Real-time forecasting US GDP from small-scale factor models

We show that the single-index dynamic factor model developed by Aruoba and Diebold (Am Econ Rev, 100:20–24, 2010) to construct an index of the US business cycle conditions is also very useful to forecast US GDP growth in real time. In addition, we adapt the model to include survey data and financial indicators. We find that our extension is unequivocally the preferred alternative to compute backcasts. In nowcasting and forecasting, our model is able to forecast growth as well as AD and better than several baseline alternatives. Finally, we show that our extension could also be used to infer the US business cycles very precisely.     

A participation model with non-convex budget sets: the case of the wives of the unemployed in Great Britain

In this paper we estimate a participation model for the wives of the unemployed in Great Britain. The aim is to bring new evidence about the importance of the disincentive effect caused by the Benefit System, in particular, by Supplementary Benefit, in explaning the low probability of participation associated with the wives of the unemployed. The participation model takes into account the non convexities of the budget set which are due to the characteristics of Supplementary Benefit. The utility function is assumed to be of the CES type.     

Equilibrium with Default and Endogenous Collateral

We study a two‐period general equilibrium model with incomplete asset markets and default. We make collateral endogenous by allowing each seller of assets to fix the level of collateral. Sellers are required to provide collateral whose first‐period value, per unit of asset, exceeds the asset price by an arbitrarily small amount. Moreover, borrowers are also required to be fully covered by the purchase, in the first period, of state‐by‐state default insurance. These insurance contracts are offered by lenders. The insurance cost or revenue is a linear charge and plays the role of a spread penalizing borrowers who will incur in default and benefiting lenders who will suffer default. Under these assumptions, equilibrium always exists.     

火热经济与忧伤的中国人

金钱能买来幸福吗？没人回答能，包括那些改革开放中出现的中国暴发户。 可以肯定的是，中国确实在很多方面值得夸耀：现在已经是世界第二大经济体，仅次于美国，人均收入从1980年的不足200美元增长到2010年的3700美元，约3亿农民摆脱了绝对贫困。公民的预期寿命延长了十年。     

Policies for the prevention of cigarette consumption: the case of Spain

This paper describes the causes that generate the relatively high – among comparable OECD countries – prevalence of tobacco consumption in Spain. It evaluates the current policy interventions geared towards reducing incidence and prevalence. It argues that, despite a recent major breakthrough in legislation on advertising and consumption in public places, one of the major shortcomings of current policies is the lack of an effective fiscal policy. This lack of effectiveness is explained by some idiosyncrasies of the Spanish cigarette market that call for specific measures.     

Implementation of Basel II

In this article Jaime Caruana, Governor of the Bank of Spain and Chairman of the Basel Committee on Banking Supervision, first discusses the current status of the Basel II Accord. Next, he offers his perspective on macroeconomic issues related to the capital framework, focusing especially on pro‐cyclicality. Finally, he discusses three important Basel II implementation issues, namely calibration, validation, and cross‐border supervision.     

Rules of Origin in North–South Preferential Trading Arrangements with an Application to NAFTA

All preferential trading agreements (PTAs) short of a customs union use rules of origin (ROO) to prevent trade deflection. ROO raise production costs and create administrative costs. This paper argues that in the case of the recent wave of North–South PTAs, the presence of ROO virtually limits the market access that these PTAs confer to the Southern partners. In the case of NAFTA, we find average compliance costs around 6% in ad valorem equivalent, undoing the tariff preference (4% on average) for a large number of tariff lines. Administrative costs amount to 47% of the preference margin. These findings are coherent with the view that North–South PTAs could well be viewed like a principal–agent problem in which the Southern partners are just about left on their participation constraint.     

Modelling the effects of protection in a dynamic framework

The effects of alternative trade strategies on development performance are analyzed using a small, dynamic, computable general equilibrium model. The static allocation costs of protection are quantitatively weighed against the dynamic benefits resulting from heterogenous capital goods and imperfect foresight. An attempt at quantifying the effects of protection on employment and savings behavior is made by using submodels specifying distortions in labor-markets and alternative savings functions.     

Tax Rules and the Sale and Leaseback of Corporate Real Estate

This study examines the effect of the sale and leaseback of corporate real estate on the stock prices of the selling firms. We ask whether the Tax Reform Act of 1986 (TRA 1986) had a negative impact on the market valuation effects of corporate sale and leasebacks. The results of the comparative statics analysis predict that the net present value of the lessee should be negatively related to the tax depreciation recovery life for the lessor and to the marginal ordinary income tax rate of the marginal holder of commercial mortgage debt. However, it should be positively related to the marginal tax rate of the equityholder of the corporate lessee. Changes in the marginal ordinary income tax rates of the lessor and the corporate lessee have an ambiguous effect on the equity value of the corporate lessee. Nevertheless, results of simulation analyses suggest that the relationship between the net present value of the lessee and each of the tax rates of the lessor and corporate lessee is negative. The empirical evidence suggests that subsequent to TRA 1986, the lessee's benefits associated with sale and leaseback transactions have decreased.