Chaos and the exchange rate

Chaotic exchange rate models are structural models built in discrete time (difference equations), and show that with orthodox assumptions (PPP, interest parity, etc) and introducing plausible nonlinearities in the dynamic equations, it is possible to obtain a model capable of giving rise to chaotic motion. However, none of these models is estimated, and the conclusions are based on simulations: the empirical validity of these models is not tested. In this paper, a continuous time (the exchange rate is obviously a continuous variable) exchange rate model is built as a non-linear set of three differential equations and its theoretical properties (steady state, stability, etc,) analysed. The model is then econometrically estimated in continuous time with Italian data and examined for the possible presence of chaotic motion. This paper also shows that the continuous time estimation of economic models built as systems of nonlinear differential equations is a very powerful tool in the hands of the profession.     

INCOME TAXES AND THE COMPOSITION OF PAY: EVIDENCE FROM THE BRITISH HOUSEHOLD PANEL SURVEY

According to the standard principal‐agent model, the optimal composition of pay should balance the provision of incentives with the individual demand for insurance. Do income taxes alter this balance? We show that the relative share of Performance‐related pay (PRP), on total pay is reduced by higher average and marginal income taxes. Empirical evidence based on the British Household Panel Survey is consistent with the theoretical predictions of the tax–augmented principal‐agent model. Our estimates suggest that a 10% reduction in the marginal income tax rate, holding the average tax rate constant, increases the share of PRP in total pay by 2.25–3.02%, depending on the empirical specification. Similarly, a 10% reduction in the average income tax rate, holding the marginal tax rate constant, increases the share of PRP in total pay by 5.10–5.27%.     

Productivity Dispersion and its Determinants: The Role of Import Penetration

The new heterogeneous firm models in international economics predict a negative impact of trade openness on within-sector productivity disparities, due to a restructuring process leading to a reallocation of resources towards more efficient firms and the exit of less productive ones. I test this hypothesis for the Italian manufacturing sectors making use of panel data models. I investigate the existence of heterogeneous effects in terms of origin of imports and I account for a geographical dimension computing the productivity dispersion indicator by sector and regional macro-area. The analysis is implemented within a comprehensive framework controlling for other potential determinants, such as technological factors and domestic competition. My findings show that competitive pressure from low income countries reduces the productivity heterogeneity across firms. On the contrary, a positive impact is detected for the increased availability of intermediates originating from developed countries.     

Work and Volunteering: Longitudinal Relationships between Work‐Related Experiences and Volunteering Behaviour

This study examines the effect of work‐related experiences on employees’ engagement in community volunteering, using data from a British longitudinal panel of employees. Using a novel analytical approach that separates variation in volunteering due to within‐person changes in work conditions from variation due to between‐person work differences, we more robustly test existing and new hypotheses about the effects of work on volunteering. New to this literature, we find that commuting and satisfaction with job experiences are significant predictors of community volunteering, both the likelihood to volunteer and volunteering frequency. In turn, volunteering determinants previously explored with cross‐sectional data, such as managerial and professional jobs, employment sector and hourly paid contracts, are no longer statistically significant in the within‐person models. We discuss a number of important theoretical and practical consequences of these findings.     

Expected future earnings,taxation, and university enrollment

Taxation changes the expectations of prospective university students about their future level and uncertainty of after-tax income. To estimate the impact of taxes on university enrollment, we estimate a structural microeconometric model, in which a high-school graduate decides to enter university studies if expected lifetime utility from this choice is greater than that anticipated from starting to work right away. We estimate the ex-ante future paths of the expectation and variance of after-tax income for German high-school graduates, accounting for nonrandom selection. The enrollment model takes into account university dropout and unemployment risks. Consistently with expectations, the estimation results indicate that higher expected returns to a tertiary education increase the probability of university enrollment, whereas higher uncertainty among graduates decreases enrollment rates. A simulation based on the estimated model indicates that a revenue-neutral, flat-rate tax reform with an unchanged basic tax allowance would increase enrollment rates for men in Germany.     

The impact of the new protectionist stance in US trade policy on selected German companies in Mexico

ABSTRACT

Previous studies on the impact of the new protectionist stance of the United States have focused mainly on the imposition of the controversial border tax. This research advances the understanding of the possible impacts of the tightening of the rules of origin and the imposition of the most-favored nation tariffs on manufacturing companies. The findings show a negative impact from the protectionist measures on businesses by increasing costs per unit and decreasing the gross margin. The results suggest that those additional costs could be passed on to the final buyers, raising the price level by more than previously assumed.     

Temporary Migration and Foreign Direct Investment

The question of complementarity or substitutability of FDI and international labour mobility has not yet been answered. The substitutability assumption does not take into consideration the technological spillover of FDI in the host countries. Moreover, migration flows reveal cultural characteristics and labour force properties of their native country which may stimulate bilateral business networks, strengthening the complementarity assumption between capital and labour flows. In this paper we build a continuous time dynamic model where these offsetting forces are at work. We analyze whether, and to what extent, the increase in labour mobility might affect FDI outflows. A numerical simulation is performed showing that a higher income growth rate corresponds to a higher labour mobility. Some policy implications and further research direction are suggested.     

From feudal colonization to agrarian capitalism in Mallorca: Peasant endurance under the rise and fall of large estates (1229–1900)

The colonization of Mallorca gave rise to a late‐feudal agrarian society that evolved towards capitalism based on large estates owned by noblemen who hired large numbers of wage labourers from among smallholders living in agro‐towns, the dispossessed remnants of a formerly wealthier peasantry. These well‐off peasants originated from when the colonization frontier was open in the 13th and 14th centuries, but had been defeated when three peasant–plebeian revolts were crushed. Afterwards, Mallorca followed a latifundist transition towards agrarian capitalism similar to southern Italy or Spain, in sharp contrast with the middle‐peasant paths seen in Catalonia or Valencia. The land rent rose, while agricultural wages fell from 1659 to 1800. Peasant families could not survive, and had to supplement wages with the products of their own plots. This set a socio‐agroecological limit to growth in this agrarian class structure. The agrarian crisis at the end of the 19th century bankrupted the Mallorcan nobility. Bankers bought much of the land and sold it on as small allotments. This expanded the intensive cropping formerly limited to agro‐town belts, giving rise to a new “peasantization”. Despite their subordination, Mallorcan peasants had survived and created complex agroecological landscapes endowed with a rich biocultural heritage.