Education Systems, Growth and Welfare

This paper focuses on the implications of Decentralized Education (DE) and Centralized Public Education (CPE) for growth and welfare in an overlapping generations model. Individuals choose learning time, consumption and human capital. Under DE, there is no government intervention, while in CPE, human capital is augmented by public education expenditures financed by a distortionary income tax, where the latter is chosen by a benevolent fiscal authority. CPE is welfare superior to DE for moderate/strong preferences over human capital bequests and medium/high elacticities of human capital with respect to average public education spending, average and parental human capital. So, even if we abstract from equity considerations, education policy may be supported on welfare groundsEconomic development, Educational Finance, National Government expenditures and education

Education Policies and Economic Growth

This paper studies the general equilibrium implications of two types of education policy in an overlapping generations growth model with second-best policy. We examine vouchers, which augment inherited private education spending, and public investment on economy-wide human capital, that provides economy-wide externalities to individual human capital accumulation. The government determines jointly the allocation of tax revenues among the two types of education policy and tax policy, subject to the competitive decentralized equilibrium. Using plausible parameter values it is shown that it is socially optimal to spend heavily on economy-wide human capital accumulation and finance government spending by a modest proportional tax on initial human capital and a low tax on inherited private education expenditures.Public goods, human capital, growth, economic policy.

The Components of the Bid-Ask Spread: The case of the Athens Stock Exchange

We analyze the components of the bid-ask spread in the Athens Stock Exchange (ASE), which was recently characterized as a developed market. For large and medium capitalization stocks, we estimate the adverse selection and the order handling component of the spreads as well as the probability of a trade continuation on the same side of either the bid or the ask price, using the Madhavan et al.~(1997) model. We extend it by incorporating the traded volume and we find that the adverse selection component exhibits U-shape patterns, while the cost component pattern depends on the stock price. For high priced stocks, the usual U-shape applies, while for low-priced ones, it is an increasing function of time, mainly due to the order handling spread component. Furthermore, the expected price change and the liquidity adjustment to Value-at-Risk that is needed is higher in the low capitalization stocks, while the most liquid stocks are the high priced ones. Moreover, by estimating the Madhavan et al.~(1997) model for two distinct periods we explain why there are differences in the components of the bid-ask spread.Bid-Ask Spread, Asymmetry Information, Transaction Costs, Price Impact

Fiscal policy and economic growth: empirical evidence from EU countries

This paper studies whether a reallocation of the components of public spending and revenues can enhance economic growth using data on 14 EU countries during 1990-2006. The results provide support for endogenous growth models. Specifically, the findings are: a) public expenditures on infrastructure (economic affairs, general public services) and property rights protection (defense, public order-safety) exert a positive impact on growth; b) distortionary taxation depresses growth; c) government expenditures on human capital enhancing activities (education, health, housing-community amenities, environment protection, recreation-culture-religion) and social protection do not have a significant growth effect. However, when coefficient heterogeneity across countries along with non-linearities are taken into account and public expenditures are further disaggregated, we have in addition that government outlays on education, defense and social protection are growth-enhancing. These findings are robust to changes in specification and estimation methodology.Panel Data; Fiscal Policy; Taxation; Government Expenditures.

Extending the Merton Model: A Hybrid Approach to Assessing Credit Quality

In this paper we have combined fundamental analysis and contingent claim analysis into a hybrid model of credit risk measurement. We have extended the standard Merton approach to estimate a new risk neutral distance to default metric, assuming a more complex capital structure, adjusting for dividend payments, introducing randomness to the default point and allowing a fractional recovery when default occurs. Then, using financial ratios, other accounting based measures and the risk neutral distance metric from our structural model as explanatory variables we estimate the hybrid model with an ordered probit regression method. Using the same econometric method, we estimate a model using financial ratios and accounting variables as explanatory variables and a model using our risk neutral distance to default metric as unique explanatory variable.We have found that by enriching the risk-neutral distance to default metric with financial ratios and accounting variables into the hybrid model, we can improve both in sample fit of credit ratings and out of sample predictability of defaults. Our main conclusion is that financial ratios and accounting variables contain significant and incremental information, thus the risk neutral distance to default metric does not reflect all available information regarding the credit quality of a firm.credit risk, distance to default, financial ratios, accounting variables

From First Base: The Sequence of the Tip of the X Chromosome of Drosophila melanogaster, a Comparison of Two Sequencing Strategies

We present the sequence of a contiguous 2.63 Mb of DNA extending from the tip of the X chromosome ofDrosophila melanogaster. Within this sequence, we predict 277 protein coding genes, of which 94 had been sequenced already in the course of studying the biology of their gene products, and examples of 12 different transposable elements. We show that an interval between bands 3A2 and 3C2, believed in the 1970s to show a correlation between the number of bands on the polytene chromosomes and the 20 genes identified by conventional genetics, is predicted to contain 45 genes from its DNA sequence. We have determined the insertion sites ofP-elements from 111 mutant lines, about half of which are in a position likely to affect the expression of novel predicted genes, thus representing a resource for subsequent functional genomic analysis. We compare the European Drosophila Genome Project sequence with the corresponding part of the independently assembled and annotated Joint Sequence determined through “shotgun” sequencing. Discounting differences in the distribution of known transposable elements between the strains sequenced in the two projects, we detected three major sequence differences, two of which are probably explained by errors in assembly; the origin of the third major difference is unclear. In addition there are eight sequence gaps within the Joint Sequence. At least six of these eight gaps are likely to be sites of transposable elements; the other two are complex. Of the 275 genes in common to both projects, 60% are identical within 1% of their predicted amino-acid sequence and 31% show minor differences such as in choice of translation initiation or termination codons; the remaining 9% show major differences in interpretation

Liberalism and home equity bias

Countries whose citizens have liberal ideals are less biased toward domestic equity. Data from 30 countries suggests that economic as well as social liberalism is associated with proportionally higher foreign equity holdings. A one standard deviation increase in the level of economic (social) liberalism relative to time-series and cross-sectional averages, is associated with a 5% (2%) relative decrease of home equity bias. These results hold after controlling for standard rational and behavioral explanations of the home equity bias as well as country and time fixed effects

Marketing Cooperatives' Re-engineering: Influences among Organizational Attributes, Strategic Attributes & Performance

ABSTRACT In this paper we expand the agribusiness co-op literature by studying the re-engineering process of marketing cooperatives (co-ops). More specifically we discuss and empirically examine organizational innovations adopted by marketing co-ops in Greece. We hypothesize three types of relationships: a) the influence of organizational (i.e., collective ownership, control and cost/benefit allocation) and strategic (i.e., market and brand orientation) attributes on organizational performance; b) the influence of organizational attributes on market orientation; and c) influences among strategic attributes. Data for this study were collected from a largescale survey with CEOs of marketing co-op in Greece. The results show that strategic attributes have a much greater influence on organizational performance than organizational attributes have, as only a few among the examined elements of re-engineered attributes have a (marginal) positive influence on performance. This result raises the question whether the influence of the re-engineered structures on performance has been over-emphasized in the co-op literature. Moreover, the results demonstrate positive influences among the strategic attributes of co-ops, contrary to the non-significant results of organizational attributes on market orientation. This may imply that organizational attributes do not seem to act as drivers or barriers to the adoption of strategic attributes, and, hence, reinforces the conclusion that emphasis in co-op theory and practice should also be also placed on the strategies and tactics that co-ops should adopt and implement in order to capture market benefits. Keywords: marketing cooperatives, attributes, organizational, strategic, performance, Greec

Testing the PIN variable

This paper puts the PIN variable (Probability of INformation-based trading) to test. We ¯nd that for a large set of stocks, the PIN vari- able is lower (albeit insigni¯cantly) in the periods before earnings an- nouncements dates than in the periods after earnings announcements dates. This is inconsistent with the idea of PIN capturing the proba- bility of informed trading