Template-type: ReDIF-Paper 1.0 Author-Name: Konstantinos Vrachimis Author-Name: Marios Zachariadis Title: A Contribution to the Empirics of Welfare Growth Keywords: Economic growth, Welfare, Full income Abstract: This paper compares the determinants of economic growth and welfare growth. Our main result is that determinants may differ or have different impact on welfare outcomes as compared to economic outcomes. Human capital plays a bigger role in determining the former, so that policies targeting human capital can have a greater effect on the welfare of societies than one would think by looking at their impact on economic growth alone. Institutions also have a greater effect on welfare growth compared to their impact on economic growth, consistent with the importance of government stability for the uninterrupted provision of health-related inputs and information. Finally, initial income has a greater impact on welfare growth than on real income per capita growth, implying even faster convergence than in Becker, Philipson, and Soares (2005) after adding a number of economic, health-related, institutions-related, and geographic variables. We conclude that there exist systematic differences for the impact of a number of factors on economic relative to welfare outcomes. Length: 29 pages Creation-Date: 2010-01 File-URL: http://papers.econ.ucy.ac.cy/RePEc/papers/01-10.pdf File-Format: Application/pdf Handle: RePEc:ucy:cypeua:01-2010 Template-type: ReDIF-Paper 1.0 Author-Name: Philippe Andrade Author-Name: Marios Zachariadis Title: Trends in International Prices Keywords: Price levels, Variance decomposition, Convergence, Non-stationarity, International price dispersion Abstract: We exploit the panel dimension of a price levels dataset for more than one hundred product items across 140 cities in 90 countries for the period from 1990 to 2009 in order to improve our understanding of international price dispersion and the evolution of prices over time. We consider a panel data model with exchangeable units that allows for the possibility of common components for different dimensions of the panel. This allows one to gauge the contribution of each dimension of the data to total variation and to disentangle the sources of potential non-stationarity. It also allows us to identify differences in the speed of convergence for different time-varying components in response to location-specific, product-specific, and idiosyncratic shocks. Finally, we proceed to identify the economic determinants of different components to show that particular dimensions of the data are more suited for examining particular theories. Length: 39 pages Creation-Date: 2010-01 File-URL: http://papers.econ.ucy.ac.cy/RePEc/papers/02-10.pdf File-Format: Application/pdf Handle: RePEc:ucy:cypeua:02-2010 Template-type: ReDIF-Paper 1.0 Author-Name: Marios Zachariadis Title: Immigration and International Prices Keywords: Immigration, prices, inflation, international price differences Abstract: This paper considers the relation between immigration and prices for a large number of cities across the world over the period from 1990 to 2006. Aggregate immigration ratios are shown to have a negative impact on international relative prices. The evidence is consistent with demand-side and supply-side considerations both being relevant for the price-reducing effect of immigration, with the latter offering a more likely explanation at annual frequencies during this period. Our findings regarding the inverse relation of immigration and prices and the channels via which this operates across international cities, are broadly consistent wih Lach (2007) and Cortes (2008) who investigate the same relation within Israel and for the US respectively. Length: 21 pages Creation-Date: 2010-02 File-URL: http://papers.econ.ucy.ac.cy/RePEc/papers/03-10.pdf File-Format: Application/pdf Handle: RePEc:ucy:cypeua:03-2010 Template-type: ReDIF-Paper 1.0 Author-Name: Louis N. Christofides Author-Name: Robert Swidinsky Title: The Economic Returns to the Knowledge and Use of a Second Official Language: English in Quebec and French in the Rest-of-Canada Keywords: Wages, language knowledge, language use Abstract: In a country with two official languages, such as Canada, the demand for bilingualism may lead individuals born with one mother tongue to acquire the second official language. Knowledge of an additional official language may be associated with enhanced earnings for two reasons; its actual value in the workplace, or its value as a screening mechanism for ability. Previously available data did not indicate whether bilingual language skills were actually being used at work. However, the 2001 Census reports, for the first time, the primary and the secondary languages that an individual uses at work. Conditioning on both language knowledge and language use allow us to estimate the additional earnings that can be attributed to the use of a second official language. We find very substantial, statistically significant, rewards to second official use in Quebec and much smaller, not statistically significant, effects in the Rest-of-Canada. Length: 37 pages Creation-Date: 2010-02 File-URL: http://papers.econ.ucy.ac.cy/RePEc/papers/04-10.pdf File-Format: Application/pdf Handle: RePEc:ucy:cypeua:04-2010 Template-type: ReDIF-Paper 1.0 Author-Name: Sofia Andreou Author-Name: Panos Pashardes Title: House Prices and School Quality: The Impact of Score and Non-score Components of Contextual Value-Added Keywords: School quality, hedonic regression, house prices Abstract: This paper investigates how the newly introduced Contextual Value Added (CVA) indicator of school quality affects house prices in the catchment area of primary and secondary schools in England. The empirical analysis, based on the data drawn from three independent and previously unexplored UK data sources, shows that the score component of CVA has a strong positive effect on house prices at both primary and secondary levels of education; while the non-score component of this school quality indicator has a significant (negative) effect only in the analysis of secondary school data. Nevertheless, the effect of CVA and its score and non-score components on house prices also varies with the level of spatial aggregation at which empirical investigation is pursued, assuming a more positive role between rather than within Local Authorities (Las). This reflects the emphasis placed by CVA on public good aspects of school quality and suggests that LA policies aimed at raising the average non-score quality characteristics of school conform to household preferences. Length: 26 pages Creation-Date: 2010-07 File-URL: http://papers.econ.ucy.ac.cy/RePEc/papers/05-10.pdf File-Format: Application/pdf Handle: RePEc:ucy:cypeua:05-2010 Template-type: ReDIF-Paper 1.0 Author-Name: Sofronis Clerides Author-Name: Peter Davis Author-Name: Antonis Michis Title: The Impact of the Iraq War on US Consumer Goods Sales in Arab Countries Keywords: consumer behavior, consumer boycotts, Iraq war. Abstract: Did the rise in anti-American sentiment caused by the Iraq war affect sales of US goods abroad? We address this question using data on sales of soft drinks and fabric detergents in nine Arab countries. We find a statistically significant but modest and short-lived negative impact of the war on sales of US soft drinks in some countries but no impact on the sales of detergents in any country. Variation in aggregate market shares of US products across countries correlates with consumer attitudes toward the US in the soft drink market but not in the detergent market. Length: 26 pages Creation-Date: 2010-11 File-URL: http://papers.econ.ucy.ac.cy/RePEc/papers/6-10.pdf File-Format: Application/pdf Handle: RePEc:ucy:cypeua:06-2010 Template-type: ReDIF-Paper 1.0 Author-Name: Sofronis Clerides Author-Name: Pascal Courty Title: Sales, Quantity Surcharge, and Consumer Inattention Keywords: quantity surcharge, sales, promotions, consumer inattention, quantity discounts, nonlinear pricing. Abstract: Quantity surcharges occur when firms market a product in two sizes and offer a promotion on the small size: the large size then costs more per unit than the small one. When quantity surcharges occur the sales of the large size decrease only slightly despite the fact that the small size is a cheaper option - a clear arbitrage opportunity. This behavior is consistent with the notion of rationally inattentive consumers that has been developed in models of information frictions. We discuss implications for consumer decision making, demand estimation, and firm pricing. Length: 31 pages Creation-Date: 2010-11 File-URL: http://papers.econ.ucy.ac.cy/RePEc/papers/7-10.pdf File-Format: Application/pdf Handle: RePEc:ucy:cypeua:07-2010 Template-type: ReDIF-Paper 1.0 Author-Name: Elena Andreou Author-Name: Bas J.M. Werker Title: An Alternative Asymptotic Analysis of Residual-Based Statistics Keywords: Le Cam's third lemma, Local Asymptotic Normality (LAN) Abstract: This paper presents an alternative method to derive the limiting distribution of residual-based statistics. Our method does not impose an explicit assumption of (asymptotic) smoothness of the statistic of interest with respect to the model's parameters. and, thus, is especially useful in cases where such smoothness is difficult to establish. Instead, we use a locally uniform convergence in distribution condition, which is automatically satisfied by residual-based specification test statistics. To illustrate, we derive the limiting distribution of a new functional form specification test for discrete choice models, as well as a runs-based tests for conditional symmetry in dynamic volatility models. Length: 56 pages Creation-Date: 2010-11 File-URL: http://papers.econ.ucy.ac.cy/RePEc/papers/8-10.pdf File-Format: Application/pdf Handle: RePEc:ucy:cypeua:08-2010 Template-type: ReDIF-Paper 1.0 Author-Name: Elena Andreou Author-Name: Eric Ghysels Author-Name: Andros Kourtellos Title: Should macroeconomic forecasters use daily financial data and how? Keywords: MIDAS, macro forecasting, leads, daily financial information, daily factors. Abstract: We introduce easy to implement regression-based methods for predicting quarterly real economic activity that use daily financial data and rely on forecast combinations of MIDAS regressions. Our analysis is designed to elucidate the value of daily information and provide real-time forecast updates of the current (nowcasting) and future quarters. Our findings show that while on average the predictive ability of all models worsens substantially following the financial crisis, the models we propose suffer relatively less losses than the traditional ones. Moreover, these predictive gains are primarily driven by the classes of government securities, equities, and especially corporate risk. Length: 67 pages Creation-Date: 2010-11 File-URL: http://papers.econ.ucy.ac.cy/RePEc/papers/09-10.pdf File-Format: Application/pdf Handle: RePEc:ucy:cypeua:09-2010 Template-type: ReDIF-Paper 1.0 Author-Name: Elena Andreou Author-Name: Eric Ghysels Author-Name: Andros Kourtellos Title: Forecasting with mixed-frequency data Keywords: Abstract: Length: 28 pages Creation-Date: 2010-11 File-URL: http://papers.econ.ucy.ac.cy/RePEc/papers/10-10.pdf File-Format: Application/pdf Handle: RePEc:ucy:cypeua:10-2010 Template-type: ReDIF-Paper 1.0 Author-Name: Steven N. Durlauf Author-Name: Andros Kourtellos Author-Name: Chih Ming Tan Title: Is God in the Details? A Reexamination of the Role of Religion in Economic Growth Keywords: Economic Growth, Religion, Model Uncertainty Abstract: Barro and McCleary (2003) is a key research contribution in the new literature exploring the macroeconomic effects of religious beliefs. This paper represents an effort to evaluate the strength of their claims. We evaluate their results in terms of replicability and robustness. Overall, their analysis generally meets the standard of statistical replicability, though not perfectly. On the other hand, we do not find that their results are robust to changes in their baseline statistical specification. When model averaging methods are employed to integrate information across alternative statistical specifications, little evidence survives that religious variables help to predict cross-country income differences. Length: 33 pages Creation-Date: 2010-11 File-URL: http://papers.econ.ucy.ac.cy/RePEc/papers/11-10.pdf File-Format: Application/pdf Handle: RePEc:ucy:cypeua:11-2010 Template-type: ReDIF-Paper 1.0 Author-Name: Andri Chassamboulli Author-Name: Theodore Palivos Title: “Give me your Tired, your Poor,” so I can Prosper: Immigration in Search Equilibrium Keywords: Search, Unemployment, Immigration, Skill-heterogeneity Abstract: We analyze the impact of immigration on the host country within a search and matching model that allows for skill heterogeneity, endogenous skill acquisition, differential search cost between immigrants and natives, capital-skill complementarity and different degree of substitutability between unskilled natives and immigrants. Within such a framework, we find that although immigration raises the overall welfare, it may have distributional effects. Specifically, skilled workers gain in terms of both employment and wages. Unskilled workers, on the other hand, gain in terms of employment but may lose in terms of wages. Nevertheless, in one version of the model, where unskilled workers and immigrants are imperfect substitutes, we find that even the unskilled wage may rise. These results accommodate conflicting empirical findings. Length: 44 pages Creation-Date: 2010-12 File-URL: http://papers.econ.ucy.ac.cy/RePEc/papers/12-10.pdf File-Format: Application/pdf Handle: RePEc:ucy:cypeua:12-2010 Template-type: ReDIF-Paper 1.0 Author-Name: Andri Chassamboulli Title: Labor-market Volatility in a Matching Model with Worker Heterogeneity and Endogenous Separations Keywords: search and matching, endogenous separations, worker heterogeneity, un-employment, vacancies volatility Abstract: Recessions are times when the quality of the unemployment pool is lower, because entry into unemployment is biased in favor of low-productivity workers. I develop a search and matching model with worker heterogeneity and endogenous separations that has this feature. I show that in a recession a compositional shift in unemployment towards low-productivity workers, due an increase in job separations, lowers the matching effectiveness of searching firms, thereby causing their average recruiting cost to rise. This acts to further depress vacancy creation in a recession. In contrast to most models that allow for endogenous separations, this model generates a realistic Beveridge curve correlation. Length: 25 pages Creation-Date: 2010-12 File-URL: http://papers.econ.ucy.ac.cy/RePEc/papers/13-10.pdf File-Format: Application/pdf Handle: RePEc:ucy:cypeua:13-2010 Template-type: ReDIF-Paper 1.0 Author-Name: Andri Chassamboulli Title: Cyclical Upgrading of Labor and Employment Differences across Skill Groups Keywords: Abstract: This paper examines the cyclical properties of employment rates in a search and matching model that features heterogeneous workers and jobs. Firms can create vacancies for jobs that that require either a high- or a low-skill level. High-skill workers are best suited for high-skill jobs, but are also qualified for low-skill jobs, whereas low-skill workers are only qualified for low-skill jobs. My analysis highlights the importance of a vertical type of transitory skill-mismatch, which takes the form workers accepting jobs below their skill level to escape unemployment and upgrading by on-the-job search, in explaining why typically employment is lower and more procyclical at lower skill levels. I show that this feature makes low-skill vacancy creation more strongly procyclical than high-skill vacancy creation. The model is also consistent with important features of the labor market, such as a procyclical rate of job-to-job transitions and evidence that the educational levels of new hires within occupations are higher in recessions and lower in booms. Length: 57 pages Creation-Date: 2010-12 File-URL: http://papers.econ.ucy.ac.cy/RePEc/papers/14-10.pdf File-Format: Application/pdf Handle: RePEc:ucy:cypeua:14-2010