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The Capital Asset Pricing Model: An Application on the Efficiency of Financing Higher Public Education in Egypt

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Author Info
Nevine Mokhtar Eid () (Faculty of Management Technology, The German University in Cairo)
Abstract

In the Markowitz (1952) mean-variance model as well as the Capital Asset Pricing Model of Sharpe (1964) and Lintner (1965) agents make their investment decisions based solely on the expected return and variance. On the other hand, human capital theory does not consider uncertainty in its return function except recently initiated by Harmon et al. (2001) who distinguish between the level and the years of education and incorporate uncertainty in Mincer’s Model (1974). This study has twofold objectives: First, estimate the risk-return trade-off of the public higher education capital stock in Egypt to indirectly evaluate the performance of its current financing system, and second, investigate the inter-linkage between real investment (human) and financial investment (lost opportunity or access to funds), then draw the channel through which they can affect the economic growth.

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File URL: http://mgt.guc.edu.eg/wpapers/008eid2008.pdf
File Format: application/pdf
File Function: First version, 2008
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Publisher Info
Paper provided by The German University in Cairo, Faculty of Management Technology in its series Working Papers with number 8.

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Length: 20 pages
Date of creation: Mar 2008
Date of revision:
Handle: RePEc:guc:wpaper:8

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Web page: http://mgt.guc.edu.eg/economics/RePEc/guc/
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Related research
Keywords: Human capital investment; financial capital investment; capital asset pricing model;

Find related papers by JEL classification:
G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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  1. Richards, Alan, 1992. "Higher education in Egypt," Policy Research Working Paper Series 862, The World Bank. [Downloadable!]
  2. Hartog, Joop & Vijverberg, Wim P. M., 2002. "Do Wages Really Compensate for Risk Aversion and Skewness Affection?," IZA Discussion Papers 426, Institute for the Study of Labor (IZA). [Downloadable!]
  3. Telhado Pereira, Pedro & Silva Martins, Pedro, 2002. "Is there a return-risk link in education?," Economics Letters, Elsevier, vol. 75(1), pages 31-37, March. [Downloadable!] (restricted)
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  4. Dagum, Camilo & Slottje, Daniel J., 2000. "A new method to estimate the level and distribution of household human capital with application," Structural Change and Economic Dynamics, Elsevier, vol. 11(1-2), pages 67-94, July. [Downloadable!] (restricted)
  5. Koman, Reinhard & Marin, Dalia, 1997. "Human Capital and Macroeconomic Growth: Austria and Germany 1960-1992," CEPR Discussion Papers 1551, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  6. Jorgenson, D.W. & Fraumeni, B.M., 1991. "The Output Of The Education Sector," Harvard Institute of Economic Research Working Papers 1543, Harvard - Institute of Economic Research.
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  7. Tao, Hung-Lin & Stinson, Thomas F., 1997. "An Alternative Measure of Human Capital Stock," Bulletins 7466, University of Minnesota, Economic Development Center. [Downloadable!]
  8. Sherwin Rosen, 2002. "Markets and Diversity," American Economic Review, American Economic Association, vol. 92(1), pages 1-15, March. [Downloadable!]
  9. Weiss, Yoram, 1972. "The Risk Element in Occupational and Educational Choices," Journal of Political Economy, University of Chicago Press, vol. 80(6), pages 1203-13, Nov.-Dec.. [Downloadable!] (restricted)
  10. Richard R. Nelson & Edmond S. Phelps, 1965. "Investment in Humans, Technological Diffusion and Economic Growth," Cowles Foundation Discussion Papers 189, Cowles Foundation, Yale University. [Downloadable!]
  11. Mulligan, C. B. & Sala-i-Martin, X., 1997. "A labor income-based measure of the value of human capital: An application to the states of the United States," Japan and the World Economy, Elsevier, vol. 9(2), pages 159-191, May. [Downloadable!] (restricted)
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  12. Harmon, Colm & Hogan, Vincent & Walker, Ian, 2001. "Dispersion in the Economic Return to Schooling," CEPR Discussion Papers 3037, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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