Enhancing the teaching of introductory economics with a team-based,multi-section competition

The authors describe a unique approach to enhancing student learning at the introductory economics level that utilizes a multi-section, team-based competition. The competition is structured to supplement learning throughout the entire introductory course. Student teams are presented with current economic issues, trends, or events, and use economic tools and theories to comprehensively examine the topics. Students present their analyses in their own sections with one team from each section moving on to compete in an inter-section round. Students are judged on technicality, creativity, and applicability of economic concepts. The competition has the potential to advance students' creativity, collaboration, communication, and critical and analytical thinking skills, while enhancing their ability to apply foundational economic concepts to real-world settings.     

The Contribution of Associate's Degree Holders to U.S. Earnings,Labor Quality,Productivity, and Overall Economic Growth

There is substantial evidence on the importance of education as a driver of earnings, productivity, and economic growth. However, knowledge of the specific role of associate's degrees in U.S. economic growth is limited. We analyze the sources of U.S. economic growth and identify the contribution of associate's degree holders to improvements in earnings, labor quality, productivity, and overall economic growth. We find evidence that substitution toward workers with associate's degrees has increased U.S. earnings, aggregate labor quality, and productivity, and that these effects are concentrated in the health care, trade, and government sectors. While the average educational attainment of people entering the labor force has plateaued, our results suggest that shifting workers from some college to associate degrees could improve earnings, the quality of the workforce, productivity, and growth, potentially without more time spent in school.     

Institutions,human capital,and growth: The institutional mechanism

This paper contributes to the debate on the relationship between human capital, institutions, and economic growth. The paper first develops a micro-foundation model linking institutions to human capital. The advantage of our modeling strategy is that the human capital accumulation function is derived from an endogenous process. The theoretical model shows that improvements in the quality of institutions foster human capital accumulation, decrease income inequality and change the historical development path. The paper uses cross-country panel data from 1965 to 2005 to test some of the model's propositions and finds that deep structures or structural institutions – which are very persistent and rooted on the historical development path of an economy – affect long-term economic performance, while political institutions are uncorrelated with productivity and long-term economic growth. The empirical estimates also show that growth of physical and human capital – instead of levels – determines long-run economic growth.     

Re-assessing the impact of academic performance on salary level and growth: a case study

This study examines the relationship between GPA and salary level and growth using a unique data set of Bryant University graduates in different stages of their careers. This study adds to a divided literature plagued with issues of heterogeneity and omitted variable biases. Results of the empirical analysis suggest that male graduates with higher GPA at graduation have experienced higher salary level and faster salary growth, while GPA has had no significant impact on women’s salary or salary growth.     

Persistence and determinants of income inequality: The Brazilian case

Latin America, which is a region known for its high and persistent income inequality levels, experienced a significant decline in income inequality since the second half of the 1990s. Brazil is a particularly interesting case in Latin America. While the country presented notable economic growth and improvements in income distribution in the early 2000s, Brazil continues to experience high levels of income inequality in comparison with other Latin American or advanced economies. This research contributes to the literature by examining the key drivers of income distribution and the degree of persistence of income inequality among Brazilian states. This research also improves upon previous works by using more recent and comprehensive data and addressing concerns regarding heterogeneity and endogeneity by using the system GMM estimation method. Our findings show that income inequality is highly persistent across Brazilian states and that government policies including income transfer programs made important contributions to reduce income inequality in Brazil. This study also shows that the decline in labor income ratios between different ethnic groups and the increase of the share of formal jobs in the labor market contributed to reduce income inequality.     

Two Tales on the Returns to Education: The Impact of Trade on Wages

This paper uses micro data from the Current Population Survey combined with data from the US International Trade Commission and Bureau of Economic Analysis to evaluate the impacts of international trade (import penetration and export intensiveness) on wages with a special focus on the returns to education. Consistent with the literature, our empirical analysis provides evidence that the wage rates of similarly skilled workers differ across net‐exporting, net‐importing, and nontradable industries. Our results add to the literature by showing that the wage gap usually found across importing and exporting industries vanishes for highly skilled workers (workers with college degree and beyond) when we control for the cross‐effect between international trade and education, but the wage gap due to international trade still persists for low‐skilled workers. This finding supports the view that education serves as an equalizer and counterbalances the adverse impact from import penetration on wages of highly skilled workers.     

SOLVABLE AFFINE TERM STRUCTURE MODELS

An Affine Term Structure Model (ATSM) is said to be solvable if the pricing problem has an explicit solution, i.e., the corresponding Riccati ordinary differential equations have a regular globally integrable flow. We identify the parametric restrictions which are necessary and sufficient for an ATSM with continuous paths, to be solvable in a state space     , where     , the domain of positive factors, has the geometry of a symmetric cone. This class of state spaces includes as special cases those introduced by Duffie and Kan (1996) , and Wishart term structure processes discussed by Gourieroux and Sufana (2003) . For all solvable models we provide the procedure to find the explicit solution of the Riccati ODE.     

Climate change and economic growth in Brazil

Brazil has felt the effects of climate change through significant variability in precipitation resulting in droughts and floods (Grimm, Pal, and Giorgi 2007; Verner and Tebaldi, forthcoming). This article contributes to the literature by examining the impact of rainfall variations on GDP growth rates of Brazilian states. The estimates suggest that spring droughts as well as spring droughts combined with summer floods impact Northeastern Brazil most severely. Because the Northeast has historically been the most economically deprived region in the country, the results suggest that climate events could aggravate inequality throughout the nation.     

Option pricing when correlations are stochastic: an analytical framework

In this paper we develop a novel market model where asset variances–covariances evolve stochastically. In addition shocks on asset return dynamics are assumed to be linearly correlated with shocks driving the variance–covariance matrix. Analytical tractability is preserved since the model is linear-affine and the conditional characteristic function can be determined explicitly. Quite remarkably, the model provides prices for vanilla options consistent with observed smile and skew effects, while making it possible to detect and quantify the correlation risk in multiple-asset derivatives like basket options. In particular, it can reproduce and quantify the asymmetric conditional correlations observed on historical data for equity markets. As an illustrative example, we provide explicit pricing formulas for rainbow “Best-of” options.     

Stochastic Jacobian and Riccati ODE in affine term structure models

In affine term structure models (ATSM) the stochastic Jacobian under the forward measure plays a crucial role for pricing, as discussed in Elliott and van der Hoek (Finance Stoch 5:511–525, 2001). Their approach leads to a deterministic integro-differential equation which, apparently, has the advantage of by-passing the solution to the Riccati ODE obtained by the standard Feynman-Kac argument. In the generic multi-dimensional case, we find a procedure to reduce such integro-differential equation to a non linear matrix ODE. We prove that its solution does necessarily require the solution of the vector Riccati ODE. This result is obtained proving an extension of the celebrated Radon Lemma, which allows us to highlight a deep relation between the geometry of the Riccati flow and the stochastic calculus of variations for an ATSM. We are grateful to two anonymous referees for their careful reading of the paper.