Aaron L. Jackson, Ph. D.

Professor of Economics

Director, Honors Program

Bentley University










Published Research Papers

"Are Immigrants Really Attracted to the Welfare State? Evidence from OECD Countries." Forthcoming, International Economics and Economic Policy Joint work with Michael Quinn and David Ortmeyer.

This paper examines the impact of fiscal policies on both the size and educational levels of immigrants in destination countries. We find that whether or not a country’s policies are attracting highly educated immigrants goes beyond the issue of the “welfare state”. Immigrants are making important distinctions between the different benefits provided by a receiving country’s government. Health and education spending are found to have a positive impact on the education levels of immigrants while the reverse is true for unemployment and retirement benefits. Welfare programs are found to be insignificant once other government programs/taxes and other factors are taken into account. These results imply that countries should be less concerned about whether they are a “big government” with regards to attracting immigrants, and more concerned with what types of benefits they offer.


"Prediction Market Accuracy: The Impact of Size, Incentives, Context, and Interpretation." Journal of Prediction Markets, September 2012. Joint work with Patrick McHugh.

Enterprises desiring to utilize prediction markets for decision support must consider numerous design factors for their market deployments. Through logistic regression analyses of more than 350 real and play-money prediction markets, this paper evaluates several design issues in order to identify conditions under which prediction markets can effectively contribute to an enterprise decision support process. Two of these design considerations include the size of the trader pool and the nature of trader incentives. We find that varying the number of market traders has minimal accuracy impact for markets exceeding 10-20 traders and that the impact of financial incentives is contextual and beneficial to market accuracy. When to act upon market results and at what levels of market support must also be considered. Our data shows that acting on market output up to three weeks prior to an event’s occurrence and requiring markets to sustain desired price levels for up to 3 weeks before responding to the market signal did not statistically impact the market’s ability to accurately predict an event’s occurrence. Adjusting the price threshold for market recommendation acceptance to levels between $55 and $80 ($45 and $20) also does not negatively impact market accuracy. A related measure capturing market uncertainty was found to be the leading predictor of a market’s failure to provide accurate predictions.


"The Ties that Bind: Colonies, Culture, and Education Among Immigrants" International Journal of Applied Economics, September 2010. Joint work with Michael Quinn and David Ortmeyer.

There is concern among many policy makers of a dual problem: too many immigrants overall but not enough highly-skilled immigrants. Using recently available data we examine the factors which influence both the quantity and average educational level of immigrants in OECD countries in 1990 and 2000.  We find that geographic proximity and former colonial relationships positively influence the overall number of immigrants but are negatively related to immigrants’ average educational level.  By contrast, variables such as greater economic freedom, more generous asylum policies, and a common language and religion increase both the quantity and educational level of immigrants. More highly educated immigrants also appear to be more concerned with low unemployment rates among high-skilled workers in destination countries than in income differences between the destination and source countries. These results suggest that highlighting cultural similarities of destination countries can be an important feature of programs designed to attract high-skilled immigrants.  Government reforms regarding asylum policies and economic regulation may also increase a country’s appeal to higher-skilled immigrants.


"Policy Futures Markets with Multiple Goals." Journal of Macroeconomics, February 2010

Previous work in monetary policy futures markets under a single policy goal have shown this approach to be effective at eliminating the circularity problem inherent with private-sector targeting strategies. We extend this monetary policy setting framework to a typical multiple goal policy objective: inflation and output stabilization. We also demonstrate how the prices in policy futures markets can help resolve debates over important policy questions.


"Quantitative Goals for Monetary Policy: A Quantile Regression Approach." Applied Economics, July 2009. Joint work with William Miles

A recent paper by Fatas, Mihov and Rose (2006) indicates that formal monetary policy targets-exchange rate, money supply, or inflation targets-palpably decrease inflation in a sample of forty countries. The authors employ various least squares estimations, which pick up the conditional average effect. However, there is wide inflation variability in the authors’ sample. Thus formal targets could have very different effects in high and low inflation countries. Accordingly we refine the FMR results by utilizing the technique of quantile regression, a method frequently used in labor economics. We find, in a sample of low and moderate inflation countries, that formal targets exert very little impact on low inflation nations. This result is important for debates over formal targets, such as whether the United States should adopt an inflation target. There are costs and benefits in having formal targets, and the finding that targets don’t decrease inflation when it is already moderate is an important piece of information to consider.


"Fixed Exchange Rates and Disinflation in Emerging Markets: How Large is the Effect?" Review of World Economics, 2008. Joint work with William Miles.

We examine developing countries which have institutional quality ratings for the effects of exchange rate rigidity on inflation. The level of institutional development exerts no effect on the impact of currency regimes. However, the interaction of institutional quality and exchange rates has, in the most plausible specifications, a negative impact on inflation. This suggests that fixed exchange rates exert at most a contingent effect on inflation, and indicates that countries in Eastern Europe and Latin America contemplating currency pegs would be better off improving institutional quality prior to adopting the euro or dollar and expecting a large subsequent disinflationary effect.


"Velocity Futures Markets: Does the Fed Need a Structural Model?" Economic Inquiry, October 2006. Joint work with Scott Sumner.

Previous proposals suggesting monetary policymakers target the forecast of private-sector agents’ forecasts have been shown to be problematic. Essentially, as the policy becomes more effective, the private-sector’s forecasts become less informative, and hence, would provide less guidance to monetary policymakers about economic shocks. Under perfect stabilization private-sector forecasts would be of no use to policymakers. We illustrate a way around this ‘circularity problem’ by creating a policy futures market linked to the ratio of the (realization of the) policy goal for next period and the current policy instrument setting. The implication is that extensive information gathering is not necessary to conduct policy, and in particular, it weakens the argument that the central bank needs a structural model to conduct policy.


"Disinflationary Boom Reversion" Macroeconomic Dynamics, September 2005

Recent emphasis has been placed on exploring behavioral aspects of individual agents in explaining macroeconomic phenomena. Of particular interest is augmenting New Keynesian models to produce costly disinflation, as empirics and consensus suggest. We presume a fraction of agents using rule-of-thumb behavior in price setting in an otherwise standard New Keynesian model. Our findings suggest that relatively small amounts of rule-of-thumb behavior are required to offset the net effects of Ball’s disinflationary boom. Moderate levels of rule-of-thumb behavior can produce delayed recessions consistent with some VAR evidence. However, high proportions of rule-of-thumb behavior are needed to produce immediate reductions in output following implementation.