Dollar-denominated accounts in Latin America during the 1990s

In this paper we analyze the evolution of dollar-denominated accounts in Latin America, and how they impact the stability of the banking system and the volatility of macroeconomic aggregates. Our findings reveal that dollar deposits are strongly influenced by depreciation expectations of the local currency even in an environment of fairly low inflation. We also find that having more dollar accounts increases the probability of future crises if the economy is already in a crisis. Finally, our findings suggest that for some macroeconomic aggregates there exists a positive correlation, in the long and short run, between their volatility and the volume of dollar-denominated accounts in the banking system. The views expressed in this paper do not necessarily reflect the views of the Sociedad Hipoetcaria Federal de Mexico. The authors would like to thank Bruce Smith, Scott Freeman, Alex Minicozzi, Li Gan, Subal Kumbhakar, Gil Mehrez, Maria Soledad Martinez-Peria, Keisuke Hirano, the participants of the University of Mississippi, Barcelona, and Texas at Austin seminar series and an anonymous referee for useful comments. The authors would like to dedicate this paper to the memory of Bruce Smith.     

Missing links in key sector analysis

In general terms, key sectors analysis aims at identifying and quantifying the economic impact of a sector in a given economy. For a sector, we mean here either an industry or a region, or even a cluster of them. Quite a few measures and methodologies of varied complexity have been proposed in the literature, from multiplier sums to extraction methods, but not without debate about their properties and information content. All of them, to our knowledge, focus exclusively on the interdependence effects that result from an input–output structure of the economy. By so doing the approach misses critical links beyond the interindustry ones. A productive sector's role is that of producing but also that of generating and distributing income among primary factors and households as a result of production. Thus, when measuring a sector's role, the income generating process should not be omitted if we want to elucidate the sector's true economic impact. A simple way to make the missing income links explicit is to use the SAM (Social Accounting Matrix) facility. Extending an extraction methodology to the SAM we compare lost output with and without the missing links. We observe that substantial differences in sectoral lost gross output arise but, even more important, we capture the implied shifting in the rank ordering of sectors.     

Public inputs and dynamic producer behavior: endogenous growth in U.S. agriculture

This paper is an attempt to understand the impact of public R&D and public infrastructure on the performance of the U.S. agricultural sector during the last part of the twentieth century. A neoclassical Solow growth model is not sufficient for this understanding given the sustained growth performance of the sector. We base our analysis on a well-known endogenous growth model, the ‘AK model’ where non-convexities are introduced through non-rival inputs. Based on these models and within the dynamic models that rationalize private and public decision making, we have identified three testable hypotheses regarding the aggregate agricultural production technology. They are: (1) increasing returns to scale over all inputs; (2) positive effect of additional units of public inputs on the long-run demand for private capital; and (3) negative impact of public inputs on cost. They are tested using two estimation procedures on two data sets for U.S. agriculture. One, covering the period 1948–1994, developed by USDA, the other, covering the period 1926–1990, from Thirtle et al. Maximum likelihood estimates do not conform to the regularity and behavioral properties of the economic model rendering them unusable for testing these hypotheses. Bayesian estimates, although not totally satisfactory, do not reject the hypotheses after prior imposition of some of the regularity conditions. This supports the notion of an important role for public inputs on the rapid and sustained growth of the sector. We calculate that, on average, one additional dollar spent on public R&D stock reduces private cost by $6.5, implying a return on these public expenses of 190%.

Supporting weakly Pareto optimal allocations in infinite dimensional nonconvex economies

In this paper, we prove a new version of the Second Welfare Theorem for economies with a finite number of agents and an infinite number of commodities, when the preference correspondences are not convex-valued and/or when the total production set is not convex. For this kind of nonconvex economies, a recent result, obtained by one of the authors, introduces conditions which, when applied to the convex case, give for Banach commodity spaces the well-known result of decentralization by continuous prices of Pareto-optimal allocations under an interiority condition. In this paper, in order to prove a different version of the Second Welfare Theorem, we reinforce the conditions on the commodity space, assumed here to be a Banach lattice, and introduce a nonconvex version of the properness assumptions on preferences and the total production set. Applied to the convex case, our result becomes the usual Second Welfare Theorem when properness assumptions replace the interiority condition. The proof uses a Hahn-Banach Theorem generalization by Borwein and Jofré (in Joper Res Appl Math 48:169–180, 1997) which allows to separate nonconvex sets in general Banach spacesThis work was partially supported by Nucleo Complex Engineering System. The successive versions of the paper were partly prepared during visits of Alejandro Jofré to CERMSEM and of Monique Florenzano and Pascal Gourdel to the Centro de Modelamiento Matematico. The hospitality of both institutions and the support of the french Coopération régionale Cone Sud are gratefully aknowledged. The authors thank Ali Khan for stimulating exchange of ideas and literature, Roko Aliprantis, Jean-Marc Bonnisseau, Alain Chateauneuf, Roger Guesnerie, Filipe Martins Da Rocha, Moncef Meddeb, B. Mordukovich, Lionel Thibault and Rabee Tourky for valuable discussions     

Global Engagement and Returns Volatility

This paper finds that a greater reliance on foreign market sales increases the volatility of firms’ stock returns, using high‐frequency data for publicly listed Japanese manufacturing firms over the period 2000–10. The two margins of global engagement we consider, namely, exports and sales via foreign affiliates (horizontal foreign direct investment), have both a positive and economically significant effect on firm‐level volatility. We find, however, that increasing the intensity of sales through foreign affiliates has a stronger effect on volatility than a similar change in export intensity. We also uncover evidence consistent with the notion that firms’ need to use external finance to cover the substantial costs involved in reaching foreign consumers can be an important channel through which firms’ participation in international markets increases their exposure to economic uncertainty.     

Shareholders' environmental profile and its impact on firm's environmental proactivity: An institutional approach

Theorists and practitioners still argue about different shareholders' environmental preferences. Drawing on various processes of institutional theory such as deinstitutionalization and defensive institutionalism, we test the differences between foreign and national shareholders' influences on firms' environmental proactivity. Specifically, we focus on the country of origin of the dominant shareholders and the environmental culture of the countries of origin of the shareholders. Using unbalanced panel data from between 2006 and 2017, which includes 12,527 observations of 1532 different firms from 11 economic sectors and across 23 countries, our results show that foreign shareholders are more prone to modifying existing environmental practices, whereas national shareholders may accept them, despite being reluctant to implement such changes. We make a contribution by showing that the deinstitutionalization forces coming from foreign shareholders are stronger than the defensive institutionalism efforts of national shareholders. However, such forces are not always the best options for sustainability.     

Is the tax administration just a money machine? Empirical evidence on redistributive politics

Personal income tax represents the main source of tax revenue in any developed country. In this paper, we analyse how efficiently this tax is administered in the Spanish case. While we find that the managerial (or net) efficiency of the tax administration was very high for the period 1993–2002 (95.9%), our main aim here is to identify the determinants of this. Interestingly, political factors are found to play a role. Specifically, the fear of losing a parliamentary seat in a region forces the tax authorities to reduce their efficiency in ensuring tax compliance in that region (“swing voter model”). Additionally, in those electoral districts where the central government obtains higher electoral support the efforts to collect taxes diminish (“core voter model”). However, the former political effect tends to disappear when the central government holds a sufficient majority in the central parliament. Thus, we find empirical evidence on redistributive politics in tax administration.     

The challenges of using ranks to estimate sales

Researchers have frequently used data on product ranks to estimate nonpublic sales quantities, believing that there is a power-law-induced linear relationship between logged sales ranks and logged sales. Using essentially complete data on book sales, the most commonly used product in this literature, we find that the (double-logged) relationship between sales ranks and quantity sold is not linear, but robustly concave. We demonstrate that this concavity is likely to cause very poor sales predictions in many instances. We provide two concrete examples where applying this linear method to the concave relationship has led to serious errors in sales estimates. First, in the claim that the Internet's greater product variety in books has a large positive impact on social welfare, and second, in a claim about relative sales levels in top 20 and top 50 music “charts.” We also explore the use of nonlinear specifications as an alternative method to predict sales from ranks and find a simple specification that provides much better sales estimates. Finally, we examine the possibility that a particular type of biased sample might allow reasonable linear estimates of industry sales and conclude that it is possible but quite unlikely.     

Philanthropy and social capital in Mexico

• The aim of this paper is to examine the factors underlying philanthropic behavior in Mexico. In particular, we analyze the influence of social capital on two types of behavior: giving and volunteering. This research is based upon groundbreaking national public opinion surveys conducted in 2005 and 2008, the first of their kind in Mexico to focus on donations and volunteerism. We find that membership in associations (an important component of social capital) is strongly and positively associated with secular giving and volunteering. We also tested the role of three other aspects of social capital: participation in informal personal networks, a belief in the norm of reciprocity, and interpersonal trust, and our findings show that the former two have a consistently significant effect on our dependent variables but interpersonal trust does not. We discuss the implications of this for a society where trust in others is comparatively low. Differences between Mexico and the USA, for example, highlight the importance of context in philanthropic behavior. Mexicans' religiosity also stands out as an important variable, particularly when it comes to understanding religious forms of giving and volunteering in the country. The practical significance of our findings for the promotion of philanthropy is that Mexican nonprofits must compensate for being in a low‐trust culture by encouraging membership and a sense of group belonging.

Copyright © 2014 John Wiley & Sons, Ltd.