The labor market return to academic fraud

Academic fraud by undergraduate students is pervasive, but should it be taken seriously as an economic problem? Our research suggests so. Using a unique data set from the Caucasus, we estimate a large positive effect of academic fraud on the probability of employment. Econometrically, we deal with endogenous selection into academic fraud and possible measurement error in the reporting of academic fraud using partial identification techniques. The findings demonstrate that incentives to commit academic fraud are strong and point towards the potentially damaging consequences of academic fraud in broader settings.     

The psychological effects of academic labeling: The case of class tracks

This paper studies the psychological effects of academic labeling. Exploiting the class tracking policy in a Chinese university, we identify the psychological impacts of the academic labels associated with class tracks on the students via a regression discontinuity design in the track assignment rule. We establish causal evidence of positive effects of a better academic label on the academic self-concept and self-expectation of students as well as their academic interest. Our setup ensures that the identified effects of the labels are through the mechanism of student responses, not teachers and schools, suggesting that previous literature focusing on the mechanism of teachers and schools may have neglected an important channel through which academic labels may impact students.     

Macro foundations of micro-economics

This paper attempts to circumvent the nonsense of the representative agent which arises in macroeconomics. It recognises that macro data are relevant to agents' decisions, and so excess demands should contain macro variables as arguments. The macro variables I consider are the price index, unemployment and GNP. This paper should be regarded as a tentative beginning to make macroeconomic theory literate. Received: September 19, 2001; revised version: July 24, 2002 RID="*" ID="*"I am delighted to contribute to this Festschrift for Mordecai now that he has reached the appropriate age.     

Foreign News and Spillovers in Emerging European Stock Markets

We analyze foreign news and spillovers in the emerging EU stock markets (the Czech Republic, Hungary, and Poland). We employ high‐frequency five‐minute intraday data on stock market index returns and four classes of EU and US macroeconomic announcements during 2004–07. We account for the difference of each announcement from its market expectation and we jointly model the volatility of the returns accounting for intraday movements and day‐of‐the‐week effects. Our findings show that intraday interactions on the new EU markets are strongly determined by mature stock markets as well as the macroeconomic news originating thereby. We show that strong contemporaneous links across markets are present even after controlling for macroeconomic announcements. Finally, in terms of specific announcements, we are able to show the exact sources of macro news spillovers from the developed foreign markets to the three new EU markets under research.     

Competitive experience and gender difference in risk preference,trust preference and academic performance: Evidence from Gaokao in China

This study examines whether and how competitive experience affects gender difference in the preferences for risk and trust as well as academic performance. By utilizing the provincial differences in college admission rates as an indicator of competitive experience for students, we assess its relationship with gender difference in risk preference, trust preference, and academic performance. We find that females from provinces with lower college admission rates are more risk averse and less trustful, and perform better in more competitive environment, compared with their male counterparts. Our study suggests that observed gender differences may partially reflect the effects of schooling environment rather than inherent gender traits.     

THE EFFECT OF THE BUSINESS CYCLE ON FRESHMAN FINANCIAL AID

When the economy slips into recession, more needy students enroll in college, increasing the need for financial aid while resources for aid become more scarce. We use “Freshman Survey” data from the Higher Education Research Institute to observe changes in financial aid composition from 1980 to 2000. We use state‐level tax revenues, unemployment rates, and personal income growth as macroeconomic indicators. During recessions, we find that the burden of financing a student's college education shifts from states and institutions to families and federal programs. We also show that these macroeconomic fluctuations are increasingly volatile for underrepresented minorities. (JEL I22, H52, E32)     

Deleveraging crises and deep recessions: a behavioural approach

Macroeconomic dynamics are characterized by alternating patterns of periods of relative stability and large swings. Standard microfounded macroeconomic models account for these patterns through exogenous and persistent shocks. In this article, we develop a fully decentralized and microfounded macroeconomic agent-based model, augmented with an opinion model, which produces endogenous waves of pessimism and optimism that feed back into firms’ leverage and households’ precautionary saving behaviour. A major emergent property of our model is precisely the complex successions of stable and unstable macroeconomic regimes. The model is further able to account for a wide spectrum of macro and micro empirical regularities. Within this framework, we analyse a series of macroeconomic phenomena of key relevance in the current macroeconomic debate, especially the occurrence of deleveraging crises and Fisherian debt-deflation recessions. Our analysis suggests that the relative dynamics of prices and wages and the resulting income distribution along a deflationary path are critical determinants of the severity of the recession and the chances of recovery.     

Inequality and the business cycle: evidence from U.S. survey data

ABSTRACT

We study the effects of macroeconomic shocks on measures of economic inequality obtained from U.S. survey data. To identify aggregate supply, aggregate demand, and monetary policy shocks, we estimate vector autoregressions and impose sign and zero restrictions on impulse response functions. We find that the effects of the macroeconomic shocks on inequality depend on the type of shock as well as on the measure of inequality considered. Contractionary monetary policy shocks increase expenditure and consumption inequality, whereas income and earnings inequality are less affected. Adverse aggregate supply and demand shocks increase income and earnings inequality, but reduce expenditure and consumption inequality. Our results suggest that different channels dominate in the transmission of the shocks. The earnings heterogeneity channel is consistent with the inequality dynamics after monetary policy shocks, but it appears to be less crucial when the economy is hit by either aggregate supply or aggregate demand shocks. Using variance decompositions, we find that although the macroeconomic shocks account for large shares of the variation in the macroeconomic variables, their contributions to the dynamics of the inequality measures are limited.     

Can information and counseling help students from poor rural areas go to high school? Evidence from China

Recent studies have shown that only about two-thirds of the students from poor, rural areas in China finish junior high school and enter high school. One factor that may be behind the low rates of high school attendance is that students may be misinformed about the returns to schooling or lack career planning skills. We therefore conduct a cluster-randomized controlled trial (RCT) using a sample of 131 junior high schools and more than 12,000 students to test the effects of providing information on returns or career planning skills on student dropout, academic achievement and plans to go to high school. Contrary to previous studies, we find that information does not have significant effects on student outcomes. Unlike information, counseling does have an effect. However, the effect is somewhat surprising. Our findings suggest that counseling increases dropouts and seems to lower academic achievement. In our analysis of the causal chain, we conclude that financial constraints and the poor quality of education in junior high schools in poor, rural areas (the venue of the study) may be contributing to the absence of positive impacts on student outcomes from information and counseling. The negative effects of counseling on dropout may also be due to the high and growing wages for unskilled labor (high opportunity costs) in China’s transitioning economy. It is possible that when our counseling curriculum informed the students about the reality of how difficult were the requirements for entering academic high school, it may have induced them to revise their benefit-cost calculations and come to the realization that they are better off dropping out and/or working less hard in school.     

The impact of a study abroad programme on learning abilities and personality traits: evidence from a randomization

Personality traits are increasingly considered as a powerful predictor of socio-economic success as academic achievement. In this article, we exploit the random assignment of applicants to a programme in order to retrieve unbiased estimates of the impact of studying abroad on both cognitive and noncognitive abilities. Our findings suggest that secondary school students, especially those considered ‘more able’, benefited from a 1-month experience abroad, as it enhanced both personality traits and language proficiency.     

Loss aversion in aggregate macroeconomic time series

Prospect theory has been the focus of increasing attention in many fields of economics. However, it has scarcely been addressed in macroeconomic growth models—neither on theoretical nor on empirical grounds. In this paper we use prospect theory in a stochastic optimal growth model. Thereafter, the focus lies on linking the Euler equation obtained from a prospect theory growth model of this kind to real macroeconomic data. We will use generalized method of moments (GMM) estimation to test the implications of such a non-linear prospect utility Euler equation. Our results indicate that loss aversion can be traced in aggregate macroeconomic time series.     

Do disaggregated CPI data improve the accuracy of inflation forecasts?

In this paper, we evaluate the role of using consumer price index (CPI) disaggregated data to improve the accuracy of inflation forecasts. Our forecasting approach is based on extracting the factors from the subcomponents of the CPI at the highest degree of disaggregation. The data set contains 54 macroeconomic series and 243 CPI subcomponents from 1992 to 2009 for Mexico. We find that the factor models that include disaggregated data outperform the benchmark autoregressive model and the factor models containing alternative groups of macroeconomic variables. We provide evidence that using disaggregated price data improves forecasting performance. The forecasts of the factor models that extract the information from the CPI disaggregated data are as accurate as the forecasts from the survey of experts.     

Exchange rate pass-through into German import prices – a disaggregated perspective

This study analyses the exchange rate pass-through into German import prices based on disaggregated data taken on a monthly basis between 1995 and 2012. Our main contribution is twofold: firstly, we employ various time-series techniques to analyse data for different product categories, and also cointegration techniques to carefully distinguish between short-run and long-run pass-through coefficients. Secondly, in a panel data approach we estimate time-varying pass-through coefficients and explain their development with regard to various macroeconomic factors. Our results show that long-run pass-through is only partly observable and incomplete, whereas short-run pass-through shows a more unique character, although heterogeneity across product groups does exist. We are also able to identify several macroeconomic factors that determine changes in the degree of pass-through, which is especially relevant for policymakers.     

Macroeconomic News and the Euro/Dollar Exchange Rate

This paper investigates to what extent daily movements in the euro/dollar rate were driven by news about the macroeconomic situation in the USA and the euro area during the first two years of EMU. We examine whether market participants reacted to news in different ways depending on whether the news came from the USA or from the euro area, and whether the news was good or bad. Furthermore, we investigate whether traders' reaction to news has changed over time. We find that macroeconomic news has a statistically significant correlation with daily movements of the euro against the dollar. However, this relationship exhibits considerable time variation. There are indications of asymmetric response, but to different extents at different times. Our results also provide evidence that the market seemed to ignore good news and remain fixated on bad news from the euro area, as often claimed in market commentaries, but only for some time. Finally, we find evidence that the impact of macroeconomic news on the euro/dollar rate was stronger when news switches from good to bad or vice versa.
(J.E.L.: F31).     

Financial advice: Who Exactly Follows It?

Using data from about 290,000 household investment accounts, we provide a comprehensive analysis of the role of personal economic and demographic characteristics in determining the tendency to utilize financial advice. Our findings indicate that investors' sophistication level, captured using several proxies, is negatively correlated with the decision to follow the financial advice received. In addition, we find that individual differences such as age, gender and family status are strongly associated with the tendency to use the advice. The findings are robust under different distributions of the data. Finally, we also test how macroeconomic uncertainty affects the tendency to utilize financial advice. Our results demonstrate that higher levels of financial uncertainty are associated with less use of financial advice.     

Macroeconomic performance and convergence in OECD countries

This paper investigates the robustness of the correlation between growth and a set of variables which comprises accumulation rates in human and physical capital and medium term macroeconomic indicators in OECD countries. We include these variables as additional regressors in the standard growth equation that comes from the human capital-augmented Solow model. Our results show that variables related to medium term macroeconomic performance affect both growth and convergence. In some periods these variables even outperform the explanatory power of the conventional growth variables such as the accumulation rates. Our results also suggest that it is difficult to analyse the contribution to growth of any particular macroeconomic indicator in an isolated way. Rather, these effects should be studied in a framework that accounts for the macroeconomic performance of a country.     

Assessing and predicting financial vulnerability of Italian households: a micro-macro approach

In this study we develop a micro-founded model to analyse the economic-financial conditions of Italian households. Using household level data, we build an indicator to identify vulnerable households based on their budget constraint and the composition of their financial portfolio. Then, we calculate the impact of the predicted trends of macroeconomic variables on the indicator in order to monitor its evolution in the short term (2015–2017). The empirical analysis is based on the Survey of Household Income and Wealth of the Bank of Italy and on a set of macroeconomic forecasts. Our findings suggest that the macroeconomic scenario for the period 2015–2017 implies a progressive reduction in the percentage of vulnerable households for the full extent of the projection.     

Is retention beneficial to low-achieving students? Evidence from Portugal

The role of retention as an educational tool to overcome under-achievement is a hotly debated issue, especially given that the results in the literature are not consensual. The Portuguese case is particularly well suited to study this issue: all students must take standardized national exams at specific grades. Moreover, the available dataset tracks the performance of students over time. Therefore, we are able to measure the impact of students’ retention on their subsequent academic performance since we can control for each student’s initial level of ability at the moment of retention. We use a propensity score matching approach, in which retained and promoted 4th grade students are matched according to their socioeconomic characteristics and the scores obtained in national exams. To address potentially remaining endogeneity biases, we also use the culture of retention at school level as an instrumental variable. The results suggest that in some situations retentions may have on average a positive impact on future achievement. However, in the cases where statistically significant impacts are found, the estimated magnitudes are relatively small. Our results are relevant for countries with high retention rates that are considering alternative educational policies to promote students’ achievement.     

On the optimality of escalating penalties for repeat offences against the academic honour code

Although academic dishonesty has a long history in academia, its pervasiveness has recently reached an alarming level. Academic dishonesty not only undermines the purpose of education and the assessment process but also threatens the creditability of academic records. We propose a framework for analysing students’ behaviour with respect to academic policies and honour codes. We draw an analogy between law enforcement and academic integrity enforcement and highlight similarities and differences. The proposed framework captures major determinants of academic dishonesty reported in the literature, namely detection probability, punishment severity, class average and record of academic deviance. The framework models both students’ development of nonacademic skills to improve their grades and teaching assistants’ development of detection skills, which both affect the detection probability. Our analysis demonstrates that the optimality of escalating penalties is conditional on the offenders and academic policy enforcers learning. Use-case scenarios are presented to facilitate the implementation of our results in classrooms.     

The nexus between corruption and academic freedom: An international investigation of the underlying linkages

Studying a relatively under-researched aspect in economics, this paper examines the nexus between corruption and academic freedom. Our main hypothesis is that greater corruption undermines academic freedom and we test this hypothesis using data for 104 nations from 2012 to 2018. Our results support the main hypothesis, and this finding also generally holds across alternative aspects of academic freedom. Another contribution of this work lies in dissecting the direct and indirect (through corruption) effects of various drivers of academic freedom. Finally, additional insights are gained by considering different dimensions of academic freedom and how they are impacted by corruption.