learning and wage dynamics we develop a dynamic model of learning about worker ability in a competitive labor market the model produces three testable implications regarding wage dynamics 1 although the role of schooling in the labor market s inference process declines as performance observations accumulate the estimated effect of schooling on the level of wages is independent of labor market experience 2 timeinvariant variables correlated with ability but unobserved by employers such as certain test scores are increasingly correlated with wages as experience increases and 3 wage residuals are a martingale we present evidence from the nlsy that is broadly consistent with the model s predictions

the impact of immigration comparing two global eras summary this paper asks whether history can inform modern debate about immigration s impact on high wage economies it examines the relationship between migration s labor market impact and capital flows before 1914 the first global era it then assesses the effects of immigration on wages and employment with and without international capital mobility today in the second global era it then explores the links between these economic relationships welfare burdens and immigration policy it concludes with an explanation for the apparent difference in immigration s impact in the two global eras and thus on policy

the message in weekly exchange rates in the european monetary system mean reversion conditional heteroscedasticity and jumps weekly rates of the european monetary system ems vis a vis the deutsche mark from april 1979 to march 1991 are modeled as a combined ma 1 garch 1 1 jump process the moving average ma part accounts for mean reversion required for the rates to stay inside the target zone the generalized autoregressive conditional heteroscedasticity garch part accounts for changing volatility whereas the jump process models parity changes and other erratic movements using an adjusted pearson chi squared goodness of fit test we find similar results for the bernoulli and the poisson jump processes in those cases in which the bernoulli normal distribution does not pass the goodness of fit test a mixture of three normals does finally the ma 1 garch 1 1 bernoulli jump models are jointly estimated assuming a constant contemporaneous correlation matrix for the disturbances and a common jump probability for all the currencies

the effect of immigration along the distribution of wages this paper analyses the effect immigration has on wages of native workers unlike most previous work we estimate wage effects along the distribution of wages we derive a flexible empirical strategy that does not rely on pre allocating immigrants to particular skill groups in our empirical analysis we demonstrate that immigrants downgrade considerably upon arrival as for the effects on native wages we find that immigration depresses wages below the 20th percentile of the wage distribution but leads to slight wage increases in the upper part of the wage distribution the overall wage effect of immigration is slightly positive the positive wage effects we find are although modest too large to be explained by an immigration surplus we suggest alternative explanations based on the idea that immigrants are paid less than the value of what they contribute to production generating therefore a surplus and we assess the magnitude of these effects

foreign exchange market intervention and expectations the yen dollar exchange rate abstract using press reports and official statistics on central bank intervention in conjunction with options market data we find that central bank intervention had no statistically significant systematic impact on the mean or higher moments of the exchange rate during 1993 2000 we also find that japanese authorities appeared to intervene mainly in response to deviations of the exchange rate from some implicit target levels and to a rise in market uncertainty u s monetary authorities intervened only in cooperation with the japanese authorities

do central bank foreign exchange interventions affect market expectations the aim of this article is to study the impact of the brazilian central bank swap interventions on the fx market from 2006 to 2013 in this period these nontraditional interventions were the main

hedonic price estimation of variable urban air quality abstract this paper investigates the validity of the hypothesis that the appropriate specification of the hedonic function should use mean levels of environmental quality a test of the mean specification is constructed by estimating a hedonic equation with the probabilities of various levels of environmental quality entered as independent variables the test indicates rejection of the mean specification the results imply that benefit estimates based on the traditional mean model are likely to be biased and that efforts to improve the accuracy of hedonic methods should consider more complete measures of environmental quality

assimilation to a welfare state labor market performance and use of social benefits by immigrants to finland this paper documents the economic performance of immigrants in a country characterized by an extensive welfare state and a short immigration history upon arrival immigrants to finland have substantially lower employment rates than comparable natives while they experience rapid employment growth only men from oecd countries catch up with natives despite the persisting employment and earnings differences between non oecd immigrants and natives the differences in income transfers disappear in roughly 20 years the immigrant native employment gaps are larger in finland than in australia canada or the us

should central bankers talk to the foreign exchange markets in this paper we study the role of official statements and speeches given by central bank authorities in charge of foreign exchange policy we investigate the impact of statements that comment on and confirm such interventions on the day of the intervention on the two major foreign exchange markets over an extended period 1989 2003 we also study the impact in terms of policy effectiveness of central bank communication before the actual operations our results suggest that appropriate speeches clarifying the current intervention policy can have marginally virtuous effects both in terms of exchange rate level and exchange rate volatility this leads us to conclude that in general actual interventions on the market should still be employed provided that official statements are used to clarify the nature and purpose of these interventions c 2008 elsevier ltd all rights reserved

the labour market impact of immigration in the first part of this paper we present a stylized model of the labour market impact of immigra tion we then discuss mechanisms through which an economy can adjust to immigration changes in factor prices output mix and production technology in the second part we explain the problems of empirically estimating how immigration affects labour market outcomes of the resident population and review some strategies to address these we then summarize some recent empirical studies for the uk and other countries we conclude with an outlook on what we believe are important avenues for future research

the statistical properties of daily foreign exchange rates 1974 1983 abstract this paper examines the statistical properties of daily rates of change of five foreign currencies from 1974 to 1983 the main purpose is to discriminate between two competing explanations for the observed heavy tails of the distribution that the data are independently drawn from a heavy tail distribution which remains fixed over time and that the data come from distributions which vary over time evidence point to the rejection of the first hypothesis further investigations show that the rejection can be attributed to changing means and variances in the data which can be described by a simple statistical model

in search of the exchange risk premium a six currency test assuming mean variance optimization abstract a number of authors examining deviations of actual rates of currency depreciation from forward discounts have claimed to find evidence of risk premiums if these deviations are indeed partly due to risk premiums rather than being entirely due to expectational errors then they should be systematically related to those variables on which risk premiums are thought to depend finance theory tells us that if investors optimize with respect to mean and variance the risk premium depends in a specific way on 1 the supplies of assets denominated in the various currencies 2 the variance covariance matrix of the rates of return and 3 the coefficient of risk aversion the null hypothesis of this paper is that the coefficient of risk aversion is zero countries assets are perfect substitutes and risk premiums are nonexistent the alternative hypothesis is that rates of return are systematically related to asset supplies by a macroeconomic portfolio balance function the maximum likelihood technique used dominates previous attempts to find such a relationship in that the parameters of the portfolio balance function are constrained to depend on the variance covariance matrix as the finance theory says they should on the other hand the technique also dominates previous applications of the finance theory in that the expected returns are allowed to vary over time as the macroeconomic portfolio balance theory says they should the paper s finding is a statistical inability to reject the null hypothesis for a portfolio of six currencies although this could be due to low power in the test

the distribution of foreign exchange price changes trading day effects and risk measurement this study investigates the nature of price changes in a variety of major and minor foreign exchange markets the results suggest that the log of price changes over one trading day intervals seems to follow a non normal stable distribution function different measures of location and to lesser extent scale are present for different days of the week dollar denominated price changes are high on mondays and wednesdays and low on thursdays and fridays for all currencies the wednesday thursday result is consistent with the settlement procedures used in foreign exchange transactions in the dollar the friday monday result is consistent with an increase in demand for the dollar prior to the weekend this study offers some previously unavailable results on the nature of price changes in a certain set of speculative markets in particular this is a study of the distributional characteristics of daily and weekly price changes for a number of major and minor foreign exchange markets the results document the existence of non normal stable distributions for price changes in foreign exchange markets these price change distributions differ by day of the week in ways that are only partly attributable to the institutional structure of the market the results of the study are interpreted within the context of understanding how foreign exchange markets operate and within the context of prior studies of stock market data concerned with summarizing the probability distribution of price changes for different intervals including days of the week since bachelier s 1 original treatise that contained the proposition that speculative market prices follow a process that could be described by a normal distribution there have been numerous alternative attempts to describe the stochastic processes which characterize speculative market prices these studies have not resulted in any generalized description of the probability distribution of price changes in such markets indeed the evidence suggests substantial differences in the process among various types of financial instruments the failure to achieve consensus can be traced to the lack of robustness in the statistical procedures employed to estimate processes and to differences in the underlying institutional or economic arrangements which are unique to that market the possibility of differences in the information set used to assess value or differences in technology for transmitting information makes it important to secure additional

estimating the implicit price of energy efficiency improvements in the residential housing market a hedonic approach abstract in this study a hedonic price model has been used to examine the impact which efficiency improvements have on housing values our study represents an improvement over a previous attempt to examine this issue in that the independent variable used in our analysis is designed to reflect variation in structural efficiency levels among sample homes rather than variation in occupant lifestyles and preferences in addition a flexible functional form is used to prevent bias due to misspecification of the hedonic price equation the study results reveal that efficiency improvements are capitalized into housing prices in des moines iowa at the average efficiency level of homes in the sample an efficiency improvement which results in a 1 decrease in the level of expenditures necessary to maintain the house at 65 f in the average heating season will increase the expected selling price of the house by 11 63 the premium obtained for an equivalent efficiency improvement will be greater than 11 63 in a relatively efficient home and less than 11 63 in a relatively inefficient home without further information concerning the price expectations and discount rates utilized by des moines home buyers and the average remaining life of fuels saving investments in the sample it cannot be determined whether the housing market is pricing fuel savings efficiently regardless of whether or not the implicit price of fuel savings is the outcome of an efficient market information on this implicit price facilitates the estimation of an average resale value of fuel saving investments in addition the results of this study refute the hypothesis that efficiency improving investments are not capitalized into housing prices

central bank interventions and exchange rate band regimes abstract this paper presents an endogenous switching regression model for the exchange rate process where the switch is defined by the central bank criteria functions for intervening we study the signal effect of interventions on the exchange rate using norwegian daily data on official interventions we first find that interventions seemed to have been more effective in moving the exchange rate in the expected desired direction in the regime when the exchange rate was kept away from the edges of the band this type of intervention regime also reduces significantly the conditional volatility of the exchange rate thus when the exchange rate was near the weakest edge of the currency band its conditional variance was significantly larger than when it was moving around its central parity finally we show that in order to obtain consistent estimates intervention variables cannot enter as exogenous variables in the conditional mean or conditional variance of the exchange rate

the intra day impact of communication on euro dollar volatility and jumps abstract in this paper we examine the intra day effects of verbal statements and comments on the fx market uncertainty using two measures continuous volatility and discontinuous jumps focusing on the euro dollar exchange rate we provide empirical evidence of how these two sources of uncertainty matter in measuring the short term reaction of exchange rates to communication events talks significantly trigger large jumps or extreme events for approximately an hour after the news release continuous volatility starts reacting prior to the news intensifies around the release time and stays at high levels for several hours our results suggest that monetary authorities generally tend to communicate with markets on days when uncertainty is relatively severe and higher than normal disentangling the us and euro area statements we also find that abnormal levels of volatility are mostly driven by the communication of the euro area officials rather than us authorities

immigration search and loss of skill this article develops and estimates an on the job search model of the entry of highly skilled immigrants from the former soviet union into the israeli labor market the estimated parameters of the model together with information on the wages of immigrants from earlier waves imply that on average immigrants can expect lifetime earnings to fall short of the lifetime earnings of comparable natives by 57 of this figure 14 percentage points reflect frictions associated with nonemployment and job distribution mismatch and 43 percentage points reflect the gradual adaptation of imported schooling and experience to the local labor market

effects of foreign exchange intervention under public information the chilean case this paper studies the effects of exchange rate interventions using daily and intraday data for chile from 1998 to 2003 its main contribution is the recognition of the role played by transparency and public announcements in the success of the intervention policy through the existence of an expectations mechanism which directly impacts the exchange rate three foreign exchange policy instruments are distinguished spot dollar denominated papers bcd s and announcements and treated as independent interventions time series estimations are used to capture the effect of the traditionally studied spot interventions as well as the effects associated to the announcement channel that we propose as potentially relevant results show that the impact of individual interventions spot and bcd are extremely small and in most cases non significant also the importance of the hypothesized announcement mechanism is confirmed the impact of central bank actions on the exchange rate s level and trend seem to be channeled through the public announcements made by the monetary authority the market adjusts its expectations to the information revealed through them with the exchange rate responding accordingly these effects occur on longer time spans than the ones suggested by the traditional literature the negligible effect of individual interventions is also found for the year 2001 with the use of intraday data

identifying the efficacy of central bank interventions evidence from australia and japan abstract using a model incorporating the endogenous relationship between exchange rates and intervention we show how a change in central bank policy can be used as an identification assumption estimating this model with simulated gmm for daily data from australia and japan we find that a us 100 million purchase appreciates the australian dollar by 1 3 1 8 but the yen by just 0 2 almost all of the impact of an intervention occurs during the day it is conducted and we confirm that central banks typically lean against the wind

do immigrants affect firm specific wages we propose and test a novel effect of immigration on wages existing studies have focused on the wage effects that result from changes in the aggregate labour supply in a competitive labour market we argue that if labour markets are not fully competitive immigrants might also affect wage formation at the most disaggregate level the workplace using linked employer employee data we find that an increased use of low skilled immigrant workers has a significantly negative effect on the wages of native workers at the workplace also when controlling for potential endogeneity of the immigrant share using both fixed effects and instrumental variables

what prompts japan to intervene in the forex market a new approach to a reaction function abstract this paper estimates and analyzes the reaction function of japanese intervention in the foreign exchange forex markets using daily japanese intervention data from april 1 1991 to december 31 2002 a theoretical friction model is adopted to describe the intervention as cost minimizing behavior an ordered probit model consistent with the theoretical model is employed to estimate authorities reaction function a noise to signal ratio is applied in selecting the optimal cutoff point in estimated ordered probit function major findings are as follows 1 a regime change in june 1995 from small scale frequent interventions to large scale infrequent interventions is detected 2 the optimum cutoff is higher in the first half than the second half

the determinants of foreign exchange intervention by central banks evidence from australia abstract intervention by the reserve bank of australia on foreign exchange markets from 1983 to 1997 is conjectured to have been determined by exchange rate trend correction exchange rate volatility smoothing the us and australian overnight interest rate differentials profitability and foreign currency reserve inventory considerations using probit and friction models we show that these factors were significant influences on intervention behavior consistent with the constraint of intervening only when a clear trend is apparent we find that above average measures of deviations from trend and of volatility muted the response of the reserve bank

foreign exchange market intervention in two small open economies the canadian and australian experience abstract we examine intervention by the bank of canada and the reserve bank of australia for daily data from 1989 to 1998 both central banks intervene in response to excessive exchange rate volatility and uncertainty volatility is the implied volatility of foreign currency futures options uncertainty is the kurtosis of the implied risk neutral probability density functions we also examine the impact of inflation targets unlike other studies we also consider commodity futures prices these turn out to help explain the effectiveness of intervention central bank intervention was largely unsuccessful in both countries though volatility and kurtosis were modestly affected

immigration regional conditions and crime evidence from an allocation policy in germany after the collapse of the soviet union more than 3 million people with german ancestors immigrated to germany under a special law granting immediate citizenship exploiting the exogenous allocation of ethnic german immigrants by german authorities across regions upon arrival we find that immigration significantly increases crime the crime impact of immigration depends strongly on local labor market conditions with strong impacts in regions with high unemployment similarly we find substantially stronger effects in regions with high preexisting crime levels or large shares of foreigners

a re assessment of the relationship between real exchange rates and real interest rates 1974 1990 abstract this paper uses cointegration techniques and error correction models to re examine the link between real exchange rates and real interest rate differentials the results show that real exchange rates and real interest rates are nonstationary however they are not cointegrated with each other on the other hand the dynamic models indicate that there might be a long run relationship between these variables but this cannot be verified the final conclusion is that there is little empirical evidence in support of a systematic relationship and this result is robust across exchange rates time periods and measures of expected inflation

the effectiveness of central bank intervention in the ems the post 1993 experience abstract we analyze the effectiveness of intervention in the european monetary system by using data on the dem intervention activity of six european central banks covering the period from august 1993 to april 1998 to allow for regime specific intervention effects we estimate markov switching autoregressive conditional heteroscedasticity models we find that interventions have only limited effects on the conditional means and variances

solving the phosphorus pollution puzzle synthesis and directions for future research despite the success of efforts to reduce phosphorus p pollution from point sources p from non point agricultural sources remains a vexing problem with many u s water bodies having impairments key to solving the p pollution puzzle is to take stock of progress to date the puzzle pieces available and the gaps to be filled in this paper we synthesize the state of knowledge on p pollution discuss the state of existing public programs and review economists contributions to informing p pollution policies we review the water quality valuation literature identifying limitations in the linkages to policy relevant environmental quality metrics we examine how and why p is used agriculturally along with recent advances in market based policy design and field testing we survey new knowledge in biology and engineering including improved understanding of the fate and transport of p in light of recent learning and persistent knowledge gaps we recommend directions for economic research to add needed pieces to the puzzle of how to protect our water bodies puzzle gaps meriting attention include mechanisms to target public funds more effectively in voluntary abatement programs policy design for emerging mitigation technologies new ways to implement performance based policies means to leverage social norms and behavioral cues changes in the pay the polluter paradigm and application of state of the art evaluation methods to conservation programs beyond the realm of public policy lies that of private supply chains where establishment of environmental standards holds additional promise rich research opportunities exist for economists in tandem with biologists engineers and others

water quality and cottage prices in ontario we use hedonic analysis to show that water clarity has a significant effect on lakefront property values in the near north ontario canada in this study water clarity is measured by secchi disc reading based on two different dependent variables sales price and sales price per square foot and the estimation of linear log linear and log log models we find that water clarity does matter to lakefront property buyers in the near north ontario in particular our results indicate that buyers are willing to pay about 2 more for each 1 foot increase in water clarity or secchi depth this finding is consistent across all of our specifications

does the fed beat the foreign exchange market abstract this paper s estimates and tests of fed intervention profits are the first that explicitly adjust for foreign exchange risk premia failure to adjust may grossly affect estimated profits profits appear economically and statistically significant whether risk premia are modeled as time constant or as appreciation s market beta depending on fed intervention the estimates are sensitive to the method of risk adjustment and to the periods used because a key variable cumulative intervention is i 1 test statistics may have non standard distributions a problem affecting past tests this paper s tests account for non standard distributions possible explanations of these profits have mixed empirical support in the literature

should germany have built a new wall macroeconomic lessons from the 2015 18 refugee wave abstract in 2015 2016 germany experienced a wave of predominantly low skilled refugee immigration we evaluate its macroeconomic and distributional effects using a quantitative overlapping generations model calibrated using german micro data to replicate education and productivity differentials between foreign born and native workers workers are modelled as imperfect substitutes in aggregate production leading to endogenous wage differentials we simulate the dynamic effects of this refugee wave with specific focus on the welfare impact on low skilled natives our results indicate that the small losses this group suffers can be compensated by welfare gains of other parts of the native population

overeducation job mobility and earnings mobility among holders of first degrees abstractovereducation has been researched extensively for nearly three decades but some major issues in regard to it are still topics of ongoing debate by using a panel data that combines a survey of two cohorts of israeli first degree holders and data from administrative sources on jobs and wages we examine the contribution of job turnover cognitive abilities and continuing graduate studies to the likelihood of overeducation and wage dynamics the study produces four main findings first rapid job switching makes a negative contribution to the increase in employee s wage and there is a negative correlation between two variables an employee s tenure and the number of past employers in the years after the completion of degree studies and the probability of being overeducated second the contribution of the individual s cognitive abilities and quantitative reasoning skills to the likelihood of becoming overeducated is negative third the wages of overeducated employees are some 11 lower and ris

is there evidence of fear of appreciation in china s foreign exchange market intervention abstractusing the data after the exchange rate regime reform in july 2005 this paper systematically studied the issue whether china has conducted fear of appreciation asymmetric intervention th

the effectiveness of japanese foreign exchange interventions during 1991 2001 abstract this paper empirically analyzes the effectiveness of japanese intervention policies on the yen us dollar exchange rate over the past decade using actual intervention data this paper suggests that japanese interventions were effective in affecting exchange rate movements when such operations were coordinated with the fed furthermore intervention operations were always associated with an increase in exchange rate volatility

foreign exchange intervention when interest rates are zero does the portfolio balance channel matter after all abstract this paper provides an empirical investigation of transmission channels of central bank foreign exchange intervention when interest rates are zero and traditional monetary policy options are constrained the paper develops empirically testable hypotheses regarding the functioning of the intervention transmission channels under study these hypotheses evolve around whether or not the market is aware or unaware of intervention official daily data on interventions in the jpy usd market during the 1999 to 2004 japanese zero interest rate period facilitate the analysis the results of the analysis are consistent with the suggestion that intervention when interest rates are zero works through the portfolio balance channel

technical analysis and the effectiveness of central bank intervention abstract using daily data on foreign exchange interventions of both the bundesbank and the fed we provide further evidence that central banks earn profits with interventions and that technical trading rules are unusually profitable on days on which interventions take place we argue that what lies at the root of these seemingly contradictory results is that a intervention profits and trading rule profitability are measured over different horizons and b after interventions exchange rates tend to move contrary to central banks intentions in the short run but in agreement with their intentions in the long run

why do central banks intervene abstract intervention by central banks in terms of buying and selling foreign currency has been a major activity in recent years this paper investigates the motivations for such policy and the evidence for its effectiveness we use high quality daily data on the dollar amounts of intervention by the central banks of the us and germany we also use information on agreed g7 target levels for the dm and yen nominal exchange rates daily nominal dollar exchange rate returns are well described as a martingale garch process and we find little evidence that the different types of intervention have had much effect on the conditional mean of exchange rate returns there is some evidence that intervention is associated with slight increases in the volatility of exchange rate returns while little evidence is found for the effectiveness of intervention the motivations are more clear in particular from the application of probit analysis we find that the probability of intervention is determined by the magnitude of the deviation of the nominal exchange rate from the agreed target level and to a lesser extent by the current volatility of exchange rates

the demonstration and capture of the value of an ecosystem service a quasi experimental hedonic property analysis water management can generate valuable ecosystem services but can be costly to implement we examine this issue using irrigation water storage infrastructure which has the potential to provide desirable services to residential properties affected by the condition of the storage structure we examine a particular prairie setting where concerns regarding fluctuations in water levels of an irrigation storage lake led to an agreement between the irrigation agency and the owners of properties around the lake to stabilize water levels using quasi experimental hedonic property approaches with two different control groups we estimate the subsequent impact of this agreement on shoreline property values using a time series of sales data the methods utilized in this article represent an effective approach to produce plausible estimates of some of the economic values captured by the infrastructure generating ecosystem services we find that property values increased as a result of the agreement and that the additional property tax revenues arising from these values can be used to some extent to offset the annual service fees paid to the irrigation agency to provide the stabilized lake levels this article illustrates the potential for irrigation infrastructure management to provide increases in ecosystem service values beyond irrigation and also that these values can be captured to pay for the costs of providing these increased values

return migration human capital accumulation and the brain drain in this paper we present a model that explains migrations as decisions that respond to where human capital can be acquired more efficiently and where the return to human capital is highest the basic framework is a dynamic roy model in which a worker possesses two distinct skills that can be augmented by learning by doing there are different implicit price in different countries and different rates of skill accumulation our analysis contributes to the literature on the selection of immigrants and return migrants by offering a richer framework that may help to accommodate selections of emigrants and return migrants that are not immediately compatible with the one dimensional skill model our analysis has also implications for the debate on brain drain and brain gain in the two skills model presented here return migration can lead to a mitigation of the brain drain or even the creation of a brain gain where those who return bring the home country augmented local skills

conditional covariances and direct central bank interventions in the foreign exchange markets abstract in this paper we investigate the effects of central bank interventions cbis on the ex post correlation and covariance of exchange rates using a multivariate garch model with time varying conditional covariances we estimate the effects of cbis on both the variances and covariance between the yen and the deutsche mark the euro in terms of the us dollar our results suggest that coordinated cbis not only tend to increase the volatility of exchange rates but also explain a significant amount of the covariance between the major currencies we show that this result can be useful for short run currency portfolio management

the dynamic impact of immigration on natives labor market outcomes evidence from israel abstract this paper studies the short and medium run impact of highly skilled immigrants from the former soviet union to israel on natives wages and employment if immigrants are relatively good substitutes for native workers the impact of immigration will be largest immediately upon the immigrants arrival and may become smaller as the labor market adjusts to the supply shock conversely if immigrants upon arrival are poor substitutes for natives the initial effect of immigration is small and increases over time as immigrants acquire local labor market skills and compete with native workers we empirically examine these alternative hypotheses using data from israel between 1989 and 1999 we find that wages of both men and women are negatively correlated with the fraction of immigrants with little local experience in a labor market segment a 10 percent increase in the share of immigrants lowers natives wages in the short run by 1 3 percent but this effect dissolves after 4 7 years this result is robust to a variety of different segmentations of the labor market to the inclusion of cohort effects and to different dynamic structures in the residual term of the wage equation on the other hand we do not find any effect of immigration on employment neither in the short nor in the medium run

assimilation changes in cohort quality and the earnings of immigrants this paper reexamines the empirical basis for two facts that seem to be found in most cross section studies of immigrant earnings 1 the earnings of immigrants grow rapidly as they assimilate into the united states and 2 this rapid growth leads to many immigrants overtaking the earnings of the natives within 10 15 years after immigration using the 1970 and 1980 u s censuses this paper studies the earnings growth experienced by specific immigrant cohorts during the period 1970 80 it is found that within cohort growth is significantly smaller than the growth predicted by cross section regressions for most immigrant groups this differential is consistent with the hypothesis that there has been a secular decline in the quality of immigrants admitted to the united states

central bank intervention and foreign exchange rates new evidence from figarch estimations abstract in this paper we investigate the effects of official interventions on the short run evolution and volatility of exchange rates to this aim we rely on a new measure of volatility implied by the figarch model that outperforms the traditionally used garch one it is found that central bank interventions exert an incorrectly signed effect on the levels of exchange rates and tend to increase their volatility in the short run in general our results also show that the traditional garch estimations tend to underestimate the effects in terms of volatility

mass migration to israel and natives employment transitions this study examines how mass migration from the former soviet union to israel affected natives probability of moving from employment to non employment and vice versa using 1989 99 data from the israeli labor force survey the authors find that the share of immigrants in labor market cells defined by occupation industry district of residence schooling and experience was generally positively associated with natives probability of moving from employment to non employment however when the analysis controls for the endogenous sorting of immigrants across cells this effect is substantially reduced for men and disappears or is even reversed for women the authors conclude that immigrants tended to cluster in labor market cells with high turnover rates and that immigration did not increase natives likelihood of exiting employment they also find no discernible effects of immigration on natives transitions between labor market cells or on the probability of their moving from non employment to employment

what are the benefits of the water framework directive lessons learned for policy design from preference revelation the water framework directive wfd seeks to achieve good ecological status of surface waters across the european union by 2027 the wfd guidelines explicitly recognize the economics of water management by providing exceptions to water areas with disproportionately high restoration costs this calls indirectly for estimations of benefits lost due to non attainment we employ a hedonic property pricing approach on waterfront recreational properties to estimate the welfare impacts of attaining the good ecological status described by the wfd the empirical challenge is that the quality measure proposed by the wfd specifically denotes ecological quality whereas economically measurable water quality values are heavily dependent on recreation impacts intuitively the choice of water quality measure should have an effect on estimating the value of water quality our data provide a unique chance to compare three alternative indicators of water quality 1 a usability based index 2 subjectively reported measure and 3 the ecological status determined by the wfd we find that an improvement in water quality is associated with a statistically significant non linear change in recreational property values we show how the ecological status compares with the other two indicators and discuss the justifiability of using revealed preference methods when the valued good is defined purely on the basis of ecological criteria

does the measurement of environmental quality affect implicit prices estimated from hedonic models hedonic property value models are often used to derive point estimates for identifying the relationship between environmental quality and property prices the measurement of the environmental quality variable is often selected based on convenience but variables reflecting different perceptions about environmental quality may result in implicit prices that vary substantially this case study derives implicit prices for nine measures of water clarity using hedonic property value models of lakefront properties in maine results show that water clarity variables based on different perceptions may result in differences in implicit prices large enough to potentially affect policy decisions

you can t take it with you immigrant assimilation and the portability of human capital the national origin of an individual s human capital is a crucial determinant of its value education and labor market experience acquired abroad are significantly less valued than human capital obtained domestically this difference can fully explain the earnings disadvantage of immigrants relative to comparable natives in israel variation in the return to foreign schooling across origin countries may reflect differences in its quality and compatibility with the host labor market the return to foreign experience is generally insignificant acquiring additional education following immigration appears to confer a compound benefit by raising the return to education acquired abroad

immigrants in the american labor market quality assimilation and distributional effects this paper provides evidence on immigrants performance and impact in the u s labor market we document that new immigrants do bring fewer marketable skills to the united states than did earlier cohorts and that changes in the source countries of recent immigrants account for all of this decline in immigrant quality we find no important evidence that quality has declined within immigrant ethnic groups we also show that immigrants assimilate rapidly in the u s market 10 years of u s experience offsets most of the earnings disadvantage of new immigrants and that assimilation is more rapid for groups who start with lower initial wages excerpt

central bank forex internvention assessed in continous time abstract this paper looks at some of the principal characteristics of foreign exchange intervention by central banks the approach is novel in that virtually continous time data have been exploited using reuters screen information jel f31

modeling heteroscedasticity in daily foreign exchange rates this article estimates autoregressive conditionally heteroscedastic arch and generalized arch garch models for five foreign currencies using 10 years of daily data a variety of arch and garch specifications a number of nonnormal error densities and a comprehensive set of diagnostic checks it finds that arch and garch models can usually remove all heteroscedasticity in price changes in all five currencies goodness of fit diagnostics indicate that exponential garch with certain nonnormal distributions fits the canadian dollar extremely well and the swiss franc and the deutsche mark reasonably well only one nonnormal distribution fits the japanese yen reasonably well none fit the british pound

a bayesian approach to assessing the robustness of hedonic property value studies hedonic price models are widely employed to estimate implicit prices for bundled attributes residential property value studies dominate these applications using a representative cross sectional property value data set we employ bayesian methods to translate a range of priors in covariate selection typical of hedonic property value studies into a range of posterior estimates we also formulate priors regarding measurement error in individual covariates and compute the ranges of resulting posterior means finally we empirically demonstrate that a greater and more systematic use of prior information drawn from one s own data and from other studies can break the collinearity deadlock in this data

the heterogeneity of immigrants host countries income and productivity a channel accounting approach this article exploits changes in the distribution of immigrants across 20 organization for economic co operation and development countries from 1960 to 2005 in order to assess their contribution to income of destination countries the non random sorting of immigrants across countries is addressed by using an instrumental variable strategy the instrument is built by estimating a bilateral migration model incorporating exogenous origin country determinants of migration aggregate results reveal that immigrants have a positive effect on income that works primarily through total factor productivity tfp we further construct a novel dataset from censuses and labor force surveys to explore the information on the age of immigrants contrasting income effects are found across age groups a higher share of immigrants among the youth has a negative impact on aggregate income while a higher share of immigrants among prime aged workers has a positive effect we interpret this disparity as short term versus medium term effects adjustments over time involve changes in tfp but also in the human capital of the native born jel f22 j24 j31 o31

the spatial extent of water quality benefits in urban housing markets water quality regulation continues to be controversial as demonstrated by recent litigation between the u s environmental protection agency and the state of florida over nutrient standards while the costs of standards are usually known benefits may be diverse and difficult to identify this study investigates the effects of enhanced water quality on both waterfront and nonwaterfront property prices using hedonic models within an urban market findings indicate 1 the value of increased water quality depends upon the property s location and proximity to waterfront and the surface area of the water body and 2 aggregate benefits to nonwaterfront homes may dominate those realized by waterfront homeowners

immigrant wage growth in the united states the role of occupational upgrading immigrants to the united states routinely take jobs below their skill qualifications because of barriers to entering occupations we use a structural model of immigrant job choice to quantify the benefits of potential policies to promote entry into suitable occupations we estimate the model using longitudinal labor market data on immigrants to the united states our counterfactual results show that eliminating barriers to occupational entry would lead to only a small earnings increase for the average immigrant in our sample but a substantial earnings increase for the most highly skilled immigrants

central bank intervention and exchange rate volatility abstract this paper explores the effects of foreign exchange intervention by central banks on the behavior of exchange rates the g 3 central banks have undertaken an unprecedented number of both coordinated and unilateral intervention operations in the last 10 years existing empirical evidence on the effectiveness of intervention is mixed studies using data from the 1970s suggest that intervention operations that do not affect the monetary base have at most a short lived influence on exchange rates but more recent studies indicate that the intervention operations that followed the plaza agreement influenced both the level and variance of exchange rates this paper examines the effects of us german and japanese monetary and intervention policies on dollar mark and dollar yen exchange rate volatility over the 1977 1994 period the results indicate that intervention operations generally increase exchange rate volatility this is particularly true of secret interventions which are those undertaken by central banks without notification of the public overt interventions in the mid 1980s appear to have reduced exchange rate volatility but in other periods and for the 1977 1994 period as a whole central bank intervention is associated with greater exchange rate volatility

the economics of immigration this literature review concerns the impact of immigration on the economy of the host country focusing on the experience of the united states the emphasis is on the period from the 1970s to the 1990s the author shows that research earlier in this period generally concluded that the economic effects of immigration were positive but that more recent research on later migrations have generally concluded that immigration may be having an adverse effect on the earnings of native unskilled workers and be placing an increased burden on welfare programs the importance of such economic analysis for the formulation of appropriate migration policies is stressed

does foreign exchange intervention matter the portfolio effect until recently there was an unusual degree of consensus among economists that intervention by central banks in the foreign exchange market did not offer an effective or lasting instrument for affecting the exchange rate at least not independently of monetary policy this consensus was largely shared among policymakers and participants in the financial markets as well the 1982 g 7 economic summit at versailles commissioned a study of intervention known as the jurgenson report which found that the effects were small and transitory at most we think that the time is ripe for new statistical testing of the question many policymakers and foreign exchange traders believe that the intervention operations that have taken place since the plaza agreement of september 1985 have had an effect especially when operations are coordinated moreover the theoretical case against the effectiveness of intervention is not as clear as a reading of the economics literature might suggest the academic literature is predicated on the distinction between intervention operations that are sterilized and those that are allowed to affect the money supply we study the intervention operations that actually took place between 1982 and 1988 regardless of whether they were sterilized however we do begin in section i with a review of the issues involved 2 there are two possible channels through which intervention whether sterilized or not can influence the foreign exchange rate the portfolio and the expectations channels intervention can even if sterilized influence exchange rates through the portfolio channel provided foreign and domestic bonds are considered imperfect substitutes in investors portfolios intervention operations that for example increase the current relative supply of mark to dollar assets which private investors are obliged to accept into their portfolios will force a decrease in the relative price of mark assets 3 intervention can also influence exchange rates regardless of whether foreign and domestic bonds are imperfect substitutes through the expectations channel the public information that central banks are intervening in support of a currency or are planning to intervene in the future may under certain conditions cause speculators to expect an increase in the price of that currency in the future speculators react to this information by buying the currency today bringing about the change in the exchange rate today in sections ii and iii we describe the econometric problems that arise in the standard portfolio balance estimation equation we derive an alternative portfolio balance dominguez kennedy school of government harvard university 79 j f kennedy street cambridge ma 02138 frankel department of economics university of california 787 evans hall berkeley ca 94720 we thank three anonymous referees for valuable comments and suggestions julia marsh and julia lowell for research assistance and franz scholl at the bundesbank jean pierre roth at the swiss national bank and officials at the u s treasury and the board of governors of the federal reserve system for making the daily intervention data available 1many of the econometric results finding little or no effect were reported in kenneth s rogoff 1984 and dale w henderson and stephanie sampson 1983 2for authoritative statements see henderson 1984 or maurice obstfeld 1990 3the exchange rate reaction to an increase in the relative supply of outside foreign assets may be reduced if there is an increase in their expected rate of return that induces a corresponding increase in demand

modeling the intensity of foreign exchange intervention activity abstract we suggest a count data model to study the intensity with which central banks conduct foreign exchange market intervention the application to the swiss interventions of the 1990s suggests that it yields important insight into the determinants of intervention policy

on endogenous growth with physical and human capital this paper presents a class of models in which agents may devote part of their nonleisure activities to going to school so as to increase the efficiency units of labor they supply to the firms and the wages they receive the interaction among the technology of human capital accumulation and agents preferences will determine endogenously the economy s rate of growth given a constant returns to scale technology for physical capital accumulation we characterize the set of steady states as a ray from the origin and show the global convergence of every off balanced path to some point on this ray further properties concerning the dynamic evolution of the state and control variables around the ray of steady states are also established our analysis is useful to understand the role played by the technologies of physical and human capital in the process of accumulation and to evaluate the impact of policies geared toward attaining higher levels of capital our results highlight the importance of human capital

evidence of the effects of water quality on residential land prices we use hedonic techniques to show that water quality has a significant effect on property values along the chesapeake bay we calculate the potential benefits from an illustrative but limited water quality improvement and we calculate an upper bound to the benefits from a more widespread improvement many environmental hedonic studies have almost entirely ignored the potential for omitted variables bias the possibility that pollution sources in addition to emitting undesirable substances are likely to be unpleasant neighbors we discuss the implications of this oversight and we provide an application that addresses this potential problem o 2000 acadcmic prcss

labor mobility of immigrants training experience language and opportunities summary statistics observations percent mean sdschooling 419 14 58 2 74age on arrival 419 38 05 9 15white collar in fsu 284 67 78 blue collar in fsu 127 30 31 did not work in fsu 8 1 91 married 363 86 63 english 419 1 76 0 94hebrew before migration 50 11 93 ulpan attendance 386 92 12 ulpan completion 332 79 24 ulpan length months 387 5 61 1 34hebrew1 rst survey 419 2 71 0 82hebrew2 second survey 316 2 98 0 83t able a2 transitions between the labor market states quarters 8 9quarters 3 4 wc bc wt bt ue obs wc 79 57 10 75 3 23 2 15 4 30 93bc 2 58 80 80 1 72 2 87 12 03 349wt 51 28 28 21 0 00 0 00 20 51 39bt 23 81 52 38 0 00 0 00 23 81 21ue 18 93 47 93 6 51 1 78 24 85 169quarters 14 15quarters 8 9 wc bc wt bt ue obs wc 90 52 6 90 0 00 0 86 1 72 116bc 4 56 90 88 0 35 0 70 3 51 285wt 41 18 41 18 0 00 0 00 17 65 17bt 25 00 66 67 0 00 0 00 8 33 12ue 23 86 44 32 0 00 0 00 31 82 88quarters 18 19quarters 14 15 wc bc wt bt ue obs wc 96 72 3 28 0 00 0 00 61bc 2 47 90 12 2 47 4 94 81wt bt 0 00 100 00 0 00 0 00 1ue 30 00 20 00 0 00 50 00 10

the effectiveness of central bank intervention evidence from turkey this article investigates the effectiveness of central bank intervention on the conditional variance and the mean of the exchange rate returns in turkey during the float period the daily exchange rates are studied within an exponential general autoregressive conditional heteroskedastic egarch framework little evidence is found for the effectiveness of intervention operations empirical results suggest that foreign exchange fx selling auctions increase exchange rate volatility however a reverse causality relationship detected between one day past sales of fx auctions and exchange rate returns which is supportive of leaning against the wind behaviour of the central bank contradicts its announcements also the central bank of turkey cbt tends to intervene through fx selling auctions when one day past volatility is higher

the choice of functional forms for hedonic price equations comment abstract rosen 13 freeman 4 halvorsen and pollakowski 6 and others have stressed that economic theory does not suggest an appropriate functional form for hedonic price functions 1 it consequently is reasonable to try several functional forms and utilize the multiple regression equation with the best performance in this spirit halvorsen and pollakowski 6 recommend using the box cox flexible functional form for hedonic analysis and measuring best performance with a goodness of fit test the box cox methodology has also been adapted in hedonic studies by goodman 5 linneman 10 blomquist and worley 1 and eberts and gronberg 3 2 the box cox is particularly suited for testing functional forms because many familiar forms such as semilog log linear and translog are subsets of the flexible box cox permitting nested hypothesis testing in this note we illustrate that the formal hypothesis testing advantage of the box cox functional form is purchased at the expense of other important goals the goal of most hedonic studies is to estimate the prices of the characteristics to measure the response to changes in the prices and or to predict future expenditures using a best fit criterion to choose functional forms does not necessarily lead to more accurate estimates of characteristic prices in fact the large number of coefficients estimated with the box cox functional form reduces the accuracy of any single coefficient which could lead to poorer estimates of specific prices second because any negative number raised to a noninteger real power is imaginary the traditional box cox functional form is not suited to any data set containing negative numbers third the box cox functional form may be inappropriate for prediction since the mean predicted value of the untransformed dependent variable need not equal the mean of the sample upon which it is estimated the predicted untransformed variable housing value will be biased the predicted untransformed dependent variable may also be imaginary fourth the nonlinear transformation results in complex estimates of slopes and elasticities which are often too cumbersome to use properly we discuss each of these drawbacks and quantify them when possible in the remainder of this note

hedonic prices property values and measuring environmental benefits a survey of the issues this paper provides a review of the theoretical basis and the assumptions required in order to use hedonic price equations derived from property value data to obtain measures of the prices and the inverse demand functions for environmental amenities such as air quality it also includes a review and assessment of existing empirical applications of the technique to problems of air and water quality and urban noise

are forign exchange intervention and monetary policy related and does it really matter the relationship between foreign exchange intervention and monetary policy underlies the question of whether sterilized interventions can affect the exchange rate in this article the author examines this relationship using data on u s foreign exchange interventions from 1985 to 1990 recently made publicly available she examines whether interventions could be viewed as signaling changes in future monetary policy variables the author also considers whether changes in monetary policy may induce interventions in an effort by central bankers to lean against the wind of exchange rate movements interestingly she finds evidence both that interventions help predict monetary policy variables and that monetary variables help predict interventions copyright 1995 by university of chicago press

official central bank interventions and exchange rate volatility evidence from a regime switching analysis in this paper we investigate the effect of central bank interventions on the weekly returns and volatility of the dem usd and yen usd exchange rate returns in contrast with previous analyses we allow for regime dependent specifications and investigate whether official interventions can explain the observed volatility regime switches it is found that depending on the prevailing volatility level coordinated central bank interventions can lead to either a stabilizing or a destabilizing effect our results lead us to challenge the usual view that such interventions always imply increases in volatility c 2002 elsevier b v all rights reserved

housing market fluctuations and the implicit price of water quality empirical evidence from a south florida housing market in this study we utilize a hedonic property price analysis to examine changes in the implicit price of water quality given housing market fluctuations over time we analyze martin county florida waterfront home sales from 2001 to 2010 accounting for the associated significant real estate fluctuations in this area through flexible econometric controls in space and time we apply a segmented regression methodology to identify housing market price instability over time interact water quality with these identified market segmentations and embed these interactions within a spatial fixed effect model to further account for any spatial heterogeneity in the waterfront market results indicate that water quality improvement is associated with higher property values we find no evidence that the economic downturn crowded out concern for the water quality in this area we further impute an implicit prices of 2614 evaluated at the sample mean for 1 point increase in the water quality grade

the opportunity cost of coastal land use controls an empirical analysis for more than a decade demographers have been documenting the migration of the u s population from interior to coastal states a belief that this trend will persist has led to concern about increased housing and commercial development in coastal areas added development brings water pollution and reduces the natural cover of the coastline many states have responded to this trend with land use controls that limit new residential and commercial development on land adjacent to coastal water controls such as these have essentially three economic efficiency effects first on the positive side is the preservation of coastal open space and reduction of water pollutants benefits enjoyed by residents and visitors second and on the negative side is decreased residential and commercial proximity to the coast fewer households and businesses can locate near the

residential location work location and labor market outcomes of immigrants in israel we develop and estimate a comprehensive dynamic programming dp model for the joint decisions of residential location employment location occupational choices and labor market outcomes we use data on immigrants from the former soviet union fsu we provide an extensive empirical evaluation of policies that have been designed to affect the residential and employment location decisions of the migrant population the results shed new and important light on several issues regarding this group of immigrants we find large regional differences in wages for the white collar workers but only little differences for the blue collar workers a careful examination of a number of policy measures indicate that a direct subsidy in the form of a lump sum transfer is most effective in achieving the government stated goal of inducing people to reside in the northern region of the galilee and southern region of the negev other policies such as rental and wage subsidies can also be quite effective but these are more difficult to administer

the visible and the hidden behind migrants human capital abstractthe paper explores differences in human capital between the israel born and immigrants within the jorgenson and fraumeni model using a unique imputed education method the study answers

is there monopsonistic discrimination against immigrants the authors investigate immigrants and natives labor supply to the firm within an estimation approach based on a dynamic monopsony framework applying duration models that account for unobserved worker heterogeneity to a large administrative employer employee data set for germany they find that immigrants supply labor less elastically to firms than do natives under monopsonistic wage setting the estimated elasticity differential predicts a 7 7 log points wage penalty for immigrants thereby accounting for the entire unexplained native immigrant wage differential of 5 8 to 8 2 log points when further distinguishing immigrant groups differing in their time spent in the german labor market their immigration cohort and their age at entry the authors find that the observed unexplained wage differential is larger for those groups that show a larger elasticity differential relative to natives these findings not only suggest that search frictions are a likely cause of employers more pronounced monopsony

immigration wages and education a labour market equilibrium structural model recent literature analysing wage effects of immigration assumes labour supply is fixed across education experience cells this article departs from this assumption estimating a labour market equilibrium dynamic discrete choice model on u s micro data for 1967 2007 individuals adjust to immigration by changing education participation and or occupation adjustments are heterogeneous 4 2 26 2 of prime aged native males change their careers of them some switch to white collar careers and increase education by about three years others reduce labour market attachment and reduce education also by about three years these adjustments mitigate initial effects on wages and inequality natives that are more similar to immigrants are the most affected on impact but also have a larger margin to adjust and differentiate adjustments also produce a self selection bias in the estimation of wage effects at the lower tail of the distribution which the model corrects

what do property values really tell us a hedonic study of underground storage tanks hedonic property value models are widely used but are susceptible to potentially invalid conjectures based on the assumed measure of environmental quality this paper focuses on an application where this is of particular concern leaking underground storage tanks i estimate a hedonic model using quasi experimental and spatial econometric techniques similar to previous studies i examine how house prices vary with distance to the disamenity this approach yields little evidence that prices are adversely impacted however to better measure risks i utilize home specific data on groundwater well tests and correspondence from regulators and find an 11 depreciation when households are well informed

is it signalling exchange intervention and the dollar deutschemark rate abstract the portfolio balance channel for sterilised intervention is tested by examining the effects of changes in relative asset supplies on the dollar deutschemark rate during the 1980s in contrast to previous studies we control for any signalling effects of central bank intervention and find a weak but statistically significant portfolio balance influence on the exchange rate

on the wage growth of immigrants israel 1990 2000 this paper develops a descriptive methodology for the analysis of wage growth of immigrants that is based on human capital theory the sources of the wage growth are 1 the rise of the return to imported human capital 2 the impact of accumulated experience in the host country and 3 the mobility up the occupational ladder in the host country the model implies a nonlinear wage function that includes interactions between imported skills and local wage growth using data on native israelis and immigrants from the former soviet union of israel we estimate wage equations jointly for the two groups we find that upon arrival immigrants receive non return for imported skills in the ten years following arrival wages of highly skilled immigrants grow at 8 percent a year rising prices of skills occupational transitions accumulated experience in israel and an economy wide rise in wages account for 3 4 1 1 1 5 and 1 5 percent each in the long run the return for schooling converges to 0 027 substantially below the 0 069 return for natives we do not reject the hypothesis that the return for experience converges to that of natives and that immigrants receive a higher return for their unmeasured skills we find that there is some downgrading in the occupational distribution of immigrants relative to that of natives moreover the average wages of immigrants approach but do not converge to the wages of comparable natives the main reason for this is the low return to their imported skills jel j24 j31 j60