Public versus Private Education in Hawaii

This study presents a time-series evidence on the timing and degree of feedback relationship between participation in education and income growth in Hawaii. Using the unrestricted vector autoregression approach and two related measures of linear dependence and feedback, the results suggest that across all educational levels, i.e., K-12 and tertiary, participation in public education could be a good predictor of income growth in Hawaii. However, decomposing the feedback effect by frequency suggests that the dominance of public education over private education in explaining the variation in income growth to be concentrated mainly on the short-run to medium-run for tertiary level and long-run to permanent effect for K-12 level. Hawaii state legislature and educators should perhaps take these results as a motivation not to ignore the problems plaguing Hawaii's public schools but should work towards greater improvement and support for public education given its predicted significant overall contribution to the Hawaiian economy

Taking the Pulse of Tourism in Hawaii

This study examines the dynamic employment behavior of Hawaii’s tourism related industries due to external shocks. A better understanding of how industrial employments differ in response to external shocks may be useful to policymakers and other stakeholders in designing economic development policies or response programs to help mitigate adverse employment impacts. Using VAR analysis, the empirical results suggest that shocks in visitor arrivals and crude oil prices significantly help predict the employment changes in the food and drinks sector. Statistically significant bi-directional relationship exist between visitor arrivals and employment in the accommodation sector. No strong relationship was detected between shocks in visitors’ arrivals, interest rate changes, and crude oil prices with the employment behavior in arts and entertainment sector. The statistically significant uni-directional causal relationship in the stochastic changes in interest rate to visitor arrivals validates the great sensitivity of demand for travel to financing constraints

Education spillover, public policy and economic growth

This research examines the effects of public policy on human capital formation and economic growth. Using a two-sector endogenous growth framework, a model was developed to highlight the role of policy intervention in the presence of education spillover or externality. The model examines public intervention in the form of giving direct subsidies to individuals engaged in human capital formation. For a range of plausible parameter values, the optimal subsidy is in the range of 30-50% of the market wage rate. Total public expenditure under the optimal subsidy plan lies in the range of 5-31% of the social output. I conclude that there is potentially a large role for government in encouraging human capital formation. I then investigated the dynamic time-series relationship between public expenditure on education and economic growth for a sample of six Asian and five non-Asian OECD countries. I used total public expenditure on education as a percentage of GNP as a proxy for the subsidy to human capital formation. The results showed: (i) India exhibited the most significant permanent effect of public spending level on education to income growth. This finding is robust to the inclusion of demographic variables, (ii) US exhibited the most significant permanent effect of public spending growth shocks to income growth, (iii) Causation from income growth to public spending was detected in Pakistan and Thailand while the presence of bi-directional causality was detected in Japan, Philippines and France, and (iv) Korea posted the lowest feedback estimates and showed negligible effects of public spending on education to income growth. The absence of a causal relationship and negligible feedback between public spending on education and income growth in some of the countries investigated is disappointing. Relative to what the theoretical model suggests, the actual magnitude of government spending is considerably less than optimal. The fact that spending appears to have such small effects suggests that educational policies are misdirected and that governmental allocation of educational resources if often grossly inefficient