EXTERNAL BALANCE SHEETS: CONCEPTS AND EMPIRICAL APPROXIMATION*

International financial relationships should be interpreted in the context of a comprehensive conceptual framework; this paper advocates the use of concepts developed to measure and analyze balance of payments flows. Broad-based, empirical estimates of the international wealth of most countries of the western world are presented on the basis of cumulating balance of payments flows over a lengthy period. Among the more interesting aspects of the results are: the importance of intra-industrial country capital flows in a global context; the propensity of debtors to regard a larger share of their aggregate external debt as long term than do their creditors; the overwhelming importance of banks located in the industrial countries in global external asset and liability positions, and the preponderance of short-term positions taken by those banks; and the tendency for balance of payments records to report more direct investment assets than liabilities. The paper also contains some observations, based on the cumulations of balance of payments capital flows, concerning the nature and size of certain deficiencies in alternative sources–particularly the World Bank's Debtor Reporting System, and the Bank for International Settlements' banking data–of information on outstanding external debt positions.     

Dynamic Interactions Between Private and Public Real Estate Markets: Some International Evidence

This study evaluates long-run relationships and short-run linkages between the private (unsecuritized) and the public (securitized) real estate markets of Australia, Netherlands, United Kingdom and the United States. Results indicate the existence of long-run relationships between the public and private real estate markets of each of the countries under consideration. This implies that for all countries, investors would not have realized long-term portfolio diversification benefits from allocating funds in both the private and public real estate markets since these assets are substitutable over the long run. Short-run analyses also reveal significant causal relationships between private and public markets of all countries under consideration. As expected, it was found that price discovery occurred in the public real estate market in that it leads but is not led by its private real estate market counterpart.     

Are Multiple-Choice Exams Easier for Economics Students? A Comparison of Multiple-Choice and “Equivalent” Constructed-Response Exam Questions

Many economics students believe that multiple-choice (MC) exams are easier than constructed-response (CR) exams. If true understanding of economics is reflected by performance on CR exams, then easier MC exams would give rise to misleading measures of student understanding of economics, creating a false sense of complacency among both instructors and students. This article investigates this issue by comparing student scores on MC and “equivalent” CR questions. Our results show that, for certain types of MC questions, students do indeed score better, even after correcting for guessing, and on other types of questions, they produce similar scores. These results are unaffected by comparing males versus females or “good” versus “poor” students.     

On an inappropriate means of reducing multicollinearity

In a recent issue of this journal, Buck and Hakim suggest a means of alleviating the impact of multicollinearity in the context of grouped data and show how hypothesis testing can be conducted using this estimation procedure. This note shows that (a) their suggested procedure is analytically equivalent to the traditional estimation procedure, and (b) their hypothesis-testing procedure is incorrect, invalidating their conclusions concerning the interjurisdictional mobility of urban criminals.     

On the optimality of unequal class sizes

The Glass and Smith (Education and Evaluation and Policy Analysis, 1979, 1, 2–16) meta-analysis of class size studies is shown to have employed an inappropriate functional form, negating Lippman's (Economics Letters, 1990, 33, 193–196) result concerning the optimality of equal class sizes. Policy implications for department chairs are noted.     

DEVELOPING A MULTI-SCALE MULTI-REGION INPUT–OUTPUT MODEL

Many efforts have recently been devoted to developing global multi-region input–output (GMRIO) models. Unfortunately, the scales of GMRIO models do not allow them to capture the heterogeneity of regions within a single country. Multi-scale models can provide more comprehensive analyses capable of capturing the interdependencies of the global economy while preserving regional differences. The primary objective of this research is to develop methods for integrating multi-region input–output data sets from multiple spatial scales into multi-scale multi-region input–output (MSMRIO) models. These methods result in models that may have unusual features such as non-square trade coefficient matrices and a mix of industry-by-industry and commodity-by-commodity technical coefficients. To demonstrate the feasibility of MSMRIO modelling, a Canada-centric model was developed. This model includes 47 countries and Canada's 13 subnational regions. A MSMRIO model provides a tool to analyse global issues with a more spatially detailed focus.