forecasting recessions the puzzle of the enduring power of the yield curve for over two decades researchers have provided evidence that the yield curve specifically the spread between long and short term interest rates contains useful information for signaling future recessions despite these findings forecasters appear to have generally placed too little weight on the yield spread when projecting declines in the aggregate economy indeed we show that professional forecasters are worse at predicting recessions a few quarters ahead than a simple real time forecasting model that is based on the yield spread this relative forecast power of the yield curve remains a puzzle the appendix is included online as supplementary material

economic activity and recession probabilities information content and predictive power of the term spread in italy the aim of the present article is to examine the information content of the italian term spread as for real economic growth rates and recession probabilities and to test its predictive power in forecasting regime probabilities to this end the relationship between the term spread and economic growth rates is modelled as a nonlinear one and specifically the logistic smooth transition model is used while a probit model is implemented to forecast recession probabilities specific to this article is the use of the oecd business cycle chronology which was never used before to this end for the italian case overall evidence supports the informative content of the spread in italy over the whole period 1984 2005 although results are more satisfactory as from 1992 in particular recession forecasts are generally better than those obtained with other chronologies previously adopted for the italian case isae and ecri

globalization and gender wage inequality in china summary this paper uses an enterprise population level dataset to investigate the link between globalization and gender inequality in the chinese labor market we find that foreign and exporting firms employ more female workers than domestic nonexporters foreign participation and export orientation within the same region and industry significantly encourage female employment and reduce the gender wage gap furthermore we show that while a large gender wage gap exists for foreign and exporting firms it mainly reflects the difference in gender productivity gender wage discrimination is observed only among private nonexporting firms overall our results highlight the importance of globalization in encouraging female employment and reducing gender discrimination

global educational expansion and socio economic development an assessment of findings from the social sciences summary among development agencies conventional wisdom holds that educational expansion improves economic welfare and health reduces inequalities and encourages democratic political systems we investigate the empirical foundations for these expectations in recent social science research consistent evidence indicates that health and demographic benefits result from educational expansion and suggests that education enhances but does not ensure individuals economic security however the impact of educational expansion on growth remains debated and decades of sociological studies offer evidence that educational expansion does not necessarily narrow social inequalities finally considerable controversy surrounds the implications of educational expansion for democratization reasonable forecasts of the consequences of further educational expansions need to consider the diverse social contexts in which these expansions will occur

women s schooling home teaching and economic growth the hypothesis that increases in the schooling of women enhance the human capital of the next generation and thus make a unique contribution to economic growth is assessed on the basis of data describing green revolution india estimates are obtained that indicate that a component of the significant and positive relationship between maternal literacy and child schooling in the indian setting reflects the productivity effect of home teaching and that the existence of this effect combined with the increase in returns to schooling for men importantly underlies the expansion of female literary following the onset of the green revolution

effects of family background on earnings and returns to schooling evidence from brazil we investigate whether omitted family background variables are responsible for high returns to schooling estimated in brazil returns to schooling fall by about one third when parental schooling is added to wage equations surprisingly the schooling of fathers in law has larger effects on wages than the schooling of fathers on the basis of a model of assortative mating we interpret this as evidence that parental characteristics represent unobservable worker attributes rather than nepotism in the labor market we conclude that the family background bias in returns to schooling is modest and need not imply returns to family connections

public versus private investment in human capital endogenous growth and income inequality in this paper we present an overlapping generations model with heterogeneous agents in which human capital investment through formal schooling is the engine of growth we use simple functional forms for preferences technologies and income distribution to highlight the distinction between economies with public education and those with private education we find that income inequality declines more quickly under public education on the other hand private education yields greater per capita incomes unless the initial income inequality is sufficiently high we also find that societies will choose public education if a majority of agents have incomes below average

monetary policy shifts and the stability of monetary policy models since the publication 1976 of the classic lucas critique researchers in empirical macroeconomics have endeavored to specify models that capture the underlying dynamic decision making behavior of consumers and firms who require forecasts of future events recently a number of researchers have developed simple models that have become the workhorses for monetary policy analysis the models vary considerably with regard to optimizing foundations and explicit treatment of expectations however relatively little effort has been devoted to testing the empirical importance of the lucas critique for these simple models can one find specifications that are policy invariant this paper develops and implements a set of tests for several monetary policy models used extensively in the literature in particular we attempt to test the robustness of optimizing versus nonoptimizing models to changes in the monetary policy regime we present evidence that shows that some forward looking models from the recent literat

why has u s inflation become harder to forecast we examine whether the u s rate of price inflation has become harder to forecast and to the extent that it has what changes in the inflation process have made it so the main finding is that the univariate inflation process is well described by an unobserved component trend cycle model with stochastic volatility or equivalently an integrated moving average process with time varying parameters this model explains a variety of recent univariate inflation forecasting puzzles and begins to explain some multivariate inflation forecasting puzzles as well

inference in nonlinear econometric models with structural change this paper extends the classical test for structural change in linear regression models see chow 1960 to a wide variety of nonlinear models estimated by a variety of different procedures wald lagrange multiplier like and likelihood ratio like test statistics are introduced the results allow for heterogeneity and temporal dependence of the observations in the process of developing the above tests the paper also provides a compact presentation of general unifying results for estimation and testing in nonlinear parametric econometric models

cross border asset holdings and comovements in sovereign bond markets we analyze the importance of different asset holdings for the interdependence of the yield curves in the euro area using a spatial var model we find that the cross border holdings of long term deb

does increasing women s schooling raise the schooling of the next generation the positive cross sectional relationship between the schooling of mothers and their children is substantially biased upward due to correlations between schooling and heritable ability as well as assortative mating an increase in the schooling of women would not have beneficial effects in terms of the schooling of children increased maternal schooling leads to reduced home time for mothers anticipating the consequences of investing in women s schooling requires attention to the role that schooling plays in the marriage market as well as to opportunities in the labor market for women

leading indicators of crisis incidence evidence from developed countries abstract we examine which indicators are most useful in explaining the cost of economic crises in eu and oecd countries between 1970 and 2010 to define the dependent variable we combine a measure of costs to the economy which consists of the output and employment loss and the fiscal deficit with a database of crisis occurrence designed specifically for this task we take into account model uncertainty in two steps first for each potential leading indicator we select the relevant prediction horizon by using panel vector autoregression second we identify the most useful leading indicators with bayesian model averaging our results suggest that domestic housing prices share prices and credit growth and some global variables such as private credit constitute important sources of risk

why does the yield curve predict output and inflation the slope of the yield curve has been shown empirically to be a significant predictor of inflation and real economic activity but there is no standard theory as to why the relationship exists this article constructs an analytical rational expectations model to investigate the reasons for the empirical results the model suggests that the relationships are not structural but are instead influenced by the monetary policy regime however the yield curve should have predictive power for output and inflation in most circumstances various implications of the theoretical model are tested and confirmed empirically

new keynesian macroeconomics and the term structure this article complements the structural new keynesian macro framework with a no arbitrage affine term structure model whereas our methodology is general we focus on an extended macro model with an unobservable time varying inflation target and the natural rate of output which are filtered from macro and term structure data we obtain large and significant estimates of the phillips curve and real interest rate response parameters our model also delivers strong contemporaneous responses of the entire term structure to various macroeconomic shocks the inflation target dominates the variation in the level factor whereas the monetary policy shocks dominate the variation in the slope and curvature factors

credit indicators as predictors of economic activity a real time var analysis using readily available indicators of the profitability price and availability of credit the term spread junk bond spread and banks willingness to lend as reported by the federal reserve we show that it is possible to significantly improve on the real time output and employment predictions of forecasting professionals at the medium run horizons that are most relevant to policymakers and private decision makers key to this improvement is a flexible state space model of data revisions the willingness to lend variable is the best real time predictor of gdp growth for forecasting job growth all three credit indicators prove helpful

schooling search and spouse selection testing economic theories of marriage and household behavior the implications of the economic theories of marriage and of household fertility behavior are tested in a framework in which educational investment marital search and marital matches are responsive to marriage market conditions and the personal traits of individual agents some of which are unobserved by the econometrician implications are also derived and tested for the effects of longevity attractiveness preferences and labor and marriage market conditions on schooling marriage age and spouse choice the empirical results indicate that inattention to heterogeneity and martial selection leads to a false rejection of the economic theory of marriage but to a false acceptance of the value of time fertility hypothesis

do financial indicators have directional predictability for us home sales abstractthis study investigates the directional predictability of financial indicators for home sales across tranquil 1984 2005 and volatile 1972 1983 and 2006 2013 periods we find that the mortgage rate has directional predictability for both existing and newly built home sales for up to 2005 the federal funds rate generally has directional predictability for existing newly built home sales in 1984 2005 1972 1983 the term spread has directional predictability for home sales in 1972 1983 but generally not in the tranquil period of 1984 2005 further unlike mortgage and federal funds rates the term spread has directional predictability for home sales in 2006 2013 and thus can help the fed with useful information assuming that this trend continues

the predictive power of the term structure of interest rates in europe and the united states implications for the european central bank abstract this paper examines the relationship of the term structure of interest rates to monetary policy instruments and to subsequent real activity and inflation in both europe and the united states the results show that monetary policy is an important determinant of the term structure spread but is unlikely to be the only determinant in addition there is significant predictive power for both real activity and inflation the yield curve is thus a simple and accurate measure that should be viewed as one piece of useful information which along with other information can be used to help guide european monetary policy

inflation forecast targeting implementing and monitoring inflation targets abstract inflation targeting is shown to imply inflation forecast targeting the central bank s inflation forecast becomes an explicit intermediate target inflation forecast targeting simplifies both implementation and monitoring of monetary policy the weight on output stabilization determines how quickly the inflation forecast is adjusted towards the inflation target money growth or exchange rate targeting is generally inferior than inflation targeting and leads to higher inflation variability commitment to target rules may be better than commitment to instrument rules

the central bank as shaper and observer of events the case of the yield spread the yield spread has commonly been employed as a successful predictor of economic growth and recessions although its marginal predictive power has decreased since the 1990s notably the yield spread s declining power to predict us economic activity coincided with its growing power to predict us interest rate changes in my view these phenomena are inevitably linked and share one cause the central bank intended to enhance both its transparency and credibility through greater information disclosure this disclosure improved interest rate predictability but might also have crowded out useful private information formerly in the yield spread that helped predict economic activity

learning by doing and learning from others human capital and technical change in agriculture household level panel data from a nationally representative sample of rural indian households describing the adoption and profitability of high yielding seed varieties hyvs associated with the green revolution are used to test the implications of a model incorporating learning by doing and learning spillovers the estimates indicate that i imperfect knowledge about the management of the new seeds was a significant barrier to adoption ii this barrier diminished as farmer experience with the new technologies increased iii own experience and neighbors experience with hyvs significantly increased hyv profitability and iv farmers do not fully incorporate the village returns to learning in making adoption decisions

predicting severe simultaneous recessions using yield spreads as leading indicators abstract severe simultaneous recessions are defined to occur when at least half of the countries under investigation australia canada germany japan united kingdom and united states are in recession simultaneously i pose two new research questions that extend upon stylized facts for us recessions one are the occurrences of simultaneous recessions predictable two does the yield spread predict future occurrences of simultaneous recessions i use the indicator for severe simultaneous recessions as the explained variable in probit models the lagged yield spread is an important explanatory variable where decreasing yield spreads are a leading indicator for severe simultaneous recessions both us and german yield spreads act as leading indicator for severe simultaneous recessions

predicting canadian recessions using dynamic probit modelling approaches this paper examines the ability of various financial and macroeconomic variables to forecast canadian recessions it evaluates four model specifications including the advanced dynamic autoregressive dynamic autoregressive probit models as well as the conventional static probit model the empirical results highlight several significant recession predictors notably the government bond yield spread growth rates of the housing starts the real money supply and the composite index of leading indicators both the in sample and out of sample results suggest that the forecasting performance of the four probit models is mixed the dynamic and dynamic autoregressive probit models are better in predicting the duration of recessions while the static and autoregressive probit models are better in forecasting the peaks of business cycles hence the advanced dynamic models and the conventional static probit model can complement one another to provide more accurate forecasts for the duration and turning points of business cycles ce texte examine la capacite de differentes variables financieres et macroeconomiques a predire les recessions canadiennes on examine quatre specifications du modele probit le modele dynamique avance le modele autoregressif le modele dynamique autoregressif ainsi que le modele statique conventionnel les resultats empiriques soulignent plusieurs predicteurs significatifs notamment l etalement des taux de rendement des obligations gouvernementales les taux de croissance des mises en chantier des maisons l offre de monnaie reelle et l indice composite avance les resultats a la fois pour des estimations basees sur l echantillon ou hors echantillon suggerent que la performance previsionnelle des quatre modeles probit n est pas toujours coherente les modeles dynamique et dynamique autoregressif performent mieux dans la prevision de la duree des recessions alors que les modeles statique et autoregressif font un meilleur travail dans la prevision des sommets des cycles d affaires les modeles dynamique avance et conventionnel se completent en ce qu ils fournissent des donnees plus precises sur la duree et et les points tournants des cycles d affaires

heterogeneity of the determinants of euro area sovereign bond spreads what does it tell us about financial stability abstract in this paper we assess the movements of euro area sovereign bond yield spreads vis a vis the german bund as processes specified across different levels of volatility and subject to movements in asset prices and economic conditions the determinants we use are grouped into domestic and euro area aggregates thus allowing us to derive results on their relative explanatory power and compare them across time and the spectrum of countries we find that volatility influences the deterministic processes of the euro area sovereign spreads and that identical determinants have effects on spreads that vary considerably across countries furthermore we find that variables reflecting investment confidence conditions and perceptions for the upcoming economic activity are significant determinants and their significance remains to a large extent even when controlling for fiscal variables

on stock market illiquidity and real time gdp growth this study examines whether stock market illiquidity forecasts real uk gdp growth using data over the period 1989q1 2012q2 apart from standard linear model specifications we also utilize non linear models which allow for regime switching behavior in terms of a liquid versus an illiquid market regime and over the phases of the business cycle our findings support a statistically significant negative relationship between stock market illiquidity and future uk gdp growth over and above the usual control variables this relationship is found to be stronger during periods of highly illiquid market conditions and weak economic growth our out of sample forecasting analysis indicates that a regime switching model of illiquid versus liquid market conditions predicts uk growth better than any other model actually this model is the only one to significantly outperform the gdp growth forecasts published in the bank of england s inflation report

income inequality education expenditures and growth abstract recent studies have reported a negative association between income inequality and economic growth if true what accounts for this finding what are possible transition mechanisms that might link the two this paper explores one such mechanism income inequality raises expenditures for public education as a fraction of gross domestic product gdp although public education expenditures are positively associated with future economic growth the contemporaneous effect upon growth is negative given this cost upon current growth these findings may help to explain the lack of a large positive effect from the growth of human capital upon economic growth as reported in the literature

inflation targeting some extensions previous analyses of the implementation of inflation targeting are extended to monetary policy responses to different shocks consequences of model uncertainty and effects of interest rate smoothing and stabilization model uncertainty output stabilization and interest rate stabilization or smoothing all call for a more gradual adjustment of the conditional inflation forecast toward the inflation target the conditional inflation forecast is the natural intermediate target during inflation targeting the optimal way of reacting to shocks is hence to check how they affect the inflation forecast and then take the appropriate action jel classification e42 e52 e58

are empirical measures of macroeconomic uncertainty alike there is a plethora of time series measures of uncertainty for inflation and real output growth in empirical studies but little is known whether they are comparable to the uncertainty measure reported by individual forecasters in the survey of professional forecasters are these two measures of uncertainty inherently distinct this paper shows that compared with many uncertainty proxies produced by time series models the use of real time data with fixed sample recursive estimation of an asymmetric bivariate generalized autoregressive conditional heteroskedasticity model yields inflation uncertainty estimates which resemble the survey measure there is however overwhelming evidence that many of the time series measures of growth uncertainty exceed the level of uncertainty obtained from survey measure our results highlight the relative merits of using different methods in modelling macroeconomic uncertainty which are useful for empirical researchers

an empirical analysis of information in the yield spread on future recessions in japan this article examines whether the yield spread contains information on the likelihood of future economic recessions using a probit model by taking the stability of the relationship between the yield spread and future recessions into account we also compare the accuracy of information in the yield spread with stock returns and money supply we find the following results in this article first a structural change in the relationship between the yield spread and future recessions occur at the end of 1996 second whereas the japanese yield spread contains more precise information on future recessions than stock returns and nominal money supply before the structural break we cannot predict future recessions using the yield spread after the break third the money supply does not forecast future recessions for the entire sample period

does school quality matter returns to education and the characteristics of public schools in the united states this paper estimates the effects of school quality measured by the pupil teacher ratio average term length and relative teacher pay on the rate of return to education for men born between 1920 and 1949 using earnings data from the 1980 census we find that men who were educated in states with higher quality schools have a higher return to additional years of schooling rates of return are also higher for individuals from states with better educated teachers and with a higher fraction of female teachers holding constant school quality measures however we find no evidence that parental income or education affects average state level rates of return

new keynesian economics and the phillips curve models with sticky prices are an important part of new keynesian economics the author shows that several of the new keynesian models imply a formulation that is similar to the expectations augmented phillips curve of milton friedman and edmund phelps he then presents new estimates of the new keynesian phillips curve the author uses two proxies for price expectations survey based measures and an econometric based measure originally developed by bennett mccallum 1976 overall the results are consistent with the model but the survey based results are more precise suggesting that the surveys may be better measures of actual expectations copyright 1995 by ohio state university press

the taylor rule and optimal monetary policy where it denotes the fed s operating target for the federal funds rate pt is the inflation rate measured by the gdp deflator yt is the log of real gdp and y t is the log of potential output identified empirically with a linear trend the rule has since been subject to considerable attention both as an account of actual policy in the united states and elsewhere and as a prescription for desirable policy taylor argues for the rule s normative significance both on the basis of simulations and on the ground that it describes u s policy in a period in which monetary policy is widely judged to have been unusually successful taylor 1999 suggesting that the rule is worth adopting as a principle of behavior here i wish to consider to what extent this prescription resembles the sort of policy that economic theory would recommend i consider the question in the context of a simple but widely used optimizing model of the monetary transmission mechanism which allows one to reach clear conclusions about economic welfare the model is highly stylized but incorporates important features of more realistic models and allows me to make several points that are of more general validity out of concern for the robustness of the conclusions reached the analysis here addresses only broad qualitative features of the taylor rule and attempts to identify features of a desirable policy rule that are likely to hold under a variety of model specifications

monetary policy trade offs and the correlation between nominal interest rates and real output the authors present a structural model of the u s economy that combines their price contracting specification with a term structure relationship an aggregate demand curve and a monetary policy reaction function the model matches important features of postwar data well and provides a structural explanation of the correlation between real output and the short term nominal rate of interest the authors perform a battery of monetary policy experiments that show that as viewed through the lens of this model monetary policy has struck a good balance recently among competing monetary policy objectives copyright 1995 by american economic association

literacy sharing assortative mating or what labour market advantages and proximate illiteracy revisited abstract this paper explores the relationship between household literacy and the labour market outcomes of illiterate household members which basu narayan and ravallion 2002 report using household income and expenditure data from bangladesh bnr attribute a considerable wage premium for proximate illiterate women in off farm employment to labour productivity gains from intra household literacy sharing this wage premium also suggests that women may be more efficient recipients of literacy externalities than men we propose that any such relationship might not be due to higher labour productivity but may have other explanations such as systematically different and unobserved attributes of illiterate females married into literate households we also pay attention to the negative selection of illiterate females into non farm wage employment which contrary to received wisdom suggests that household literacy may not be unambiguously progressive for females we propose that the widely reported finding that

indeterminacy and forecastability recent studies document the deteriorating performance of forecasting models during the great moderation this conversely implies that forecastability is higher in the preceding era when the economy was unexpectedly volatile we offer an explanation for this phenomenon in the context of equilibrium indeterminacy in dynamic stochastic general equilibrium models first we analytically show that a model under indeterminacy exhibits richer dynamics that can improve forecastability then using a prototypical new keynesian model we numerically demonstrate that indeterminacy due to passive monetary policy can yield superior forecastability as long as the degree of uncertainty about sunspot fluctuations is relatively small

information in the yield curve a macro finance approach this paper uses an a ne term structure model that incorporates macroeconomic and nancial factors to study the term premium in the u s bond market the results corroborate the known rejection of the expectation hypothesis and indicate that one factor closely related to the cochrane and piazzesi 2005 factor the cp factor is responsible for most of the variation in bond premia furthermore the model implied bond premia are able to explain around 32 and 40 of the variability of one and two year excess returns and their outof sample performance is comparable to the one obtained with the cp factor the model is also used to decompose yield spreads into an expectations and a term premium component in order to forecast gdp growth and in ation although this decomposition does not seem important to forecast gdp growth it is crucial to forecast in ation for most forecasting horizons also the inclusion of control variables such as the short term interest rate and lagged variables does not drive out the predictive power of the yield spread decomposition

the yield curve as a predictor of growth long run evidence 1875 1997 abstract this paper brings historical evidence to bear on the stylized fact that the yield curve predicts future growth the spread between corporate bonds and commercial paper reliably predicts future growth over the period 1875 1997 this predictability varies over time however and has been strongest in the post world war ii period

shifting endpoints in the term structure of interest rates abstract this paper links the term structure to perceptions of monetary policy long horizon forecasts of short rates required by no arbitrage term structure models are heavily influenced by the endpoints or limiting conditional forecasts of the short rate process common assumptions that the short rate is mean reverting or contains a unit root are shown to generate unrealistic yield predictions failures occur because these assumptions inadequately account for historical shifts in market perceptions of the policy target for inflation this paper links endpoint shifts to agent learning about shifts in long term policy goals shifting endpoints in short rate processes significantly improve yield predictions

why governments should invest more to educate girls abstract women and men often receive the same percentage increase in their wage rates with advances in schooling because these returns decline with more schooling the marginal returns for women will tend to exceed those for men especially in countries where women are much less educated the health and schooling of children are more closely related to their mother s education than father s more educated women work more hours in the market labor force broadening the tax base and thereby potentially reducing tax distortions these three conditions it is argued justify the disproportionate allocation of public expenditures toward women s education

assessing the effects of unconventional monetary policy and low interest rates on pension fund risk incentives this study quantifies the effects of persistently low interest rates near to the zero lower bound and unconventional monetary policy on pension fund risk incentives in the united states using two structural vector autoregressive var models and a counterfactual scenario analysis the results show that monetary policy shocks as identified by changes in treasury yields following changes in the central bank s target interest rates lead to a substantial increase in pension funds allocation to equity assets notably the shift from bonds to equity securities is greater during the period where the us federal reserve launched unconventional monetary policy measures additional findings show a positive correlation between pension fund risk taking low interest rates and the decline in treasury yields across both well funded and underfunded public pension plans which is thus consistent with a structural risk shifting incentive

intrahousehold inequalities in child rights and well being a barrier to progress this paper uses unicef s multiple indicators cluster surveys cross country data to shed light on unequal investments in the wellbeing of children boys and girls within the household the paper proposes a new methodology to measure the extent of gender intrahousehold inequality and its contribution to overall levels of inequality using an l theil index decomposition the individual and joint distribution of inequality in four key indicators of child wellbeing is analyzed stunting birth registration school attendance and time spent on work and chores working hours in the search for evidence of gender bias evidence from various separate county studies had shown that the direction of the gender bias is not universal such conclusion holds when using a consistent methodology and comparable cross country datasets this paper shows that disparities inside households do not follow the same bias toward one or the other gender in all countries and the direction of the bias is not the same across indicators of wellbeing while progress in improving child wellbeing has occurred in many countries inequalities remain intrahousehold inequalities might still be considered a priority in an agenda focused on closing these progress gaps

the yield curve and the macro economy across time and frequencies this paper assesses the relation between the yield curve and the main macroeconomic variables in the u s between early 1960s and 2009 across time and frequencies using wavelet analyses the shape of the yield curve is modelled by latent factors corresponding to its level slope and curvature estimated by maximum likelihood with the kalman filter the macroeconomic variables measure economic activity unemployment inflation and the fed funds rate the cross wavelet tools employed coherency and phase difference the set of variables and the length of the sample allow for a thorough appraisal of the timevariation and structural breaks in the direction intensity synchronization and periodicity of the relation between the yield curve and the macro economy our evidence establishes a number of new stylized facts on the yield curve macro relation and sheds light on several results found in the literature which could not have been achieved with analyses conducted strictly in the time domain as most of the literature or purely in the frequency domain

married women s employment in rapidly industrializing societies examples from east asia a variety of explanations have addressed the phenomenon of secular change in married women s employment in rapidly industrializing countries these include theoretical frameworks that emphasize female labor supply the conditions of labor demand patriarchal values the international division of labor and the effects of exported industrialization this article examines two societies south korea and taiwan that showed considerable similarity in female labor supply conditions female labor force participation and cultural values 20 years ago but have since diverged in dramatic and puzziling ways using aggregate and microlevel data this article shows that the emergent differences in married women s employment are best explained by the intersection of labor supply similar in the two cases and demand markedly different the article highlights the impact of government policy and foreign loan investment in shaping the nature of labor demand during rapid export led industrialization in both countries

what is wrong with taylor rules using judgment in monetary policy through targeting rules it is argued that inflation targeting is best understood as a commitment to a targeting rule rather than an instrument rule e ither ageneral targeting rule explicit objectives for monetary policy or a specific targeting rule a criterion for the forecasts of the target variables to be fulfilled essentially the equality of the marginal rates of transformation and substitution between the target variables targeting rules allow the use of judgment and extramodel information are more robust and easier to verify than optimal instrument rules and they can nevertheless bring the economy close to the socially optimal equilibrium

returns to schooling in less developed countries new evidence from zambia this article provides new evidence on returns to education in a developing country by estimating human capital models for zambia the full model allows for endogenous participation and sector choice removing some bias on the estimated coefficients in the income equation the general finding is that the return to primary schooling is higher in rural than in urban areas the return is higher in the informal sector than in the formal sector and in rural areas it is higher in employment than in self employment moreover selectivity mechanism guides the allocation of workers across sectors among females from urban areas those with the best unobserved characteristics are employed in the formal sector among the males from urban areas the most able are informally employed

what does the term structure tell us about future inflation abstract this empirical analysis indicates that for maturities of six months or less the term structure of nominal interest rates provides almost no information about the future path of inflation but does provide information about the term structure of real interest rates however as maturities lengthen to nine and twelve months the nominal term structure begins to contain information about future inflation but ceases to provide information about the real term structure these results are explained by differences in the relative variability of expected future inflation changes and real term structure slopes at different points in the term structure

labor migration and returns to rural education in china this paper provides an answer to the following question why do empirical studies find low returns to schooling in rural china and yet the schooling rates are high i find that schooling played a significant role in raising the accessibility of urban formal employment to rural people in the late 1970s and early 1980s in the face of the government s restrictive policy on labor migration from rural to urban areas the large urban rural income difference provided a strong incentive for senior high school education the theory also explains the drop in the senior high school attendance in the mid 1980s

viewpoint male female wage differentials how can that be abstract the paper outlines the main empirical procedures that are used to document the male female wage differential and the extent to which it reflects discrimination it then discusses the evidence on male female wage differentials their existence the extent to which they reflect discrimination their changes over time and the factors that influence the gap particular attention is paid to more recent studies that control for a wider range of conventionally unobserved factors theoretical perspectives are then outlined focusing on the issue of how discriminatory wage differentials can survive given the forces of competition the impacts of policy initiatives are also discussed

the quality of schooling quantity alone is misleading although much research discusses the quantity of schooling as an effective impact on productivity and earnings most such research leaves out the idea of the quality of schooling which may cause biases in the estimated returns to schooling this paper consequently attempts to extend the standard mincerian approach to incorporate school quality as well as quantity it demonstrates how exclusion of quality in the standard procedure may cause biases in the estimated returns to years of schooling probably in the upward direction the paper explores the implications of this extension of the standard model for the case of young brazilian males it shows that the estimate of the private return to years of schooling using the preferred quality inclusive specification is only one half the estimate using the standard procedure indicating substantial upward bias in the standard estimates it further outlines a method for estimating a social return to quality and finds that it exceeds substantially the social return to quantity the paper then shows why this in turn suggests there may be an equity productivity trade off in schooling investments

dynamic inconsistencies counterfactual implications of a class of rational expectations models a number of recent papers have developed dynamic macroeconomic models that incorporate rational expectations and optimizing foundations while the theoretical motivation behind these models is sound the dynamic implications of many of the specifications that assume rational expectations and optimizing behavior can be seriously at odds with the data for both inflation and real side variables exhibit gradual and hump shaped responses to real and monetary shocks for models that are intended for monetary policy analysis these dynamic shortcomings should be considered quite serious when monetary policy has only short run effects on real variables the inability to approximately capture the short run responses of inflation or real variables to policy shocks makes a model unsuitable for policy analysis this paper identifies a simple feature common to many dynamic specifications for prices and real variables that causes the problem the paper also discusses several potential solutions to the problem including alterations to the expectations assumption to the order of differencing implicit in the model and to the underlying behavioral assumptions this abstract was borrowed from another version of this item

how stable is the predictive power of the yield curve evidence from germany and the united states empirical research over the last decade has uncovered predictive relationships between the slope of the yield curve and subsequent real activity and inflation some of these relationships are highly significant but their theoretical motivations suggest that they may not be stable over time we use recent econometric techniques for break testing to examine whether the empirical relationships are in fact stable we consider continuous models which predict either economic growth or inflation and binary models which predict either recessions or inflationary pressure in each case we draw on evidence from germany and the united states models that predict real activity are somewhat more stable than those that predict inflation and binary models are more stable than continuous models the model that predicts recessions is stable over our full sample period in both germany and the united states

assessing the economy wide effects of quantitative easing this article examines the macroeconomic impact of the first round of quantitative easing qe by the bank of england we attempt to quantify the effects of these purchases by focusing on the impact of lower long term interest rates on the wider economy we use three different models to estimate the impact of qe on output and inflation a large bayesian vector autoregression var a change point structural var and a time varying parameter var our estimates suggest that qe may have had a peak effect on the level of real gdp of around and a peak effect on annual cpi inflation of about points