E. Hanushek, Lavinia Kinne, Philipp Lergetporer, Ludger Woessmann
Patience and risk-taking – two preference components that steer intertemporal decision-making – are fundamental to human capital investment decisions. To understand how they contribute to international skill differences, we combine PISA tests with the Global Preference Survey. We find that opposing effects of patience (positive) and risk-taking (negative) together account for two-thirds of the cross-country variation in student skills. In an identification strategy addressing unobserved residence-country features, we find similar results when assigning migrant students their country-of-origin preferences in models with residence-country fixed effects. Associations of national preferences with family and school inputs suggest that both may act as channels.
{"title":"Patience, Risk-Taking, and Human Capital Investment Across Countries","authors":"E. Hanushek, Lavinia Kinne, Philipp Lergetporer, Ludger Woessmann","doi":"10.1093/ej/ueab105","DOIUrl":"https://doi.org/10.1093/ej/ueab105","url":null,"abstract":"\u0000 Patience and risk-taking – two preference components that steer intertemporal decision-making – are fundamental to human capital investment decisions. To understand how they contribute to international skill differences, we combine PISA tests with the Global Preference Survey. We find that opposing effects of patience (positive) and risk-taking (negative) together account for two-thirds of the cross-country variation in student skills. In an identification strategy addressing unobserved residence-country features, we find similar results when assigning migrant students their country-of-origin preferences in models with residence-country fixed effects. Associations of national preferences with family and school inputs suggest that both may act as channels.","PeriodicalId":85686,"journal":{"name":"The Economic journal of Nepal","volume":"26 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-12-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"87767473","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2021-12-31DOI: 10.3126/ejon.v44i3-4.55075
B. P. Gautam
Inflow of personal remittances has exceeded 20 percent of the gross domestic product (GDP) of Nepal for several years. Compared to foreign direct investment (FDI) or foreign aid (grants & loans), the money injected to the economy of Nepal through remittances is markedly larger. Huge investment in the real estate sector and large sums of money applied for share subscription indicate the need and opportunities of channelizing remittances in the infrastructure development and productive sector. However, most studies on remittances are focused on the ex-post analysis of the economy and few studies focus on the planning and policy issues aimed to utilize remittances. This paper reviews literature on utilizing remittance money and analyzes the prospects of capitalizing remittances in Nepal. A conceptual model is proposed on utilizing remittance money for infrastructure development. The proposed model of a remittance investment trust aims to synergize the three best attributes of the three domains of stakeholders, namely, abundant remittance money of the people, excellent management skills of the private sector, and the superior public trust to the government. Remittance money can serve as a great investment vehicle for executing properly investigated and attractive infrastructure projects. As estimated for Lumbini province, the remittance investment trust may contribute to fulfill 20% of the deficit of investment towards achieving the sustainable development goals. While the model is proposed for a province, it is expected to be replicable to the national and sub-national governments in Nepal.
{"title":"A Proposal for Capitalization of Remittances in Nepal","authors":"B. P. Gautam","doi":"10.3126/ejon.v44i3-4.55075","DOIUrl":"https://doi.org/10.3126/ejon.v44i3-4.55075","url":null,"abstract":"Inflow of personal remittances has exceeded 20 percent of the gross domestic product (GDP) of Nepal for several years. Compared to foreign direct investment (FDI) or foreign aid (grants & loans), the money injected to the economy of Nepal through remittances is markedly larger. Huge investment in the real estate sector and large sums of money applied for share subscription indicate the need and opportunities of channelizing remittances in the infrastructure development and productive sector. However, most studies on remittances are focused on the ex-post analysis of the economy and few studies focus on the planning and policy issues aimed to utilize remittances. This paper reviews literature on utilizing remittance money and analyzes the prospects of capitalizing remittances in Nepal. A conceptual model is proposed on utilizing remittance money for infrastructure development. The proposed model of a remittance investment trust aims to synergize the three best attributes of the three domains of stakeholders, namely, abundant remittance money of the people, excellent management skills of the private sector, and the superior public trust to the government. Remittance money can serve as a great investment vehicle for executing properly investigated and attractive infrastructure projects. As estimated for Lumbini province, the remittance investment trust may contribute to fulfill 20% of the deficit of investment towards achieving the sustainable development goals. While the model is proposed for a province, it is expected to be replicable to the national and sub-national governments in Nepal.","PeriodicalId":85686,"journal":{"name":"The Economic journal of Nepal","volume":"69 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-12-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"87087081","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2021-12-31DOI: 10.3126/ejon.v44i3-4.55074
Tej Prasad Devkota
This paper tries to analyze whether the ‘Political Business Cycle (PBC)’ exists in Nepal or not. The term PBC is coined to describe the fluctuation in economic activities from the intervention of the political actors before the election expecting to be re-elected in the forthcoming election. The abuse of political power in manipulating fiscal and monetary policies by the ruling party prior to the election period has become normal in developing countries like Nepal. The incumbent tries to convince their voters by increasing the size of the populist public expenditure before or during the election period. Nepal can’t be exceptional in the case of public resource manipulation during the time of the election. Democracy was restored in Nepal after the people’s political movement of 1990 and after that six consequent general elections were completed. The study used the annual data set from 1990/91 to 2017/18 and employed the ordinary least square method in three different models to capture the relationship among the variables used in the study. Real GDP, government consumption expenditure, and fiscal deficit are used as dependent variables of each model whereas government capital expenditure, transfer payment and subsidy, and total tax revenue are taken as independent variables under the study along with introducing election as a dummy variable. The results showed a positive relationship between the variables, but not enough to confirm the opportunistic political business cycle. The study recommends policymakers ensure policy consistency considering non-intervention in fiscal policies at the time of election.
{"title":"An Analysis of the Existence of Political Business Cycle in Nepal","authors":"Tej Prasad Devkota","doi":"10.3126/ejon.v44i3-4.55074","DOIUrl":"https://doi.org/10.3126/ejon.v44i3-4.55074","url":null,"abstract":"This paper tries to analyze whether the ‘Political Business Cycle (PBC)’ exists in Nepal or not. The term PBC is coined to describe the fluctuation in economic activities from the intervention of the political actors before the election expecting to be re-elected in the forthcoming election. The abuse of political power in manipulating fiscal and monetary policies by the ruling party prior to the election period has become normal in developing countries like Nepal. The incumbent tries to convince their voters by increasing the size of the populist public expenditure before or during the election period. Nepal can’t be exceptional in the case of public resource manipulation during the time of the election. Democracy was restored in Nepal after the people’s political movement of 1990 and after that six consequent general elections were completed. The study used the annual data set from 1990/91 to 2017/18 and employed the ordinary least square method in three different models to capture the relationship among the variables used in the study. Real GDP, government consumption expenditure, and fiscal deficit are used as dependent variables of each model whereas government capital expenditure, transfer payment and subsidy, and total tax revenue are taken as independent variables under the study along with introducing election as a dummy variable. The results showed a positive relationship between the variables, but not enough to confirm the opportunistic political business cycle. The study recommends policymakers ensure policy consistency considering non-intervention in fiscal policies at the time of election.","PeriodicalId":85686,"journal":{"name":"The Economic journal of Nepal","volume":"4 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-12-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"90523055","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
C. Dustmann, Bernd Fitzenberger, Markus Zimmermann
The trend of rising income inequality in Germany since the mid-1990s is strongly amplified when considering income after housing expenditure. The income share of housing expenditure rose disproportionally for the bottom income quintile and fell for the top quintile. Factors contributing to these trends include declining relative costs of homeownership versus renting, changes in household structure, declining real incomes for low-income households, and residential mobility towards larger cities. Younger cohorts spend more on housing and save less than older cohorts did at the same age, which will affect future wealth accumulation, particularly at the bottom of the income distribution.
{"title":"Housing Expenditure and Income Inequality","authors":"C. Dustmann, Bernd Fitzenberger, Markus Zimmermann","doi":"10.1093/ej/ueab097","DOIUrl":"https://doi.org/10.1093/ej/ueab097","url":null,"abstract":"\u0000 The trend of rising income inequality in Germany since the mid-1990s is strongly amplified when considering income after housing expenditure. The income share of housing expenditure rose disproportionally for the bottom income quintile and fell for the top quintile. Factors contributing to these trends include declining relative costs of homeownership versus renting, changes in household structure, declining real incomes for low-income households, and residential mobility towards larger cities. Younger cohorts spend more on housing and save less than older cohorts did at the same age, which will affect future wealth accumulation, particularly at the bottom of the income distribution.","PeriodicalId":85686,"journal":{"name":"The Economic journal of Nepal","volume":"107 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-12-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"85747289","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We study how the contracting environment affects the quality of trade. A better contracting environment not only induces specialisations in industries intensively using customised inputs, but also causes quality upgrading of domestic varieties and tougher competition in these industries. We incorporate these effects into a Ricardian model with customised input and product quality. Our model predicts that better judicial quality raises a country’s import prices and quality more in contract-intensive products, but has no impacts on its export prices or quality. We empirically confirm these predictions, and find that rising judicial quality is associated with increasing specialisations in contract-intensive industries.
{"title":"Judicial quality, input customisation, and trade margins: the role of product quality","authors":"Xiaomin Cui, Miaojie Yu, Rui Zhang","doi":"10.1093/ej/ueab098","DOIUrl":"https://doi.org/10.1093/ej/ueab098","url":null,"abstract":"\u0000 We study how the contracting environment affects the quality of trade. A better contracting environment not only induces specialisations in industries intensively using customised inputs, but also causes quality upgrading of domestic varieties and tougher competition in these industries. We incorporate these effects into a Ricardian model with customised input and product quality. Our model predicts that better judicial quality raises a country’s import prices and quality more in contract-intensive products, but has no impacts on its export prices or quality. We empirically confirm these predictions, and find that rising judicial quality is associated with increasing specialisations in contract-intensive industries.","PeriodicalId":85686,"journal":{"name":"The Economic journal of Nepal","volume":"42 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-12-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"77647540","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Recent empirical work has demonstrated a positive correlation between grandparent-child wealth-rank, even after controlling for parent-child wealth-rank, and a positive correlation between dynastic wealth-ranks across almost 600 years. We show that a simple heterogeneous agents model with idiosyncratic wealth returns generates a realistic wealth distribution but fails to capture these long-run patterns of wealth mobility. An auto-correlated returns specification of this model also fails to capture both short and long-run mobility. However, an extension of the heterogeneous agents model which includes permanent heterogeneity in wealth returns is able to simultaneously match the wealth distribution and short- and long-run wealth mobility.
{"title":"Heterogeneous Dynasties and Long-Run Mobility","authors":"J. Benhabib, Alberto Bisin, Ricardo T. Fernholz","doi":"10.1093/ej/ueab095","DOIUrl":"https://doi.org/10.1093/ej/ueab095","url":null,"abstract":"\u0000 Recent empirical work has demonstrated a positive correlation between grandparent-child wealth-rank, even after controlling for parent-child wealth-rank, and a positive correlation between dynastic wealth-ranks across almost 600 years. We show that a simple heterogeneous agents model with idiosyncratic wealth returns generates a realistic wealth distribution but fails to capture these long-run patterns of wealth mobility. An auto-correlated returns specification of this model also fails to capture both short and long-run mobility. However, an extension of the heterogeneous agents model which includes permanent heterogeneity in wealth returns is able to simultaneously match the wealth distribution and short- and long-run wealth mobility.","PeriodicalId":85686,"journal":{"name":"The Economic journal of Nepal","volume":"28 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-12-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"91112634","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Bernd Fitzenberger, Gary Mena, J. Nimczik, U. Sunde
Economists increasingly recognise the importance of personality traits for socio-economic outcomes, but little is known about the stability of these traits over the life cycle. Existing empirical contributions typically focus on age patterns and disregard cohort and period influences. This paper contributes novel evidence for the separability of age, period, and cohort effects for a broad range of personality traits based on systematic specification tests for disentangling age, period and cohort influences. Our estimates document that for different cohorts, the evolution of personality traits across the life cycle follows a stable, though non-constant, age profile, while there are sizeable differences across time periods.
{"title":"Personality Traits Across the Life Cycle: Disentangling Age, Period, and Cohort Effects","authors":"Bernd Fitzenberger, Gary Mena, J. Nimczik, U. Sunde","doi":"10.1093/ej/ueab093","DOIUrl":"https://doi.org/10.1093/ej/ueab093","url":null,"abstract":"\u0000 Economists increasingly recognise the importance of personality traits for socio-economic outcomes, but little is known about the stability of these traits over the life cycle. Existing empirical contributions typically focus on age patterns and disregard cohort and period influences. This paper contributes novel evidence for the separability of age, period, and cohort effects for a broad range of personality traits based on systematic specification tests for disentangling age, period and cohort influences. Our estimates document that for different cohorts, the evolution of personality traits across the life cycle follows a stable, though non-constant, age profile, while there are sizeable differences across time periods.","PeriodicalId":85686,"journal":{"name":"The Economic journal of Nepal","volume":"14 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-11-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"84346912","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Outsourcing the management of ninety-three randomly-selected government primary schools in Liberia to eight private operators led to learning gains of .18σ after one year, but these effects plateaued in subsequent years (reaching .2σ after three years). Beyond learning gains, the program reduced corporal punishment (by 4.6 percentage points from a base of 51%), but increased dropout (by 3.3 percentage points from a base of 15%) and failed to reduce sexual abuse. Despite facing similar contracts and settings, some providers produced uniformly positive results, while others present trade-offs between learning gains, access to education, child safety, and financial sustainability.
{"title":"Beyond Short-Term Learning Gains: The Impact of Outsourcing Schools in Liberia After Three Years","authors":"Mauricio Romero, J. Sandefur","doi":"10.1093/ej/ueab087","DOIUrl":"https://doi.org/10.1093/ej/ueab087","url":null,"abstract":"\u0000 Outsourcing the management of ninety-three randomly-selected government primary schools in Liberia to eight private operators led to learning gains of .18σ after one year, but these effects plateaued in subsequent years (reaching .2σ after three years). Beyond learning gains, the program reduced corporal punishment (by 4.6 percentage points from a base of 51%), but increased dropout (by 3.3 percentage points from a base of 15%) and failed to reduce sexual abuse. Despite facing similar contracts and settings, some providers produced uniformly positive results, while others present trade-offs between learning gains, access to education, child safety, and financial sustainability.","PeriodicalId":85686,"journal":{"name":"The Economic journal of Nepal","volume":"10 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-11-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"84374948","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We evaluate the welfare cost of housing transaction taxes with a new assignment model based framework, where welfare effects are driven by distortions in the matching of houses and households. We calibrate the model with data from the Helsinki metropolitan region to assess the impact of a reform where an ad valorem transaction tax is replaced with a revenue equivalent property tax. The aggregate welfare gain from this reform increases rapidly with the initial transaction tax rate, with the Laffer curve peaking at about 10%. The proportion of households that lose out from the reform is nevertheless increasing in the tax rate. We compare our model-based counterfactual aggregate welfare results with welfare calculations based on reduced-form estimates from previous policy evaluation studies; they are broadly in line, despite the latter using data from different housing markets at various levels and changes of the tax rate.
{"title":"Welfare Effects of Housing Transaction Taxes: A Quantitative Analysis with an Assignment Model","authors":"Niku Määttänen, Marko Terviö","doi":"10.1093/ej/ueab080","DOIUrl":"https://doi.org/10.1093/ej/ueab080","url":null,"abstract":"\u0000 We evaluate the welfare cost of housing transaction taxes with a new assignment model based framework, where welfare effects are driven by distortions in the matching of houses and households. We calibrate the model with data from the Helsinki metropolitan region to assess the impact of a reform where an ad valorem transaction tax is replaced with a revenue equivalent property tax. The aggregate welfare gain from this reform increases rapidly with the initial transaction tax rate, with the Laffer curve peaking at about 10%. The proportion of households that lose out from the reform is nevertheless increasing in the tax rate. We compare our model-based counterfactual aggregate welfare results with welfare calculations based on reduced-form estimates from previous policy evaluation studies; they are broadly in line, despite the latter using data from different housing markets at various levels and changes of the tax rate.","PeriodicalId":85686,"journal":{"name":"The Economic journal of Nepal","volume":"33 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-10-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"88502421","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We investigate a structural model of demographic-economic interactions for England during 1570 to 1850. We estimate that the annual rate of population growth consistent with constant real wages was 0.4% before 1760 but 1.5% thereafter. We find that exogenous shocks increased population growth dramatically in the early decades of the Industrial Revolution. Simulations of our model show that if these demographic shocks had occurred before the Industrial Revolution the impact on real wages would have been catastrophic and that these shocks were largely responsible for very slow growth of real wages during the Industrial Revolution.
{"title":"Considering the Counterfactual: Real Wages in the First Industrial Revolution","authors":"N. Crafts, T. Mills","doi":"10.1093/ej/ueab081","DOIUrl":"https://doi.org/10.1093/ej/ueab081","url":null,"abstract":"\u0000 We investigate a structural model of demographic-economic interactions for England during 1570 to 1850. We estimate that the annual rate of population growth consistent with constant real wages was 0.4% before 1760 but 1.5% thereafter. We find that exogenous shocks increased population growth dramatically in the early decades of the Industrial Revolution. Simulations of our model show that if these demographic shocks had occurred before the Industrial Revolution the impact on real wages would have been catastrophic and that these shocks were largely responsible for very slow growth of real wages during the Industrial Revolution.","PeriodicalId":85686,"journal":{"name":"The Economic journal of Nepal","volume":"34 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-10-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"89897787","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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