Asymmetric effects of shocks on TFP

We study the TFP distribution and examine the non-stationarity of productivity series at various quantiles. Using the quantile autoregression unit root test, we find that the US TFP exhibits an asymmetric adjustment dynamics, that is, positive and negative shocks might have different (permanent or temporary) effects on the TFP. Shocks dissemination depends on the local behaviour of the TFP. We find that positive shocks have permanent effects on the TFP, while negative shocks can potentially have only transitory effects.     

Information and strategic voting

We theoretically and experimentally study voter behavior in a setting characterized by plurality rule and mandatory voting. Voters choose from three options. We are interested in the occurrence of strategic voting in an environment where Condorcet cycles may occur and focus on how information about the preference distribution affects strategic behavior. We also vary the relative importance of the second preferred option. Quantal response equilibrium analysis is used to analyze the game and derive predictions. Our results indeed show that strategic voting arises. Its extent depends on (i) information availability; (ii) the relative importance of the intermediate candidate; (iii) the electorate’s relative support for one’s preferred candidate; (iv) the relative position of the plurality-supported candidate in one’s preference ordering. Our results show that information serves as a coordination device where strategic voting does not harm the plurality-preferred candidate’s chances of winning.     

Wage restraint and monetary union

Existing work on wage bargaining predicts more aggressive wage setting under monetary union. This is exemplified by Cukierman and Lippi (2001) who postulate that wages are set having area-wide prices in mind. The insight of aggressive wage behaviour has not been confirmed by the EMU experience, which has been characterised by wage moderation. The present paper investigates the possibility of wage restraint using a monetary union model which, realistically, assumes that trade unions set wages with national prices in mind. Drawing on plausible ranges for all parameter values (and macroeconomic shocks), our simulations show that a monetary union elicits real wages that are broadly comparable to those obtained under monetary autonomy. The confidence bounds around these results are rather wide, in particular including scenarios of wage restraint.     

纽约大学商学院 5亿人的潜在客户群

在经济衰退时期,既有消费激情又未被充分开发的客户群是什么？他们在哪？请留意遍布全球的2亿移民以及他们家乡的亲属,这是一个规模高达5亿人的潜在客户群。2007年全球移民对其亲属的汇款总额达3500亿美元,这个数字是同年OECD富裕国家对发展中国家援助总金额的3倍。在美国,拉丁裔作为最大的移民群体,购买力已经超过8000亿美元。     

The Effectiveness of Capital Controls: Theory and Evidence from Chile

Selective capital controls tax only some components of capital flows. One of the rationales for such controls is that they increase the scope for an independent monetary policy, without taxing foreign direct investment and other long term flows. The first part of this paper offers a new framework to evaluate how selective capital controls might increase monetary autonomy, which considers two types of capital flows that coexist: the taxed and exempt flows. It is found that under free floating selective controls increase monetary autonomy, in the sense of allowing the authorities to set the path of the nominal exchange rate. But under predetermined exchange rate rules, the contribution of selective controls to monetary autonomy depends of the ability to reduce total inflows, which is an empirical matter. The second part describes the Chilean unremunerated reserve requirement (URR), a selective control introduced in June 1991 on a permanent basis, in a setting of predetermined exchange rates. This control collected substantial revenue, proving that it was relevant. An econometric model with data for 1987–1996 finds that substitution from the exempt short-term flows compensated reductions in taxed short-term flows, so the Chilean URR did not discourage total net short-term credit inflows to the private sector. This implies that the Chilean URR failed to contribute to monetary autonomy.     

On the determinants of inequality in Bosnia and Herzegovina

We provide empirical evidence on the determinants of income inequality in Bosnia and Herzegovina after the civil war. To do this, we use a an ordered probit approach and take advantage of the first post‐war household survey for the country which sheds some light on the influence of regional differences as well as household characteristics on income quintile determination. With respect to the former, we find large income differences between the two entities in the country, the Federation and Republika Srpska. Such income differences are also noticeable inside entities. On the latter, there are some signs that education, experience, and employment, among others, may help reduce the probability of income decline. Our results are robust to changes of specification as shown by applying a formal sensitivity analysis. JEL classification: O15, O10, I30.     

Income distribution,basic needs and trade-offs with growth: The case of semi-industrialized Latin American countries

This paper addresses income distribution issues and policy options to eliminate extreme poverty in a particular typology of middle-income semi-industrialized developing countries of Latin America. The countries included in the typology are characterized by a relatively high per capita income (above US$700/yr in 1977), a relatively high degree of industrialization (industry representing over 30% of GNP), a rather large size both in population and area, and relatively well endowed resources in agriculture. A distinctive feature is a strong inequality in the distribution of income and wealth relative to other countries of similar levels of per capita income. The countries included are Brazil, Columbia, Ecuador, Mexico and Peru, representing two-thirds of the population of that region.     

Reparameterized inverse gamma regression models with varying precision

In this article, we propose a mean linear regression model where the response variable is inverse gamma distributed using a new parameterization of this distribution that is indexed by mean and precision parameters. The main advantage of our new parametrization is the straightforward interpretation of the regression coefficients in terms of the expectation of the positive response variable, as usual in the context of generalized linear models. The variance function of the proposed model has a quadratic form. The inverse gamma distribution is a member of the exponential family of distributions and has some distributions commonly used for parametric models in survival analysis as special cases. We compare the proposed model to several alternatives and illustrate its advantages and usefulness. With a generalized linear model approach that takes advantage of exponential family properties, we discuss model estimation (by maximum likelihood), black further inferential quantities and diagnostic tools. A Monte Carlo experiment is conducted to evaluate the performances of these estimators in finite samples with a discussion of the obtained results. A real application using minerals data set collected by Department of Mines of the University of Atacama, Chile, is considered to demonstrate the practical potential of the proposed model.     

Exchange rate movements and monetary policy in Brazil: Econometric and simulation evidence

The literature on monetary economy has aroused growing interest in macroeconomics. Due to computational advancements, models have become increasingly more complex and accurate, allowing for an in-depth analysis of the relationships between real economic variables and nominal variables. Therefore, using a dynamic stochastic general equilibrium (DSGE) model, based on Gali and Monacelli (2005), we propose and estimate a model for the Brazilian economy by employing Bayesian methods so as to assess whether the Central Bank of Brazil takes exchange rate fluctuations into account in the conduct of monetary policy. The most striking result of the present study is that the Central Bank of Brazil does not directly change the interest rate path due to exchange rate movements. A simulation exercise is also used. Our conclusion is that the economy quickly accommodates shocks induced separately on the exchange rate, on the terms of trade, interest rate, and global inflation.