DISC-CSSRR Blog

November 18, 2016

CSSRR Economics/Health/Sociology–November 18, 2016

Center for Policy Research [Maxwell School, Syracuse University] Working Papers:

A. “The Health Care Expenditure and Income: A Global Perspective,” Badi H. Baltagi, Raffaele Lagravinese, Francesco Moscone, and Elisa Tosetti (WP197, November 2016, .pdf format, 28p.).

Abstract:

This paper investigates the long-run economic relationship between health care expenditure and income in the world using data on 167 countries over the period 1995-2012, collected from the World Bank data set. The analysis is carried using panel data methods that allow one to account for unobserved heterogeneity, temporal persistence, and cross-section dependence in the form of either a common factor model or a spatial process. We estimate a global measure of income elasticity using all countries in the sample, and for sub-groups of countries, depending on their geo-political area and income. Our findings suggest that at the global level, health care is a necessity rather than a luxury. However, results vary greatly depending on the sub-sample analyzed. Our findings seem to suggest that size of income elasticity depends on the position of different countries in the global income distribution, with poorer countries showing higher elasticity.

www.maxwell.syr.edu…

B. “Stationary Points for Parametric Stochastic Frontier Models,” by William C. Horrace and Ian A. Wright (WP196, November 2016, .pdf format, 38p.).

Abstract:

The results of Waldman (1982) on the Normal-Half Normal stochastic frontier model are generalized using the theory of the Dirac delta (Dirac, 1930), and distribution-free conditions are established to ensure a stationary point in the likelihood as the variance of the inefficiency distribution goes to zero. Stability of the stationary point and “wrong skew” results are derived or simulated for common parametric assumptions on the model. Identification is discussed.

www.maxwell.syr.edu…

C. “The Academic Effects of Chronic Exposure to Neighborhood Violence,” Amy Ellen Schwartz, Agustina Laurito, Johanna Lacoe, Patrick Sharkey, and Ingrid Gould Ellen (WP195, November 2016, .pdf format, 47p.).

Abstract:

We estimate the causal effect of repeated exposure to violent crime on test scores in New York City. We use two distinct empirical strategies; value-added models linking student performance on standardized exams to violent crimes on a student’s residential block, and a regression discontinuity approach that identifies the acute effect of an additional crime exposure within a one-week window. Exposure to violent crime reduces academic performance. Value added models suggest the average effect is very small; approximately -0.01 standard deviations in English Language Arts (ELA) and mathematics. RD models suggest a larger effect, particularly among children previously exposed. The marginal acute effect is as large as -0.04 standard deviations for students with two or more prior exposures. Among these, it is even larger for black students, almost a 10th of a standard deviation. We provide credible causal evidence that repeated exposure to neighborhood violence harms test scores, and this negative effect increases with exposure.

www.maxwell.syr.edu…

D. “The Identification and Estimation of a Large Factor Model with Structural Instability,” by Badi H. Baltagi, Chihwa Kao, and Fa Wang (WP194, November 2016, .pdf format, 77p.).

Abstract:

This paper tackles the identification and estimation of a high dimensional factor model with unknown number of latent factors and a single break in the number of factors and/or factor loadings occurring at unknown common date. First, we propose a least squares estimator of the change point based on the second moments of estimated pseudo factors and show that the estimation error of the proposed estimator is Op(1). We also show that the proposed estimator has some degree of robustness to misspecification of the number of pseudo factors. With the estimated change point plugged in, consistency of the estimated number of pre and post-break factors and convergence rate of the estimated pre- and post-break factor space are then established under fairly general assumptions. The finite sample performance of our estimators is investigated using Monte Carlo experiments.

www.maxwell.syr.edu…

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