The Dynamics of Immigration Policy with Wealth-heterogeneous Immigrants
James F. Dolmas and Gregory W. Huffman
Abstract: In this paper we consider a simple intertemporal economy in which immigrants, if admitted, bring heterogeneous amounts of capital. We show that under certain conditions there is a level of immigration which maximizes the economy's capital-labor ratio, and that this level of immigration is the preferred choice of a majority of the economy's citizens. We then characterize, in an overlapping generations setting, the dynamics of capital accumulation and immigration policy, which can include multiple steady state equilibria and a sensitivity of immigration levels to changes in the economy's technology growth rate.
Self-Selection Among Undocumented Immigrants from Mexico
Pia Orrenius and Madeline Zavodny
Published as: Orreninus, Pia M. and Madeline Zavodny (2005), "Self-Selection Among Undocumented Immigrants from Mexico," Journal of Development Economics 78 (1): 215-240.
Abstract: This paper examines the effect of changes in migration determinants on the skill level of undocumented immigrants from Mexico. We focus on the effect of changes in economic conditions, migrant networks, and border enforcement on the educational attainment of Mexican-born men who cross the border illegally. Although previous research indicates that illegal aliens from Mexico tend to be unskilled relative to U.S. natives and that economic conditions, networks and border enforcement affect the size of illegal immigrant flows across the border, the interaction of these variables has not been investigated. Results from hazard models using data from the Mexican Migration Project indicate that improvements in U.S. and Mexican economic conditions are associated with relatively less-skilled undocumented immigrants. Stricter border enforcement is associated with higher skill levels. Access to a network of previous immigrants appears to lower the cost of migrating but has no differential effect by skill level.
The Use and Abuse of "Real-Time" Data in Economic Forecasting
Evan F. Koenig, Sheila Dolmas and Jeremy Piger
Published as: Koenig, Evan F., Shelia Dolmas and Jeremy Piger (2003), "The Use and Abuse of "Real-Time" Data in Economic Forecasting," The Review of Economics and Statistics 85 (3): 618-628.
Abstract: We distinguish between three different ways of using real-time data to estimate forecasting equations and argue that the most popular approach should generally be avoided. The point is illustrated with a model that uses monthly industrial production, employment, and retail sales data to predict real GDP growth. When the model is estimated using our preferred method, its out-of-sample forecasting performance is superior to that obtained using conventional estimation and compares favorably with that of the Blue-Chip consensus.
Unilateral OECD Policies to Mitigate Global Climate Change
Stephen P. A. Brown and Hillard G. Huntington
Abstract: This article offers an alternative perspective for thinking about climate change policy when the developing countries are not participating. If industrialized countries cooperate with each other to reduce their emissions, but comply at levels below those required under the Kyoto protocol, they will have incentives to adopt policies that are more costly to the world than a carbon tax. These incentives result from terms-of-trade gains that result if conservation lowers world prices lower for fuels the industrialized countries import. We consider cases where the industrialized countries act cooperatively and non-cooperatively to achieve these gains. Because the regional terms-of-trade effects of a particular policy cancel each other at the world level, participating nations have incentives to adopt policies that are more costly to non-participants than a carbon tax that minimizes world costs.
On Fed Watching and Central Bank Transparency in an Overlapping Generations Model
Joseph H. Haslag
Abstract: I develop a simple general equilibrium model that integrates fed watching with central bank opaqueness. With the intergenerational conflict, opaqueness can solve a Ramsey problem. With monetary uncertainty as the only source of randomness, transparency is the welfare maximizing policy. With other sources of variation, transparency is costly in the sense that it limits the central bank's response to intrinsic shocks. In short, opaqueness is the veil that permits the central bank freedom to choose money growth in a way to raise welfare.
Low Frequency Movements in Stock Prices: A State Space Decomposition
Nathan S. Balke and Mark E. Wohar
Published as: Balke, Nathan S. and Mark E. Wohar (2002), "Low Frequency Movements in Stock Prices: A State Space Decomposition," The Review of Economics and Statistics 84 (4): 649-667.
Abstract: Previous analyses have concluded that expectations of future excess stock returns rather than future real dividend growth or real interest rates are responsible for most of the volatility in stock prices. In this paper, we employ a state-space model to model the dynamics of the log price-dividend ratio along with long-term and short term interest rates, real dividend growth, and inflation. The advantage of the state space approach is that we can parsimoniously model the low frequency movements present in the data. We find that if one allows permanent changes, even though very small, in real dividend growth, real interest rates, inflation but not excess stock returns then expectations of real dividend growth and real interest rates become significant contributors to fluctuations in stock prices. However, we also show that stock price decompositions are very sensitive to assumptions about which unobserved market fundamentals have a permanent component. When we allow excess stock returns to have a permanent component but not real dividend growth, then excess stock returns becomes an important contributor to stock price movements while real dividend growth is not. Unfortunately, the data is not particularly informative about which of these alternative models is more likely.