The Effect of Deleting Anchor on the Classification of Examinees

The presence of outlying anchor items is an issue faced by many testing agencies. This study examines the effect of removing or retaining one aberrant anchor item. The degree of aberrancy was manipulated as well as the ability distribution of examinees, and four IRT scaling methods were investigated (Mean-sigma, mean-mean, Stocking & Lord, and Haebara). The results indicate that the percent of correctly classified students was not affected by either retaining or removing the aberrant item, although the over- and under- classification of examinees was. There was no difference among the methods.

Financial Liberalization and Inflationary Dynamics in the Context of a Small Open Economy

The paper develops a short-run model of a small open financially repressed economy characterized by unorganized money markets, capital good imports, capital mobility, wage indexation, and flexible exchange rates. The analysis shows that financial liberalization, in the form of an increased rate of interest on deposits and tight monetary policy, unambiguously and unconditionally causes deflation. Moreover, the results do not depend on the degree of capital mobility and structure of wage setting. The paper recommends that a small open developing economy should deregulate interest rates and tighten monetary policy if reducing inflation is a priority. The pre-requisite for such a policy, however, requires the establishment of a flexible exchange rate regime.