RATIONAL EXPECTATIONS IN THE AGGREGATE

This paper investigates the relationship between the way rational expectations is employed in practice and the argument initially put forth to justify its use. In practice rational expectations has meant that the expectations of each agent taken separately is consistent with the predictions of the theory. This is different than the argument frequently used by proponents of rational expectations that on an aggregate level expectations should be consistent with the theory. The primary findings are that standard and aggregate rational expectations typically yield systematically different equilibria and that the size of the difference depends positively on the degree of synergism.     

The influence of social programs in source countries on various classes of U.S. immigration

"This article uses a unique set of pooled cross-sectional and time series data to examine the annual rate of U.S. immigration during 1972-1991 from 60 source countries. One distinguishing feature of the article is that it breaks out and cross-classifies various classes of immigrants--numerically limited versus numerically exempt and new immigrant versus adjustment of status. A second distinguishing feature is that it utilizes a unique vector of variables relating to the presence and characteristics of various social programs in source countries. The models developed here emphasize the importance of both differential economic advantage and the ease with which a prospective migrant can transfer skills to the U.S. labor market. Hausman-Taylor instrumental variable estimates of the coefficients indicate that in addition to other factors, social programs in source countries are significant determinants of immigration to the USA." Data are from the Immigration and Naturalization Service's Public Use Files.