Economic Model/Empirical Methodology
This is what you have studied in most of your other economics categories. For illustration, what happens to the monetary value of lodging when the population additions? Using demand-supply theoretical account, we know that an addition in population leads to an addition in the demand for lodging, increasing the equilibrium monetary value. In reading economics research documents, the economic theoretical account is frequently non identified because it is assumed the reader ( economic research workers ) are familiar with the underlying theoretical account. However, to the novitiate research worker, the theoretical account may non be obvious, so it is of import to sketch the theoretical account and include it in your research paper.
So, how could a researcher go about proving the relationship between lodging monetary values and population? First, we know that lodging monetary value is the dependent variable. Population is one explanatory variable, but are there others that affect lodging monetary values? Yes. We know this from the demand and provide theoretical account that there are other variables that shift demand for lodging ( income, monetary values of replacements and complements, outlooks, gustatory sensations and penchants, etc. ) and the supply of lodging ( input costs, outlooks, the figure of Sellerss, etc. ) . In order to insulate the consequence of population on house monetary value, we need to command for these other factors.
An economic system is a system of bring forthing and administering goods and services with a value that is in demand, nevertheless, with rare supply or resources to run into them. These resources in short supply, or scarce resources, go the chief focal point in economics, which is the survey of tendencies, forms, and demands that a society has on goods and services. In add-on, it surveies the motive behind the minutess that will finally assist foretell the forms and flow of concern rhythms. Questia provides a list of all the facets below that play a major function in our economic system that decides the what, how and wherefore of making goods and services. These facets carry a high precedence in prolonging and foretelling supply of wealth set uping both economic and concern scheme beneficially or problematically.
This is a sample research paper for an introductory class in econometrics. It shows how to pass on econometric work in written signifier. The paper integrates many composing instructions and regulations into a individual illustration and shows how they all fit together. You should pay attending to the construction of the paper: how it is divided into subdivisions and how each subdivision serves a distinguishable intent. You should besides observe how the descriptive statistics and empirical consequences are presented. The paper includes legion notes in the borders. These notes explain the intent of each paragraph, and supply remarks on tabular arraies and other facets of the paper. The border notes are at that place to do you cognizant of the authorship procedure. They are designed to assist you bridge the spread between reading and understanding on one manus, and composing and making cognition on the other. The readings which have been assigned in your economics classs are finished merchandises which you are able to read and understand. However, in order for you to be able to make a finished merchandise yourself, you need to go cognizant of how such a merchandise is created. The notes in the borders reveal the thought and consideration that go into each subdivision, paragraph and tabular array, and should therefore aid you in composing your ain paper. It is deserving stressing that you should utilize this paper merely as a usher. You should non copy the paper and merely make full in your ain names, words and Numberss. You can divert from the order and intent of each paragraph in order to run into the demands of your ain work. You can add separate subdivisions on anterior literature, methodological analysis or theory. Such subdivisions would usually come after the debut. The sample paper includes the treatment of anterior literature in the debut. The theory and methodological analysis are folded into the Introduction, Data and Empirical Results subdivisions. The absence of a separate theory or methodological analysis subdivisions is non uncommon in applied empirical documents. However, theory or methodological analysis subdivisions are a must when the empirical inquiry is derived from an expressed theoretical theoretical account or when the methodological analysis requires a longer account. You are besides welcome to include extra tabular arraies or graphs. What should stay the same, though, is that each subdivision, paragraph, tabular array and graph has a intent, and that they are organized in a logical mode. For pressman friendly version chink here.
1. Introduction The concern of athleticss draws considerable attending from the media and the general populace. Fans and athleticss authors often speculate about the effects of money on athletic public presentation. There is general understanding that more fiscal resources normally lead to better athletic public presentation. In squad athleticss, higher wage can be used to entice better participants from other squads and hence better public presentation. However, public presentation can besides be affected by wage inequality among participants within a squad. On the one manus, wage inequality could hold a negative consequence because it may impede cooperation among team members. In many athleticss, squad cooperation is critical for good public presentation. If pay inequality creates tensenesss or animus among team members, public presentation is likely to endure. On the other manus, inequality could hold a positive consequence on public presentation by supplying inducements. The chance of a really big wage could be a powerful thrust behind an athletes public presentation. Pay inequality might besides heighten public presentation if low paid participants learn from high paid participants. This would go on when wage inequality is associated with skill inequality. For illustration, if a extremely paid ace can learn other participants, the overall public presentation of a squad may better. Give that statements can be made both ways, it is non surprising that there is small understanding on the effects of wage inequality on squad public presentation. The intent of this paper is to find whether, on balance, the consequence of wage inequality on public presentation is positive or negative.
Understanding the consequence of wage inequality on a teams public presentation is of import for at least two grounds. First, squad directors can utilize this information to do determinations about which participants to engage. For illustration, should they engage one expensive ace and two cheap participants, or three medium-priced participants? If we find that wage inequality leads to hapless squad public presentation, so the squad may execute better with three medium-priced participants than one ace and two low-cost participants. Second, because wages are a big portion of contract dialogues between participant associations and squad proprietors, understanding the effects of wage inequality on public presentation can assist find optimum policies. For illustration, if wage inequality has a negative consequence on public presentation, an statement for a higher minimal wage could be made.
There are a figure of surveies that look at the effects of wage inequality on public presentation. DeBrock, Hendricks and Koenker ( 2004 ) study the effects of wage inequality on public presentation in Major League Baseball ( MLB ) . They find that wage inequality is associated with hapless public presentation. Frick, Prinze and Winklemann ( 2003 ) expression at the effects of wage inequality in all four major conferences in North America. They find that inequality improves team public presentation in hoops and worsens squad public presentation in baseball. They find no statistically important consequence of inequality on public presentation in football and hockey.
This paper looks at the effects of inequality on public presentation in MLB. It differs from that of DeBrock, Hendricks and Koenker ( 2004 ) in that it uses the most recent informations. While the old writers use informations from 1985 through 1998, I use informations from the latest two seasons: 2003 and 2004. Another difference is that I use a different step of wage inequality. Rather than the Herfindahl index, I use the per centum of paysheet earned by the best paid 20 % of participants. I chose the portion earned by the top 20 % participants for two grounds: it is slightly easier to cipher, and its magnitude is easier to construe.
2. Data The information on wage inequality was constructed in the undermentioned manner. From the USA Today salary database, I collected one-year wages for each participant in all MLB squads during the 2003 and 2004 seasons. I summed the wages of all participants for each squad and each season to obtain the entire paysheet. The active roll in baseball is 25, but the database includes wages of handicapped participants every bit good. Therefore, the figure of participants for each squad ranges from 25 to 31. As the step of wage inequality, I calculated the per centum of paysheet earned by the highest paid 20 % of participants. For illustration, for a 30 participant squad I summed the wages of the highest paid 6 participants and split that sum by entire paysheet. If every participant earned the same sum, the best paid 20 % would gain precisely 20 % of the paysheet. When wage is unequal, this step is higher than 20 % . The higher the portion of paysheet earned by the top 20 % of participants, the higher the wage inequality. To mensurate public presentation I use the per centum of games won in the regular season. This information comes from BaseballReference.com. It does non include public presentation during league titles or the World Series. However, with 162 games per habitue season, the winning per centum can be regarded as a sensible step of public presentation. This is besides the step used by DeBrock, Hendricks and Koenker ( 2004 ) .
In add-on to pay inequality and public presentation, I use informations on the entire paysheet of each squad. This is a step of fiscal resources which could be an of import determiner of public presentation. I measure paysheet in current dollars and do non set for rising prices. While 2003 dollars are non precisely comparable to 2004 dollars, 2003 rising prices was low plenty non to act upon the consequences significantly. Table 1 shows the descriptive statistics of each variable. In the first row we see that on norm the highest paid 20 % of participants earn about 61 % of the entire paysheet. This implies that on a 30 participant squad, the six best paid participants earn more than the staying 24 combined. Harmonizing to this step, the squad with the most just wage is the New York Yankees during the 2003 season when the top 20 % of participants earned merely 42 % of entire paysheet. The squad with the highest inequality was the Colorado Rockies during the 2004 season. On that squad, five participants earned more than 78 % of the teams entire paysheet. The 2nd row in Table 1 shows that the mean victorious per centum is 50 % which has to be the instance since for every game won there is a game lost. The Detroit Tigers have the lowest winning per centum in the information with merely 26 % of games won during the 2003 season. The maximal victorious per centum in the information is for the St. Louis Cardinals, who won about 65 % of their games during the 2004 season. Finally, the last row in Table 1 shows that the mean paysheet is about 70 million dollars. The scope of paysheet is rather dramatic. It goes from less than 20 million dollars for the Tampa Bay Rays to over 184 million for the New York Yankees. Table 1: Descriptive Statisticss
3. Empirical Results I estimate three different specifications. The dependent variable in each specification is public presentation, as measured by the per centum of games won. Pay inequality and entire paysheet are the independent variables. Table 2 shows the consequences. In the first specification, I regress public presentation on the portion earned by the top 20 % of participants. The coefficient on the portion of top 20 % is negative and statistically important. This indicates that squads with higher wage inequality tend to win fewer games. A one per centum point addition in the portion of paysheet earned by the top 20 % of participants is associated with about half of a per centum point diminution in the per centum of games won. Table 2: Arrested development Consequences
In the 2nd specification I include entire paysheet as an independent variable. Payroll is a step of the fiscal resources which can impact public presentation - the higher the paysheet, the higher the quality of participants and, by and large, the better the public presentation. Therefore, including paysheet may increase the preciseness of the estimated coefficient on wage inequality. More significantly, it is possible that wage inequality is correlated with entire paysheet. If low paysheet squads tend to hold more wage inequality, so the coefficient on wage inequality in specification ( 1 ) is biased. Indeed, the correlativity coefficient between the portion earned by the top 20 % of participants and entire paysheet is -0.5. Teams with high wage inequality may execute worse non because of wage inequality, but because they are besides the squads with a lower paysheet. Therefore, in order to mensurate the consequence of wage inequality on public presentation, I need to command for entire paysheet. Once I control for entire paysheet, the coefficient on the portion of the top 20 % remains statistically important but the magnitude drops well. Keeping paysheet invariable, a one per centum point addition in the portion earned by the highest paid 20 % is associated with a 0.27 per centum point diminution in the per centum of games won. The impact of inequality on public presentation does non look tremendous. For illustration, a five per centum point addition in inequality for the squad with average inequality would switch the squad up 13 musca volitanss in the inequality ranking, but its public presentation ranking would drop by merely 2 musca volitanss. The coefficient on entire paysheet is positive and statistically important. A one million dollar addition in entire paysheet is associated with about 0.1 per centum point addition in the per centum of games won. This indicates that greater fiscal resources tend to better public presentation. Adding paysheet as an independent variable led to an addition in R-squared from about 0.19 to 0.29. Finally, in specification ( 3 ) I include the logarithm of paysheet alternatively of paysheet. I want to verify that the consequence in specification ( 2 ) is robust to different functional signifiers. In add-on, the consequence of an extra one million dollars may be smaller for a squad with a 100 million paysheet than for one with a 20 million paysheet. Therefore, including paysheet in logarithm seems appropriate. The coefficient on the portion of the top 20 % remains statistically important with approximately the same magnitude. The log of paysheet is statistically important. A one per centum addition in paysheet is associated with about 0.07 per centum points addition in the per centum of games won.
4. Decision The analysis in this paper shows that wage inequality within MLB squads has a negative consequence on public presentation. The consequence remains statistically important even after commanding for entire paysheet. The consequence is the same as that of DeBrock et Al. ( 2004 ) who use informations from 1985 through 1998. My paper confirms their determination utilizing the most recent informations and utilizing a different step of wage inequality. The fact that wage inequality leads to worse public presentation implies that directors should endeavor for wage equality in their squads. For illustration, alternatively of engaging two low-cost participants and one ace, public presentation may be better if three medium-priced participants are hired. Given these consequences, it is surprising that there is non a more equal distribution of wage in baseball. One possible account is that directors may care about attending every bit good as winning. They may be willing to subscribe up an expensive ace who will pull fans even though it will increase wage inequality and may impede public presentation.
The decisions above are capable to a figure of restrictions. First, it is ill-defined to what extent the consequences can be generalized to other athleticss. Each athletics requires a different grade of cooperation among team members. Therefore, the relationship between wage inequality and public presentation is likely to differ across athleticss. Second, the mistake footings for each squad could be correlated over clip. For illustration, if a squad wins a batch of games one twelvemonth given its paysheet and pay inequality, that squad is likely to win a batch of games the following twelvemonth every bit good. Therefore, the appraisal process may necessitate to rectify for this autocorrelation. Finally, there may be other variables that affect public presentation, e.g. manager wage or quality of preparation installations. Including these in the arrested development would increase the preciseness of my estimations every bit good as eliminate potency omitted variable prejudice. The channels through which pay inequality affects public presentation are non clear. I can believe of two possibilities. One is that wage inequality leads to tensenesss within the squad and impairs public presentation. The other possibility is that baseball requires participants of similar quality. Pay inequality is likely associated with skill inequality, and it may be the skill inequality that drives down public presentation. An first-class hurler can non win the game when the outfielders can non catch or throw. It may be possible to separate these two channels through empirical observation. Using statistics on single participant accomplishment degree, one could build a step of accomplishment inequality for a squad and include it as an extra control. The coefficient on wage inequality in that instance would capture the consequence of wage inequality on public presentation while keeping skill inequality invariable. A negative impact of wage inequality would so back up the thought that pay inequality leads to tensenesss which affect public presentation. This probe, nevertheless, is left for future research.
Gross Domestic Product ( GDP ) The Gross Domestic Product ( GDP ) is considered by many to be the broadest step of a state 's economic public presentation. It represents the entire market value of all finished goods and services produced in a state in a given twelvemonth or other period ( the Bureau of Economic Analysis besides issues a study monthly during the latter terminal of the month ) . Many investors, analysts and bargainers do n't really concentrate on the concluding one-year GDP study, but instead on the two studies issued a few months before: the progress GDP study and the preliminary study. This is because the concluding GDP figure is often considered a lagging index, intending it can corroborate a tendency but it ca n't foretell a tendency. In comparing to the stock market, the GDP study is slightly similar to the income statement a public company studies at year-end.
Retail Gross saless Reported by the Department of Commerce during the center of each month, the retail gross revenues is a really closely watched study that measures the entire grosss, or dollar value, of all ware sold shops. The study estimates the entire ware sold by taking sample informations from retail merchants across the state. This figure serves as a placeholder of consumer disbursement degrees. Because consumer disbursement represents more than two-thirds of the economic system, this study is really utile to bet on the economic system 's general way. Besides, because the study 's informations is based on the old month gross revenues, it is a timely index. The content in the retail gross revenues study can do above normal volatility in the market, and information in the study can besides be used to bet on inflationary force per unit areas that affect Fed rates.
Industrial Production The industrial production study, released monthly by the Federal Reserve, reports on the alterations in the production of mills, mines and public-service corporations in the U.S. One of the closely watched steps included in this study is the capacity use ratio, which estimates the degree of production activity in the economic system. It is preferred for a state to see increasing values of production and capacity use at high degrees. Typically, capacity use in the scope of 82-85 % is considered `` tight '' and can increase the likeliness of monetary value additions or supply deficits in the close term. Levels below 80 % are normally interpreted as demoing `` slack '' in the economic system, which might increase the likeliness of a recession.
Employment Data The Bureau of Labor Statistics ( BLS ) releases employment informations in a study called the non-farm paysheets, on the first Friday of each month. By and large, crisp additions in employment indicate comfortable economic growing. Likewise, possible contractions may be at hand if important lessenings occur. While these are general tendencies, it is of import to see the current place of the economic system. For illustration, strong employment informations could do a currency to appreciate if the state has late been through economic problems, because the growing could be a mark of economic wellness and recovery. Conversely, in an overheated economic system, high employment can besides take to rising prices, which in this state of affairs could travel the currency downward.
Consumer Price Index ( CPI ) The Consumer Price Index ( CPI ) , besides issued by the BLS, measures the degree of retail monetary value alterations ( the costs that consumers pay ) and is the benchmark for mensurating rising prices. Using a basket that is representative of the goods and services in the economic system, the CPI compares the monetary value alterations month after month and twelvemonth after twelvemonth. This study is one of the more of import economic indexs available, and its release can increase volatility in equity, fixed income, and forex markets. Greater-than-expected monetary value additions are considered a mark of rising prices, which will probably do the implicit in currency to deprecate.
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