Some aspects of this article I had not thought of before were comparing single countries of OPEC to the OPEC organization as a whole excluding the country I choose to use as the dependent variable. This could should possible dominance countries may have within the OPEC organization.
After reading this article and gaining much more knowledge in regards to my thesis, I am looking forward to reading more articles. It was exciting to come across an article that had so much relevancy to my research topic.

Kaufmann, Robert. 2004. "Does OPEC Matter? An Econometric Analysis of Oil Prices." The Energy Journal, Vol. 25, No. 4.

Thursday, March 1, 2012

Opec Levels Reach New Highs

The article in today's Wall Street Journal, "OPEC Feb Output Reaches New Highs" has much relevancy to my final paper topic. My paper is going to analyze the oil production levels of the 12 OPEC members and the non-OPEC oil producers and how their respective oil production levels affect the price of oil. The article explains how the 12 OPEC members in February produced a record high level of oil production since 2008, a little above 32 billion barrels a day. The reason for this massive increase in production is because of the current sanctions that have been imposed on Iran. Not only have sanctions been put in place but Iran has decided to cut supplies to France and the U.K. and threatens the rest of the European Union. Thankfully, the OPEC members, particularly in the Persian Gulf region aside from Iran, have pledged to make up any missing barrels OPEC may owe to those countries mentioned above.

So there is a reason why OPEC has increased oil production so significantly which may or may not play a role in oil prices. It will be interesting to see how the uncertainty with Iran's oil exportation will affect the oil markets.

In terms of my paper, I will have to take into account such variables as sanctions, oil embargoes, and supply cuts because these all affect oil production and oil prices. For example, during the Saudi oil embargo in the 1970's prices sky rocketed and the U.S. implemented certain days when people could fuel their cars depending on what letters and numbers their license plates ended with. There are plenty of different factors that I will need to respect when analyzing oil prices, not just the production levels of OPEC and non-OPEC members.