The impact of cost on the choice of university: evidence from Ontario

Abstract. This paper provides the first Canadian study of the link between cost to the student and the choice of university. Over the past two decades, there has been a substantial increase in the differences among Ontario universities in ‘net cost’ defined as tuition and fees minus the expected value to an academically strong student of a guaranteed merit scholarship. Our estimates generally indicate no relationship between net cost and the overall share of strong applicants that a university is able to attract. An increase in net cost is associated with an increase in the ratio of strong students from high‐income neighbourhoods to strong students from middle‐income and low‐income neighbourhoods in Arts and Science programs but not in Commerce and Engineering. Finally, more advantaged students are more likely to attend university, but merit aid is not of disproportionate benefit to those from more economically advantaged backgrounds, given registration. JEL classification: Health Education and Welfare     

Does the sophistication of use of unemployment insurance evolve with experience?

Abstract The subject of this paper is the repeat use of UI/EI benefits in Canada. The first objective is to investigate empirically the pattern of adjustment that UI users exhibit over a multiple claim horizon. Our secondary objective is to investigate a behavioural channel that might potentially underlie observed adjustment effects, namely, individual learning effects. We estimate an econometric model of how certain features of their claims change as they file subsequent claims. We find strong empirical patterns suggesting that there does appear to be some sort of an adjustment process; beneficiaries tend to approach a desired value for these particular facets of their UI claims. There appears to be some process of growing sophistication of UI use – which some might label ‘gaming the system’– reflecting the adjustment of claims and the concomitant employment patterns to the provisions and rules of the regime. We also uncover evidence in favour of the existence of individual learning effects.     

Inventories,inflation dynamics and the New Keynesian Phillips curve

We introduce inventories into an otherwise standard New Keynesian model and study the implications for inflation dynamics. Inventory holdings are motivated as a means to generate sales for demand-constrained firms. We derive various representations of the New Keynesian Phillips curve with inventories and show that one of these specifications is observationally equivalent to the standard model with respect to the behavior of inflation when the model's cross-equation restrictions are imposed. However, the driving variable in the New Keynesian Phillips curve – real marginal cost – is unobservable and has to be proxied by, for instance, real unit labor cost. An alternative approach is to impute marginal cost by using the model's optimality conditions. We show that the stock–sales ratio is linked to marginal cost. We also estimate these various specifications of the New Keynesian Phillips curve using GMM. We find that the predictive power of the inventory-specification at best approaches that of the standard model, but does not improve upon it.     

Social contracts,markets and efficiency: Groundwater irrigation in North India

This paper uses primary data to analyze the institutions and informal markets that govern groundwater allocation in a sugarcane-cultivating village in North India. We find that, in contrast to earlier literature, the observed water trades result in efficient water allocation across farms. We interpret this and other stylized facts in terms of a social contract using a simple bargaining model with limited inter-player transfers. Poor functioning of the power sector leads to reduced pumping and a water supply constraint. Simulations show that power supply reform can significantly increase farm yields, and be financed out of increased farm profits.     

Does non-linearity help us understand,model and forecast UK stock and bond returns: evidence from the BEYR

The usefulness of non-linear models to provide accurate estimates and forecasts remains an open empirical debate. This paper examines the nature of the estimated relationships and forecasting power of smooth-transition models for UK stock and bond returns using a range of financial and macroeconomic variables as predictors. Notably, evidence of non-linearity is stronger when the bond-equity yield ratio is used as the transition variable. This ratio measures whether stocks are over (under)-valued relative to bonds and can act as a signal for portfolio managers. In-sample results reveal noticeable differences regarding the nature of relationships between the linear and non-linear setting, while results of a recursive forecasting exercise reveal both statistical and economic improvement over a linear model. Overall, these results support the view that non-linear estimates and forecasts can provide useful information for stock market traders, portfolio managers and policy-makers.     

A STATE‐LEVEL ANALYSIS OF BUSINESS CYCLE ASYMMETRY

This paper provides a comprehensive examination of asymmetry in US state‐level business cycles. We consider two different types of asymmetry in the adjustment process of a stationary time series: deepness and steepness. The data used in the study are a comparable set of state‐level coincident indexes (SCIs) developed by the Federal Reserve Bank of Philadelphia. Specifically, results from using the momentum‐threshold autoregressive model provide evidence of asymmetry in the growth rate of 23 SCIs as well as the equivalent national coincident index.     

The optimal choice of pre-launch reviewer

We develop a framework in which: (i) a firm can have a new product tested publicly before launch; and (ii) tests vary in toughness, holding expertise fixed. Price flexibility boosts the positive impact on consumer beliefs of passing a tough test and mitigates the negative impact of failing a soft test. As a result, profits are convex in toughness: the firm selects either the toughest or softest test available. The toughest test is optimal when consumers start with an unfavorable prior and receive sufficiently uninformative private signals (an “innovative” product); the softest test is optimal when signals are sufficiently informative.     

Patterns of expectations for emerging sustainable technologies

Innovation is characterized by uncertainties, high risks, large investments and late returns on investment which make it a complex process. This is particularly true for sustainable innovation where market forces alone cannot be relied upon to realize the desired transitions. Insight in the dynamics of such innovation processes is necessary in order to influence technological change toward a more sustainable direction. However, few instruments and indicators are available to assess the performance of emerging technological innovation systems. In this phase competition often takes place based on expectations rather than on technological performance. This paper therefore focuses on the expectation patterns of technological innovation systems in the exploratory phase through the analysis of the expectation dynamics of three emerging technologies in the field of sustainable mobility within the Netherlands: biofuels, hydrogen as a transport fuel and natural gas as a transport fuel. These technologies do not only compete with the current fossil-fuel based system but also with each other. We have collected over 5000 expectation events regarding these technologies for the period 2000–2008 and discuss the insights generated by the comparison of the observed expectation dynamics to theoretical patterns.     

Trends and cycles of the internet evolution and worldwide impacts

In this paper we present a quantitative analysis of the evolution of some Internet and ICT evolution indicators. It focuses on the number of Internet hosts, the Internet penetration index, the ICT development index and the software/protocols development. In addition, we analyzed the series of most impacting events building up the Internet along the last fifty years. These analyses were carried out using the multi-logistic procedure recently proposed by the authors. Our results for hosts counting, penetration index and software/protocols development are compatible with the onset of some radical changes in the Internet technology to be currently underway and we forecast new growth rate peaks to occur by 2015. The software/protocols were found to having been powered by bursts of creativity with periods of the order of the Kuznets and Kondratiev economic cycles. Similar conclusions were drawn from the series of main events building up the Internet. Despite the clear signs of worldwide improvement in the ICT infrastructure and usage between 2002 and 2007 obtained from the ICT development index, its cross-correlation with the human development index (HDI) revealed the presence of a group of countries whose improvements in the operational ICT index are disconnected from their corresponding HDI improvements.     

Firm Market Performance and Volatility in a National Real Estate Sector

We present empirical evidence using daily data for stock prices for 17 real estate companies traded in the Sao Paulo, Brazil stock exchange, from August 26, 2006 to March 31, 2010. We use the U.S. house price bubble, financial crisis and risk measures to instrument for momentums and reversals in the domestic real estate sector. We find evidence of conditional premium persistence and conditional volatility persistence in the market. We find that the conditional risk-return relationship in the sector is consistent with the prospect theory of risk attitudes in this period. Certain companies seem to be operating on a perceived potential industry return above the target, while most others are below the target, and the whole sector is below target on average.