M Iqbal Ahmed
web: www.miqbalahmed.com
iahmed@ksu.edu
Research Statement
M Iqbal Ahmed
I. Introduction
I am a PhD candidate in economics at Kansas State University with research interests in the
fields of Macroeconomics, Monetary Economics, International Economics and Development Economics. My current research using modern econometric techniques is guided by two primary
interests:
First, given the increasingly uncertain economic environment since the financial crisis of
2007-08, I have growing interests in contributing to a deeper understanding of how behavior of
economic agents is shaped by uncertain economic environments and its connection to aggregate
macroeconomic fluctuations.
Second, prior to joining the PhD program, I worked extensively on development and public
policy issues within the purview of government, non-government and international organizations in Bangladesh and other countries. Now as a development-practitioner-turned-economist,
I also have interests in pursuing research in the field of development economics, including international development and finance. My recent research focuses on inclusive growth, poverty,
income inequality and vulnerability, role of information and communication technologies (ICTs)
to improve the livelihoods of rural poor, effectiveness of development aid in developing countries
and financing climate change.
As a result of these shaping factors, much of my work, including my dissertation, has concentrated on macroeconomics and monetary policy as well as on development economics.
II. Macroeconomics and Monetary Policy: Dissertation
My dissertation primarily focused on monetary policy, its reaction to volatile financial markets
and macroeconomic effects of consumer/ business sentiment across the state of business cycles.
My research was motivated by Bloom (2009) and Akerlof and Shiller (2010).
1. The first chapter of my dissertation, submitted for publication to Applied Economics, is
titled “Threshold cointegration between inflation and U.S. capacity utilization,”
and it is co-authored with my major professor, Dr. Steven P. Cassou. In this paper, we
examine a long-standing issue of central bankers regarding the nexus between inflation
and capacity utilization of the U.S. manufacturing sector. Some recent empirical work,
using post-1980s data, has shown that this relationship has broken down. We empirically
investigate this issue using several threshold error correction models and show that there
continues to be a short-term and long-term connection between these two variables. Our
findings support recent calls made in the popular press by some economists for the FED
to induce inflation in an effort to stimulate the economy. However, our findings cast doubt
on the older view that capacity utilization could be a leading indicator for future inflation.
2. The second chapter of my dissertation, which is also my job market paper, is titled “Does
consumer confidence affect durable good spending during normal and slack
times equally?” and is again co-authored with Dr. Steven P. Cassou. This paper has been
accepted for presentation at the 85th Annual Meeting of the Southern Economic Association, to be held November 21-23 in New Orleans, Louisiana. In this paper, we examine the
effects of confidence innovations on household spending on durable goods. Recent econometric analysis shows that consumer confidence innovations have long lasting effects on
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M Iqbal Ahmed
web: www.miqbalahmed.com
iahmed@ksu.edu
economic activities such as consumption. Using U.S. data, we show this conclusion is more
nuanced when considering an economy that has different potential states. In particular,
using regime-switching models, we show that the connection between consumer confidence
and some types of consumer purchases is important during normal economic times but is
relatively unimportant during slack economic times. We consistently find that the impact
of consumer confidence is dependent on the state of the economy for durable goods purchases. We also use this type of model to investigate the connection between news and
consumer confidence, and this connection is also state dependent. These findings have important implications for recent policy debates that consider whether confidence boosting
policies, such as raising inflation expectations on big-ticket items such as automobiles or
business equipment, would lead to a faster recovery.
3. Chapter 3 of my dissertation (still in progress) is titled “Monetary policy when the financial market is uncertain.” Evidence suggests that when the U.S. financial market
becomes volatile, monetary policy tends to react in a bid to mitigate the risk and uncertainty in the financial market. Bekaert, Duca and Hoerova (2014) show that a lax monetary policy decreases risk and uncertainty in the financial market. Using updated data of
Romer’s (2004) new measure of monetary policy shocks, I show that that a lax monetary
policy does not always decrease risk and uncertainty in the financial market.
Other related work
4. One of my recent related papers is “Measuring how uncertainty shocks affect households’ spending on durable goods: A threshold cointegration approach,” which I
presented at the 79th meeting of the Midwest Economic Association in 2015. Assuming the
rate of returns on assets follow an augmented geometric random walk process, I extended
households’ consumption-wealth relationship to incorporate the realized volatility of the
financial market. In a linear VECM, I show that when there is a deviation between spending on durable goods and wealth, much of the error correction is due to implied volatility of
the financial market. However, using a threshold VECM, I show that adjustment towards
long-run equilibrium is not symmetric.
Future work
In the near future, I will mainly concentrate on publishing my current research. Additionally, I plan to widen my scope of research by contributing to new econometric techniques in the
field of Macroeconometrics. Accordingly, I am currently working on a joint research project with
Quazi Fidia Farah. Motivated by the work of Greenwood, Hercowitz and Huffman (1988), we
examine macroeconomic effects of information technology (IT) shocks, aiming to provide a novel
identification strategy of the IT shocks.
III. Development Economics and Public Policy Issues
To date, I have worked on several development research projects on topics including inclusive
growth and income inequality, food security, ICTs to improve livelihoods at community level, aid
effectiveness, financing for climate change, etc., in the context of developing countries. Some of
my recent works are summarized below:
1. As the UN Millennium Development Goals (MDGs) set to expire in 2015, one key challenge
facing the global development community is how to make growth inclusive in developing
countries. In one of my recent papers titled “Millennium development goals and inclusive growth: Evidences from developing countries,” I examine the effects of the
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M Iqbal Ahmed
web: www.miqbalahmed.com
iahmed@ksu.edu
MDGs’ policy outcomes on an empirical measure of inclusive growth in developing countries that adopted MDGs strategies in late 1990s. The paper shows that the growth of developing countries in the past couple of decades was not inclusive because of lack of access
to income opportunity by the lower income groups. I take a social opportunity function
to compute the inclusive growth empirically. Unlike standard measurements of growth
rate, one advantage of inclusive growth is that it considers both level and equity of the
distribution of income. I employed the panel data of 39 countries in Asia, Africa and Latin
America obtained from the World Bank for estimation. I show that some of the MDG indicators that are related to market access - issues such as foreign direct investment - have
negative impacts while others have failed to make significant impacts on growth inclusive.
This paper received two awards for the Best Graduate Paper in 2014-2015 - one from
the College of Arts and Science and the other from the Department of Economics, Kansas
State University, in recognition of educational excellence and outstanding commitment to
and achievement in the study of economics.
2. Among other selected publications, “Enhancing the livelihoods of the rural poor
through ICT: A knowledge map - Bangladesh country study,” is an outcome of the
InfoDev project, which mainly examined how information and communication technology
changes the livelihoods of the rural poor in developing countries like Bangladesh. Coauthored with Erin C. Lentz, Assistant Professor of Public Affairs, University of Texas,
Austin, this paper was published online by the World Bank in 2009.
Poverty and vulnerability in South Asia, aid effectiveness of the multilateral organizations
and financing for global climate change are among other selected topics I’ve researched.
Detailed descriptions of projects that I have completed in the field of development economics and public policy issues are available at my personal website:
http://www.miqbalahmed.com.
Other recent works
3. In a paper titled “Variations of traffic fatality rates across the US: Evidences from
Bayesian inferences,” I examine the variation of fatality rates across the United States
using Bayesian inferences. With the frequentist approach, it is hard to predict the variations of the fatality rates across states because of model uncertainty, especially when the
sample size is small. I estimate a simple Bayesian hierarchical model that takes into account the state and time effects, allowing us to make Bayesian inferences on the variations
of fatality rates across the states. We find that the posterior mean of fatality rates in states
like Montana, Louisiana, Mississippi and South Carolina is over 2%, while in states like
Connecticut, Massachusetts, New York, New Jersey and Rhode Island, the mean fatality
rate is less than 1%.
4. Currently, I am also working on another paper that examines the impacts of government
debt on per capita GDP growth in EU countries that have been experiencing high debt in
recent years.
Future work
While my short-term priority is to complete and submit the above mentioned papers for publication, in the long run I plan to extend my research conducting some natural experiments on
how access to opportunity or adoption of small-scale technology improves the livelihood behavior of the rural poor. I am actively seeking funding in order to materialize my future research
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M Iqbal Ahmed
web: www.miqbalahmed.com
iahmed@ksu.edu
agenda.
IV. Conclusion
To summarize, at this point of my career, I am primarily focusing on my current research
projects, aiming to publish them in near future. In the future, I intend to pursue my research
interests in Macroeconomics and Monetary Policy and Development Economics, as described
above. My orientation to academic research through my PhD program, my exposure to the
wider network of the public policy domain and my experience at field level data collection will
ensure success with my future research agenda. I am committed to maintain my existing collaborative research network within the USA and other countries and look forward to working
with the colleagues/faculty members at my future working place as I am committed to carry
forward my future research agenda.
References
[1] Ahmed, M.I. & Cassou, S.P. 2015. Threshold cointegration between inflation and the U.S.
capacity utilization, working paper.
[2] Ahmed, M.I.,& Lentz, E. C. 2008. Enhancing the livelihoods of the rural poor through ICT:
a knowledge map - Bangladesh country study. InfoDev working paper: no. 11. Agribusiness
Entrepreneurship. Washington, DC: World Bank.
[3] Akerlof, G. A., & Shiller, R. J. 2010. Animal spirits: How human psychology drives the
economy, and why it matters for global capitalism. Princeton University Press.
[4] Bekaert, G., Hoerova, M., & Duca, M. L. 2013. Risk, uncertainty and monetary policy. Journal of Monetary Economics, 60(7), 771-788.
[5] Bloom, N. 2009. The impact of uncertainty shocks. Econometrica, 77(3), 623-685.
[6] Greenwood, J., Hercowitz, Z., & Huffman, G. W. 1988. Investment, capacity utilization, and
the real business cycle. The American Economic Review, 402-417.
[7] Romer, C. D., & David H. R. 2004. A New Measure of Monetary Shocks: Derivation and
Implications. The American Economic Review, 94(4): 1055-1084.
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