Economics Recession and Historically Black Colleges and Universities: An Analysis of Factors Impacting Historically Black Colleges and Universities

By Uwakonye, Matthew; Osho, Gbolahan S. | International Journal of Education, October 1, 2012 | Go to article overview

Economics Recession and Historically Black Colleges and Universities: An Analysis of Factors Impacting Historically Black Colleges and Universities


Uwakonye, Matthew, Osho, Gbolahan S., International Journal of Education


Abstract

The primary purpose of this research study is to know how recession affected Historically Black Colleges and Universities. Analysis was based on data obtained from the schools' fact books. The HBCU's chosen were Grambling State University, Southern University Baton Rouge, Alabama A&M University and Prairie View A&M University. The Non-Historically Black Colleges and Universities were used for comparison. GSU, Southern University Baton Rouge, Alabama A&M University and Prairie View A&M University all lost their percentage of a state appropriations for 2005and 2007. Louisiana Tech was the only school that went from negative to positive in percentage of state appropriation. From the state appropriations chart downturn could negatively impact factors of success for each university. In addition to the state appropriations; tuition, alumni resources, and other school fees all impacted the Universities' revenue for each year. Each of the schools maintained a consistent percentage change rate. Enrollments declined and at the same time endowments dropped and fundraising sources dried up.

Keywords: recession; HBCU; inflation; tuition; enrollments; revenue; appropriations

(ProQuest: ... denotes formulae omitted.)

1. Introduction

The United States of America is beyond a doubt a powerful country held by its promise of prosperity, and a chance at wealth through our economy. However, lately it has been impacted by a horrible plague. This plague is called downturn. Downturn is defined as a period or trend in which business or economic activit6y is reduced or is less successful (World English Dictionary). The current recession that our country is experiencing is said to impact future state appropriations for higher education. Namely, in addition to other factors such as weaker alumni resources, downturn is impacting Historically Black Colleges and Universities at an alarming rate. The HBCU's that we have chosen to analyze are Grambling State University, Southern University Baton Rouge, Alabama A&M University, and Prairie View A&M University. The Non-Historically Black Colleges and Universities control that we have chosen to compare them is Louisiana Tech University.

2. Method

This model relates inflation less trend inflation to past values provides a useful starting point for assessing changes in the behavior of inflation.

...(1)

Where Uz is denoting core PCE inflation

... is denoting trend inflation measured as the long-term expectation.

a1, a2 are the model coefficients which can be used to determine current inflation from the past values of inflation and inflation expectations.

bt is the regression error which captures unexpected changes in detrended inflation and represents the shocks to inflation.

If we the leftterm into the right we can get:

...(2)

If we suppose the moment that inflation expectations move slowly, such that inflation expectations in the past two periods are roughly the same as in the current period. Then the formula can be changed into:

...(3)

Which means suppose the ... we use ... to replace the other two terms

From above, a large coefficient on inflation expectations implies expectations exert a significant influence on inflation. A large coefficient on inflation expectations translates into a small value of , smaller coefficients imply a greater influence on long-term expectations on inflation has become more influenced by inflation expectations. Changed in model coefficients could also explain the reduced volatility of inflation in recent years. Alternatively, reduced volatility could be due to a fall in the size of the shocks to inflation.

The model is a vector auto regression with time-varying coefficients and stochastic volatility. The model takes the form:

...(4)

The errors are independent structural shocks, identified from the common recursive, or Choleski, ordering, the reduced-form residuals are . …

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