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Apr 14, 2017

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  • Fall 2015 | The Visible Hand | 1

    Volume xxiV. issue i.

    The Visible HandDecember 2015, Volume XXIV, Number I

    Spencer Koo Princeton University Comparing Assimilation and Success Rate of Legal First Generation Asian and Hispanic Immigrants in the United States

    Victor Ghazal Grinnell College CEO Duality and Corporate Stewardship: Evidence from Takeovers

    Ziyi Yan Bryn Mawr College The Effect of Driving Restrictions on Air Quality in Beijing

    Sylvia Klosin and Cameron Taylor University of Chicago Parental Employment and Childhood Obesity

    Damilare Aboaba Cornell University Preserving Financial Stability: Capital Controls in Developing Countries during Times of Finacial Crisis

    Alex Foster and Adam Sudit University of Chicago Veteran Rehabilitation: A Panel Data Study of the American Civil War

    Michael Berton University of California - Santa Bar-bara The Origins of the Federal Reserve

    Wendy Morrison University of Virginia Optimal Liquidity Regulation Given Heterogeneous Risk Preferences and Retrade

  • 2 | The Visible Hand | Fall 2015

    Volume xxiV. issue i.

    The Visible HandISSN: 1559-8802

    Editor-in-Chief:

    Nivedita Vatsa

    Executive Board:

    Kristina HurleyJames O'Connor

    Anthony MohammedAlina Dvorovenko

    Nabeel Momin

    Editors and Referees:

    Aleksandre NatchkebiaAnthony Mohammed

    Aya AbuosbehCharles Anyamene

    Christian CovingtonDan Liu

    Daniel AboroahaEdward Chen

    Henry Marshall

    Jack EllrodtJohn IndergaardJoshua MensahMargaret Wong

    Monica CaiRishu Jain

    Todd LensmanYasmeen Mahayni

    Wendy Li

    2015 Economics Society at Cornell. All Rights Reserved.The opinions expressed herein and the format of citations are those of the authors and do not represent the view or

    the endorsement of Cornell University and its Economics Society.

    The Visible Hand thanks:

    Jennifer P. Wissink, Senior Lecturer and Faculty Advisor, for her valuable guidance and kind supervi-

    sionThe Student Assembly Finance Commissionfor their generous continued financial support.

    Table of Contents

    3 Editorial Nivedita Vatsa4 Comparing Assimilation and Success Rate of Legal First Generation Asian and Hispanic Immigrants in the U.S. Spencer Koo13 CEO Duality and Corporate Stewardship: Evidence from Takeovers Victor Ghazal22 The Effect of Driving Restrictions on Air Quality in Beijing Ziyi Yan30 Parental Employment and Childhood Obesity Sylvia Klosin and Cameron Taylor 42 Preserving Financial Stability: Capital Controls in Developing Countries during Times of Financial Crisis Damilare Aboaba58 Value-at-Risk: The Effect of Autoregression in a Quantile Process Khizar Qureshi68 Veteran Rehabilitation: A Panel Data Study of the American Civil War Alex Foster & Adam Sudit79 The Origins of the Federal Reserve Michael Berton79 Optimal Liquidity Regulation Given Heterogeneus Risk Preferences and Retrade Wendy Morrison

    Issues of The Visible Hand are archived at http://rso.cornell.edu/ces/publications.html

    The Visible Hand is published each fall and spring with complimentary copies avaiable

    around the Cornell campus. We welcome your letters to the editor and comments! Please

    direct correspondence to the Editor-in-Chief at

    Cornell Economics Society

    Department of Economics, Uris Hall, 4th Floor Cornell University

    Ithaca, NY 14853 or

    CornellVisibleHand@gmail.com

  • Fall 2015 | The Visible Hand | 3

    Volume xxiV. issue i.

    Over the past few years, the effects of globalization and the linkages between various international economic and political events have only grown stronger. The negative interest rates set by the European Central Bank have sent waves through the global economy, while the positive and negative effects of an oversupply of crude oil were seen around world. Almost no subject in economics can be analyzed in geographic isolation anymore. This issue of The Visible Hand hopes to provide readers with an appreciation for the complexity of contemporary economic issues. As this issue of our journal goes to print, leaders from 150 countries are meeting in Paris for the 21st Conference of Parties on global climate change. The challenge of reducing greenhouse gas emissions weighs on us now more than ever and Ziyi Yans work in The Effect of Driving Restrictions on Air Quality in Beijing, addresses the way in which environmental change, enforced on an institutional level, can be effective in lowering carbon emissions. In the run-up to the U.S. primary elections, the topics of immigration and the treatment of immigrants are receiving attention from both presidential candidates and social justice activists. The subject of immigration not only shapes the contemporary discussion of economic development, but also the discussion of economic inequality. In Comparing Assimilation & Success Rates of Legal First Generation Asian and Hispanic Immigrants in the United States, Spencer Koo looks into various economic factors such as education and their effect on the wage gap of first-generation immigrants from different ethnicities. This research underscores the importance of identifying policies that ensure progress for all social groups. The recent recession in Brazil and economic slowdown in China have cast a spotlight on the need to find ways of stabilizing economies. In December 2012, the IMF released a statement saying, In certain circumstances, capital flow management measures can be useful. They should not, however, substitute for warranted macroeconomic adjustment. A calibrated approach to capital controls has been seen to lead to financial stability, whereas tight controls have been linked to illegal transactions. Therefore, Damilare Aboabas Preserving Financial Stability: Capital Controls

    in Developing Countries during Times of Financial Crisis, comes at an appropriate time as it explores the ways in which the setup of capital controls in developing economies influences their financial stability. The separation of the roles of chairman and CEO roles in corporate leadership has been the subject of debate for decades. Victor Ghazal, in his paper, CEO Duality and Corporate Stewardship: Evidence from Takeovers, offers a new take on the much-debated question by studying the nature of negotiation and aggressiveness in dual CEOs. The subject of childrens health, particularly the growing obesity epidemic, continues to be an important topic in public debate. Sylvia Klosin and Cameron Taylor explain various causal mechanisms that affect the weight of children in their work, titled Parental Employment and Childhood Obesity. Khizar Qureshis Value-at-Risk:The Effect of Autoregression in a Quantile Process, is more specific study, demonstrating a conditional autoregressive value at risk model. Readers curious about the intersection between finance and mathematics would be particularly interested in this research as it shows how statistical reasoning and various mathematical models contribute to risk management in finance. Regular readers would be interested to know that for the first time The Visible Hand will be publishing an extended online version, which will include additional research that the editorial board was unable to print due to the physical limit on the number of pages in the journal. We are thrilled to have received work of such high caliber and look forward to seeing the journal grow in the future.

    Nivedita Vatsa Editor-in-Chief

  • 4 | The Visible Hand | Fall 2015

    Volume xxiV. issue i.

    Unlike previous notable works, which focus pri-marily on comparing immigrant wages against the native white and black populations, this paper will focus solely on the comparison between the United States main immigrant groups: Asians and Hispan-ics. Currently, there are no other important prior pa-pers that concentrate exclusively on the economic impact and equality between Asian and Hispanic immigrants.

    II. Literature Review

    One of the first major papers discussing the earn-ings difference between immigrants and United States natives is Barry Chiswicks The Effect of Americanization on the Earnings of Foreign-born Men (1978). His influential work suggests the im-portance of years resided as well as worked in the United States as major factors affecting the wage gap between natives and foreign-born. Ultimately, he asserts that the foreign-born labor forces average

    I. Introduction

    Despite representing less than five percent of the U.S. population as compared to the near 17% Hispanic population (United States Census Bureau, 2014), Asian-Americans, who are generally looked upon as the model minority, have been left out of the diversity conversation. Some believe they are no longer looked upon as minorities due to their finan-cial success and are thus not given certain advan-tages afforded to other minorities (Linshi, 2014).This paper aims to analyze relatively new, very comprehensive data from the Princeton New Immi-grant Survey (NIS) in order to locate the apparent wage gap between Hispanic and Asian immigrants and to isolate the reasons behind said income dif-ferences2/. However, after locating the wage differ-ence and some reasons behind it, many questions still remain: does one races propensity to find more financial success in a new country justify programs like Affirmative Action? Or, conversely, since most of the Hispanic immigrants in the survey have re-sided in the United States for much longer than their Asian counterparts (Princeton University, 2006), does the wage gap represent a failure of the Unite