Monopoly power of the medical school market and high incomes of U.S. physicians

We expect the incomes of physicians to remain high in the next decades. Using the latest published physician income data (2015) we calculated the weighted median income of U.S. physicians and the net present value (NPV) of an investment in physician education. We estimated the NPV assuming that the physicians training began in 2007 and their practice would commence in 2015. We estimated the NPV of the lifetime earnings of a physician based on the median income of all physicians in the sample to be between $7.1 and$7.3 million. This finding of high NPV’s is consistent with almost all earlier studies of this kind. Physicians continue to experience relatively high incomes and very slow increases in the number of new graduates. We expect an excess demand for positions in medical colleges to continue. Our findings with respect to the incomes of non-primary physicians (surgeons, radiologist and cardiologists), indicate will continue to be much higher than those of primary physicians. There are strong evidence suggesting this is because of blockages in physician residency openings in these non-primary fields of medicine.peer-reviewe

Twin Deficits or Distant Cousins? Evidence from India

The twin-deficits theory has intrigued economists and policy-makers alike for the past few decades. In a Keynesian economy, budget deficit increases the absorption of the economy, causes import expansions, and thereby, worsens the trade deficit. It also causes domestic interest rates to rise, domestic currency to appreciate, and thereby, contributes to trade deficits. However, according to the Ricardian Equivalence Hypothesis (REH), rising budget deficits implies higher future tax-liabilities so people would save more and consume less. As a result, an inter-temporal shift between taxes and budget deficits would have no impact on the real interest, or the trade deficit. Thus, the issue of whether the twin-deficits phenomenon holds becomes more of an empirical question, and the recent fiscal expansions to curb recession makes it timely to revisit the phenomenon, especially for the developing countries confronting both the deficits on a chronic basis. To this end, we make a case study of India, using the bounds-testing approach to cointegration and error-correction modeling on monthly and quarterly data over 1998-2009. Our results suggest that the twin-deficits theory holds for India in the short-run (validating the Keynesian channel) but not in the long run (validating the REH)

Exchange Rate Uncertainty and Import Demand of Thailand

This study investigates the impact of real exchange rate uncertainty on import demand of Thailand. The period of study is during July 1997 to December 2011. The results from bounds testing for cointegration show that all variables are cointegrated. Even though there is no short-run impact, but the long-run negative impact of real exchange rate uncertainty on real imports is large and highly significant under the floating exchange rate regime. In the long run, a rise in real exchange rate uncertainty can improve the country’s trade balance by substantially lowering import demand, but can harm industrial production at the same time. Therefore, stabilization of real effective exchange rate via major nominal exchange rates may deem necessary

Exchange Rate Regime, Real Exchange Rate, Trade Flows and Foreign Direct Investments: The case of Morocco

We study the behavior of the Real Effective Exchange Rate (REER) of the dirham against the European currencies (Europe of the 15), over the period 1960-2000 (annual data). We measure the volatility using standard deviation, and the misalignments as the difference between the actual REER and the equilibrium REER (NATREX model). We show that a rise of the volatility of the dirham reduces the trade flows (exports and imports). The misalignments affect also the trade flows: an overvaluation leads to a reduction in Morocco exports from, to a raise of Morocco imports, and globally to a deterioration of the trade balance with the European Union. On the other hand, neither the volatility nor the misalignments have an effect on the direct investments (FDI) in favor of Morocco