Financial Aid and Higher Education Enrollment in Chile: A Government Policy Analysis

This paper evaluates the impact of the Chilean government's nancial aid on college and vocational education enrollment. We found that there is an endogenous process in the application for nancial aid. To solve this problem we use a two-step procedure with instrumental variables (IV) and found that nancial aid increases the probability of students going to college by over 30%. In the case of vocational education, we found that being pre-selected for college nancial aid decreases the enrollment. However, vocational nancial aid increases that probability of enrollment. Therefore, students choose college education over vocational education when they have nancial aid for both. Theoretical conclusion and public policy recommendations are provided.Financial aid; college enrollment; Chile; education; public policy.

A model-based methodology for managing technological risk

Imperial Users onl

Testing the Forecasting Performance of Ibex 35 Option-implied Risk-neutral Densities

Published also as: Documento de Trabajo Banco de España 0504/2005.risk-neutral densities, forecasting performance

Option-Implied Preferences Adjustments and Risk-Neutral Density Forecasts

The main objective of this paper is to analyse the value of information contained in prices of options on the IBEX 35 index at the Spanish Stock Exchange Market. The forward looking information is extracted using implied risk-neutral density functions estimated by a mixture of two-lognormals and three alternative risk-adjustments: the classic power and exponential utility functions and a habit-based specification that allows for a counter-cyclical variation of risk aversion. Our results show that at four-week horizon we can reject the hypothesis that between October 1996 and March 2000 the risk-neutral densities provide accurate predictions of the distributions of future realisations of the IBEX 35 index at a four-week horizon. When forecasting through risk-adjusted densities the performance of this period is statistically improved and we no longer reject that hypothesis. All risk-adjusted densities generate similar forecasting statistics. Then, at least for a horizon of four-weeks, the actual risk adjustment does not seem to be the issue. By contrast, at the one-week horizon risk-adjusted densities do not improve the forecasting ability of the risk-neutral counterparts.forecasting performance, risk adjustment, option implied densities