Factors of Educational Attainment

The following research has been conducted in order to establish both the economic and statistical significance of certain factors that affect the percentage of those who hold a bachelor’s degree by age 25. We look at what demographics are/are not important when predicting who will obtain a bachelor’s degree by age 25, and list some options we think would increase the percentage of those who hold a bachelor’s degree, based on our research. We stipulate that increasing the percent of the population holding a degree will better prepare people for success and a higher standard of living in our rapidly changing economy. To test our hypothesis, we have estimated an equation and run regressions on our data from which we can draw insight about where we ought to focus our efforts in education policy

Crime and Social media

Purpose-The study complements the scant macroeconomic literature on the development outcomes of social media by examining the relationship between Facebook penetration and violent crime levels in a cross-section of 148 countries for the year 2012. Design/methodology/approach-The empirical evidence is based on Ordinary Least Squares (OLS), Tobit and Quantile regressions. In order to respond to policy concerns on the limited evidence on the consequences of social media in developing countries, the dataset is disaggregated into regions and income levels. The decomposition by income levels included: low income, lower middle income, upper middle income and high income. The corresponding regions include: Europe and Central Asia, East Asia and the Pacific, Middle East and North Africa, Sub-Saharan Africa and Latin America. Findings-From OLS and Tobit regressions, there is a negative relationship between Facebook penetration and crime. However, Quantile regressions reveal that the established negative relationship is noticeable exclusively in the 90th crime decile. Further, when the dataset is decomposed into regions and income levels, the negative relationship is evident in the Middle East and North Africa (MENA) while a positive relationship is confirmed for sub-Saharan Africa. Policy implications are discussed. Originality/value- Studies on the development outcomes of social media are sparse because of a lack of reliable macroeconomic data on social media. This study primarily complemented three existing studies that have leveraged on a newly available dataset on Facebook

TO FLOAT OR NOT TO FLOAT? CURRENCY REGIMES AND GROWTH

One recent line of research on exchange rates is the effect of fixed or floating currencies on long-term growth. One difficulty with such studies is that emerging market countries with certain imbalances and potentially hard-to-observe policy distortions are more likely to choose a fixed exchange rate regime, and thus estimates of the effect of exchange rates on growth are likely to be biased upward in magnitude. Results here indicate that when a measure of domestic distortions and macroeconomic imbalances is added to the model the exchange rate regime at most exacerbates existing distortions, and no longer appears to have an independent, significant effect on growth, contrary to some recent findings.International Finance, Open Economy Macroeconomics, Economic Growth

Technological change and the demand for currency: An analysis with household data

Advances in transaction technology allow agents to economize on the cost of cash management. We argue that accounting for the impact of new transaction technologies on currency holding behaviour is important to obtain theoretically consistent estimates of the demand for money. We modify a standard inventory model to study the effect of withdrawal technology on the demand for currency. An empirical specification for households’ demand schedule is suggested, in which both the level of currency holdings and the interest rate elasticity of demand depend on the withdrawal technology available to agents (e.g. ATM card ownership or a high/low density of bank branches, ATMs). The theoretical implications are tested using a unique panel of Italian household data (on currency holdings, deposit interest rates, consumption, development of banking services, etc.) for the period 1989-2004.money demand, inventory models, technological change

Growth, convergence and public investment : a bayesian model averaging approach [WP]

The aim of this paper is twofold. First, we study the determinants of economic growth among a wide set of potential variables for the Spanish provinces (NUTS3). Among others, we include various types of private, public and human capital in the group of growth factors. Also, we analyse whether Spanish provinces have converged in economic terms in recent decades. The second objective is to obtain cross-section and panel data parameter estimates that are robust to model speci¯cation. For this purpose, we use a Bayesian Model Averaging (BMA) approach. Bayesian methodology constructs parameter estimates as a weighted average of linear regression estimates for every possible combination of included variables. The weight of each regression estimate is given by the posterior probability of each model.L'objectiu d'aquest estudi és doble. Primer, estudiem els factors determinants del creixement econòmic entre un ampli ventall de possibles variables per a les províncies espanyoles. Entre aquests determinant s'inclouen difrents tipus de capital privat, públic i humà. A més, s'analitza si les províncies espanyoles han convergit en termes econòmics. El segon objectiu és l'obtenció d¿estimacions, transversals i amb dades de panell, robustes a l'especificació del model utilitzant una metodologia bayesiana, la qual construeix els paràmetres estimats com una mitja ponderada dels estimadors lineals de totes les possibles combinacions de models donades les variables tingudes en compte. La ponderació de cada paràmetre estimat bé donada per la probabilitat a posteriori de cada model

The Importance of Spatial Autocorrelation for Regional Employment Growth in Germany

In analyzing the disparities of the regional developments in the volume of employment in Germany, in the recent empirical literature so called shift-share-regression-models are frequently applied. However, these models usually neglect spatial interdependencies, even though such interdependencies are likely to occur on a regional level. Therefore, this paper focuses on the importance of spatial dependencies using spatial autocorrelation in order to analyze regional employment development. Spatial dependency in the form of spatial lag, spatial error and cross regressive model are compared. The results indicate that the exogenous variables’ spatial lag sufficiently explains the spatial autocorrelation of regional employment growth.spatial interdependency, spatial autocorrelation, shift-share-regression, regional employment growth

Autoregressive multifactor APT model for U.S. Equity Markets

Arbitrage Pricing Theory is a one period asset pricing model used to predict equity returns based on a multivariate linear regression. We choose three sets of factors – Market specific, firm specific, and an autoregressive return term to explain returns on twenty U.S. stocks, using monthly data over the period 2000-2005. Our findings indicate that, apart from the CAPM beta factor, at least five other factors are significant in determining time series and cross sectional variations in returns. The times series regression establishes factor loadings and the cross sectional regression gives the risk premiums associated with these factors.Equity Pricing; APT; Arbitrage pricing theory; Multifactor model; Security; Pricing; CAPM

Human capital and economic development: a macroeconomic assessment

Despite abundant microeconomic level evidence, the role of human capital in economic development has not been well documented at the macroeconomic level. Up to now, many empirical macro studies lack a consistent theoretical foundation. In addition, the wide range of published results seems to result from measurement problems due to a very narrow concept of human capital focusing on formal education. Future empirical research should take into account other important determinants of human capital such as the quality of education, the experience of the workforce, and the health status and the nutritional status of the population.

Impact of Job Complexity and Performance on CFO Compensation

Prior research suggests that Big 4 auditors provide higher quality audits by virtue of their large size. Still, the recent reforms mandated by the Sarbanes Oxley Act – by increasing client and auditor incentives for accurate reporting – may have narrowed audit quality differences across auditor groups. In this paper, we examine audit quality for Big 4 and Mid-tier auditors during 2003-06 and include clients of other smaller audit firms for comparison purposes. We examine actual audit quality (as proxied by earnings management metrics) as well as perceived audit quality (as proxied by the client- and year-specific eloading and ex ante equity risk premium metrics). We include in our analysis only those Big 4 clients for whom the Mid-tier firms are potentially viable as auditors. Relative to other smaller audit firm clients, we find Big 4 and Mid-tier audit clients to have (1) lower levels of accrual management, (2) higher levels of real earnings management, and (3) higher levels of investor-perceived accruals quality. In each case, we were unable to reject the null that Big 4 and Mid-tier audits are similar. However, we find Big 4 audit clients to have a lower client-specific ex ante equity risk premium relative to both Mid-tier and other smaller audit firm clients. Collectively, our findings indicate that in situations where a Mid-tier auditor is potentially viable, Big 4 clients could utilize a Mid-tier firm without adversely affecting audit quality. Still, the results suggest that Big 4 clients have a lower ex ante cost of equity capital which is likely related to the insurance considerations (“deep pockets”) – rather than the audit quality -- associated with having a Big 4 auditor.Auditor concentration, Audit quality, Earnings management, Cost of equity capital.