Research

Projects undertaken by HEDGE address the interrelated issues of health, environmental and economic development and growth. Below are examples of completed and current projects:

Utility, Mood and Active Investment in Health and Lifetime Well Being
A mood-utility link is incorporated into a theory of rational investment in personal health, whereby one’s mood worsens as instantaneous utility falls below a threshold but improves as instantaneous utility rises above the threshold. The analysis is conducted within an intertemporal framework, where instantaneous utility is gained and good and bad moods are experienced along a health-dependent random lifespan. The qualitative properties of the resulting optimal control model are investigated by making use of the Frischian form of the feedback demand functions. The investigation highlights the effects of many parameters, including the inclination to be moody, on an agent’s investment in personal health, rate of consumption, and health and mood flows. Numerical simulations may be performed.

Rational Choice of Food: Healthy Food and Junk Food
This analysis of dietary choice distinguishes between healthy food and addictive junk food and between a physiologically optimal dietary path and a rational dietary path. An optimal control framework that highlights the price and taste advantages and the health disadvantages of junk food for consumers is used for analysing the rational dietary path. In this framework longevity and productivity rise with health, and health deteriorates with junk-food consumption. A rational dietary path is the continuum of combinations of the non-addictive healthy food and the addictive junk food that maximises the consumer’s lifetime expected utility from eating subject to the consumer’s health and addiction motion equations. Numerical simulations will be performed.

Environmental Health Hazard and Choice of Residence
HEDGE researchers develop a conceptual framework for analysing the relationships between the values and dispersion of residential properties and the environmental health quality of their locations. A resident's health-adjusted lifetime-utility function is constructed by combining satisfaction from consumption over the lifespan with risk to life from living in an environmentally unhealthy location. This utility function is employed in assessing willingness to pay for environmental health quality, choice of location and residential dispersion and its relationship with income distribution. The conceptual framework will be applied for testing the effect of distance from Port Kembla Steel Work on the market value of houses in greater Wollongong.

Dynamics of the World’s Environment and Population
Due to the open-access nature of the environment an ad hoc adjustment model of people’s footprints to the quality of the environment is constructed. The adjustment is due to concerns, but hindered by scepticism about announced changes in the state of the environment. Changes in the quality of the environment affect Earth’s carrying capacity. By expanding the Lotka-Volterra predator-prey model to include these features it is shown that despite scepticism the environment-population system does not collapse. It is also shown that in the ideal case of no scepticism, the interplay between the non-optimally changing environmental concerns and carrying capacity sends the world’s environment and human population on an oscillating course that leads to a unique interior steady state. These results require no further technological, social or international progress.

International Emission Inequality and Per Capita Abatement Schemes
Carbon-dioxide emission inequalities between and within five income groups of countries are computed. The revealed dominant inequality between the high income groups and the low and middle income groups and its likely intensification by an internationally uniform abatement rate constitute a case for using per capita figures in assessing countries’ unilateral and internationally cooperative abatements. The analysis suggests that the cooperative expected net benefit maximising abatement which can be smaller than the unilateral abatement for weak countries and for countries with high ability and inclination to politically and economically reward other countries.

Trade Liberalisation and Emissions in India and China
The aim of the project is to investigate the hypothesis that trade liberalisation in China, India and Australia has a short-term negative effect on the environment, but that long-term positive effects will occur provided that externalities can be internalised and that an Environmental Kuznets curve exists. The significance of the project is that no previous research has incorporated both China and India in the one analysis that also combines current anti-pollution policy with increased levels of trade liberalisation.

Trade Integration and Wage Inequality in ASEAN Countries
The aim of the project is to investigate the hypothesis that an economic integration (trade and investment liberalisation) has had a positive impact on wage differentials across ASEAN countries (especially Malaysia, Singapore, Thailand and Indonesia) and sectors. The significance of the project is that no previous research has incorporated such studies across countries and sectors together in a single study.

Economic Integration and Wage Premia in Emerging Economies: Special Reference to ASEAN Countries
Around 1.3 million workers migrate each year from Southeast Asian countries, and this is growing at more than twice the growth of the labour forces in the origin countries. More than 40 per cent of these migrants now move within the Asia region (compared to around 90 per cent which moved outside the Asia region in the 1980s). The increasingly intra-regional migration reflects the underlying demographic trends and the increasing integration of the Asia economies. Members of HEDGE have teamed with the Asian Development Bank Institute to study the economic integration, demographic changes and labour migrations of selected ASEAN countries. The analysis will calculate industry level wage premia and migration/employment elasticities to provide policy prescriptions on shifting comparative advantages by country and industry and the migration pattern which will facilitate future regional cooperation and integration for Australia and Asia.

Analysis of the Changing Transmission Channels of Monetary Policy in India
This project evaluates the evolving changes in the relative importance of the interest rate, liquidity, exchange rate, credit and expectations channels of monetary policy in India. The dynamic stochastic general equilibrium (DSGE) model, containing new Keynesian relationships, is calibrated to track the developing economy characteristics of the Indian financial and real sectors. Alternative Taylor rules for monetary policy are to be simulated to provide policy insights into how possible combinations of monetary policy instruments may affect economic objectives.

Migrant Remittances, Financial Sector Development and the Government Ownership of Banks
The influence of migrant remittances on two dimensions of the financial sector, namely, size and efficiency are investigated. Evidence suggests that migrant remittances contribute to increasing the size and efficiency of the financial sector. The study, in addition, examines the impact of remittances on financial sector size and efficiency through the government ownership of banks. While the results suggest that remittances lead to larger increases in financial sector size in countries in which the government ownership of banks is lower and increases in efficiency in countries in which the government ownership of banks is higher, the government is found to play an important role in promoting financial sector development.

The Role of the Government in Financial Sector Development
This study examines the impact of two dimensions of the government, namely, size and quality, on two dimensions of the financial sector, size and efficiency, in a cross section of 71 economies. The study finds that increased quality of the government as measured by governance and legal origin positively influence both financial sector size and efficiency. The size of the government proxied by government expenditure and the government ownership of banks have a negative effect on financial sector efficiency, and a positive impact on financial sector size, particularly in the low income economies.

Evaluation of Environmental Improvement – Lake Illawarra Case Study
This project has been funded by the Environmental Trust for 2007. It uses the Hedonic Pricing Method to evaluate how the community values improvements to the water quality and surrounds of Lake Illawarra by estimating incremental changes in house prices in the area. If the methodology proves successful, it could be extended to coastal lakes throughout NSW.

Developmental, Environmental and Health Economic Aspects of Internal Conflicts
The nexus of relationships between rival groups’ strength and developmental, environmental and health economic variables in countries plagued by internal conflict is highlighted in this research. The project constructs a macroeconomic model for such countries that spells the various channels through which internal conflicts can influence the country’s economy, environment and public health and the rival groups’ armament race and reliance on foreign powers.

Sticky Floors, Glass Ceilings and Mental Depression
The terms “sticky floor” and “glass ceiling” are casually used to indicate low promotion prospects for employees with minority backgrounds. This project assesses the appropriateness of their use in a relatively transparent and growth-essential knowledge industry—the public university system. It will estimate the effects of a worker’s ethnic representation and the representation of co-workers with different ethnic backgrounds on the floor and above the ceiling on the worker’s career prospects. Assessing the prevalence and causes of unequal opportunities for employees with minority backgrounds is essential for addressing ethnically based disparities and improving the allocation of human resources and employees’ satisfaction and mental health in a multicultural society.

An Analysis of Benchmarks and Promotional Outliers for Academic Performance at the University of Wollongong: Does a Gender Disparity Exist?
This study will develop research performance benchmarks for various academic ranks at the Faculty level at the University of Wollongong (UOW). Such a database will help identify promotional outliers and any disparity between male and female academics. The findings of this study will have implications for UOW and education policymakers providing useful guidelines for academics and promotions committee.

Knowledge Flows, Organisation and Innovation
The general purpose of this research project is to improve the empirical knowledge base on innovation and globalisation in the manufacturing sector using microdata from Malaysia. More specifically, the project focuses on two key areas in innovation that are under-researched in the ASEAN region, namely, knowledge management and relational competencies. An understanding of these micro dimensions of the innovation process is crucial for policymakers as they provide insights into how firms build up technological capabilities.

Bounded Rationality and the Emergence of Simplicity Amidst Complexity
This research attempts to explore the relationship between the simple and the complex in economics by anchoring our analysis on bounded rationality. Much of the conventional literature focuses on “un-bounded rationality” of the rationality-as-consistency variety. Theorising of bounded rationality tends to assume that the problem to be solved is independent of the nature of bounded rationality. Following the insights from the works of Herbert Simon, bounded rationality and the complexity of environment within which it is located are both interdependent. Within this perspective, bounded rationality - far from being merely simplicity - is actually complex. This further implies that bounded rationality is the norm rather than the rule in society.

Spectrum Assignment and Institutions
Institutions are recognised as important determinants of economic growth and development. Within the regulatory economics literature, scholars have argued that the choice of regulatory regimes is influenced by institution factors. This project attempts to empirically examine the influence of institutional factors in the choice spectrum assignment methods (such as auction and beauty contest) using 3G spectrum assignment data in the telecommunications sector.

Optimal Control of Broadcasting Spectrum
A socially desirable number of royalties-paying users of state-owned broadcasting spectrum is derived within an optimal control framework that allows free entry and exit. The analysis takes into account the trade-off between the benefits from higher variety and royalties’ revenues and the costs of the intensified interferences associated with entry. It also considers the opposing effects of broadcasts on aggregate income: information dissemination versus diversion of productive time. The steady-state of the broadcasting industry is derived for the case where these effects offset one another and for the case where the positive information-dissemination effect is dominant.

Optimal Control of Locusts in Subsistence Farming Areas
Locust swarms hit subsistence-staple-crop-growing households at random and are not privately controllable. An aerial-spraying optimal control model that supports the said households’ livelihood at least expected cost is therefore developed. The qualitative properties of the model are analysed under economically plausible but mild assumptions. The steady state comparative statics reveal that the locust swarm size and the probability of a household’s crop being destroyed by a swarm decrease with the number of households, yield per household, and the staple crop’s replacement price, and increase with the marginal cost of spraying and the planner’s discount rate. A local comparative dynamics analysis is also conducted, as it provides the necessary economic intuition behind other ostensibly anomalous steady state comparative statics results.