Discrepancies between ex ante and ex post efficiency under identical subjective probabilities

Summary. Starr (1973) showed that, if people have different subjective probabilities, ex ante and ex post efficiency conflict. Conversely, under the simple preferences that he considered, the discrepancy between ex ante and ex post efficiency disappears when subjective probabilities are identical. Here I consider identical subjective probabilities, but more general preferences. First, risk attraction is admitted. Second, I dispense with the double requirement (dubbed IZU) of additive separability and state-independence of the utility of zero-date consumption, an unrealistic requirement when modeling the investment in durable goods. I find that, under IZU, and as long as ex post preferences satisfy the natural assumption of quasiconcavity (and satisfy some technical qualifications), an ex ante efficient allocation is indeed ex post efficient, but the converse is not necessarily true under risk attraction. If, on the other hand, IZU is violated, then one can have ex ante efficient allocations that are not ex post efficient, and vice-versa, even under risk aversion. Received: June 25, 1999; revised version: March 2001     

An empirical model of the Brazilian country risk -- an extension of the beta country risk model

The paper examines the distribution of unemployment experience in Britain within the framework of the Han and Hausman semi-parametric estimator, which has the advantage of circumventing problems associated with individual heterogeneity arising from unobserved individual characteristics. The results imply that the unemployment burden is unequally distributed among the working population. Males and females bear an unequal unemployment burden. The study casts light on the characteristics of those individuals who are most likely to experience a high unemployment burden.     

Investment, credit, and endogenous cycles

This paper presents a general-equilibrium dynamic Ramsey-type model that can generate endogenous cycle. We assume two different representative agents, borrowers and lenders, and financial intermediaries with inside and outside money. We investigate under which conditions this model presents a cyclical relationship between capital and loans. The sources of endogenous fluctuations in this model come from a credit restriction in the representative-borrower problem.     

Are complementary reforms a “luxury” for developing countries?

This paper investigates the impact of complementarity reforms on growth and how it depends on GDP per capita. Based on reform data for six policy areas compiled from various sources during the period 1994–2006 for over 100 countries, we compute composite indicators of reform level and complementarity. We provide qualitative justification for the existence of pair-wise complementarities among policy areas. We then use cross-section and panel data estimates to test the effect of reform level and complementarity on GDP per capita growth. We found reforms to be positively related and their dispersion (or the inverse of complementarity) negatively related to growth, controlling for initial conditions, monetary stability and other structural and institutional variables, as well as endogeneity of reform level and complementarity. We show that the effect of policy complementarity is a stronger condition for sustainable growth in developing than in advanced countries, to conclude that complementary reforms are not a ‘luxury’ for developing countries.     

POLICY MAKING FOR INDUSTRIAL COMPETITIVENESS IN PORTUGAL - Patterns of change in a traditional bureaucracy

In Portugal the EEC membership represented a major change in Portuguese Administration functioning. This article uses the new institutionalism approach and the concept of path-dependence to analyse the change in the functioning of a central directorate reponsible for industrial policy. It argues that despite the external pressures for change has altered the directorate operations, there are patterns of continuity which are path-dependent. The response to change shows institutional reproduction in traditional features which is partly due to the reluctance to change traditional methods and partly because of the routines, procedures and norms embedded in the culture.     

Who in Brazil Will Gain from Global Trade Reforms?

The potential impacts of multilateral trade liberalisation on developing countries are the subject of numerous controversies. One particular concern is that Brazil, a major agricultural exporter and a country with one of the world's most unequal income distributions, will reap a substantial share of the potential benefits to developing countries from agricultural trade reform, and that most of those benefits will go to large‐scale commercial farmers rather than to the country's smallholders. This claim is explored via a global general equilibrium model and a national model of Brazil containing multiple agricultural and non‐agricultural households. Brazil is found to account for nearly one‐half of all the benefits to developing countries deriving from global agricultural trade reform. These gains are associated with improvements in the welfare of each group and a lower incidence of poverty. Large‐scale producers gain more than smallholders as they tend to be relatively specialised in export products, but there are important gains to agricultural employees, who are relatively poor, and to urban households, who benefit from the expansion of the agro‐food sector. Overall, there is no discernible impact on income inequality, and no evidence that the gains to commercial farmers occur at the expense of poorer households.     

Understanding the microenterprise sector to design a tailor-made microfinance policy for Cape Verde

Two of the central challenges faced by Cape Verde at the present are the high level of unemployment and the increasing proportion of the population living in (relative) poverty. Microenterprise development can be an effective means of addressing both problems in a developing country like Cape Verde, where microenterprises account for about 50% of employment. In this paper we provide a detailed profile of Cape Verdean microenterprises and microentrepreneurs and investigate the relationship between their characteristics and the resort to outside seed capital. We find a cluster of factors—the microentrepreneur’s age, gender, level of education and reason for being self-employed—which influence significantly the probability of being in need for external start-up capital. The policy implications of these findings for the design of a specific microfinance program for Cape Verde are discussed.