Nilanjana Roy

IS ADAPTIVE ESTIMATION USEFUL FOR PANEL MODELS WITH HETEROSKEDASTICITY IN THE INDIVIDUAL SPECIFIC ERROR COMPONENT? SOME MONTE CARLO EVIDENCE

ABSTRACT This paper first derives an adaptive estimator when heteroskedasticity is present in the individual specific error in an error component model and then compares the finite sample performance of the proposed estimator with various other estimators. While the Monte Carlo results show that the proposed estimator performs adequately in terms of relative efficiency, its performance on the basis of empirical size is quite similar to the other estimators considered.

The human development index as a criterion for optimal planning

Planning strategies that maximize the Human Development Index (HDI) tend towards minimizing consumption and maximizing non-investment expenditures on education and health. Interestingly, such strategies also tend towards equitable outcomes, even though inequality aversion is not modelled in the HDI. A problematic feature of strategies that maximize the HDI is that the income component in the index only role is to distort the allocation between health and education expenditure. Because the income component does not play its intended role of securing resources for a decent standard of living, we argue that it is better to drop income from the index in considering optimal plans. Alternatively, we consider net income, income net of education and health expenditures, as indicator of capabilities not already reflected in the education and life expectancy components of the index. When net income is used in a modified HDI index, optimal plans yield a balance between allocations for consumption, education, and health. Finally, we calculate our modified indexes for OECD countries and compare them with the HDI.

On the Robustness of Racial Discrimination Findings in Mortgage Lending Studies

That mortgage lenders have complex underwriting standards, often differing legitimately from one lender to another, implies that any statistical model estimated to approximate these standards, for use in fair lending determinations, must be misspecified. Exploration of the sensitivity of disparate treatment findings from such statistical models is, thus, imperative. We contribute to this goal. This article examines whether the conclusions from several bank-specific studies, undertaken by the Office of the Comptroller of the Currency, are robust to changes in the link function adopted to model the probability of loan approval and to the approach used to approximate the finite sample null distribution for the disparate treatment hypothesis test. Our evidence, of discrimination findings that are reasonably robust to the range of examined link functions, suggests that regulators and researchers can be reasonably comfortable with their current use of the logit link. Based on several features of our results, we advocate regular use of a resampling method to determine p-values.

A semiparametric analysis of calorie response to income change across income groups and gender

This paper estimates the relationship between calorie intake and income within a semiparametric framework, which allows for heterogeneity across individuals and possible nonlinearity in the relationship. The results, using a panel data set from rural south India, indicate that the income elasticity of calorie intake is small but is nonzero and statistically significant, and that the elasticity is higher for the relatively poor households in the sample. The semiparametric analysis also brings out some interesting patterns of calorie response to income change at different income levels for males and females.

Health and wealth: Short panel Granger causality tests for developing countries

The world has experienced impressive improvements in wealth and health, with, for instance, the worlds real GDP per capita having increased by 180% from 1970 to 2007 accompanied by a 50% decline in infant mortality rate. Healthier and wealthier. Pl Are health gains arising from wealth growth? Or, has a healthier population enabled substantial growth in wealth? We contribute to understanding the dynamic links between wealth and health by examining for causal, rather than associative, links between health (as measured by infant mortality rate) and wealth (as measured by GDP per capita) for a panel of 58 developing countries using quinquennial data covering the period 1960–2005. Estimating as a panel allows us to account for unobserved heterogeneity, as well as permitting heterogeneous causal effects. We test for panel and country-specific noncausality, and we explore robustness of outcomes to level of economic development (as measured by national income), whether we account for bias in least squares estimators, and to our heterogeneity assumption on the causal coefficients. Overall, our panel tests detect bidirectional links between wealth and health, compatible with other research. However, our country-specific work suggests that the panel results arise from the dominance of a few countries, as there is evidence of noncausality between health and wealth for a majority of countries. These findings contrast with earlier research, and likely arise from different metrics being used to measure the health of a nation. Our work highlights the usefulness of panel causality tests accompanied by unit specific analysis and the importance of examining different metrics for health.