Ghironi, FabioAlatrash, Yacoub2023-08-142023-08-142023-08-142023Alatrash_washington_0250E_25391.pdfhttp://hdl.handle.net/1773/50317Thesis (Ph.D.)--University of Washington, 2023A well-documented result in the literature is that more corruption is associated with more income inequality. However, the relationship is not necessarily this simple and can depend on the size of the informal sector in an economy. In the first chapter, I use panel data spanning from 2003-2018 on 15 ex-Eastern Bloc countries and utilize threshold regression techniques from Hansen (1999) to test that. The findings suggest that when the size of the informal economy exceeds a threshold point, there exist a tradeoff between corruption and inequality. However, when the size of the informal economy is below that threshold point, a positive association is found. I also show the existence of a statistically significant informal sector size threshold below/above which the relationship between tax evasion and income inequality is positive/negative, respectively. As a robustness check, I demonstrate similar findings for multiple measures of inequality, informality, and corruption. In the second chapter, I develop a macroeconomic model to explain the intuition behind the empirical non-linearity between tax evasion and inequality found in the first chapter. The second chapter continues on to explore the welfare implications of the model. The third chapter focuses on banking in the Gulf Cooperation Council (GCC) countries. Interest rates were rising in the US in 2015-2018. GCC countries have pegged exchange rate regimes and will have to raise policy rates in tandem. In aggregate data, it is challenging to find interest rates effects on economic and financial variables in the GCC. In this chapter, co-authors from the IMF and I use a panel of bank level data, exploiting variation across banks within country, to isolate the impact of rising US interest rates on GCC banks funding costs and profitability. We find strong pass-through from US monetary policy to GCC policy rates and bank liabilities. However, US interest rates seem to have limited impact on asset rates and profitability. We explore two potential explanations to the findings by looking at what happens to the size of bank funding after a monetary tightening episode. We also explore the importance of looking at the degree of bank competition across the GCC countries to understand transmission of monetary policy into banks cost of funding and profitability. The fourth chapter examines the effectiveness of fiscal policy in Egypt under different debt regimes. In so doing, Nurmukhametov and I evaluate the relationship between expansionary fiscal policy and real economic growth. Two elements of particular interest are the (non)linearity and the impact of domestic debt on macroeconomic variables. Specifically, we search for a threshold effect by applying the Hansen (2000) sample-splitting threshold regression model. We establish with statistical significance that fiscal expenditure leads to greater real GDP in a low-debt regime (81.5\% domestic debt-to-GDP threshold) and lower real GDP in a high domestic debt above the threshold. We further explore and test possible theoretical explanation for the findings. The paper concludes with a discussion of policy implications of this research.application/pdfen-USnoneEconomicsEconomicsThesis