Estimating the Permanent Growth Effects of Human Capital

This paper estimates with the least trimmed least squares (LTS) a specification suitable to estimate the permanent growth effects of human capital, using educational attainment (H) as a proxy. Our results show that H has significant permanent growth effects but these are much smaller than in Temple (1999).Least Trimmed Squares, Human capital, Educational attainment, Permanent growth effects

Estimates of the long-run growth rate of Singapore with a CES production function

This paper estimates with the Bayesian methods a CES production function for Singapore for 1960-2009. It is found that the elasticity of substitution is 0.6, technical progress is labour augmenting and the steady state growth rate of Singapore is about 1.8%.Bayesian methods, CES production function and Technical progress

Production Under Uncertainty: A Simulation Study

In this article we model production technology in a state-contingent framework. Our model analyzes production under uncertainty without being explicit about the nature of producer risk preferences. In our model producers’ risk preferences are captured by the risk-neutral probabilities they assign to the different states of nature. Using a state-general state-contingent specification of technology we show that rational producers who encounter the same stochastic technology can make significantly different production choices. Further, we develop an econometric methodology to estimate the risk-neutral probabilities and the parameters of stochastic technology when there are two states of nature and only one of which is observed. Finally, we simulate data based on our state-general state-contingent specification of technology. Biased estimates of the technology parameters are obtained when we apply conventional ordinary least squares (OLS) estimator on the simulated data.CES, Cobb-Douglas, OLS, output-cubical, risk-neutral, state-allocable, state-contingent

The low noise phase of a 2d active nematic

We consider a collection of self-driven apolar particles on a substrate that organize into an active nematic phase at sufficiently high density or low noise. Using the dynamical renormalization group, we systematically study the 2d fluctuating ordered phase in a coarse-grained hydrodynamic description involving both the nematic director and the conserved density field. In the presence of noise, we show that the system always displays only quasi-long ranged orientational order beyond a crossover scale. A careful analysis of the nonlinearities permitted by symmetry reveals that activity is dangerously irrelevant over the linearized description, allowing giant number fluctuations to persist though now with strong finite-size effects and a non-universal scaling exponent. Nonlinear effects from the active currents lead to power law correlations in the density field thereby preventing macroscopic phase separation in the thermodynamic limit.Comment: 17 pages, 5 figure

Why does the US dominate university league tables?

According to Academic Ranking of World Universities, the world’s top 500 universities are owned by only 38 countries, with the US alone having 157 of them. This paper investigates the socioeconomic determinants of the wide performance gap between countries and whether the US’s dominance in the league table is largely due to its economic power or something else. It is found that a large amount of cross country variation in university performance can be explained by just four socioeconomic factors: income, population size, R&D spending, and the national language. It is also found that conditional on the resources that it has, the US is actually underperforming by about 4 to 10 percent.

Defect unbinding in active nematics

We formulate the statistical dynamics of topological defects in the active nematic phase, formed in two dimensions by a collection of self-driven particles on a substrate. An important consequence of the non-equilibrium drive is the spontaneous motility of strength +1/2 disclinations. Starting from the hydrodynamic equations of active nematics, we derive an interacting particle description of defects that includes active torques. We show that activity, within perturbation theory, lowers the defect-unbinding transition temperature, determining a critical line in the temperature-activity plane that separates the quasi-long-range ordered (nematic) and disordered (isotropic) phases. Below a critical activity, defects remain bound as rotational noise decorrelates the directed dynamics of +1/2 defects, stabilizing the quasi-long-range ordered nematic state. This activity threshold vanishes at low temperature, leading to a re-entrant transition. At large enough activity, active forces always exceed thermal ones and the perturbative result fails, suggesting that in this regime activity will always disorder the system. Crucially, rotational diffusion being a two-dimensional phenomenon, defect unbinding cannot be described by a simplified one-dimensional model.Comment: 15 pages (including SI), 4 figures. Significant technical improvements without changing the result

Exploring the links between corruption and growth

Corruption is a widespread phenomenon, but relatively little is confidently known about its macroeconomic consequences. This paper explicitly models the transmission channels through which corruption indirectly affects growth. Results suggest that corruption hinders growth through its adverse effects on investment in physical capital, human capital, and political instability. Concurrently, corruption is found to foster growth by reducing government consumption and, less robustly, increasing trade openness. Overall, a total negative effect of corruption on growth is estimated from these channels. These effects are found to be robust to modifications in model specification, sample coverage, and estimation techniques as well as tests for model exhaustiveness. Moreover, the results appear supportive of the notion that the negative effect of corruption on growth is diminished in economies with low governance levels or a high degree of regulation. No one-size-fits-all policy response appears supportable.

Equity home bias—A global perspective from the shrunk frontier

Equity home bias research explicates the need for correct characterisation of benchmark (optimum) foreign equity investment weights required for the estimation of equity home bias. This paper improves upon the traditional mean–variance optimisation framework by utilising the Bayes–Stein shrinkage technique to obtain optimal equity weights and home bias estimates for 39 countries for the period, 2000–2009. A regression model estimated with system GMM identifies financial integration, trade openness (exposure), stock market capitalisation, idiosyncratic risk and Global Financial Crisis (GFC) as the significant determinants of equity home bias. Unlike earlier studies, the relationship between home bias and financial integration is found to be U-shaped

Estimating Efficiency Effects in a Panel Data Stochastic Frontier Model

This paper proposes a stochastic frontier model which includes time-invariant unobserved heterogeneity along with the efficiency effects. The efficiency effects are specified by a standard normal cumulative distribution function of exogenous variables which ensures the efficiency scores to lie in a unit interval. The model parameters are consistently estimated by non-linear least squares after removing the individual effects by the usual within transformation. The efficiency scores are directly calculated once the model is estimated. An empirical illustration based on widely used panel data on Indian farmers is presented