Long-term regional convergence in Mexico: A new look

This paper explores the convergence hypothesis of Mexican states with the national level and with one another from 1940 to 2015. Interpreting convergence as catching-up, we also capture other types of regular evolution, namely, invariance of the income gap over time, permanent absence of the gap, and steadily increasing gap (deterministic divergence). As a tool of econometric analysis, we use a novel model that describes convergence by asymptotically decaying trends and covers other types of evolution as particular cases. The results obtained suggest one or other type of regularity to be peculiar to roughly ca. 40% of income gaps both with the national level and between states. However, convergence is observed only in 6% to 15% of cases. Regarding convergence at the national level, an additional analysis by three 50-year subperiod shows that in many cases the type of evolution changes for the same state from one subperiod to another. Analyzing convergence between states, we find that convergence between neighboring states is more frequent than between other states; however, the effect of the neighborhood is not too strong.     

The pace of fiscal consolidations,fiscal sustainability,and welfare: An overlapping generations approach

This study investigates expenditure- and tax-based consolidations under the rule of reductions in debt-to-GDP ratios to the target level and the effects of these consolidations on fiscal sustainability and welfare, using an overlapping generations model with exogenous growth settings. We derive (i) a threshold (ceiling) of public debt to ensure fiscal sustainability, (ii) sustainable paces of these consolidations, and (iii) the optimal pace of consolidations under both expenditure- and tax-based consolidations, examining whether these consolidations are effective in the sense that they are sustainable, increase welfare, and induce fairness of welfare distribution across generations (lower intergenerational conflicts over welfare). We find that the pace of tax-based consolidation required to ensure fiscal sustainability is higher than that required for expenditure-based consolidation. As for welfare, countries may differ in their choice of the type of consolidation, which depends on the size of outstanding debts relative to capital, the economy’s productivity, tax rate levels, and the extent of utility derived by individuals from public goods and services. More importantly, it may also depend on whether policymakers emphasize social welfare or fairness of welfare distribution between generations. By contrast, a common result from the viewpoints of both social welfare and fair distribution of welfare across generations is that fiscal consolidation cannot persist much longer than 30 years (one period in the model). This result will support the pace of consolidation in the EU: the Stability and Growth Pact.     

Technology adoption in autocratic economies: The role of fiscal capacity

What determines technology in autocratic regimes? In this paper, I assume that a rent-extracting regime can adopt technology from the global technology frontier, tax-paying citizens can oust the regime, and technology can decrease the ousting cost. I show that a lack of fiscal capacity can increase technology by preventing the ousting constraint from binding. Consistent with this prediction, tax collections and total factor productivity are negatively related in autocratic regimes. Extensions show that natural resources can divorce fiscal revenues from technology, which can encourage technology blocking. However, if technology adoption is socially costly, autocratic regimes can adopt too much technology.     

Public debt and welfare in a quantitative Schumpeterian growth model with incomplete markets

This paper quantifies the welfare effects of counterfactual public debt policies using an endogenous growth model with incomplete markets. The economy features public debt, Schumpeterian growth, infinitely-lived agents, uninsurable income risk, and discount factor heterogeneity. Two versions of the model are specified, one with households holding equity in the group of innovating firms. The model is calibrated to the U.S. economy to match the degree of wealth inequality, the share of R&D expenditure in GDP, the firms’ exit rate, the average growth rate, and other standard long-run targets. When comparing balanced growth paths, I find large welfare gains in equilibria characterized by governments accumulating public wealth. The result is robust to the mechanism used to generate a highly concentrated wealth (i.e., preference heterogeneity or “superstar” income shocks). Welfare effects decompositions show that level effects and growth effects reinforce each other. The responses of both the intermediate goods and their market conditions are key in explaining the large level effects. The version of the model without equity is computationally easier to solve, allowing to consider transitional dynamics. Taking into account the dynamic adjustment to the new long-run equilibrium, I show that the transitional welfare costs are not large enough to change the sign of the welfare effects stemming from a change in public debt. I find that eliminating public debt would lead to a 0.8% increase in welfare, while moving to a debt/GDP ratio of 100% would entail a welfare loss of 0.5%. A decomposition analysis shows that growth accounts for approximately 50% of the overall welfare effects.     

Model uncertainty,economic development,and welfare costs of business cycles

Some researchers argue that the welfare gains from eliminating consumption fluctuations for the United States are not small once model uncertainty is taken into account. This paper presents new evidence on the welfare gains from eliminating model uncertainty using a data set from a broad range of countries. It quantifies exactly the effect of model uncertainty on the welfare gains using an analytical formula. The results indicate that most countries derive much larger gains from the reduction of model uncertainty compared with the United States. Countries at higher stages of economic development tend to have lower welfare gains because their gains from eliminating model uncertainty become smaller. This relationship does not depend on country size or trade openness.     

美国金融危机对我国金融业的影响与启示分析

当前美国金融危机备受关注,受其影响全球金融市场陷入本世纪以来最大的金融动荡之中,这一现状对我国金融业带来了一定的冲击。本文分析了美国金融危机对我国金融业产生的影响与引发的启示,以期促进我国金融业的健康发展。