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Comparing the treatment provided by migrant and nonmigrant health professionals: dentists in Scotland
Get PDFMany OECD countries are increasingly relying on migrants to address shortages of trained health professionals. One key concern is whether migrant health professionals provide equivalent health care. We compare the treatment provided by migrant and non-migrant health professionals using administrative data from the Scottish dental system. A difference-in-differences model is estimated to examine whether migrant dentists respond differently to case mix and individual circumstances as compared with their non-migrant counterparts, and assess the extent to which any differences diminish over time. After controlling for both observed and unobserved differences between individual dentists and the cohort of patients that they treat, we find that migrant dentists have marginally different practice styles, and the variation diminishes over time within two years of practice
How much does industry matter in an emerging market economy?
Get PDFTheories of firm profitability make different predictions about the relative importance of firm, industry and time specific factors. We assess, empirically, the relevance of these effects over a sixteen year period in India, as a regime of control and regulation, pre 1985, gave
way to partial liberalisation between 1985 and 1991 and to more decisive
liberalisation after 1991. We find that firm effects are important throughout, when rent seeking opportunities proliferated, as well as when competitive forces were enhanced by institutional change. In contrast, industry effects significantly increased after liberalisation, suggesting that industry structure matters more within competitive
markets. These findings help understand the relevance of different models over different stages of liberalisation, and have important implications for both theory and policy
Adaptive Continuous time Markov Chain Approximation Model to General Jump-Diusions
Get PDFWe propose a non-equidistant Q rate matrix formula and an adaptive numerical algorithm for a continuous time Markov chain to approximate jump-diffusions with affine or non-affine functional specifications. Our approach also accommodates state-dependent jump intensity and jump distribution, a
flexibility that is very hard to achieve with other numerical methods. The Kolmogorov-Smirnov test shows that the proposed Markov chain transition density converges to the
one given by the likelihood expansion formula as in Ait-Sahalia (2008). We provide numerical examples for European stock option pricing in Black and Scholes (1973), Merton (1976) and Kou (2002)
Productivity shocks and aggregate fluctuations in an estimated endogenous growth model with human capital
Get PDFEmploying an endogenous growth model with human capital,
this paper explores how productivity shocks in the goods and
human capital producing sectors contribute to explaining aggregate
fluctuations in output, consumption, investment and hours. Given
the importance of accounting for both the dynamics and the trends in
the data not captured by the theoretical growth model, we introduce
a vector error correction model (VECM) of the measurement errors
and estimate the model’s posterior density function using Bayesian
methods. To contextualize our findings with those in the literature,
we also assess whether the endogenous growth model or the standard
real business cycle model better explains the observed variation in
these aggregates. In addressing these issues we contribute to both
the methods of analysis and the ongoing debate regarding the effects
of innovations to productivity on macroeconomic activity
Primary Commodity Prices: Co-movements, Common Factors and Fundamentals
Get PDFThe behavior of commodities is critical for developing and developed countries alike. This paper contributes to the empirical evidence on the co-movement and determinants of commodity prices. Using nonstationary panel methods, we document a statistically significant degree of co-movement due to a common factor. Within a Factor Augmented VAR approach, real interest rate and uncertainty, as postulated by a simple asset pricing model, are both found to be negatively related to this common factor. This evidence is robust to the inclusion of demand and supply shocks, which both positively impact on the co-movement of commodity prices
Learning about Risk and Return: A Simple Model of Bubbles and Crashes
Get PDFThis paper demonstrates that an asset pricing model with least-squares learning can lead to bubbles and crashes as endogenous responses to the fundamentals
driving asset prices. When agents are risk-averse they need to make forecasts of the conditional variance of a stock’s return. Recursive updating of both the conditional variance and the expected return implies several mechanisms through which learning impacts stock prices. Extended periods of
excess volatility, bubbles and crashes arise with a frequency that depends on
the extent to which past data is discounted. A central role is played by changes over time in agents’ estimates of risk
Hysteresis in the fundamentals of macroeconomics
Get PDFTwo fundamental problems in economic analysis concern the deter mination of aggregate output, and the determination of market prices and quantities. The way economic adjustments are made at the micro
level suggests that the history of shocks to the economic environment matters. This paper presents tractable approach for introducing hysteresis into models of how aggregate output and market prices and quantities are determined
Memory of Recessions
Get PDFThis paper reviews the evidence on the effects of recessions on potential
output. In contrast to the assumption in mainstream macroeconomic models that economic fluctuations do not change potential output paths, the evidence is that they do in the case of recessions. A model is proposed to explain this phenomenon, based on an analogy with water flows in
porous media. Because of the discrete adjustments made by heterogeneous
economic agents in such a world, potential output displays hysteresis with
regard to aggregate demand shocks, and thus retains a memory of the shocks associated with recessions
Distributional and Poverty Consequences of Globalization: A Dynamic Comparative Analysis for Developing Countries
Get PDFThis study examines the impact of globalization on cross-country inequality and
poverty using a panel data set for 65 developing counties, over the period 1970-2008.
With separate modelling for poverty and inequality, explicit control for financial
intermediation, and comparative analysis for developing countries, the study attempts to
provide a deeper understanding of cross country variations in income inequality and
poverty.
The major findings of the study are five fold. First, a non-monotonic relationship
between income distribution and the level of economic development holds in all samples
of countries. Second, both openness to trade and FDI do not have a favourable effect on
income distribution in developing countries. Third, high financial liberalization exerts a
negative and significant influence on income distribution in developing countries. Fourth,
inflation seems to distort income distribution in all sets of countries. Finally, the government emerges as a major player in impacting income distribution in developing countries
Using Effluent Charges in Promoting Investment in Water Pollution Control Technology: A Model of Coordination Failure among Firms
Get PDFUntreated wastewater being directly discharged into rivers is a very harmful environmental hazard that needs to be tackled urgently in many countries. In order to safeguard the river ecosystem and reduce water pollution, it is important to have an effluent charge policy that promotes the investment of wastewater treatment technology by domestic firms.
This paper considers the strategic interaction between the government and the domestic firms regarding the investment in the wastewater treatment technology and the design of optimal effluent charge policy that should be implemented. In this model, the higher is the proportion of non-investing firms, the higher would be the probability of having to incur an
effluent charge and the higher would be that charge. On one hand the government needs to
impose a sufficiently strict policy to ensure that firms have strong incentive to invest. On the other hand, it cannot be too strict that it drives out firms which cannot afford to invest in such expensive technology. The paper analyses the factors that affect the probability of investment in this technology. It also explains the difficulty of imposing a strict environment policy in countries that have too many small firms which cannot afford to invest unless subsidised