Interactions between fiscal and monetary policy

Mestrado em Economia Monetária e Financeira

"Policy externalisation" inherent failure : international financial institutions' conditionality in developing countries

Conditionalities – i.e. ‘exchanging finance for policy reform’ in an asymmetrical relationship between the ‘donor’ and the ‘recipient’ – are central mechanisms of the reform programmes of international financial institutions (IFIs). As they are imposed by outside entities, they can also be viewed as ‘policy externalisation’, which is paradoxically a massive intrusion in the shaping of a country’s domestic policies. The resilience of such devices is remarkable, however. Indeed, in the early 1980s, many developing countries were facing balance of payments difficulties and called upon these international financial institutions for financial relief. In exchange for this relief, they devised economic reforms (fiscal, financial, monetary), which were the conditions for their lending. These reforms were not associated with better economic performance, and this led the IFIs to devise in the 1990s different reforms, which this time targeted the functioning of the government and its ‘governance’, economic problems being explained by governments’ characteristics (e.g., rent-seekers). The paper demonstrates the limitations of the device of conditionality, which is a crucial theoretical and policy issue given its stability across time and countries. These limitations stem from: i) the concept of conditionality per se - the mechanism of exchanging finance for reform; ii) the contents of the prescribed reforms given developing countries economic structure (typically commodity-based export structures) and the weakness of the concept of ‘governance’ in view of these countries’ political economies; and iii) the intrinsic linkages between economic and political conditionalities, whose limitations thus retroact on each other, in particular regarding effectiveness and credibility.

Interest rate (in)sensitivity of emerging market corporate debt : economic analysis based on 2002-2015 empirical evidence

Interest rate sensitivity assessment framework based on fixed income yield indexes is developed and applied to two types of emerging market corporate debt: investment grade and high yield exposures. Our research advances beyond the correlation analyses focused on co- movements in yields and/or spreads of risky and risk-free assets. We show that correlation- based analyses of interest rate sensitivity could appear rather inconclusive and, hence, we investigate the bottom line profit and loss of a hypothetical model portfolio of corporates. We consider historical data covering the period 2002 – 2015, which enable us to assess interest rate sensitivity of assets during the development, the apogee, and the aftermath of the global financial crisis. Based on empirical evidence, both for investment and speculative grades securities, we find that the emerging market corporates exhibit two different regimes of sensitivity to interest rate changes. We observe switching from a positive sensitivity under the normal market conditions to a negative one during distressed phases of business cycles. This research sheds light on how financial institutions may approach interest rate risk management, evidencing that even plain vanilla portfolios of emerging market corporates, which on average could appear rather insensitive to the interest rate risk in fact present a binary behavior of their interest rate sensitivities. Our findings allow banks and financial institutions for optimizing economic capital under Basel III regulatory capital rules.

How does banking industry influence economic growth in Latin American countries?

Mestrado em Finanças

Sistemas de controlo de gestão, empreendedorismo corporativo, estratégia e performance : contraste entre empresas familiares e não familiares

Mestrado em Contabilidade, Fiscalidade e Finanças Empresariais

Relationship between estimation and real motor performance in school-age children

The relationship between estimated and real motor competences was analyzed for several tasks. Participants were 303 children (160 boys and 143 girls), which had between 6 and 10 years of age (M=8.63, SD=1.16). None of the children presented developmental difficulties or learning disabilities, and all attended age-appropriate classes. Children were divided into three groups according to their age: group 1 (N= 102; age range: 6.48-8.01 years); group 2 (N= 101; age range: 8.02-9.22 years); and group 3 (N=100; age range: 9.24-10.93 years). Children were asked to predict their maximum distance for a locomotor, a manipulative, and a balance task, prior to performing those tasks. Children’s estimations were compared with their real performance to determine their accuracy. Children had, in general, a tendency to overestimate their performance (standing long jump: 56.11%, kicking: 63.37%, throwing: 73.60%, and Walking Backwards (WB) on a balance beam: 45.21%), and older children tended to be more accurate, except for the manipulative tasks. Furthermore, the relationship between estimation and real performance in children with different levels of motor coordination (Köperkoordinationstest für Kinder, KTK) was analyzed. The 75 children with the highest score comprised the Highest Motor Coordination (HMC) group, and the 78 children with the lowest score were placed in the Lowest Motor Coordination (LMC) group. There was a tendency for LMC and HMC children to overestimate their skills at all tasks, except for the HMC group at the WB task. Children with the HMC level tended to be more accurate when predicting their motor performance; however, differences in absolute percent error were only significant for the throwing and WB tasks. In conclusion, children display a tendency to overestimate their performance independently of their motor coordination level and task. This fact may be determinant to the development of their motor competences, since they are more likely to engage and persist in motor tasks, but it might also increase the occurrence of unintended injuries.

A orçamentação por programas, a Informação de desempenho e as políticas públicas:tendências, perspetivas e desafios

Dissertação de Mestrado em Gestão e Políticas Públicas