Since the 1960s, economists have experimented with incorporating computerized economic simulations into their classes. This article reviews the literature on the use of simulations and describes some of the simulations currently being distributed. In microeconomics, the simulations have taken three different forms: optimization exercises (in which students must maximize profits or utility given some fixed parameters), exploratory environments (in which students try to identify different aspects of a simulated economy), and market simulations (in which prices are determined endogenously). All macroeconomic simulations involve students’ selecting policy variables to try to control inflation, unemployment, and, in most cases, interest rates. Supporters of simulations, like proponents of classroom experiments, argue that simulations give students the opportunity to apply economic theory, but there have been very few controlled studies of the effectiveness of simulations. Increased support by publishers of software development may lead to wider use of computerized simulations in the near future.
This paper provides a new treatment of district location in modeling the determinants of teacher salaries by incorporating the methodology of spatial econometrics. Using a location weighting variable, we examine how starting teacher salaries in one district are influenced by other districts' starting salaries in the region. We find that a $1 increase in average beginning teacher salaries of a district's neighbors generates an own salary increase in average teacher salaries ranging from $0.51 to $0.96. In order to completely account for the spillover effects present, the specification of the location variable must incorporate both the size and distance of neighboring districts.
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