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

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

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

Anomalous Soft Photons in Hadron Production

Anomalous soft photons in excess of what is expected from electromagnetic bremsstrahlung have been observed in association with the production of hadrons, mostly mesons, in high-energy (K+)p, (pi+)p, (pi-)p, pp, and (e+)(e-) collisions. We propose a model for the simultaneous production of anomalous soft photons and mesons in quantum field theory, in which the meson production arises from the oscillation of color charge densities of the quarks of the underlying vacuum in the flux tube. As a quark carries both a color charge and an electric charge, the oscillation of the color charge densities will be accompanied by the oscillation of electric charge densities, which will in turn lead to the simultaneous production of soft photons during the meson production process. How the production of these soft photons may explain the anomalous soft photon data will be discussed. Further experimental measurements to test the model will be proposed.Comment: 19 pages, 2 figures, to be published in Physical Review

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

Information Diffusion in a Cobweb World

Based on an assumption of one-way learning, Granato and Wong (2004) consider a framework with two groups of agents, Group L and Group H, where Group L is less attentive and uses the expectations of the more or highly attentive Group H to update their forecasts. The paper shows the boomerang effect, which is defined as a situation where the inaccurate forecasts of a less attentive group confound a more attentive group\u27s forecasts. This extended paper relaxes the one-way learning assumption and investigates the case that both groups are learning from each other, i.e., dual learning. Simulations suggest that a boomerang effect still exists. Surprisingly, although the highly attentive group has a full set of information to make forecasts, they still learn from Group L. The reason is that Group H adjusts their forecasts because there is available information in Group L\u27s forecast measurement error

Inward FDI, Remittances, and Out-migration

In this study, we look at the relationship between remittances received at home, inward Foreign Direct Investment (FDI) and out-migration of individuals with different levels of education. Using the bilateral international migration data in 1990 and 2000, we find that inward FDI tends to deter the out-migration of individuals with secondary and tertiary education, but has no significant impact on the out-migration of individuals with primary education. In addition, remittances received at home induce the out-migration of individuals with primary education, but not the out-migration of individuals with secondary and tertiary education. The stock of existing migrants in a foreign country encourage future out-migration regardless of migrants’ levels of education