Privatization of state holding corporations

Many countries have privatized part of their state holding corporations in recent years. However, the literature on this issue has analyzed mainly the privatization of uniproduct public firms. We consider a state holding corporation with two plants that may produce complement or substitute goods. Assuming that private firms are more efficient than the state holding corporation we find the following: If the marginal cost of the state corporation is low, it is not privatized either if goods are substitutes or if they are complements. However, if the marginal cost of the state corporation is high the two plants of the state holding corporation are sold to a single private investor if goods are complements, and to different investors if goods are substitutes. If goods are close substitutes and the marginal cost of the state corporation takes an intermediate value only one plant is privatized. We extend the model to consider that firms are equally efficient, that they face quadratic cost functions and that there are n uniplant private firms producing each good. We find two differences with the previous result: The government never privatizes just one plant of the state corporation, and when goods are complements the two plants of the state corporation are sold to different investors if n is high.     

The loan structure and housing tenure decisions in an equilibrium model of mortgage choice

The objective of this paper is to understand how loan structure affects (i) the borrower's selection of a mortgage contract and (ii) the aggregate economy. We develop a quantitative equilibrium theory of mortgage choice where households can choose from a menu of long-term (nominal) mortgage loans. The model accounts for observed patterns in housing consumption, ownership, and portfolio allocations. We find that the loan structure is a quantitatively significant factor in a household's housing finance decision. The model suggests that the mortgage structure preferred by a household is dependent on age and income and that loan products with low initial payments offer an alternative to mortgages with no downpayment. These effects are more important when inflation is low. The presence of inflation reduces the real value of the mortgage payment and the outstanding loan over time reducing mobility. Changes in the structure of mortgages have implications for risk sharing.     

From scratch to efficiency gains after a financial crisis? A tale of a restructured banking system

We study the efficiency of the Argentine banking system after the 2001–2002 crisis. The financial system had to be restructured from scratch and recovered jointly with the economy, but its productivity and average cost levels have been stagnant since 2007. The analysis includes efficiency frontier estimations for retail banks and a comparison of subsamples for different categories of banks for the period 2005–15. We try to determine whether public banks are more efficient than private ones, whether privatized are more efficient than always private, as well as national versus foreign entities. Our findings show a modest average efficiency of the system and quite similar efficiency rankings for the different groups of banks. On average, public tend to be slightly more cost efficient than private, and national are slightly more efficient than foreign.     

Cities export specialization

We analyse whether more populated cities have an export specialization different from the one of less populated cities. Using very detailed product-level export data for Brazilian urban areas over the period 2000–2013, we show that more populated cities export proportionately more skill-intensive and complex goods than less populated cities. This result is consistent with the larger diversity of skills and the higher share of skilled workers in more populated cities.     

An index of political support for decentralization: the Spanish case

This paper presents a method to make measurable what was not: the discourses of politicians regarding decentralization. For this purpose, we develop a “matrix of arguments” and a set of indexes, and apply them to provide a snapshot of the politicians’ views on the “General Law of Budgetary Stability”, a landmark for the process of decentralization in Spain.     

Entrepreneurship and unemployment: A nonlinear bidirectional causality?

This paper tests the view that the relation between unemployment and entrepreneurship is dynamic and possibly nonlinear. It performs Granger-causality tests and STAR-EXT estimation to assess the causality direction and the nonlinear nature of the relation for a set of OECD countries. The results reveal a bidirectional and nonlinear relation between business creation and changes in unemployment.     

A decision support system for financial and social investment

This article proposes a decision-making model that assesses the different aspects associated to Social Venture Capital (SVC) investment decisions. SVC companies buy shares of investee companies, valued according to financial and social aspects. The proposed model includes three main factors: the previous experience with the company (the past); its financial information and intangible assets (the present); and the proposed project, considering financial and social criteria (the future). The model has 26 criteria and 160 indicators, prioritized by means of Analytic Hierarchy Process (AHP). AHP simplifies a complex problem using a hierarchical analysis methodology, which enables subjective judgements among different criteria. The model has been tested in a given SVC company. Its development is explained in this article.     

Inferential Implications of Over‐Parametrization: A Case Study in Incomplete Categorical Data

In the context of either Bayesian or classical sensitivity analyses of over‐parametrized models for incomplete categorical data, it is well known that prior‐dependence on posterior inferences of nonidentifiable parameters or that too parsimonious over‐parametrized models may lead to erroneous conclusions. Nevertheless, some authors either pay no attention to which parameters are nonidentifiable or do not appropriately account for possible prior‐dependence. We review the literature on this topic and consider simple examples to emphasize that in both inferential frameworks, the subjective components can influence results in nontrivial ways, irrespectively of the sample size. Specifically, we show that prior distributions commonly regarded as slightly informative or noninformative may actually be too informative for nonidentifiable parameters, and that the choice of over‐parametrized models may drastically impact the results, suggesting that a careful examination of their effects should be considered before drawing conclusions.