This chapter uses fully modified OLS principles to develop new methods for estimating and testing hypotheses for cointegrating vectors in dynamic panels in a manner that is consistent with the degree of cross sectional heterogeneity that has been permitted in recent panel unit root and panel cointegration studies. The asymptotic properties of various estimators are compared based on pooling along the ‘within’ and ‘between’ dimensions of the panel. By using Monte Carlo simulations to study the small sample properties, the group mean estimator is shown to behave well even in relatively small samples under a variety of scenarios.

https://web.williams.edu/Economics/wp/pedroniaie.pdf

Fully modified OLS for heterogeneous cointegrated panels

Econometric policy evaluation: A critique

The stability of the labor share of income is a key foundation in macroeconomic models. We document, however, that the global labor share has signicantly declined since the early 1980s, with the decline occurring within the large majority of countries and industries. We show that the decrease in the relative price of investment goods, often attributed to advances in information technology and the computer age, induced rms

/pdf/the-global-decline-of-the-labor-share-3z94gv9gla.pdf

The Global Decline of the Labor Share

Migration, both within and beyond borders, has become an increasingly prominent theme in domestic and international debates, and is the topic of the 2009 Human Development Report (HDR09). The starting point is that the global distribution of capabilities is extraordinarily unequal, and that this is a major driver for movement of people. Migration can expand their choices — in terms of incomes, accessing services and participation, for example — but the opportunities open to people vary from those who are best endowed to those with limited skills and assets. These underlying inequalities, which can be compounded by policy distortions, is a theme of the report.The report investigates migration in the context of demographic changes and trends in both growth and inequality. It also presents more detailed and nuanced individual, family and village experiences, and explores less visible movements typically pursued by disadvantaged groups such as short term and seasonal migration.There is a range of evidence about the positive impacts of migration on human development, through such avenues as increased household incomes and improved access to education and health services. There is further evidence that migration can empower traditionally disadvantaged groups, in particular women. At the same time, risks to human development are also present where migration is a reaction to threats and denial of choice, and where regular opportunities for movement are constrained.National and local policies play a critical role in enabling better human development outcomes for both those who choose to move in order to improve their circumstances, and those forced to relocate due to conflict, environmental degradation, or other reasons. Host country restrictions can raise both the costs and the risks of migration. Similarly, negative outcomes can arise at the country levels where basic civic rights, like voting, schooling and health care are denied to those who have moved across provincial lines to work and live. HDR09 shows how a human development approach can be a means to redress some of the underlying issues that erode the potential benefits of mobility and/or force migration.

Human Development Report 2009. Overcoming Barriers: Human Mobility and Development

THIS paper is concerned with those actions of business firms which have harmful effects on others. The standard example is that of a factory the smoke from which has harmful effects on those occupying neighbouring properties. The economic analysis of such a situation has usually proceeded in terms of a divergence between the private and social product of the far' ory, in which economists have largely followed the treatment of Pigou in The Economics of Welfare. The conclusions to which this kind of analyris seems to have led most economists is that it would be desirable to make the owner of the factory liable for the damage caused to those injured by the smoke, or alternatively, to place a tax on the factory owner varying with the amount of smoke produced and equivalent in money terms to the damage it would cause, or finally, to exclude the factory from residential districts (and presumably from other

闡釋《社會成本問題》[The Problem of Social Cost]

There is considerable debate regarding the relative contribution of international migrants' remittances to sustainable economic development. While the rates and levels of officially recorded remittances to developing countries has increased enormously over the last decade, academic and policy-oriented research has not come to a consensus over whether remittances contribute to longer-term growth by building human and financial capital or degrade long-run growth by creating labor substitution and "Dutch disease" effects. This paper suggests that contradictory findings have emerged when looking at the remittances-growth link because previous studies have not correctly controlled for endogeneity. Using Dynamic Data Panel estimates we find that remittances exert a weakly positive impact on long-term macroeconomic growth. The paper also considers the proposition that the longer-term developmental impact of remittances is increased in the presence of sound economic policies and institutions.

Remittances, Institutions and Economic Growth

The elasticity of substitution between capital and labor and the direction of technical change are key parameters in many areas of economics. However, little empirical consensus has emerged on the value of the substitution elasticity and arguably less on the nature of technical change. We present estimation of flexible production functions, utilizing Monte Carlo methods for different estimation and methodological strategies. We find that single equation methods (particularly in the presence of biased technical change) are chronically unsuitable for jointly uncovering technical characteristics. Direct estimation of the non-linear CES (particularly when merged with the “normalization” approach) proves to be an improvement, but still suffers identification problems for high elasticity assumptions. We also prove the unsuitability of the widely-used Kmenta approximation to uncover technical change. The key result that emerges is that the superiority of the system approach (i.e., modeling the production function alongside the first-order conditions) especially when merged with normalization.

/pdf/identifying-the-elasticity-of-substitution-with-biased-4c62fsz9ko.pdf

Identifying the Elasticity of Substitution with Biased Technical Change

https://www.econstor.eu/bitstream/10419/34110/1/512343977.pdf

Remittances, Institutions, and Economic Growth

Many studies have addressed the effect of migration on both home and host countries, but few have focused on the effect of the economic flows derived from migration, especially for the Central and East European (CEE) countries. In this paper we analyze the effect of remittances on employment performance for CEE economies. To model the macro effects of remittances on the source country we proceed along the lines of Mancellari et al (1996) who extended the model of Aghion and Blanchard (1994) by adding migration. The impact of remittances on unemployment depends on its effect on productivity growth and entrepreneurial investment. In order to empirically analyze the impact of remittances we estimated a productivity equation using a set of 11 transition countries during the 1990-1999 period. We also analyze the impact of remittances on investment and consumption. Our results show support for the view that remittances have a positive impact on productivity and employment both directly and indirectly through its effect on investment.

/pdf/international-migration-and-the-role-of-remittances-in-qztp8db279.pdf

International Migration and the Role of Remittances in Eastern Europe

In this paper we analyse the effect of remittances on employment performance for Central and East European (CEE) economies. We show that the impact of remittances on unemployment depends on its effect on productivity growth and investment. In order to empirically analyse the impact of remittances we estimate a productivity equation using a set of 11 transition countries during the 1990 to 1999 period. Our results show support for the view that remittances have a positive impact on productivity and employment both directly and indirectly through its effect on investment.

/pdf/international-migration-and-the-role-of-remittances-in-4lrbbclp38.pdf

Miguel A. León-Ledesma

Papers

Remittances, Institutions and Economic Growth

Identifying the Elasticity of Substitution with Biased Technical Change

Remittances, Institutions, and Economic Growth

International Migration and the Role of Remittances in Eastern Europe

International Migration and the Role of Remittances in Eastern Europe