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Research Notes–December 2004

Featuring research published in November 2004

Macroeconomics

Convergence Properties of the Likelihood of Computed Dynamic Models
Working Paper 2004-27
Using approximated policy functions, computed dynamic models arrive at approximated likelihoods. The authors demonstrate, among other outcomes, that the closer the policy function is to the exact policy, the approximated likelihood converges to the exact likelihood.

Dollar Down in October
In October the average monthly value for the trade-weighted dollar index of 15 major currencies tracked by the Federal Reserve Bank of Atlanta declined 1.7 percent.

Finance

Trading Institutions and Price Discovery: The Cash and Futures Markets for Crude Oil
Working Paper 2004-28
The authors conclude that increased fluctuations in the price for West Texas Intermediate crude oil are based on information reflected in the futures market, not uninformed speculation in that market.

Optimal Minimum Wage in a Competitive Economy
Working Paper 2004-30
Although conventional wisdom maintains that a minimum wage is an inefficient policy tool, this paper uses an econometric model to determine the optimal minimum wage policy based on a variety of considerations.

Regional Economics

Income and Education of the States of the United States: 1840-2000
Working Paper 2004-31
Measuring each state’s years of schooling and income, the authors determine which areas of the nation are educational and income leaders and laggards. They estimate that a year of schooling increases labor output by around 10 percent.

International Economics

The Role of Social Capital in the Remittance Decisions of Mexican Migrants from 1969 to 2000
Working Paper 2004-29
Remittances from Mexican migrants in the United States play a major role in the Mexican economy. The author explores the factors underlying the migrant’s decision to remit and the amount to remit.