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2012

Economics Working Papers, 2012

Copies may be downloaded on pdf, or hard copies may be requested from  Joshua Hall, Working Paper Coordinator.

12-01 Douglas, Stratford and Annie Walker

"Sample Selection in Appalachian Research" 
Published version in  The Review of Regional Studies

Abstract: The Appalachian Regional Commission's definition of the Appalachian region is the one used most often by scholars, politicians, and the popular press. The uncritical use of this definition of Appalachia raises issues of both selection bias and excess heterogeneity in regression analysis of Appalachian income and growth. The ARC was created as part of President Johnson's war on poverty, and the geographical extent of its purview has been driven by politics and by the geography of poverty, neither of which is exogenous. It is well known that endogenous choice of a sample creates bias and inconsistency in estimation of regression coefficients. To identify the counties that belong to the Appalachian region exogenously we use an algorithm based on three criteria: topography, contiguity, and prevalence of slavery in the 1860 census. We apply our sample to growth regressions using data from 1970 to 2008, addressing the question of the existence of a resource curse from coal extraction.

12-02 Guo, Jang-Ting, Sirbu, Anca-Ioana, and Mark Weder

"News about Aggregate Demand and the Business Cycle"

Abstract: We show that an otherwise standard one-sector real business cycle model with variable capital utilization and mild increasing returns-to-scale is able to generate qualitatively as well as quantitatively realistic aggregate fluctuations driven by news shocks to future consumption demand. In sharp contrast to many studies in the existing expectations-driven business cycle literature, our results do not rely on non-separable preferences or investment adjustment costs.