Human capital plays an important role in the theory of economic growth, but it has been difficult to measure this abstract concept. We survey the psychological literature on cross-cultural IQ tests and conclude that intelligence tests provide one useful measure of human capital. Using a new database of national average IQ, we show that in growth regressions that include only robust control variables, IQ is statistically significant in 99.8% of these 1330 regressions, easily passing a Bayesian model-averaging robustness test. A 1 point increase in a nation’s average IQ is associated with a persistent 0.11% annual increase in GDP per capita. Copyright Springer Science + Business Media, Inc. 2006Intelligence, Human capital, Economic growth, O47, J24, I20,
There is an emerging consensus that money can be largely ignored in making monetary policy decisions. Svensson (1999, 2002) provide some empirical support for this view. In this paper, we reconsider the role of money. We find that money is not redundant. More specifically, there is a significant statistical relationship between lagged values of money and the output gap, even when lagged values of real interest rates and lagged values of the output gap are accounted for. We further test for and find significant information useful in predicting movements in the output gap arise from movements in both inside and outside money.
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