IQ in the Ramsey Model: A Naive Calibration

I show that in a conventional Ramsey model, between one-fourth and one- half of income differences across countries can be explained by a single factor: The steady-state effect of large, persistent differences in national average IQ on worker productivity. These differences in cognitive ability--which are well-supported in the psychology literature--are likely to be malleable through better nutrition, better education, and better health care in the world’s poorest countries. A simple calibration exercise in the spirit of Bils and Klenow (2000) and Castro (2005) is conducted. According to the model, a move from the bottom decile of the global IQ distribution to the top decile will cause steady-state living standards to rise by between 75 and 350 percent. We provide evidence that little of IQ-productivity relationship is likely to be due to reverse causality.Economic Growth, Intelligence, IQ, Ramsey.

Volatile Interest Rates, Volatile Crime Rates: A new argument for interest-rate smoothing

Good monetary policy requires estimates of all of its effects: monetary policy impacts traditional economic variables such as output, unemployment rates, and inflation. But does monetary policy influence crime rates? By extending the vector autoregression literature, we derive estimates of the dynamic effect of higher interest rates on crime rates. Higher interest rates have socially and statistically significant positive effects on rates of theft and knife robberies, while effects on rates of burglary and assault are smaller and statistically insignificant. Higher interest rates have no effect on homicide rates. We conclude that monetary policy influences the rate of economically-motivated crimes.crime, monetary policy, vector autoregressive models (VARs)

Volatile Interest Rates, Volatile Crime Rates: A new argument for interest-rate smoothing

Good monetary policy requires estimates of all of its effects: monetary policy impacts traditional economic variables such as output, unemployment rates, and inflation. But does monetary policy influence crime rates? By extending the vector autoregression literature, we derive estimates of the dynamic effect of higher interest rates on crime rates. Higher interest rates have socially and statistically significant positive effects on rates of theft and knife robberies, while effects on rates of burglary and assault are smaller and statistically insignificant. Higher interest rates have no effect on homicide rates. We conclude that monetary policy influences the rate of economically-motivated crimes.http://deepblue.lib.umich.edu/bitstream/2027.42/40080/3/wp694.pd

Intelligence, Human Capital, and Economic Growth: A Bayesian Averaging of Classical Estimates (BACE) Approach

Human capital plays an important role in the theory of economic growth, but it has been difficult to measure this abstract concept. We survey the psychological literature on cross-cultural IQ tests, and conclude that modern intelligence tests are well-suited for measuring an important form of a nation’s human capital. Using a new database compiled by Lynn and Vanhanen (2002) along with a Bayesian methodology derived from Sala-i-Martin, Doppelhofer, and Miller (AER, 2004), we show that national average IQ has a robust positive relationship with economic growth. In growth regressions that include only robust control variables, IQ is statistically significant in 99.8% of these 1330 regressions, and the IQ coefficient is always positive. A strong relationship persists even when OECD countries are excluded from the sample. A 1 point increase in a nation’s average IQ is associated with a persistent 0.11% annual increase in GDP per capita.Economic Growth, Human Capital, Intelligence, IQ, Education

The Effect of Monetary Policy on Economic Output

There is substantial research effort devoted to identifying a sufficient statistic for monetary policy. The purpose of this paper is to broaden the scope of the on-going investigation along three dimensions. First, we follow up the Rudebusch-Svensson claim of parameter instability in the output regressions by examining the statistical stability of the parameter estimates with post-1996 data. Second, we examine whether alternative measures of the cyclical component affect the correlation between money supply, interest rates and output. Third, we consider alternative measures of the money supply, permitting us to assess the distinct roles of inside and outside money in terms of the correlation between each component and output.Monetary Policy, Money Supply

IQ in the Ramsey Model: A Naive Calibration

I show that in a conventional Ramsey model, between one-fourth and one-half of the global income distribution can be explained by a single factor: The effect of large, persistent differences in national average IQ on the private marginal product of labor. Thus, differences in national average IQ may be a driving force behind global income inequality. These persistent differences in cognitive ability--which are well-supported in the psychology literature--are likely to be somewhat malleable through better health care, better education, and especially better nutrition in the world’s poorest countries. A simple calibration exercise in the spirit of Bils and Klenow (2000) and Castro (2005) is conducted. I show that an IQ-augmented Ramsey model can explain more than half of the empirical relationship between national average IQ and GDP per worker. I provide evidence that little of the IQ-productivity relationship is likely to be due to reverse causality.

Adaptive Paddle Board

This Final Design Review (FDR) document outlines the Adaptive Paddle Board senior project, done by four Mechanical Engineering Students at California Polytechnic State University and provides detail on the project and what the team has accomplished. The goal was to create a universally adaptive paddle board that can be used by the Central California Adaptive Sports Center for a wide range of persons with disabilities. This document highlights current research from patents and existing products, details regarding customer specifications, results from concept generation, the manufacturing and testing that went into the final design, and the process taken to get there. Testing has proven the final design to crucial specifications such as cost, reproducibility, and tipability

The Effect of Monetary Policy on Economic Output

There is substantial research effort devoted to identifying a sufficient statistic for monetary policy. The purpose of this paper is to broaden the scope of the on-going investigation along three dimensions. First, we follow up the Rudebusch-Svensson claim of parameter instability in the output regressions by examining the statistical stability of the parameter estimates with post-1996 data. Second, we examine whether alternative measures of the cyclical component affect the correlation between money supply, interest rates and output. Third, we consider alternative measures of the money supply, permitting us to assess the distinct roles of inside and outside money in terms of the correlation between each component and output