Negative Calories. What are they? Negative Calorie foods have what we will refer to as a —negative calorie effect.“ To give you an idea of what that means, we‘ll go through the process. You eat an apple. The apple you consume has 80 calories however, your body‘s chemical processing, digestion and breakdown of that apple causes you to burn off 100 calories thus, your negative calorie effect is œ20 calories. Can you see the implications of a diet based on this premise?
Let‘s talk about the word diet. What images do you conjure up when you see or hear that word? I think of starving. I think of not ever getting full when I sit down to a meal. I think of all the foods that I like. I think of all the foods that I‘m missing. What do you think?
Human capital increases through training, be that implicit on-the-job training (as captured by tenure), or explicit classroom-type formal training leading to human capital accumulation. Our focus in this paper is mostly on the latter: we are interested in how a firm’s explicit decision to train depends on aggregate and sectoral output fluctuations.
It is not ex-ante obvious whether investments in human capital are counter cyclical, pro-cyclical, or a-cyclical. Since the opportunity cost to train workers is lower in downturns, a negative productivity shock should be associated with increased training. This channel is highlighted by deJong and Ingram (2001) who find that training activities “are distinctively countercyclical” and by Devereux (2000) who argues that during downturns firms hoard labor by assigning high-skill workers to lower-production activities such as training, thus avoiding layoffs and the fixed costs associated with firing and re-hiring workers. On the worker side, the literature documents that college enrollment is counter-cyclical (e.g. Dellas and Sakellaris (2003)); typically, enrollment in universities increases when the economy is not doing well and good jobs are harder to find.
This thesis identifies monetary policy shocks employing vector autoregressions (VAR) for open economies, using Canada and the UK as case studies. The main argument is that if the information set in the monetary policy reaction function in a VAR model is different from that of a central bank, then the policy reaction function is incorrectly identified. The incorrect policy function then yields mis-measured policy shocks, which in turn generates misleading results. First I examine the macroeconomic variables a central bank considers to make monetary policy decisions and then I formulate monetary policy functions by using those variables. Having identified the monetary policy function by incorporating the set of variables actually observed by the central bank, this thesis concludes that most of the previous puzzling results about the effects of monetary policy shocks might be due to incorrectly identifying the policy reaction function.
