FDI, Education, and Economic Growth: Quality Matters!

In this paper, we revisit the results from the influential study by Borensztein et al. (Journal of International Economics 45:115–135, 1998), which argues that inward foreign direct investment (FDI) promotes the economic growth in a less developed host country only when the host country obtains a threshold level of secondary schooling. Borensztein et al. (Journal of International Economics 45:115–135, 1998) only focus on the quantity of education. We take into consideration both the quantity and the quality of education. We adjust the original schooling data in Borensztein et al. (Journal of International Economics 45:115–135, 1998) by two quality of education indices and re-estimate their model. We find that the complementarity between inward FDI and schooling still exists, but the threshold level of schooling in our study is lower than the threshold calculated in Borensztein et al. (Journal of International Economics 45:115–135, 1998). Our results support the importance of education quality and suggest that with improved quality of education, it does not take as much quantity of schooling, as established in Borensztein et al. (Journal of International Economics 45:115–135, 1998), for inward FDI to have a positive impact on economic growth in the host country

Learning Dynamics in Monetary Policy: The Robustness of an Aggressive Price Stabilizing Policy

This paper investigates the effect of an aggressive inflation stabilizing monetary policy on the ability of agents to reach a rational expectations equilibrium for inflation and output. Using an adaptive learning framework, we develop a model that combines a real wage contracting rigidity with an interest rate rule. We show that an AR(1) equilibrium requires more aggressive monetary policy to achieve both determinacy and learnability. This model and policy findings contrast with Bullard and Mitra’s [Determinacy, learnability and monetary policy inertia (2001); Journal of Monetary Economics 49 (2002) 1105] model (no inflation persistence) and policy findings (less aggressive policy). These results suggest that aggressive policy is robust in different model specifications

Leisure and Happiness in the U.S.: Evidence from Survey Data

We study the relationship between leisure and happiness, controlling for income and other determinants. Using survey data for the United States in 2007, our results show that certain aspects of leisure, such as leisure activity satisfaction, have a significant impact on individual well-being whereas the amount of leisure time may not play an important role in affecting happiness

Learning Dynamics in Monetary Policy: The Robustness of an Aggressive Price Stabilizing Policy

This paper investigates the effect of an aggressive inflation stabilizing monetary policy on the ability of agents to reach a rational expectations equilibrium for inflation and output. Using an adaptive learning framework, we develop a model that combines a real wage contracting rigidity with an interest rate rule. We show that an AR(1) equilibrium requires more aggressive monetary policy to achieve both determinacy and learnability. This model and policy findings contrast with Bullard and Mitra’s [Determinacy, learnability and monetary policy inertia (2001); Journal of Monetary Economics 49 (2002) 1105] model (no inflation persistence) and policy findings (less aggressive policy). These results suggest that aggressive policy is robust in different model specifications

Leisure and Happiness: Evidence from International Survey Data

We study the statistical link between leisure and happiness. Using survey data from 33 countries in 2007, we find that (1) certain leisure activities, leisure’s role in self-fulfillment and social interaction, and leisure’s relation to work and other spheres of life are significantly linked to individual happiness; (2) the effect of leisure quantity is not as important as other aspects of leisure; and (3) some leisure activities can be negatively associated with happiness. Consistent with findings in previous studies, family income and individual demographic variables such as age and health condition are significantly associated with happiness. National unemployment and political stability also have robustly significant effects on happiness

International R&D Transfer and Technical Efficiency: Evidence from Panel Study Using Stochastic Frontier Analysis

We study the effect of foreign research and development (R&D) transferred through imports and foreign direct investment (FDI) on domestic technical efficiency using stochastic frontier analysis. Unbalanced panel results from a 77-country sample over 1986–2007 show that FDI- and imports-transferred foreign R&D have a significant impact on domestic country’s technical efficiency. Furthermore, we observe a complementarity between FDI-transferred R&D and domestic human capital. In other words, the domestic country needs to obtain a threshold level of human capital to benefit from FDI-transferred R&D. Other macro conditions such as infrastructure, political stability, and urbanization also help to improve the technical efficiency of a country