the phillips curve macroeconomic policy and the welfare of canadians a review of the two competing paradigms explaining inflation and unemployment fluctuations singles out the keynesian phillips curve as the clear empirical winner over its classic competitors reestimation of the canadian phillips curve for 1957 90 identifies a sharp structural shift toward a high degree of unemployment hysteresis after 1972 the recent attempt of macropolicy to flatten the aggregate demand curve and limit supply side shock accommodation which aims at lower and more stable inflation is then shown to make unemployment higher and more unstable on average to an extent that is an increasing function of the degree of hysteresis understanding and reducing hysteresis and developing a consensus based incomes policy that has a chance of alleviating the dismal trade off should therefore to top research and policy priorities

how useful are the forecasts of intergovernmental agencies the imf and oecd versus the consensus this study compares the accuracy and information content of economic forecasts for g7 countries made in the 1990s by the oecd and imf the benchmarks for comparison are the average forecasts of private sector economists published by consensus economics with few exceptions the private sector forecasts are less biased and more accurate in terms of mean absolute error and root mean square error formal tests show these differences are statistically significant for forecasts of real growth and production less so for forecasts of inflation and unemployment overall there appears little information in the oecd and imf forecasts that could be used to reduce significantly the error in the private sector forecasts

who receives the college wage premium assessing the labor market returns to degrees and college transfer patterns using data from the 1979 national longitudinal survey of youth we estimate wage models in which college educated workers are classified according to their degree attainment college type and college transfer status the detailed taxonomy produces modest improvements in explanatory power relative to standard specifications and reveals considerable heterogeneity in the predicted wages of college educated workers we find that transfer students receive an indirect wage benefit insofar as changing colleges allows them to earn a degree some transfer students receive an additional direct wage benefit presumably because switching schools increases their skill investment opportunities

analysts interim earnings forecasts evidence on the forecasting process existing empirical evidence indicates that analyst forecasts of corporate earnings do not meet the strict rationality standards prescribed by econometric tests of the rational expectations hypothesis 1 in this paper we address the question of whether the expectation formation process underlying analyst forecasts is adaptive or whether these forecasts are influenced by noninformational factors such as incentives arising from the market for their forecasts o brien 1988 lin and mcnichols 1993 francis and philbrick 1993 and dugar and nathan 1992 and interaction between judgmental and or statistical forecasting methods bunn and wright 1991 fan 1990 and hoerl and kennard 1970 the rejection of rational expectations gives rise to two views of the forecasting process of analysts the first based on an informational argument is that the forecasting process is adaptive marcet and sargent

labor market returns to two and four year college the paper examines labor market returns to a two and four year college education analysis of the 1972 national longitudinal survey of youth observation that the average person who attended a two year college earned about 10 percent more than those without any college education comparison with the wages of those who attended a four year college education

models of inflation expectations formation a comparison of household and economist forecasts the recent appreciation of the critical role played by expectations of inflation in the behavior of macromodels has stimulated empirical studies of the formation of expectations by different groups time series survey data on expectations of inflation exist now for economists households and businesses these data have been used as independent variables in explaining wage behavior gordon 16 turnovsky and wachter 34 and de menil and bhatta 5 prices turnovsky and wachter 34 and wachtel 36 interest rates gibson 14 hendershott and van horne 19 pearce 30 and mishkin 27 and consumption wachtel 36 generally with a significant improvement in explanatory power they have also been used as dependent variables in attempts to determine how expectations are formed by gordon 15 mullineaux 28 jacobs and jones 20 and figlewski and wachtel 9 for the economist survey van duyne 35 for the household survey and leonard 23 and de leeuw and mckelvey 4 for businesses given their different levels of knowlege of economics and perspectives one might expect that the models used by the different groups to forecast inflation would

macroeconomic forecasts and microeconomic forecasters in the presence of principal agent problems published macroeconomic forecasts by professional economists may not measure expectations forecasters may use their forecasts in order to manipulate beliefs about their ability i test a cross sectional implication of models of reputation and information revelation i find that as forecasters become older and more established they produce more radical forecasts since these more radical forecasts are in general less accurate ex post forecast accuracy grows significantly worse as forecasters become older and more established these findings are consistent with reputational factors at work in professional macroeconomic forecasts

panel tests of okun s law for ten industrial countries donald g freeman i introduction okun s law describes an empirical regularity between unemployment and real output growth each extra percentage point in the unemployment rate above four percent i e full employment has been associated with about a three percent decrement in real gnp okun 1962 9 1 okun s law has proved to be one of the more durable relationships in modern macroeconomics and is now often presented as an element of core beliefs as in textbooks by hall and taylor 1993 77 and in policy discussions by blinder 1997 durability and simplicity being relatively scarce commodities in macroeconomics okun s law is appealing as a shorthand guide to policy outcomes whether okun s law travels well is another question cross country comparisons of the relationship between unemployment and output have been estimated for other countries by knoester 1986 paldam 1987 and moosa 1997 among others but magnitudes vary depending on country and time period estimates in these papers of the increase in output growth associated with unemployment reduction of one percent range from a low of around two percent in the u s and canada to three to five percent in europe to more than 10 percent in japan with estimates for europe tending to be higher for more recent time periods because of the way that okun s law is framed tests of its proposition involve two imposing empirical problems first as usually stated the law refers to the relationship between departures of real gdp 2 and unemployment from their long run or equilibrium trends often referred to as potential gdp and the natural rate of unemployment respectively these equilibrium trends must be estimated either by time series methods as in moosa 1997 or by construction using a modified production function approach in which potential output is estimated using fully employed inputs as in gordon 1984 or adams and coe 1989 either of these fapproaches invites considerable criticism of assumptions and methods see for example the comments of clark 1984 and of baily 1984 on gordon 1984 second in formulating his law okun seems clearly not to be referring to a ceteris paribus relationship between changes in the unemployment rate and changes in real gdp writing later okun posited that other factors and inputs would be changing pari passu with employment the 3 percent result from a reduction of one percent in the unemployment rate implies that considerable output gains in a period of rising utilization rates stem from some or all of the following induced increases in the size of the labor force longer average weekly hours and greater productivity okun 1970 p 140 thus a complete specification of the effect of changing unemployment rates on output would include factors such as capital inputs labor hours and participation rates all measured as deviations from long run trends this article addresses these two obstacles by using a recent trend cycle decomposition developed by baxter and king 1999 to measure gaps in output unemployment capital stock and the labor force the baxter king bandpass filter extracts the trend component of economic time series by eliminating both high frequency those less than two years and low frequency more than eight years components it is both flexible and easy to implement by using the bandpass filter to filter all the time series using the same methodology this paper departs from previous research of prachowny 1993 and attfield and silverstone 1997 incorporating capital and labor to augment estimates of okun s law additionally using the bandpass filter allows the estimates in this article to incorporate more timely data reflecting the shift to lower levels of unemployment in the u s and higher levels of unemployment in europe and japan during the 1990s the latest year of observation for the constructed data sets of gordon and of adams and coe used for example by prachowny 1993 and attfield and silverstone 1997 is 1988

the speculative efficiency hypothesis the hypothesis that forward prices are the best unbiased forecast of future spot prices is often presented in the economic and financial analysis of futures markets this paper considers the hypothesis independently of its implications for rational expectations or market efficiency and in order to stress this fact the term speculative efficiency is used to characterize the state envisaged under the hypothesis if a market is subject to efficient speculation the supply of speculative funds is infinitely elastic at the forward price that is equal to the expected future spot price the expected future spot price is a market price determined as the solution to the underlying rational expectations macroeconomic model although the paper is primarily concerned with testing this hypothesis in the foreign exchange market the methodology introduced in the paper is of general application to all futures markets this abstract was borrowed from another version of this item

inflation expectations in turkey learning to be rational turkey implemented an ambitious restructuring of the economy in the past several years including the adoption of inflation targeting along with a floating exchange rate regime inflation came down from almost triple digits to single digits between 2001 and 2005 this particular episode of the turkish economy sets a genuine case study for investigating the possible changes in the behaviour of inflation expectations upon a regime shift accordingly this study analyses inflation expectations in turkey focusing especially on the post 2001 transition phase we first conduct classical tests of unbiasedness and efficiency using aggregate survey data between august 2001 and october 2007 to get a statistical benchmark for rationality we find that classical tests reject full rationality hypothesis for all series except next month s consumer price index cpi inflation expectations then we carry out time varying parameter tvp estimates based on a kalman filter to see how the coefficients in the classical tes

inflation forecast errors and time variation in term premia the expectations theory of the term strueture is well known to give wrong signals as to the future course of long term interest rates one explanation involves rational time varying term premia however the anomaly may also be due to inflation forecast errors we study survey forecasts of inflation it seems that the respondents forecasts are insufficiently adaptive interest rates reflect expectations similar to the inflation forecasts as a result past survey forecast errors reliably predict premia on u s government bonds

bettor handicapping and market efficiency in greyhound parimutuel gambling this paper evaluates the speculative efficiency of the parimutuel gambling market for greyhound racing the efficiency tests consider the informational content of bettor handicapping data as well as the forecasts of professional handicappers and the aggregate market previous studies have failed to consider the wide range of performance data that are available for bettor handicapping activities two tests of efficiency are considered the first test evaluates the in sample explanatory power of the handicapper s forecasts and handicapping data relative to the aggregate market s forecasts as indicated by the final odds the second test compares simulated rates of return to hypothetical gambling obtained from ex ante finish forecasts to the efficient rates of return that are dictated by the track s commission significant speculative inefficiencies are revealed the second test suggests the existence of above normal returns to gambling from using conditional forecasts generated from bettor handicapping data

wage expectations in the labor market survey evidence on rationality using a new set of directly observed wage expectations among firms this paper finds that in general firms forecasts fail the unbiasedness and efficiency requirements of weak form rational expectations these market participants consistently underestimate the wages they actually end up paying and their expectations do not efficiently utilize the information in past realizations the mean absolute forecast error of two percent compares with an error of only five percent if static expectations were held the major source of wage fore cast error seems to be errors in predicting demand rather than in predicting supply or the general price level wage forecast errors are positively correlated across fields with distinct supply patterns and are positively correlated with quantity forecast error the properties of stochastically weighted expectations and the effectiveness of the wage and price controls of the early 1970 s are also discussed this abstract was borrowed from another version of this item

the varied economic returns to postsecondary education new evidence from the class of 1972 this paper estimates the returns to postsecondary education using the national longitudinal survey of the class of 1972 with earnings measured at about age 32 the results are based on transcripts rather than self reports about the amount of education allowing postsecondary education to be more precisely described than usual the results confirm the well known returns to b a degrees other credentials associate degrees and certificates for women also lead to higher earnings and wage rates though indirectly these credentials gain individuals access to jobs where they accumulate more experience and on the job training but provide no further advantage once experience and ojt are controlled most individuals who enroll in postsecondary education but fail to complete credentials have no higher earnings than high school graduates the effects of experience high school achievement and family background are familiar the results indicate a fundamental difference between labor markets for college graduates and the sub baccalaureate labor market

nominal interest rates as indicators of inflation expectations forward interest rates have become popular indicators of inflation expectations theusefulness of this indicator depends on the relative volatilty and the correlation of inflation expectations and expected real interest rates this paper studies u s and u k data using a range of different tools and data sets the forward rate rule perfoms reasonably well in spite of significant movements in the expected real interest rate the reason is that the noise that movements in the expected real interest rate add to the inflation expectations is balanced by a tendency for expected real interest rates and inflation expectations to move in opposite directions

bias in federal reserve inflation forecasts is the federal reserve irrational or just cautious abstract inflation forecasts of the federal reserve seem to have systematically under predicted inflation from the fourth quarter of 1968 until volcker s appointment as chairman and to systematically over predict it afterwards until the second quarter of 1998 furthermore under quadratic loss commercial forecasts seem to have information not contained in those forecasts to investigate the cause of this apparent irrationality this paper recovers the loss function implied by federal reserve s inflation forecasts the results suggest that the cost of having inflation above an implicit time varying target was larger than the cost of having inflation below it for the period since volcker and that the opposite was true for the pre volcker era once these asymmetries are taken into account the federal reserve s inflation forecasts are found to be rational

using survey data to test standard propositions regarding exchange rate expectations survey data provide a measure of exchange rate expectations superior to the forward rate in that no risk premium interferes we estimate extrapolative adaptive and regressive models of expectations static or random walk expectations and bandwagon expectations are rejected current appreciation generates the expectation of future depreciation because variables other than the contemporaneous spot rate receive weight in comparing expectations to the process governing the spot rate we find statistically significant bias no variable is as ubiquitous in international financial theory and yet as elusive empirically as investors expectations regarding exchange rates in the past expectations have been modeled in an ad hoc way often by using the forward exchange rate there is however a serious problem with using the forward discount as the measure of the expected change in the exchange rate in that the two may not be equal the gap that may separate the forward discount and expected depreciation is generally interpreted as a risk premium most of the large empirical literature testing the unbiasedness of the forward exchange rate for example has found it necessary either arbitrarily to assume away the existence of the risk premium if the aim

multicriteria decision aid in financial management abstract the financial decisions of an organization are usually included in the context of optimization concerning a long term period there are decisions related to the optimal allocation of funds and decisions related to the optimal financial structure in the short term case the decisions are related to the optimization of stocks cash accounts receivable current liabilities etc the financial theory analyzes these decisions mainly from an optimal point of view the optimal character of such decisions has led researchers to propose operations research techniques to solve the problems that are inherent in such decisions this paper examines the contribution of multicriteria analysis in solving financial decision problems in a realistic context the paper also includes an extensive bibliography on the subject

multiple criteria decision making combined with finance a categorized bibliographic study abstract this paper provides a categorized bibliography on the application of the techniques of multiple criteria decision making mcdm to problems and issues in finance a total of 265 references have been compiled and classified according to the methodological approaches of goal programming multiple objective programming the analytic hierarchy process etc and to the application areas of capital budgeting working capital management portfolio analysis etc the bibliography provides an overview of the literature on mcdm combined with finance shows how contributions to the area have come from all over the world facilitates access to the entirety of this heretofore fragmented literature and underscores the often multiple criterion nature of many problems in finance

education decisions and labour market outcomes the financial return to a college degree is an increasing concern amid rising tuition costs and stagnant wages using the education longitudinal study of 2002 els 2002 i analyse the effect of po

an analysis of a panel of spanish gdp forecasts this article undertakes an analysis of the forecasts included in the panel of spanish forecasts in order to highlight the fact that the predictions made and the errors committed by the entities participating on this panel contain information that is particularly useful in analysing the evolution of the spanish economy here a study is undertaken of the gdp growth forecasts for the spanish economy for the period 2000 to 2002 made in distinct forecast time horizons specifically it analyses whether the forecasts are optimistic or pessimistic and whether new information concerning the variable being predicted is used efficiently in revising earlier forecasts

an analysis on the structural stability of okun s law a cross country study okun s law postulates an inverse relationship between movements of the unemployment rate and the real gross domestic product gdp this article investigates okun s law for 15 oecd countries and checks for its the structural stability by using data on employment and the labour force whether structural instability is caused either from the demand side or supply side is inferred

accounting for race and gender differences in college wage premium changes much recent research has been devoted to the rapid rise in the college wage premium during the 1980s 3 5 10 13 14 murphy and welch 13 estimated that between 1979 and 1986 the college wage premium for all age groups increased almost 20 percentage points while the college wage premium for workers with one to five years of experience grew by 38 percentage points while the size of the college wage premium increase is impressive especially among recent graduates there is substantial disparity in this change among individual race gender groups 2 4 coleman 4 found that the wage premium increase for graduates with one to five years of experience was 45 percentage points for white men 30 percentage points for white women and 27 percentage points for black men while the wage premium decreased by 3 percentage points for black women

okun s law asymmetries and jobless recoveries in the united states a markov switching approach abstract prevailing markov regime switching approaches to asymmetries in okun s law assume either asymmetry between unemployment and output across regimes or asymmetry within a regime we combine both approaches and give an insight into the 1991 and 2001 united states jobless recoveries

inattentive professional forecasters abstract using the ecb survey of professional forecasters to characterize expectations at the micro level we emphasize two new facts forecasters i fail to systematically update their forecasts and ii disagree even when updating it is moreover found that forecasters have predictable forecast errors these facts are qualitatively supportive of recent models of inattention and suggest a setup where agents imperfectly process information due to both sticky information a la mankiw reis and noisy information a la sims however building and estimating such an expectation model we find that it cannot quantitatively replicate the error and disagreement observed in the data

do professional forecasters trust in taylor type rules evidence from the wall street journal poll this article uses the monthly wall street journal poll between 2002 and 2010 to analyse whether professional economic forecasters believe in and thus apply taylor type rules for their own forecasts using their forecasts for the federal funds rate the inflation rate and capacity utilization we estimate whether these are internally consistent with the message of taylor type rules we find that the expectation formation can indeed be described by taylor type rules

why are the returns to schooling higher for women than for men many studies have found that the impact of schooling on earnings is greater for females than for males despite the fact that females tend to earn less both absolutely and controlling for personal characteristics this study investigates possible reasons for this effect using data from the national longitudinal survey of youth 1979 one explanation is that education appears to have a double effect on the earnings of women it increases their skills and productivity as it does with men and in addition it appears to reduce the gap in male and female earnings attributable to factors such as discrimination tastes and circumstances the latter appear to account for about half of the differential in the returns to schooling

do professional economists forecasts reflect okun s law some evidence for the g7 countries using survey data for the g7 countries we report that professional economists forecasts of changes in the unemployment rate and the growth rate of real output are consistent with okun s law professional economists do not believe in potential asymmetries in okun s law over the business cycle they believe in the classic linear version of okun s law

efficiency and formation of expectations evidence from the european investment survey the european commission conducts an annual survey regarding planned and realized business fixed investment across various manufacturing sectors in euroland in this study we investigate the predictive content of survey based expectations on investment in addition we empirically test the rationality of respondents both in a time series as well as in a panel context according to our results based on pooling the data efficiency is rejected since expectations are biased predictors of actual outcomes furthermore expectations revisions are found to be correlated with components of the information set known at the time of decision making finally our results qualify regressive expectations as the mechanism that more adequately describes the formation of expectations

who believes in the taylor principle evidence from the livingston survey abstract the livingston survey data are used to investigate whether economists forecasts are consistent with the taylor principle consistency with the taylor principle is strong for academics and federal reserve economists and less strong for private sector economists

vested interest and biased price estimates evidence from an auction market this study employs a new data set from art auctions to examine the relationship between auctioneer presale price estimates and the long term performance of artworks we find that the price estimates for expensive paintings have a consistent upward bias over a long period of 30 years high estimates at the time of purchase are associated with adverse subsequent abnormal returns moreover the estimation error for individual paintings tends to persist over time these results are consistent with the view that auction house price estimates are affected by agency problems and that

do professional forecasters in asian pacific countries believe in the monetary neutrality we analyze more than 40 000 forecasts of the annual growth rate of the money supply the inflation rate and the growth rate for eleven asian pacific countries between 1994 and 2011 we document that forecasters believe in nominal effects of future monetary policy

regional growth and unemployment in the medium run asymmetric cointegrated okun s law for uk regions this article tests for the presence of a medium run asymmetric okun s law relationship between regional output and regional unemployment rate in uk regions the test is performed with a panel data version of the hidden cointegration technique suggested by granger and yoon a novelty of the article is to combine the method of hidden cointegration with a panel data method of removing cross sectional dependence the medium run okun relationship for regions in the uk appears to confirm results found elsewhere in the literature on countries as a whole although the coefficients tend to be smaller

testing the rationality of price forecasts new evidence from panel data this paper tests the rationality of individual price forecasts in a panel of professional forecasters here unlike in most previous studies rationality is not rejected the results here differ because 1 using individual forecasts avoids aggregation bias 2 comparison of forecasts to initial data avoids bias due to data revision 3 the professional forecasters have economic incentives to state their expectations accurately and 4 a new covariance matrix estimator consistent when forecast errors are correlated across individuals is used copyright 1990 by american economic association

imperfect information and wage inertia in the business cycle a comment in a recent article gertler 1982 presents a model that explains certain stylized facts concerning the relative behavior of the money supply and nominal wages one additional feature of the model is the behavior of real output which is found to have a serially correlated response to a money supply shock this serial correlation appears to arise from an information structure that precludes agents from directly disentangling permanent versus transitory movements in relevant state variables this information structure complicates the forecasting problem that must be solved to analyze the model and affects the behavior of wages and the variance of output it will not however lead to serial correlation in real output an algebraic error is responsible for the serial correlation found by gertler this note corrects the error and presents an alternative solution to the forecasting problem gertler constructs forecasts of the relevant state variable through the use of a kalman filter while this technique is appropriate for the problem a simpler solution is available this solution is based on an equivalent representation of the stochastic process generating the disturbances of the model this equivalent representation can then be used in a straightforward way to describe wage dynamics and the variance of real output it is sufficient to analyze gertler s model in the case where there are only monetary disturbances the relevant equations are

are statistical reporting agencies getting it right data rationality and business cycle asymmetry this article provides new evidence on the rationality of early releases of industrial production ip and producer price index ppi data rather than following the usual practice of examining only first available and fully revised data we examine the entire revision history for each variable thus we are able to assess for example whether earlier releases of data are in any sense less rational than later releases and when data become rational our findings suggest that seasonally unadjusted ip and ppi become rational after approximately 3 4 months whereas seasonally adjusted versions of these series remain irrational for at least 6 12 months after initial release for all variables examined we find evidence that the remaining revision is predictable from its own past or from publicly available information in other economic and financial variables in addition we find a clear increase in the volatility of revisions during recessions suggesting that early data releases are less reliable in toughe

kram a sector model of danish agriculture background and framework development this paper outlines a new spatial nonlinear programming model of the agricultural sector in denmark the kram model kvl s rationalized agricultural model optimizes production functions on a very disaggregated level allowing for analysis of changes in physical constraints to production as well as price changes the model is dynamic with a time horizon of 10 years the structural development is determined endogenously using profits and a markov chain model the purpose of this paper is to place kram in a theoretical framework future work will address the programming calibration and application of kram

is there a core of practical macroeconomics that we should all believe with emphasis on the adjective practical and the normative verb should my answer to the question of this session is a resounding yes indeed i spent a good deal of time between january 1993 and january 1996 acting on the belief that there is such a core macro model so i certainly hope it exists this believable core model falls well short of perfection leaves many questions unanswered and is subject to substantial stochastic errors nonetheless it is both useful and extensively used in policy analysis where contact with reality is a necessity and you cannot beat something with nothing it also closely resembles but does not quite match the way macroeconomics is taught to beginning and intermediate but not to graduate students in this short presentation i will describe briefly the main practical elements that i think we should agree on without worrying too much about their theoretical underpinnings then i will turn to two critical failings of the standard macro model which cry out for theoretical and empirical repair my organizing principle is the textbook exposition that has been standard though not universal in teaching intermediate macroeconomics for years the question is how does it differ from the core model used in policy analysis

forecast uncertainty ex ante and ex post u s inflation and output growth survey respondents who make point predictions and histogram forecasts of macro variables reveal both how uncertain they believe the future to be ex ante as well as their ex post performance macroeconomic forecasters tend to be overconfident at horizons of a year or more but overestimate i e are underconfident regarding the uncertainty surrounding their predictions at short horizons ex ante uncertainty remains at a high level compared to the ex post measure as the forecast horizon shortens there is little evidence of a link between individuals ex post forecast accuracy and their ex ante subjective assessments

forecasting dynamics and convergence to market fundamentals evidence from experimental asset markets abstract subjects trade shares of a fictitious asset in a computerized double auction market and submit one period ahead forecasts of the mean contract price on average the predictions of the rational expectations hypothesis are not supported and forecasts tend to be both biased and inconsistent with the specification of the process which would generate prices in a rational expectations equilibrium nevertheless an empirical analysis of agents forecasting dynamics indicates that learning does occur and that agents forecasts evolve in a direction consistent with a rational expectations equilibrium

asymmetry in okun s law in this paper we support the proposition that the output unemployment relationship as represented by okun s law is asymmetric okun s coefficients are defined based on a dynamic model that allows for asymmetry in the relationship between cyclical output and unemployment using data from the united states for the post war period our results show that the short run effects of positive cyclical output on cyclical unemployment are quantitatively different from those of negative ones and the data are consistent with the proposition that cyclical unemployment is more sensitive to negative than to positive cyclical output several theoretical

gainfully employed assessing the employment and earnings of for profit college students using administrative data we draw on population level administrative data from the u s department of education and the internal revenue service to quantify the impact of for profit college attendance on the employment and earnings of more than one million students using a matched comparison group difference in differences design we find that certificate seeking students in for profit institutions are 1 5 percentage points less likely to be employed and conditional on employment have 11 percent lower earnings after attendance than students in public institutions these results hold for both men and women and for seven of the top ten fields of study we find that earnings and employment outcomes are particularly poor for students attending for profit colleges that offer the majority of their courses online and for multicampus chains we find that for profit students experience small statistically insignificant gains in annual earnings after attendance compared to a matched end page 342 control group of young individuals who do not attend college a back of the envelope comparison of these earnings gains to average debt burdens suggests that for profit certificate programs do not pay off for the average student abstract from author

on the rationality of us macroeconomic forecasts evidence from a panel of professional forecasters asa nber survey data is used to check the rationality of us macroeconomic forecasts it is found that of 75 forecast series examined 51 are biased 25 are both unbiased and efficient and only two pass the null hypothesis of orthogonality this calls into question the validity of rational expectations hypothesis

firm performance and macro forecast accuracy abstract combining a unique survey of japanese firms gdp forecasts with accounting data for 25 years we find three main results first firms gdp forecasts are associated with their employment investment and output growth in the subsequent year second over optimistic and pessimistic forecast errors predict lower profitability and productivity consistent with our model of input choice under uncertainty third larger and more cyclical firms make forecasts closer to professionals presumably reflecting their higher return to accuracy forecasts by more productive and older firms are also more similar to professional forecasts implying forecasting ability is linked to management ability and experience

safe port in a storm the impact of labor market conditions on community college enrollments the paper examines the impact of the business cycle on enrollments and finances at individual community colleges between the late 1960s and the mid 1980s we find that 1 percent increases in the unemployment rates of recent high school graduates and of all adults are associated with rises in full time attendance of about 0 5 percent and 4 percent respectively part time enrollment exhibits similar anticyclical patterns this link carries over in large part to degrees obtained in contrast state and local appropriations per student are procyclical we interpret this funding pattern as a failure to integrate education policy sufficiently closely with labor market policy

where they go what they do and why it matters the importance of geographic accessibility and social class for decisions relating to higher education institution type degree level and field of study this article considers the impact of geographic accessibility and social class on school leavers when making decisions relating to higher education institution hei type degree level and field of study using a novel and comprehensive irish data set we consider a number of joint decisions facing school leavers in relation to where and what to study and employ a range of bivariate choice models which allows us to control for correlations in these decisions we find that geographic accessibility and social class play an important role in determining outcomes relating to hei type degree level and field of study we argue that these decisions are important in terms of future labour market and other outcomes for school leavers and that current policy in ireland does not go far enough in mitigating the impact of distance and socio economic barriers on these outcomes

tests of equilibrium macroeconomics using contemporaneous monetary data abstract this paper uses contemporaneous monetary data to carry out econometric tests of the equilibrium approach to modelling the relation between monetary disturbances and macroeconomic fluctuations the theoretical analysis introduces into an equilibrium macroeconomic model the availability of preliminary data on current monetary aggregates and the process of accumulation of revised monetary data the econometric analysis tests two hypothesis derived from this extended model one hypothesis concerns the neutrality of perceived monetary policy the econometric results imply rejection of this hypothesis the other hypothesis concerns the non neutrality of errors in preliminary monetary data the econometric results fail to reject the contrary of this hypothesis these tests provide strong evidence against the reality of the equilibrium approach

the structure of expectations of the weekly money supply announcement abstract this paper examines the structure of expectations of the weekly money supply announcement in the late 1970s the data used are from a weekly telephone survey of money market participants the rationality and structure of expectations are explored with the data organized in three ways the mean response to each weekly survey the pooled sample of individual responses and time series of responses by each individual in the survey the effect of data aggregation on rationality tests is investigated the structure of the expectations data are also examined and it is found that both strong regressive influences and adaptive learning characterize the data

asymmetry complementarities and state dependence in federal reserve forecasts forecasts are a central component of policymaking the federal reserve s forecasts are published in a document called the greenbook previous studies of the greenbook s inflation forecasts have found them to be rationalizable but asymmetric if considering particular subperiods for example before and after the volcker appointment in these papers forecasts are analyzed in isolation assuming policymakers value them independently we analyze the greenbook forecasts in a framework in which the forecast errors for different variables are allowed to interact we find that allowing the losses to interact makes the unemployment forecasts virtually symmetric the output forecasts symmetric prior to the volcker appointment and the inflation forecasts symmetric after the onset of the great moderation

is bank supervision central to central banking whether central banks should play an active role in bank supervision and regulation is being debated both in the united states and abroad while the bank of england has recently been stripped of its supervisory responsibilities and several proposals in the united states have advocated removing bank supervision from the federal reserve system other countries are considering enhancing central bank involvement in this area many of the arguments for and against these proposals hinge on the effect this change would have on the ability of the central bank to conduct monetary policy we find that confidential supervisory information on bank ratings significantly improves

expectations and the quantity equation evidence from eastern european countries this article analyses the usefulness of the quantity equation from the financial market s view we use more than 10 000 forecasts of financial analysts concerning projections of the growth rate of money supply prices and real output for six central and eastern european countries to test whether they are internally consistent with the quantity equation in particular we report that forecasts are consistent with the quantity equation in high inflation countries and high inflation regimes

the rationality of usda forecasts under multivariate asymmetric loss a large number of previous studies suggest that many usda forecasts are biased and or inefficient these findings however may be the result of the assumed loss function of usda forecasters we test the rationality of the usda net cash income forecasts and the wasde production and price forecasts between 1988 and 2018 using a flexible multivariate loss function that allows for asymmetric loss and non separable forecast errors our results provide robust evidence that usda forecasters are rational expected loss minimizers yet demonstrate a tendency to place a greater weight on under or overprediction as a result this study provides an alternate interpretation of previous findings of forecast irrationality

what do economists know an empirical study of experts expectations for more than three decades economic columnist joseph a livingston has canvassed a panel of economists twice a year eliciting their six month and twelve month forecasts for more than a dozen key variables this study analyzes whether the experts predictions are unbiased and whether complete use was made of all relevant known information unbiasedness and completeness being necessary conditions for fully rational expectations little bias was found in either the half year or full year predictions but extensive underutilization of information particularly data on monetary growth occurred to prophecy is extremely difficult especially with respect to the future chinese proverb do economists expectations regarding key price and nonprice variables utilize all known relevant information in an unbiased efficient manner this is a worthy subject for research for several reasons properties of experts predictions likely form an upper bound for those of laymen further as john muth 14 has noted the character of dynamic processes is typically very sensitive to the way expectations are influenced by the actual course of events p 316 hence we need to know precisely how events do affect expectations finally the common practice of replacing a variable s generally unobserved expectation with a proxy based on its past values will be unbiased and will not cause bias in other

perceived inflation persistence this article constructs and estimates a measure called perceived inflation persistence that can be used to determine if professional forecasters inflation forecasts indicate there has been a change in inflation persistence this measure is built via the implied autocorrelation function that follows from the estimates obtained using a forecaster specific state space model findings indicate that u s perceived inflation persistence has changed since the mid 1990s with more consensus among forecasters at lower levels of persistence when compared to the autocorrelation function for actual inflation forecasters typically react less to shocks to inflation than the actual inflation data would suggest

tests of the rational expectations hypothesis this paper reviews evidence on the structure of anticipation from a number of empirical studies jack muth s rational expectations hypothesis is compared with a variety of alternative models including ferber s law the implicit expectations model of edwin mills and muth s new errors in the variables model the cumulative evidence is of such strength as to compel the suspension of belief in the concept of rational expectations this implies that it is a mistake to proceed under the maintained hypothesis that expectations are rational instead it is necessary to test the sensitivity of empirical and theoretical results to alternative assumptions about the structure by which anticipations are generated copyright 1986 by american economic association

financial planning for the multinational corporation with multiple goals this paper presents a methodology for analyzing the financing problems raised by uncertain exchange rates and the various barriers to free capital flows the stochastic goal programming model developed allows a way to improve the efficiency with which alternative combinations of corporate strategies various environmental assumptions and financing mechanisms can be evaluated

personal experiences and expectations about aggregate outcomes using novel survey data we document that individuals extrapolate from recent personal experiences when forming expectations about aggregate economic outcomes recent locally experienced house price movements affect expectations about future u s house price changes and higher experienced house price volatility causes respondents to report a wider distribution over expected u s house price movements when we exploit within individual variation in employment status we find that individuals who personally experience unemployment become more pessimistic about future nationwide unemployment the extent of extrapolation is unrelated to how informative personal experiences are is inconsistent with risk adjustment and is more pronounced for less sophisticated individuals

frequency bias in consumers perceptions of inflation an experimental study we investigate whether the perception of economy wide inflation is affected by the frequency with which various goods prices are observed we provide novel experimental evidence that consumers perceptions of aggregate inflation are systematically biased toward the perceived inflation rates of the frequently purchased items this frequency bias may affect consumers consumption and investment decisions and thus have important macroeconomic consequences it may also explain why consumers typically over estimate inflation in surveys during periods where frequently purchased non durable goods are inflating faster than durables