Reflexiones teóricas en torno a la propuesta de recuperación del poder de compra del salario mínimo en México

Regarding the recent proposal made by the Mexico City Government about the recovery of the purchasing power of the minimum wage, some reflections on the theories of production and distribution are proposed. We first review the seminal paper written by Cobb and Douglas (1928). Some obstacles in measuring the marginal factor products, and a pair of inconsistencies between the theories of production and distribution on the one hand, and some exercises of quantifying “productivities” on the other hand, are presented. Finally, a model of imperfect competition, which displays the dispute over income between economic agents, is included. One conclusion is that income distribution does not follow a simple rule, but a bargaining process based on market power in a historical context that provides inertia and in which institutions play a key role.     

On the cyclical behavior of employment, unemployment and labor force participation

In this paper I evaluate to what extent a real business cycle (RBC) model that incorporates search and home production decisions can simultaneously account for the observed behavior of employment, unemployment and out-of-the-labor-force. This contrasts with the previous RBC literature, which analyzed employment or hours fluctuations either by lumping together unemployment and out-of-the-labor-force into a single non-employment state or by assuming a fixed labor force. Once the three employment states are explicitly introduced I find that the RBC model generates highly counterfactual labor market dynamics.     

Irreversible investment,managerial discretion and optimal capital structure

We explore the significance of employee compensation and alternative (reservation) income on investment timing, endogenous default, yield spreads and capital structure. In a real-options setting, a manager’s incentive to under(over)invest in a project is associated to labor income he has to forego in order to work on the project, the manager’s salary, his stake on the project’s equity capital and his subsequent income, should he decide to terminate operations. We find that the optimal level of coupon payments decreases with managerial salary and ownership stake while it is increasing in the manager’s reservation income. Yield spreads (optimal leverage ratios) are increasing (decreasing) in the manager’s salary and ownership stake, while they are decreasing (increasing) in the manager’s reservation income. Exploring agency costs of debt as deviations from a value-maximizing investment policy, we document a U-shaped relationship between agency costs of debt and the managerial compensation parameters: the manager’s reservation income, salary and ownership share.     

Skills, search and the persistence of high unemployment

The persistence of high-unemployment rates in Europe has fueled theories advocating the existence of multiple natural rates of unemployment. Labor-market institutions and increasing returns to scale have been singled out as the main causes of multiplicity and, therefore, of high-unemployment traps. The contribution of this paper is both to expand the set of mechanisms leading to multiple natural rates of unemployment and to establish a minimum set of assumptions under which such multiplicity may arise. To this aim, a search-matching model is presented where households allocate time to market and non-market activities, and invest both in physical and human capital. It is shown that under the standard assumption of concavity in production and matching such a model yields multiple long-run equilibria with different rates of unemployment. This result does not rely on labor-market institutions or increasing returns to scale. Multiplicity in our model arises from differences in the intensity of use of human capital across time-consuming activities.     

Some Implications of Changing the Tax Basis for Pension Funds

Governments in many developed economies provide private pension plans with significant taxation incentives. However, as many retirement income systems are now being reviewed due to demographic, social and economic pressures, these taxation arrangements are also under scrutiny. This paper discusses some of the implications of the differences between the traditional taxation treatment adopted by most OECD nations and that adopted by Australia, where there is a tax on contributions, a tax on investment earnings and a tax on benefits. The results show that there are significant differences in the net value of the benefits received by individuals and the taxation revenue received by the government. On the other hand, it is shown that there is remarkably little to distinguish between the two tax structures in terms of summary measures of lifetime income, although the form in which the benefit is taken in retirement is significant in influencing intragenerational equity.     

After the death of inflation: will fiscal drag survive?

Declining inflation rates might have negative consequences for tax revenues. Phenomena such as the inflationary bracket creep in a progressive income tax system do not work any longer. With this background, the paper analyses the extent of fiscal drag for OECD countries since 1965. Some consideration of the role of money illusion and indexation in this context lays the theoretical base. A framework is presented that allows for the classification of fiscal structures with regard to the type of fiscal drag. The subsequent econometric panel analysis is performed for total and disaggregated government revenues. The results back theoretical considerations of inflation's impact on different kinds of taxes, which tends to be positive for individual income taxes and social security contributions and is negative for corporate income taxation. The paper concludes that both declining inflation and changing tax structures limit the potential for future fiscal drag.     

Monetary Equilibrium and the Cost of Banking Activity

We investigate the effects of banks' operating costs on allocations and welfare in a low interest rate environment. We introduce an explicit production function for banks in a microfounded model where banks employ labor resources, hired on a competitive market, to run their operations. In equilibrium, this generates a spread between interest rates on loans and deposits, which reflects the underlying monetary policy and the efficiency of financial intermediation. In a deflation or low-inflation environment, equilibrium deposits yield zero returns. Hence, banks soak up labor resources to offer deposits that do not outperform idle balances, thus reducing aggregate efficiency.     

Contratos de riesgo de petróleo,patrones de conducta y desempeño de empresas: Análisis de panel de datos

Using data from financial and economic performance of International Oil Companies (IOCs) in the exploration-extraction (E&E) business, along with institutional and market orientation of governments and National Oil Companies (NOCs) that receive project offers, the international E&E market is analyzed in both institutional development and behavioral patterns of type of E&E contract following an agency theory approach. Additionally, given Mexico's recent energy reform being launched between 2015 and next 2019, the various types of E&E contracts are analyzed, comparing license contracts with production sharing and risk service ones. Next, using panel data methods an analysis of 17 enterprises between 2005 and 2015 is presented, where so-called global IOCs show higher returns and commitment than specialized ones, demonstrated by their net income and return on equity, or ROE.     

Regime-switching debt and taxation

The effects of changes to the tax rate are studied within a framework where an estimated regime-switching process for the debt-output ratio is embedded in a standard growth model. The regime is a hidden state variable, so agents face a signal extraction problem. Consequently, agents incorporate the possibility of switching to different fiscal regimes when forming expectations over future taxes. Decision rules have additional nonlinearity relative to fixed-regime models. Income allocation and the tax elasticity of investment depend on agents’ inference regarding the regime. Specifically, the tax elasticity can be either positive or negative, depending on whether agents perceive a tax reform as an intra-regime shock or change in regime.     

Financial constraints and entrepreneurial investment

There is a well documented interdependence between the investment and saving decisions of entrepreneurial households. I study this interdependence in a dynamic, general equilibrium model with heterogeneous agents and occupational choice. The simulated economy replicates U.S. data on the distribution of wealth and income, and the shares of wealth and income for each occupation. The dominant incentive behind the high level of savings of business households is the desire to relax a wealth constraint in financing entrepreneurial projects in order to operate their firms at an optimal size. Because successful firms grow over time, entrepreneurs enter business despite lower initial earnings than they would receive in paid employment.     

Oil risk contracts,business conduct and performance patterns: Data panel analysis

Using the economic and financial performance data of international companies for the exploration, and exploration–extraction (E&E) of oil, as well as the patterns of institutional situation and orientation with the government market and national oil companies or NOCs that receive project offers, we analyze the institutional development and behavior patterns by type of E&E contract, following the strategic actor approach, or the so-called agency theory. Additionally, in light of Mexico's energy reform being implemented between 2015 and 2019, we analyzed the types of license contracts compared to those for production and shared profit. Subsequently, it was determined-through panel data methods in the analysis of 17 companies between 2005 and 2015-that global companies present bigger yields and commitments compared to specialized companies, confirmed by their net income and returns on equity or ROE.     

The Determinants of Household Saving in China: A Dynamic Panel Analysis of Provincial Data

In this paper, we conduct a dynamic panel analysis of the determinants of the household saving rate in China using a life cycle model and panel data on Chinese provinces for the 1995–2004 period from China's household survey. We find that China's household saving rate has been high and rising and that the main determinants of variations over time and over space therein are the lagged saving rate, the income growth rate, (in many cases) the real interest rate, and (in some cases) the inflation rate. However, we find that the variables relating to the age structure of the population have the expected impact on the household saving rate in only one of the four samples. These results provide mixed support for the life cycle hypothesis as well as the permanent income hypothesis, are consistent with the existence of inertia or persistence, and imply that China's household saving rate will remain high for some time to come.     

Credit Card Debt and Default over the Life Cycle

This paper solves an empirically parameterized model of life cycle consumption, which allows for uncollaterized borrowing and the possibility of default. The simulation results show that: (i) "social stigma " and credit limit have a very large impact on default rates; (ii) education level also has a significant effect on the probability of default, namely, through differences in the shape of lifetime labor income profiles; and (iii) the response of simulated default rates to labor income shocks is determined by the nature of labor income uncertainty (temporary versus permanent). Additionally, the model generates simultaneous consumer holdings of credit card debt and liquid assets.     

Long-term changes in labor supply and taxes: Evidence from OECD countries, 1956-2004

We document large differences in trend changes in hours worked across OECD countries between 1956 and 2004. We assess the extent to which these changes are consistent with the intratemporal first order condition from the neoclassical growth model, augmented with taxes on labor income and consumption expenditures. We find that the model can account for most of the trend changes in hours worked measured in the data. Differences in taxes explain much of the variation in hours worked both over time and across countries.     

Spanish credit institutions: do efficiency and solvency support the first decisions on bank restructuring from a financial point of view 2008-2012?

The restructuring processes of the Spanish financial entities over the last years has led us to analyze financially how efficiency and solvency of banks and savings banks explain the decisions of incorporation and control of these entities. We analyze 51 Spanish financial entities for the period 2008-2012. The results show higher solvency and efficiency of banks over savings banks. On the other hand, after the first integrations it is observed that it is still early for these ratios to improve on the results obtained by the entities before the integrations. However, from the financial point of view, these integrations do explain how correct the start-up and intensification of the restructuring processes were. There are some exceptions to the global criteria, which are explained by the size, strength and structure of the business and the closeness of its financial management scope to the area and business structure of the bigger banking groups.     

An equilibrium model of wealth distribution

I present an explicitly solved equilibrium model for the distribution of wealth and income in an incomplete-markets economy. I first propose a self-insurance model with an inter-temporally dependent preference [Uzawa, H. 1968. Time preference, the consumption function, and optimal asset holdings. In: Wolfe, J.N. (Ed.), Value, Capital, and Growth: Papers in Honour of Sir John Hicks. Edinburgh University Press, Edinburgh, pp. 485-504]. I then derive an analytical consumption rule which captures stochastic precautionary saving motive and generates stationary wealth accumulation. Finally, I provide a complete characterization for the equilibrium cross-sectional distribution of wealth and income in closed form by developing a recursive formulation for the moments of the distribution of wealth and income. Using this recursive formulation, I show that income persistence and the degree of wealth mean reversion are the main determinants of wealth-income correlation and relative dispersions of wealth to income, such as skewness and kurtosis ratios between wealth and income.     

The Role of Durables Replacement and Second‐Hand Markets in a Business‐Cycle Model

Transactions of used durables are large and cyclical, but their interaction with purchases of new durables has been neglected in business‐cycle studies. I fill this gap by introducing a new business‐cycle model of consumer durables where households resell their goods on the second‐hand market and the production of new durables is affected by the supply of used goods. The model delivers three conclusions: Markups are smaller for goods that are more durable and more frequently replaced; markups are countercyclical for durables, resolving the comovement puzzle of Barsky, House, and Kimball (2007); and procyclical replacement demand amplifies durables spending.     

Nonoptimality of the Friedman Rule with Capital Income Taxation

This paper studies the efficient taxation of money and factor income in intertemporal optimizing growth models with infinite horizons, transaction costs technologies, and flexible prices. Second‐best optimality calls for a positive inflation tax and a nonzero capital income tax when there are restrictions on taxation of production factors or profits/rents. Our cases of nonoptimality of the Friedman rule—which differ from those of Mulligan and Sala‐i‐Martin (1997) and extend substantially those of Schmitt‐Grohè and Uribe (2004a) —follow from the violation of the Diamond and Mirrlees (1971) principle on production efficiency.     

New cross-proposal entrepreneurship and innovation in educational programs in third level (tertiary) education

Capitalism has promoted and requires the growing knowledge of entrepreneurs, creative people who have the ability to solve problems in the form of innovation. The types of enterprises they create can be social, public and private. By creating an enterprising company new products and new production methods can be introduced, new markets are open, new sources of raw materials and inputs are developed and new market structures in an industry are created. Entrepreneurship can be taught, the question is how to do it. Teaching entrepreneurship should go beyond the business plan. It proposes a form that overcomes the mistakes found by the author in two research studies in 2008 and 2014 in the programs of management in Bogotá.     

Social Security Design in the UK: What is optimal?

This paper uses a simple model of how households at different points on the income distribution make decisions about saving and labour supply to illustrate some of the problems government faces in designing social security systems. We show simulation results, which highlight the costs and benefits of alternative pension and income support regimes, and analyse what is happening in the UK in the light of the results.