Steven Yamarik

Are regional trading arrangements trade creating?: An application of extreme bounds analysis

In this study, we use extreme bounds analysis to test the robustness of the hypothesis that regional trading arrangements (RTAs) are trade creating. Extreme bounds analysis provides a more rigorous test of specification uncertainty than traditional econometric theory by incorporating prior information and using a systematic approach to testing the fragility of coefficient estimates. The results show that the trade creation effect of most RTAs is fragile. Using a least squares estimator where all weight is attached to the sampling distribution, eight or more of the twelve RTAs considered are found to be trade creating. When the relative weight in the estimation is shifted from the sampling to the prior distribution, the number of RTAs that are trade creating falls to six at the 95 percent likelihood ellipsoid. Moreover, when we specify that not all RTAs are trade creating, four RTAs increase trade at the 95 percent likelihood ellipsoid. At the extreme bounds, when all weight is attached to the prior distribution, none of the RTAs are found to be trade creating. As a result, we conclude that the pervasive trade creation effect found in the literature reflects not the information content of the data but rather the unacknowledged beliefs of the researchers.

Regional Convergence: Evidence from a New State-by-State Capital Stock Series

This paper seeks to reconcile the growth empirics technique of Mankiw, Romer, and Weil (1992) with the empirical results of Barro and Sala-i-Martin (1991) through the development of a new database covering the 1977-96 period. We create state-by-state capital stock and gross investment estimates by apportioning the national capital stock among the states. Using these estimates along with gross state product and employment data, we find evidence that the Solow growth model explains state-wide growth during this period. We consistently find a rate of convergence of around 2. Our results, as a consequence, suggest that the empirical results of Barro and Sala--Martin are driven by the neoclassical growth process of Solow.

Does Cooperative Learning Improve Student Learning Outcomes

What is the effect of small-group learning on student learning outcomes in economic instruction? In spring 2002 and fall 2004, the author applied cooperative learning to one section of intermediate macroeconomics and taught another section using a traditional lecture format. He identified and then tracked measures of student learning outcomes. Using multivariate regression analysis, he found that students taught by cooperative learning achieved greater academic performance in the form of higher exam scores.

A Sensitivity Analysis of the Gravity Model

Abstract In this article, we examine the robustness of variables used in the gravity model literature. We use a variant of Leamers extreme-bounds analysis, which tracks the sign and significance level of the variable of interest to changes in the conditioning set of variables. Of the 47 variables investigated, we find 20 measuring level of development, trade policy, linguistic and colonial ties, geographic factors, relative population density, common currency, and membership in the Central American Common Market (CACM), Caribbean Community (Caricom), Mercado Común del Sur (Mercosur), Australia-New Zealand Closer Economic Relations Trade Agreement (ANZCERTA), and Asian Pacific Economic Cooperation (APEC) are robustly linked to trade. As a result, this study provides researchers with a suitable starting point in which to examine new potential determinants of international trade.

Can tax policy help explain state-level macroeconomic growth?

This paper empirically tests the role of tax distortions in explaining state-level economic growth through the estimation of disaggregated personal income, general sales and property tax rates. The results show that these disaggregated tax rates generate predictions more consistent with growth theory.

Nonlinear Tax Structures and Endogenous Growth

The growth implications of a nonlinear tax structure are investigated. The interest here is on the distortionary not the redistributive effects of taxation on economic growth. The study finds two results. First, the inclusion of a nonlinear tax structure into an Ak growth model introduces the convergence behavior of the neoclassical growth model while retaining the steady-state growth properties of the Ak model. Second, a tax structure that is more progressive through time will lower the transitional growth rate and raise the speed of convergence. Therefore, it is suggested that the tax structure may be another source of observed differences in per capita growth rates. Copyright 2001 by Blackwell Publishers Ltd and The Victoria University of Manchester

Estimating Returns to Schooling from State-Level Data: A Macro-Mincerian Approach

In this paper, we use information from U.S. states to determine the social return to schooling. We estimate a macro-Mincerian model where aggregate earnings (or income) depend upon physical capital, labor, average years of schooling and average labor force experience. We find that the social return to U.S. schooling is 9 to 16 percent, which matches estimates of the private return found in the labor literature. Our results therefore provide evidence that U.S. schooling is indeed productive, but generates no positive externalities.

Does the Confucius institute impact international travel to China? A panel data analysis

This article examines the impact of Confucius Institutes on inbound travel to China. We estimate a panel gravity model of inbound tourism flows to China between 2004 and 2010. We use a Poisson pseudo-maximum likelihood estimator to control for heteroscedasticity endemic in gravity models (Santos Silva and Tenreyro, 2006). We find that the presence of Confucius Institute(s) in the source country increases overall tourism in general and business and worker tourists in particular.

Broad versus regional integration: what matters more for economic development?

In this paper, we examine the impacts of broad and regional integration on long-run economic development.We construct cross-country measures of regional integration that account for both the magnitude and the endogeneity of individual regional integration agreements. We then include our regional integration measures along with the broad trade share, institutions and geography in a deep determinants regression. Our results show that regional integration, unlike broad trade, can raise the long-run level of real gross domestic product (GDP) per capita.