ISSN 1556-6757








Volume 3, Issue 1, 2009, ISSN 1948-5794


Reducing California’s Income Inequality Gap
Steven J. Balassi

This is the final paper, of three, addressing concerns about California’s income inequality levels. The first paper showed that United States fiscal policies accounted for 69% of California’s income inequality. The second paper examined variables, which were different in California. These variables helped explain the 31% difference for which the United States fiscal policy did not account. It also reported the results of multiple regression tests with additional variables to
strengthen the prior correlation of 69%. This concluding paper searches for proven global solutions and provides policy recommendations. The areas of focus are education, health care, crime and tax policies. Full Article


Entrepreneurship, Entrepreneurship Education, and the Role of the Regional University  Charles F. Harrington and Cammie Hunt Oxendine

Regional colleges and universities are integral to providing economic and workforce development resources that support local and regional economies. Similarly, nascent entrepreneurs create economic opportunities and build enterprises through deliberate planning and risk taking. This paper contributes to a growing body of academic literature on the role that universities play in the development of the economy. However, it adds a new dimension by articulating the role that entrepreneurially engaged regional universities may have in regards to improving their regional communities. Full Article

Early school dropouts in developing countries: An integer approach to guide intervention: The case of Uruguay  Rossana Patrón

Are early leavers from the education system irrational or ill informed? They might be, but this approach shows that with underperforming education sectors – typical in developing countries – early dropout may be perfectly rational and well informed, even in the absence of liquidity constraints. This paper provides an integer approach to guide intervention in developing countries, though there are no clear-cut policies. Long-term measures should be aimed at improving the productivity of the activity, for instance by improving teaching processes, qualification of human resources and organization of schools. Also, less costly measures targeting subjective factors like motivation might be as effective. Full Article


Overreaction of US stock markets to interest rate news
Samih Antoine Azar

The purpose of this paper is to measure overreaction to interest rate news for three US stock market indices. This is a different kind of overreaction than the one studied in previous literature. It relies on observations from the field of psychology that some individuals suffer from winter depression. Those individuals may even affect trading in financial markets, or at least introduce significant noise trading. The paper provides empirical evidence that there indeed exists overreaction to interest rate changes during January and during the northern winter (December, January, and February). There is weak evidence that overreaction typically occurs in January rather than in winter, because significance levels are lower for January effects. Full Article

Direct Investment, Economic and Democratic Development
Jenny Rebecca Kehl

Foreign direct investment is arguably one of the most important strategies used to promote economic development in poor countries. Developing countries have the opportunity to increase their integration into global financial flows, expand employment, receive transferred technology, and establish investment arrangements that increase their potential for economic growth. This cross-national study asks: What accounts for the wide variation in the success and failure of developing countries to use foreign investment to promote economic growth? The central argument posits that the interaction of international investments with democratic institutions accounts for the variation in the capacity to parlay investment into growth. The interaction of foreign investment with democratic institutions and government effectiveness, measured as the ability to formulate and implement policy, have a positive effect on the capacity of governments to negotiate benefits from foreign investment. The study develops an interactive model, which outperforms the models of Political Institutions and Political Economy alone. Cross-Sectional Times Series analysis is used to test the model for 141 countries from 1971-2007. The results indicate that the ability to use foreign investment to promote economic growth is contingent on the interaction of international investments with domestic democratic development. Full Article