Can we model the educational process?

Operational analysis has not yet made a contribution to the improvement of the educational process. There are several reasons for this. First, relative to the magnitude of the job of teaching our youth, financial support for educational research and analysis has been much smaller than for other problem areas, e.g., health.

The second difficulty is in the relationship between operational analysis and theory. The more complete the theory, the better the system designs resulting from analysis. For education there is no theory. Worse, there are few efforts to develop such theory. It must be recognized, however, that the phenomenon called learning is very complex.

The lack of theory means that the system design proceeds with more uncertainty. Large “safety factors” must be built in. This means that educational systems have to be expensive.

Large, continuing financial support is required; first, to build up present school systems, so that they perform well under existing, changing circumstances; and, second, to support research that will provide theories and models which in turn will lead to more effective learning systems.     

How Banks Price Loans to Public‐Private Partnerships: Evidence from the European Markets

This article presents the findings of a recent analysis of the drivers of credit spreads in project finance loans to public‐private partnerships, or PPPs, an increasingly popular form of procurement worldwide. PPPs are project finance transactions in which project output is a function of government policy in fields such as health, transport, and education. Because of the controversy that now surrounds the use of private finance in PPPs, understanding the determinants of the cost of debt in such highly leveraged projects is of interest to policy makers as well as originators and participants in the transactions. Using a large sample of credit spreads on debt extended to PPP projects in Europe over the past 15 years, the authors' study reports that market risk is the only significant driver of PPP debt credit spreads in a large portfolio of PPP debt; at the same time, technical risks appear to be diversified “away” by the structuring of the projects. Most important, and contrary to standard debt pricing models, factors like loan size, maturity, and leverage do not show up as significant determinants of the cost of debt in PPPs, reflecting a high degree of confidence by lenders that loans will be repaid or recovered. These results support the view that the use of project finance in PPPs is premised on effective risk management as well as confidence in the private sector's ability to manage public projects.     

Cultural Distance and the US Immigrant–Trade Link

Using data from the World and the European Values Surveys, we calculate cultural distances between the US and 54 immigrant home countries and examine the influences of cultural distance and immigrant populations on US imports from and exports to immigrants’ home countries during the years 1997–2004. Our study indicates that, for both US imports and exports, the trade‐enhancing effect of immigrants partially offsets the trade‐inhibiting effect of cultural distance. Further, decomposing our measure of cultural distance into two component dimensions and revisiting the immigrant–trade relationship, we find significant variation in the extent to which immigrants counter the trade‐inhibiting influences of the underlying dimensions of culture for both US imports and exports. Our findings have the implication that by countering the trade‐inhibiting influences of cultural differences between their home and host countries, immigrants exert pro‐development effects.     

The impact of horizontal and vertical FDI on host's country economic growth

In this paper, we contribute to the literature investigating the impact of FDI on host country economic growth by distinguishing between the growth effects of horizontal (market seeking) FDI and vertical (efficiency seeking) FDI. Using a new database, we estimate the growth effects of vertical and horizontal US MNE activity into 44 host countries over the period 1983–2003, also using traditional total FDI figures as a benchmark. Controlling for endogeneity and absorptive capacity effects, we find that horizontal and vertical FDI have positive and significant growth effects in developed countries. Moreover, our results indicate a superior growth effect of horizontal FDI over vertical FDI. In line with existing literature, we find no significant effects of horizontal or vertical FDI in developing countries.     

On reproducible econometric research

Recent software developments are reviewed from the vantage point of reproducible econometric research. We argue that the emergence of new tools, particularly in the open‐source community, have greatly eased the burden of documenting and archiving both empirical and simulation work in econometrics. Some of these tools are highlighted in the discussion of two small replication exercises. Copyright © 2009 John Wiley & Sons, Ltd.