WEALTH,ASSET PORTFOLIO,MONEY DEMAND AND POLICY RULE

I look at the linkages between monetary policy and asset wealth using quarterly data for the USA. I show that a positive interest rate shock leads to a fall in aggregate wealth and an important change in portfolio composition: housing wealth gradually decreases, but the effects are very persistent; and financial wealth quickly shrinks, but the impact is short‐lived. I also find that the money market can be characterized as follows: (i) the money demand has a large interest elasticity and a small output elasticity; and (ii) the estimated monetary policy reaction function highlights the special focus given by the central bank to developments in monetary aggregates. These features call for an approach whereby monetary authorities put more emphasis on tracking wealth developments, in particular, given the asset portfolio rebalancing between money holdings and financial and/or housing assets.     

FOREIGN DIRECT INVESTMENT IN MEXICO,CRIME, AND ECONOMIC FORCES

This paper re‐examines inflows of foreign direct investment (FDI) in the 32 subnational Mexican states based on quarterly data from 2005 to 2015, which includes rising drug‐related crimes. We estimate our models using panel data methods by type of crime, state‐level indicators (real wages and electricity consumption), macroeconomic forces (the real exchange rate and interest rate), and a dummy variable for the financial crisis of 2008–2009. We employ a flexible lag‐length method and find that homicides and thefts have negative and statistically significant effects on FDI, while other crimes have no effects. Subsample work suggests higher negative effects in the most violent states. (JEL F15, F21, F23, F36)     

Residents' Perceptions of Tourism Impacts on Island Destinations: A Comparative Analysis

This paper presents a comparative analysis of the resident's perception of tourisms impacts on two very successful major mature island destinations (Tenerife and Mallorca). To do so, we conducted a study based on the social exchange theory by using a scale that measures residents' perceptions of tourism's positive and negative impacts on the economy, culture, society and the environment. The results based on more than 1100 interviews show that similar opinions arise on both islands; however, significant differences in terms of the level of perception of the impacts in the two destinations have also been unveiled. Copyright © 2013 John Wiley & Sons, Ltd.     

Control Premium and Corporate Regulatory Changes: Theory and Evidence

We propose a model to estimate the private benefits of control in control transfer transactions for a broad range of regulatory environments, from private negotiations to mandatory tender offers. The Barclay and Holderness' and Dyck and Zingales' Block Premium models are nested as special cases. With corporate control transfer regulation around the world moving from the Market Rule to the Equal Opportunity Rule, our theoretical model is a flexible tool for empirical studies. We apply our model to study the effect of the implementation of Chile's Tender Offer Law in 2000 and find that control premiums fell significantly. This drop is statistically unrelated to the targets' affiliation to an economic group. Our results suggest that improved corporate governance practices and the Equal Opportunity Rule alignment effect reduced the scope for extraction of private benefits of control.     

Drawing up the official adjustment rules for damage assessment in agricultural insurance: Results of a Delphi survey for fruit crops in Spain

This paper presents the results of an innovative use of the Delphi technique to obtain quantitative information for the evaluation of the Official Adjustment Rules for Damage Assessment in agricultural insurance. An efficient insurance system must guarantee that loss adjustment is performed fairly and transparently, so that the continual review and modification of adjustment rules becomes especially important. The present study develops and applies a methodology based on the subjective information compiled by experts to evaluate the modification of the Specific Loss Adjustment Rule for Fruit Crops under real market conditions.The results show that the method employed comes forward as a valid option to provide reliable information, as well as other economic and social advantages, in the absence of alternative statistical sources. The validity of the study has been proved by its utility, as the results were extremely useful for drawing up a new Official Adjustment Rule. This application opens up an interesting field of development for this technique, which will enable the proposed methodology to be applied to similar studies in the context of agricultural insurance loss adjustment.     

What are the effects of fiscal policy on asset markets?

We investigate the link between fiscal policy shocks and asset markets. Our results show that spending shocks have: a positive and persistent effect on GDP in the U.S. and in the U.K., while for Germany and Italy, such impact is temporary; a positive and persistent effect on housing prices; a negative effect on stock prices; and mixed effects on the price level. A VAR counter-factual exercise suggests that fiscal shocks play a minor role in the asset markets of the U.S. and Germany, and substantially increase the variability of housing and stock prices in the U.K., while government revenue shocks have increased volatility in Italy.     

The emerging global financial architecture and exchange rate regimes in a volatile world

Previous work has documented inflation effects on Tobin's q in the long run. This paper examines whether the FED's different policies and chairmen tenure have an impact on Tobin's q, after a modified stylized AD-AS model shows that central banks affect q. We do find changing responses of q depending on the pre-Volcker and post-Volcker periods.     

The macroeconomic effects of fiscal policy in Portugal: a Bayesian SVAR analysis

With a new quarterly dataset we estimate a Bayesian Structural Autoregression model and a Fully Simultaneous System approach to analyze the macroeconomic effects of fiscal policy. Results show that positive government spending shocks, in general, have a negative effect on real GDP; lead to “crowding-out” effects of private consumption and investment; have a persistent and positive effect on the price level and a mixed impact on the average financing cost of government debt. Explicitly considering the government debt dynamics in the model is also important. A VAR counter-factual exercise confirms that unexpected positive spending shocks create relevant “crowding-out” effects.     

The macroeconomic effects of fiscal policy

We investigate the macroeconomic effects of fiscal policy using a Bayesian Structural Vector Autoregression (B-SVAR) approach. We identify fiscal policy shocks via a partial identification scheme, but also: (i) include the feedback from government debt; (ii) look at the impact on the composition of output; (iii) assess the effects on asset markets; (iv) use quarterly data; and (v) analyse empirical evidence from the US, the UK, Germany and Italy. The results show that government spending shocks, in general, have a small effect on Gross Domestic Product (GDP); lead to important ‘crowding-out’ effects; have a varied impact on housing prices and generate a quick fall in stock prices. Government revenue shocks generate a mixed effect on housing prices and a small and positive effect on stock prices. The empirical evidence also suggests that it is important to explicitly consider the government debt dynamics in the model.