Conference Summary: Money, Monetary Policy, and Transmission Mechanisms

This article summarizes the proceedings of a conference hosted by the Bank of Canada in November 1999. Three major themes emerged at the conference. The first concerned uncertainty about the transmission mechanism by which monetary policy affects output and inflation. The second concerned the potential usefulness of monetary aggregates in guiding the economy along a stable non-inflationary growth path. The third was the recent developments in dynamic monetary general-equilibrium models. The work presented suggests that a wide range of models is useful for understanding the various paths by which monetary policy actions might influence the economy.

Individual Heterogeneity in the Returns to Schooling: Instrumental Variables Quantile Regression using Twins Data

Considerable effort has been exercised recently in estimating mean returns to education while carefully considering biases arising from unmeasured ability and measurement error. Some of this work has also attempted to determine whether there are variations from the “mean” return to education across the population with mixed results. In this paper, we use recent extensions of instrumental variables techniques to quantile regression on a sample of twins to estimate an entire family of returns to education at different quantiles of the conditional distribution of wages while addressing simultaneity and measurement error biases. We test whether there is individual heterogeneity in returns to education against the alternative that there is a constant return for all workers. Our estimated model provides evidence of two sources of heterogeneity in returns to schooling. First, there is evidence of a differential effect by which more able individuals become better educated because they face lower marginal costs of schooling. Second, once this endogeneity bias is accounted for, our results provide evidence of the existence of actual heterogeneity in market returns to education consistent with a non-trivial interaction between schooling and unobserved abilities in the generation of earnings. The evidence suggests that higher ability individuals (those further to the right in the conditional distribution of wages) have higher returns to schooling but that returns vary significantly only along the lower quantiles to middle quantiles. In our final approach, the resulting estimated returns are never lower than 9 percent and can be as high as 13 percent at the top of the conditional distribution of wages, thus providing rather tight bounds on the true return to schooling. Our findings have meaningful implications for the design of educational policies.

ON THE FRONTIER OF GENERATING REVEALED PREFERENCE CHOICE SETS: AN EFFICIENT APPROACH

Deterministic rules for generating choice sets are often employed by analysts confronting universal sets with large numbers of alternatives. For destination choice analysis, site exclusion rules defined by travel time, distance, or quality have a behavioral appeal, yet are fundamentally limited by their one-dimension scope. To remedy this shortcoming while maintaining the concept that trips require costly inputs to yield utility generating outputs, we develop and test an exclusion rule for generating choice sets defined by efficiency measures derived from stochastic frontier econometric models. Choice set composition, site choice efficiency and probability of selection, and consumer surplus are compared with results obtained under alternative exclusion rules.Research Methods/ Statistical Methods,

A Magnetically Coupled Cryogenic Pump

Historically, cryogenic pumps used for propellant loading at Kennedy Space Center (KSC) and other NASA Centers have a bellows mechanical seal and oil bath ball bearings, both of which can be problematic and require high maintenance. Because of the extremely low temperatures, the mechanical seals are made of special materials and design, have wearing surfaces, are subject to improper installation, and commonly are a potential leak path. The ball bearings are non-precision bearings [ABEC-1 (Annular Bearing Engineering Council)] and are lubricated using LOX compatible oil. This oil is compatible with the propellant to prevent explosions, but does not have good lubricating properties. Due to the poor lubricity, it has been a goal of the KSC cryogenics community for the last 15 years to develop a magnetically coupled pump, which would eliminate these two potential issues. A number of projects have been attempted, but none of the pumps was a success. An off-the-shelf magnetically coupled pump (typically used with corrosive fluids) was procured that has been used for hypergolic service at KSC. The KSC Cryogenics Test Lab (CTL) operated the pump in cryogenic LN2 as received to determine a baseline for modifications required. The pump bushing, bearings, and thrust rings failed, and the pump would not flow liquid (this is a typical failure mode that was experienced in the previous attempts). Using the knowledge gained over the years designing and building cryogenic pumps, the CTL determined alternative materials that would be suitable for use under the pump design conditions. The CTL procured alternative materials for the bearings (bronze, aluminum bronze, and glass filled PTFE) and machined new bearing bushings, sleeves, and thrust rings. The designed clearances among the bushings, sleeves, thrust rings, case, and case cover were altered once again using experience gained from previous cryogenic pump rebuilds and designs. The alternative material parts were assembled into the pump, and the pump was successfully operated meeting all expected operating parameters. Unique pump sub-assembly parts were designed and manufactured by the CTL using specialized materials determined to be superior for cryogenic thermal applications under the pump design conditions. This work is a proof-of-concept/proof-of-operation of the pump only. Other known internal design modifications to the pump should be accomplished for the long-term use of the pump. An upscaled version of this pump, which is under development and testing at the CTL, can be used either for current or future vehicle loading or for vehicle replenishment. Scaling of this pump can be easily accomplished