Industry and time specific deviations from fundamental values in a random coefficient model

The paper analyzes the relationship between stock prices and fundamentals for a large sample of US stocks in the last 10 years using a random coefficient model. Heterogeneity and omitted variable bias are properly taken into account with model coefficients being allowed to vary across time and industries. The random coefficient model allows to track waves of reliance on analysts’ forecasts and nonfundamental stock price components across time and clearly identifies the growth of the nonfundamental component in the long 1991–2000 swing.      

Congestion pricing,transit subsidies and dedicated bus lanes: Efficient and practical solutions to congestion

We analyze urban congestion management policies through numerical analysis of a simple model that: allows users to choose between car, bus or an outside option (biking); consider congestion interactions between cars and buses; and allow for optimization of frequency, vehicle size, spacing between stops and percentage of capacity to be dedicated to bus lanes. We compare resulting service levels, social welfare and consumer surplus for a number of different policies and find that: (i) dedicated bus lanes is a better stand-alone policy than transit subsidization or congestion pricing. The latter is marginally better than subsidization but has a negative impact in consumer surplus. (ii) Efficient transit subsidies are quite large since in many cases first-best transit price is negative; establishing dedicated bus lanes or implementing congestion pricing render subsidies unnecessary for high demand levels. (iii) Both subsidization and dedicated bus lanes would count with public support while congestion pricing would probably encounter opposition. (iv) Transit subsidies and/or congestion pricing do not induce large changes on optimal bus size, frequency, circulation speeds and spacing between stops in mixed-traffic conditions: dedicated bus lanes do. (v) In all cases analyzed, revenues from congestion pricing are enough to cover transit subsidies; the optimal percentage of capacity that should be devoted for bus traffic is around one third.     

Wars and Child Health: Evidence from the Eritrean-Ethiopian Conflict

Conflict between and within countries can have lasting health and economic consequences, but identifying such effects can be empirically challenging. This paper uses household survey data from Eritrea to estimate the effect of exposure to the 1998-2000 Eritrea-Ethiopia war on children's health. The identification strategy exploits exogenous variation in the conflict's geographic extent and timing and the exposure of different birth cohorts to the fighting. The unique survey data include details on each household's migration history, which allows us to measure a child's geographic location during the war and without which war exposure would be incorrectly classified. War-exposed children have lower height-for-age Z-scores, with similar effects for children born before or during the war. Both boys and girls who are born during the war experience negative impacts due to conflict. Effects are robust to including region-specific time trends, alternative conflict exposure measures, and mother fixed effects.     

The Political Economics of Tax Reform in Chile

This paper explores the political economy at the time of the 2012 tax reform, which paved the way for a radical tax increase in 2014. Both were an explicit response to demands to improve public education. As opposed to the 2014 reform, the 2012 tax adjustment was an unplanned decision made in the wake of a pact of long-term fiscal stability during the government's last year in office and was partially negotiated with student associations and pressure groups. We hypothesise that the existing institutions were not strong enough to meet emerging social demands through formal channels. We will show evidence for the hypothesis that the government's incorporation of students’ demands in its agenda was mainly a response to the role of the media, the fact that it is not difficult for students to organise themselves and express their demands, the support of students’ families and the ruling government's fear of missing out on a second term in office.     

Empirical validation of Metcalfe’s law: How Internet usage patterns have changed over time

Few doubt that Digital Information Networks (DINs) such as the Internet constitute the basis of a new technology-driven economic era. A large body of literature tries to understand and quantify the value of DINs to help policy makers justify investments in new or improved infrastructures. The prevailing methodological approach is to depict DINs as an observable production input changing the uncertainty regarding the performance of an economic system. In such context, the value of DINs is typically measured with regression techniques between the penetration rate of DINs and economic growth. This approach provides too little insight on the actual causality between DINs and economic value. We recently developed a framework that identified 13 different ways (“capabilities”) how users convert information into economic value. In this article, we show how a simple quadratic relation (Metcalfe’s law) can be used to quantify how adequate these capabilities are in converting the ability to access information into economic value. To our knowledge, this is the first time that Metcalfe’s law is empirically validated as such.     

GROWTH AND INCOME POVERTY IN LATIN AMERICA AND THE CARIBBEAN: EVIDENCE FROM HOUSEHOLD SURVEYS

This paper provides evidence on growth and income poverty in Latin America and the Caribbean (LAC). Results are obtained by processing microdata from household surveys of 18 LAC countries covering the 1990s and early 2000s. Over this period the LAC economies experienced heterogeneous patterns of growth and poverty changes. Most countries in the region had a rather meager performance in terms of poverty reduction. Episodes of positive, significant and unambiguously pro-poor income growth have been rare in Latin America.     

商业银行反周期资本缓冲的方法选择

本文提供了设计反周期资本缓冲的一些经验教训和方法选择,主要贡献在于分析了用于指引资本缓冲建立和释放的条件变量。不同反周期资本措施的主要区别在于条件变量是银行特定的还是系统性的,前种方法对特定构成要素的数量要求巨大,相比之下系统性的方法更具优势。作为资本缓冲增加进度和规模信号的最佳变量未必是指引资本缓冲释放时机和程度的最佳变量。信贷/GDP比率是指引建立阶段开始的最好变量,总损失的某种衡量,与信贷条件指标一起,可以很好地发出释放资本的信号。不过,现阶段设计完全以规则为基础的机制不太可能,不同程度的主观判断不可避免。此外,本文还认为,减少最低资本要求的敏感性是可靠的反周期缓冲措施的重要组成部分。在本次金融危机发生之后,反周期资本管理正逐渐引起国内银行业及相关部门的重视,本刊征得作者同意,翻译并发表此文,以期为相关部门资本监管和风险管理提供借鉴。作者及所在机构对译文免责。     

Practicing Human Dignity: Ethical Lessons from Commedia dell’Arte and Theater

The paper considers two main cases of how the creative arts can inform a greater appreciation of human dignity. The first case explores a form of theater, Commedia dell’Arte that has deep roots in Italian culture. The second recounts a set of theater exercises done with very minimal direction or self-direction in executive education and MBA courses at the Darden School, University of Virginia, in the United States. In both cases we highlight how the creative arts can be important for promoting human dignity in organizations, and how they can lead to a more authentic conversation about values, ethics, and meaning.     

Biased procurement auctions

In a complex procurement a buyer may consider biasing the auction rules in order to account for differences in product characteristics offered by the sellers. This paper studies the gathering, disclosure and use of information about this bias. While we also describe the optimal procurement auction in our setting, the main focus of the paper is on the case where the buyer does not have commitment power. We find that without commitment full disclosure of the buyer’s preferences is optimal. Furthermore, lack of commitment distorts the buyer’s incentives to learn about its preferences: unlike the commitment case, without commitment the value of this information can be negative. Based on Chapter 3 of my Ph.D. dissertation at Stanford University. I gratefully acknowledge the support of a John M. Olin Dissertation Fellowship and a Melvin and Joan Lane Stanford Graduate Fellowship. Thanks to Pat Bajari, Tim Bresnahan, Vinicius Carrasco, George Deltas, Jonathan Levin, Paul Milgrom, Ilya Segal and an anonymous referee for valuable suggestions.     

On the monetary-macro dynamics of Colombia and Mexico

This paper investigates the dynamic interrelationship among money growth, inflation, and output growth for Colombia and Mexico on the basis of implementation of a vector autoregression methodology. The evidence for Colombia generally shows autonomous output growth and money growth behavior, and an important role for money shocks in accounting for variations in inflations. A different pattern of results emerged for Mexico: there are strong two-way feedbacks among money growth and inflation, and a less autonomous output growth behavior than in Colombia.