https://hal.archives-ouvertes.fr/hal-00501795/document

Testing slope homogeneity in large panels

This paper proposes a modified version of Swamy's test of slope homogeneity for panel data models where the cross section dimension (N) could be large relative to the time series dimension (T). The proposed test exploits the cross section dispersion of individual slopes weighted by their relative precision. In the case of models with strictly exogenous regressors and normally distributed errors, the test is shown to have a standard normal distribution. Using Monte Carlo experiments, it is shown that the test has the correct size and satisfactory power in panels with strictly exogenous regressors for various combinations of N and T. For autoregressive (AR) models the proposed test performs well for moderate values of the root of the autoregressive process. But for AR models with roots near unity a bias-corrected bootstrapped version of the test is proposed which performs well even if N is large relative to T. The proposed cross section dispersion tests are applied to testing the homogeneity of slopes in autoregressive models of individual earnings using the PSID data. The results show statistically significant evidence of slope heterogeneity in the earnings dynamics, even when individuals with similar educational backgrounds are considered as sub-sets.

Testing Slope Homogeneity in Large Panels

Mathematica--A System for Doing Mathematics by Computer.

Even though some countries track students into differing-ability schools by age 10, others keep their entire secondary-school system comprehensive. To estimate the effects of such institutional differences in the face of country heterogeneity, we employ an international differences-in-differences approach. We identify tracking effects by comparing differences in outcome between primary and secondary school across tracked and non-tracked systems. Six international student assessments provide eight pairs of achievement contrasts for between 18 and 26 cross-country comparisons. The results suggest that early tracking increases educational inequality. While less clear, there is also a tendency for early tracking to reduce mean performance. Therefore, there does not appear to be any equity-efficiency trade-off.

/pdf/does-educational-tracking-affect-performance-and-inequality-4ow18allsk.pdf

Does Educational Tracking Affect Performance and Inequality? Differences-in-Differences Evidence across Countries

http://docs.dises.univpm.it/web/quaderni/pdfmofir/Mofir065.pdf

Public debt and economic growth: Is there a causal effect?

This paper studies the sustainability of fiscal policy for selected Furo-area countries. We focus on those countries that either have a high debt to GDP ratio (Italy) or have recently violated the Maastricht treaty by permitting more than three percent of the deficit to GDP ratio (France, Germany, and Portugal). We apply an approach developed by Bohn who proposes to study whether the primary surplus to GDP ratio is a positive function of the debt to GDP ratio which does not need arbitrary discount rates that other approaches have to assume. By controlling for the impact of other variables in this process, we can show that for the above mentioned countries fiscal policy shows evidence for sustainability, although the three percent rule of the Maastricht treaty might temporarily be violated. We also compare our results from the Euro-area countries to results obtained for the US fiscal policy.

Debt sustainability in the European Monetary Union: Theory and empirical evidence for selected countries

Endogenous Growth, Government Debt and Budgetary Regimes *

In economics, the emergence of New Growth Theory in recent decades has directed attention to an old and important problem: what are the forces of economic growth and how can public policy enhance them? This book examines major forces of growth--including spillover effects and externalities, education and formation of human capital, knowledge creation through deliberate research efforts, and public infrastructure investment Unique in emphasizing the importance of different forces for particular stages of development, it offers wide-ranging policy implications in the process The authors critically examine recently developed endogenous growth models, study the dynamic implications of modified models, and test the models empirically with modern time series methods that avoid the perils of heterogeneity in cross-country studies Their empirical analyses, undertaken with newly constructed time series data for the United States and some core countries of the Euro zone, show that models containing scale effects, such as the R&D model and the human capital model, are compatible with time series evidence only after considerable modifications and nonlinearities are introduced They also explore the relationship between growth and inequality, with particular focus on technological change and income disparity The Forces of Economic Growth represents a comprehensive and up-to-date empirical time series perspective on the New Growth Theory

The Forces of Economic Growth: A Time Series Perspective

This paper presents and analyses an endogenous growth model with public capital and public debt. It is assumed that the ratio of the primary surplus to gross domestic income is a positive linear function of the debt income ratio which assures that public debt is sustainable. The paper then derives necessary conditions for the existence of a sustainable balanced growth path for the analytical model. Further, simulations are undertaken in order to gain insight into stability properties of the model and in order to analyse growth effects of deficit financed increases in public investment. The latter is done for the model on the sustainable balanced growth path as well as for the model along the transition path.

An endogenous growth model with public capital and sustainable government debt

In this paper, we test whether German public debt has been sustainable by resorting to a test proposed by Bohn (1998). We apply non-parametric and semi-parametric regressions with time depending coefficients. This test shows that the mean of the coefficient relevant for sustainability has been significantly positive over the time period considered. However, there is a negative trend in that coefficient which seems to have ceased to decline only in the middle to late 1990s. Further, we find evidence that the response of the primary deficit is a U-shaped function of the debt ratio which first declines and then rises after a certain threshold of the debt ratio is exceeded.

Alfred Greiner

Papers

Debt sustainability in the European Monetary Union: Theory and empirical evidence for selected countries

Endogenous Growth, Government Debt and Budgetary Regimes *

The Forces of Economic Growth: A Time Series Perspective

An endogenous growth model with public capital and sustainable government debt

Testing Sustainability of German Fiscal Policy. Evidence for the Period 1960-2003