Abstract
This paper uses a large variety of different models and examines the predictive performance of these exchange rate models by applying parametric and non-parametric techniques. For forecasting, we will choose that predictor with the smallest root mean square forecast error (RMSE). The results show that the better model is equation (34), but none of them gives a perfect forecast. At the end, error correction versions of the models will be fit so that plausible long-run elasticities can be imposed on the fundamental variables of each model.
Highlights
As the baseball league with the highest standards in the world, the Major League Baseball (MLB) attracts baseball players from all over the world with its high salaries and intense competitiveness
Krautmann and Oppenheimer (2002) used free agents for their sample and found a positive correlation between contract length and salary, indicating that the players with the best performance obtained higher salaries, and longer contracts. This study extends this analysis to players eligible for salary arbitration and players extending their current contracts
According to data collected from 1,681 players between the years of 2009 and 2013, when controlling for player characteristics, performance, team characteristics, and dummy variables for free agents and players extending their current contracts, the random effects (RE) model showed that contract length had a significant positive impact on average salary
Summary
As the baseball league with the highest standards in the world, the MLB attracts baseball players from all over the world with its high salaries and intense competitiveness. During the early years of the MLB, players found it difficult to obtain fair pay due to its systems still being in their infancy. In 1994, the league’s players collectively went on strike over the salary cap issue. After this event, some attributed the strike to the free market system. The league has since repeatedly amended its salary regulations. The league’s players have a guaranteed minimum salary, but no salary cap
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