CGE assumptions under scrutiny: uncertainty in the ethanol promotion policy in Mexico

Based on a CGE exercise of a subsidy to initiate ethanol production in Mexico, we use Monte Carlo simulations for consumer demand elasticities and ethanol cost estimates. The analysis provides three conclusions: when markets vary smoothly and predictably, Monte Carlo methods can then help to gauge the actual probability that a given program will achieve a desired outcome. Second, secondary markets may display little or no sensitivity to these parameter variations. Finally, a ‘razor’s edge’ outcome with no positive benefits if a critical parameter falls below some critical value, reveals that an economic policy may not be conducive to ‘fine tuning’ by marginal adjustments.     

The “Six Ws” of sustainable development risks

Risk management in an organization represents a decisive function in seizing opportunities and managing the risks that can affect a business's reputation, prosperity, growth, value creation, stakeholder engagement, long-term survival, and a firm's contribution to sustainable development. For this paper, we conduct a systematic literature review of 148 indexed studies and uses the “Six Ws” (what, who, why, where, when, and how) approach to understand the linkages between sustainability and risk management. This study's findings reveal that the management of environmental, social, and governance (ESG) concerns plays a mitigation's function on business risks.     

What drives stock market integration? An analysis using agribusiness stocks

This article explores the drivers of regional stock market integration with a focus on the agribusiness sector across relevant regional trade blocs around the world. We implement panel cointegration models to analyze the stock indices of agribusiness firms in the Southern Common Market (MERCOSUR), European Union (EU), Asia‐Pacific Economic Cooperation (APEC), and North American Free Trade Agreement (NAFTA). Based on the literature on market integration and stock return pricing, we identify nine possible determinants of stock market integration, which we separate into three categories: individual market performance, macroeconomic conditions, and agricultural trade. In our analysis, we account for agriculture‐specific factors to control for possible structural shifts in financial markets regimes by including the two main commodity price bubbles during last 20 years. Our results show that most of the variables included in our categories have been important factors in promoting regional stock market integration. Moreover, integration among regional stock markets was strengthened by the implementation of trade agreements. This effect is stronger in trade blocs with fewer members, such as NAFTA and MERCOSUR, compared with larger and more heterogeneous blocs, such as the EU and APEC.     

Public–private wage gap in Latin America (1992–2007): A matching approach

Using matching methods, we estimate the public–private wage gap for urban workers in eleven Latin American countries for the 1992–2007 period. These methods do not require any estimation of earnings equations and hence no validity-out-of-the-support assumptions; furthermore, this approach allows us to estimate not only the average wage gap but also its distribution. Our main findings indicate that the average public sector worker earns more than his/her private counterpart, and that this differential increased over the 1992–2007 period. Important differences along the wage distribution are also shown in the results; in fact, public servants in the highest percentiles of the wage distribution generally earn less than their private sector equivalents. Nonetheless, the percentile at which a positive wage gap becomes a wage penalty shifted over the period as the average wage gap experienced by most countries widened. Still, the most qualified public sector workers do face a wage penalty. Furthermore, indicators of government effectiveness show no relationship with the country ranking according to the public–private wage gap.     

Gender Effects of Social Security Reform in Chile

In 1981 Chile replaced a mature government-run social securitysystem that operated on a pay-as-you-go basis with a privatelymanaged system based on individual retirement accounts. Thenew system is more fiscally sustainable because pension benefitsare defined by contributions. The minimum pension guaranteedto beneficiaries with at least 20 years is funded from generaltaxes, preserving the tight matching between contributions andbenefits. The new system also eliminates several cross-subsidies.Men and women with less than secondary education gain underthe new system, but single women with more education lose. Comparisonof the old and the new systems reveals a complex set of factorsthat cause gender effects given constant behavior or changebehavior across genders.     

As times goes by. A dynamic impact assessment of the innovation policy and the Matthew effect on Argentinean firms

ABSTRACT

The objective of this paper is to analyse the impact of public funds for innovation on firm’s capabilities, innovative dynamics and economic performance. A large stream of literature about the evaluation of public funds is focused on testing the existence of additionality effects on investments and results. This paper aims to provide evidence about other dimensions of the firm that public policy can alter, with focus on the time window between the treatment and the impact, and the role of the Matthew effect (recurrence) in this process. The empirical exercise is based on a dynamic panel data made of 1465 firms (3337 observations) that applied to the Argentinean Technological Fund (FONTAR), which is the main public fund for innovation in Argentina, between 2007 and 2016. Results show short-term effects of accessing to FONTAR on firms’ capabilities, medium-term effects on innovation efforts and long-term effects on productivity. Even though the effect on productivity is larger among recurrent firms, the differences among recurrent and non-recurrent firms are not conclusive in case of capabilities and innovation efforts. All in all, this research provides evidence about the ‘when’ of public policy and the need to look beyond input additionality effects when analysing its impact.     

In School or at Work? Evidence from a Crisis

This paper makes use of the income variability generated by the macroeconomic crisis of 2001/2002 to examine schooling outcomes in Argentina. The effect of this macroeconomic swing is examined with a focus on whether the income or substitution effect dominates in the decision-making of young people. It is demonstrated that the probability of being in school was 6.5–10 percentage points higher in May 2002 than in 2001 for 15–18-year-olds. This is probably the largest (positive) effect found in the developing country literature so far and is comparable to the effect of a 10% increase in household income. For 19–25-year-olds, the probability is between 2 and 6 percentage points higher. Results are robust to a wide range of controls and specification checks. Difference-in-difference panel estimation corroborates these findings and shows that the increase in schooling seems to be driven by a decrease in school exits during the crisis.     

STATE DEPENDENCE AND HETEROGENEITY IN HEALTH USING A BIAS‐CORRECTED FIXED‐EFFECTS ESTIMATOR

This paper estimates a dynamic ordered probit model of self‐assessed health with two fixed effects: one in the linear index equation and one in the cut‐points. This robustly controls for heterogeneity in unobserved health status and in reporting behavior, although we cannot separate both sources of heterogeneity. We find important state dependence effects, and small but significant effects of income and other socioeconomic variables. Having dynamics and flexibly accounting for unobserved heterogeneity matters for those estimates. We also contribute to the bias correction literature in nonlinear panel models by comparing and applying two of the existing proposals to our model. Copyright © 2012 John Wiley & Sons, Ltd.