National Bureau of Economic Research

About: National Bureau of Economic Research is a nonprofit organization based out in Cambridge, Massachusetts, United States. It is known for research contribution in the topics: Monetary policy & Population. The organization has 2626 authors who have published 34177 publications receiving 2818124 citations. The organization is also known as: NBER & The National Bureau of Economic Research.

Do Better Schools Lead to More Growth? Cognitive Skills, Economic Outcomes, and Causation

Abstract: We develop a new metric for the distribution of educational achievement across countries that can further track the cognitive skill distribution within countries and over time. Cross-country growth regressions generate a close relationship between educational achievement and GDP growth that is remarkably stable across extensive sensitivity analyses of specification, time period, and country samples. In a series of now-common microecono- metric approaches for addressing causality, we narrow the range of plausible interpretations of this strong cognitive skills-growth relationship. These alternative estimation approaches, including instrumental variables, difference-in-differences among immigrants on the U.S. labor market, and longitudinal analysis of changes in cognitive skills and in growth rates, leave the stylized fact of a strong impact of cognitive skills unchanged. Moreover, the results indicatethatschoolpolicycanbeanimportantinstrumenttospurgrowth.Thesharesofbasic

Empirical Exchange Rate Models of the Nineties: Are Any Fit to Survive?

Abstract: Previous assessments of nominal exchange rate determination have focused upon a narrow set of models typically of the 1970's vintage. The canonical papers in this literature are by Meese and Rogoff (1983, 1988), who examined monetary and portfolio balance models. Succeeding works by Mark (1995) and Chinn and Meese (1995) focused on similar models. In this paper we re-assess exchange rate prediction using a wider set of models that have been proposed in the last decade: interest rate parity, productivity based models, and behavioral equilibrium exchange rate' models. The performance of these models is compared against a benchmark model the Dornbusch-Frankel sticky price monetary model. The models are estimated in error correction and first-difference specifications. Rather than estimating the cointegrating vector over the entire sample and treating it as part of the ex ante information set as is commonly done in the literature, we recursively update the cointegrating vector, thereby generating true ex ante forecasts. We examine model performance at various forecast horizons (1 quarter, 4 quarters, 20 quarters) using differing metrics (mean squared error, direction of change), as well as the consistency' test of Cheung and Chinn (1998). No model consistently outperforms a random walk, by a mean squared error measure; however, along a direction-of-change dimension, certain structural models do outperform a random walk with statistical significance. Moreover, one finds that these forecasts are cointegrated with the actual values of exchange rates, although in a large number of cases, the elasticity of the forecasts with respect to the actual values is different from unity. Overall, model/specification/currency combinations that work well in one period will not necessarily work well in another period.

The Effect of Prison Population Size on Crime Rates: Evidence From Prison Overcrowding Litigation

Abstract: Previous studies of the impact of changes in prisoner populations on crime rates have failed to adequately control for the simultaneity between those two variables. While increases in the number of prisoners are likely to reduce crime, rising crime rates also translate into larger prison populations. To break that simultaneity, this paper uses the status of prison overcrowding litigation in a state as an instrument for changes in the prison population. Overcrowding litigation is demonstrated to have a negative impact on prison populations, but is unlikely to be related to fluctuations in the crime rate, except through its effect on prison populations. Instrumenting results in estimates of the elasticity of crime with respect to the number of prisoners that are two to three times greater than previous studies. The results are robust across all of the crime categories examined. For each one-prisoner reduction induced by prison overcrowding litigation, the total number of crimes committed increases by approximately 15 per year. The social benefit from eliminating those 15 crimes is approximately $45,000; the annual per prisoner costs of incarceration are roughly $30,000.

Time-Varying Conditional Covariances in Tests of Asset Pricing Models

Abstract: This paper proposes tests of asset pricing models that allow for time variation in conditional covariances. The evidence indicates that the conditional covariances do change through time. Estimates of the expected excess return on the market divided by the variance of the market (reward-to-risk ratio) are presented for the Sharpe-Lintner CAPM, as well as a number of tests of the model specification. The patterns of the pricing errors through time suggest the model's inability to capture the dynamic behavior of asset returns. This is the working paper version of my 1989 Journal of Financial Economics article.

The Syndication of Venture Capital Investments

Abstract: This paper examines three rationales for the syndication of venture capital investments, using a sample of 271 private biotechnology firms Syndication is commonplace, even in the first-round investments Experienced venture capitalists primarily syndicate first-round investments to venture investors with similar levels of experience In later rounds, established venture capitalists syndicate investments to both their peers and to less experienced capita) providers When experienced venture capitalists invest for the first time in later rounds, the firm is usually doing well Syndication also often insures that the ownership stake of the venture capitalist stays constant in later venture rounds I argue that the results are consistent with the proposed explanations