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The Expenditure Impacts of London-based Individual Higher Education Institutions (HEIs) and their Students on the Economy of England: Homogeneity or Heterogeneity?
Get PDFThis paper replicates the analysis of Scottish HEIs in Hermannsson et al
(2010a) to identify the impact of London-based HEIs on the English economy
in order to provide a self-contained analysis that is readily accessible by those
whose primary concern is with the regional impacts of London HEIs. When we
treat each of the 38 London-based Higher Education Institutions (HEIs) that
existed in England in 2006 as separate sectors in conventional input-output
analysis, their expenditure impacts per unit of final demand appear rather
homogenous (though less so than HEIs in Wales and Scotland), with the
apparent heterogeneity of their overall impacts being primarily driven by scale.
However, a disaggregation of their income by source reveals considerable
variation in their dependence upon general public funding and their ability to
draw in income/funding from external sources. Acknowledging the possible
alternative uses of the public funding and deriving balanced expenditure
multipliers reveals large differences in the net-expenditure impact of London
HEIs upon the English economy, with the source of variation being the origin
of income. Applying a novel treatment of student expenditure impacts,
identifying the amount of exogenous spending per student, modifies the
heterogeneity of the overall expenditure impacts. On balance this suggests that
the impacts of impending budget cut-backs will be quite different by institution
depending on their sensitivity to public funding. However, predicting the
outcome of budget cutbacks at the margin is problematic for reasons that we
identify
Forecasting Inflation Using Dynamic Model Averaging
Get PDFWe forecast quarterly US inflation based on the generalized Phillips curve using
econometric methods which incorporate dynamic model averaging. These methods
not only allow for coe¢ cients to change over time, but also allow for the entire
forecasting model to change over time. We nd that dynamic model averaging leads
to substantial forecasting improvements over simple benchmark regressions and more
sophisticated approaches such as those using time varying coe¢ cient models. We
also provide evidence on which sets of predictors are relevant for forecasting in each period
Delay and Haircuts in Sovereign Debt: Recovery and Sustainability
Get PDFOne of the striking aspects of recent sovereign debt restructurings is, conditional on default, delay length is positively correlated with the size of "haircut", which is size of creditor losses. In this paper, we develop an incomplete information model of debt restructuring where the prospect of uncertain economic recovery and the signalling about sustainability concerns together generate multi-period delay. The results from our analysis show that there is a correlation between delay length and size of haircut. Such results are supported by evidence. We show that Pareto ranking of equilibria, conditional on default, can be altered once we take into account the ex ante incentive of sovereign debtor. We use our results to evaluate proposals advocated to ensure orderly resolution of sovereign debt crises
Strong Hysteresis due to Age Effects
No full textStrong hysteresis in the labour market (see Cross, 1995) requires workers to be
heterogeneous in terms of the cost of hiring and firing. We show how such heterogeneity
arises naturally in labour markets due to differences in workers’ age by showing that both the hiring and the firing thresholds for productivity are age dependent. The presence of strong hysteresis does not for this reason depend on ad-hoc differences in the cost of hiring and firing workers
The Economic Effects of Micronutrient Deficiency: Evidence from Salt Iodization in the United States
Get PDFIodine deficiency is the leading cause of preventable mental retardation in
the world today. Iodine deficiency was common in the developed world until
the introduction of iodized salt in the 1920’s. The incidence of iodine deficiency
is connected to low iodine levels in the soil and water. We examine the impact
of salt iodization in the US by taking advantage of this natural geographic
variation. Areas with high pre-treatment levels of iodine deficiency provide
a treatment group which we can compare to a control group of low iodine
deficiency areas. In the US, salt was iodized over a very short period of time
around 1924. We use previously unused data collected during WWI and WWII
to compare outcomes of cohorts born before and after iodization, in localities
that were naturally poor and rich in iodine. We find evidence of the beneficial
effects of iodization on the cognitive abilities of the cohorts exposed to it
Infrastructure Finance and Industrial Takeoff in England
Get PDFThat financial matters did not constrain industrial takeoff in the UK is
generally accepted in the historical literature; in contrast, contemporary
empirical analyses have found evidence that financial development can be a
causal determinant of economic growth. We look to reconcile these findings by
concentrating on a particular aspect of industrialising UK where inefficiencies
in finance could have had bite: The finance of physical infrastructures. We
document the historical record and develop the importance of spatial
disaggregation and spillovers in both technological and financial development.
We develop a simple model that captures the nature of infrastructure finance
within a theory of endogenous growth where financial costs are endogenous.
We argue that the conception of the finance-growth nexus as a largely static,
aggregative phenomenon misses out a good deal of complexity and we relate
that complexity to a number of implications for regulation of both financial
systems and the emergence of infrastructure
Incorporating jurisdiction issues into regional carbon accounts under production and consumption accounting principles
Get PDFDespite increased public interest, policymakers have been slow to enact targets based on limiting emissions under full consumption accounting measures (such as carbon footprints). This paper argues that this may be due to the fact that policymakers in one jurisdiction do not have control over production technologies used in other jurisdictions. The paper uses a regional input-output framework and data derived on carbon dioxide emissions by industry (and households) to examine regional accountability for emissions generation. In doing so, we consider two accounting methods that permit greater accountability of regional private and public (household and government) final consumption as the main driver of regional emissions generation, while retaining focus on the local production technology and consumption decisions that fall under the jurisdiction of regional policymakers. We propose that these methods permit an attribution of emissions generation that is likely to be of more use to regional policymakers than a full global footprint analysis
Does the euro dominate Central and Eastern European money markets?
Get PDFThe so-called German Dominance Hypothesis (GDH) claimed that Bundesbank
policies were transmitted into other European Monetary System (EMS)
interest rates during the pre-euro era. We reformulate this hypothesis for the
Central and Eastern European (CEE) countries that are on the verge of accessing
the eurozone. We test this \Euro Dominance Hypothesis (EDH)" in a novel way using a global vector autoregressive (GVAR) approach that combines country-speci c error correction models in a global system. We nd that euro area monetary policies are transmitted into CEE interest rates which provides evidence for monetary integration between the eurozone and CEE countries.
Our framework also allows for introducing global monetary shocks to provide
empirical evidence regarding the e ects of the recent nancial crisis on monetary
integration in Europe
International Evidence on the New Keynesian Phillips Curve Using Aggregate and Disaggregate Data
Get PDFWe present a unique empirical analysis of the properties of the New Keynesian Phillips Curve using an international dataset of aggregate and disaggregate sectoral in
ation. Our results from panel time-series estimation clearly indicate that sectoral heterogeneity has important consequences for aggregate in ation behaviour. Heterogeneity helps to explain the overestimation of in
ation persistence and underestimation of the role of marginal costs in empirical
investigations of the NKPC that use aggregate data. We nd that combining disaggregate information with heterogeneous-consistent estimation techniques helps to reconcile, to a large extent, the NKPC with the data
Optimal contracting with private information on cost expectation and variability
Get PDFWe study the screening problem that arises in a framework where, initially,
the agent is privately informed about both the expected production cost and the
cost variability and, at a later stage, he learns privately the cost realization. The
speci c set of relevant incentive constraints, and so the characteristics of the optimal mechanism, depend nely upon the curvature of the principal s marginal surplus function as well as the relative importance of the two initial information problems.
Pooling of production levels is optimally induced with respect to the cost variability
when the principal's knowledge imperfection about the latter is sufficiently less
important than that about the expected cost