The Importance of Stock Market Returns in Estimated Monetary Policy Rules: a Structural Approach

This paper estimates a standard version of the New Keynesian Monetary (NKM) model augmented with financial variables in order to analyze the relative importance of stock market returns and term spread in the estimated U.S. monetary policy rule. The estimation procedure implemented is a classical structural method based on the indirect inference principle. The empirical results show that the Fed seems to respond to the macroeconomic outlook and to the stock market return but does not seem to respond to the term spread. Moreover, policy inertia and persistent policy shocks are also significant features of the estimated policy rule.

Term Structure and the Estimated Monetary Policy Rule in the Eurozone

Published as an article in: Spanish Economic Review, 2008, vol. 10, issue 4, pages 251-277.

The Comovement between Monetary and Fiscal Policy Instruments during the Post-War Period in the U.S.

This paper empirically studies the dynamic relationship between monetary and fiscal policies by analyzing the comovements between the Fed funds rate and the primary deficit/output ratio. Simple economic thinking establishes that a negative correlation between Fed rate and deficit arises whenever the two policy authorities share a common stabilization objective. However, when budget balancing concerns lead to a drastic deficit reduction the Fed may reduce the Fed rate in order to smooth the impact of fiscal policy, which results in a positive correlation between these two policy instruments. The empirical results show (i) a significant negative comovement between Fed rate and deficit and (ii) that deficit and output gap Granger-cause the Fed funds rate during the post-Volcker era, but the opposite is not true.

Policy Coordination in an Oligopolistic Housing Market

This paper analyzes the consequences of the interaction between two different levels of government (regulators) in the development of housing policy when their decisions determine the level of competition in the housing market. The analysis discusses the implications derived from a lack of coordination between a local regulator who controls the supply of land for housing development and a central regulator who decides on housing subsidies. The results suggest that lack of coordination has significant effects on prices and supply of houses, housing developers’ profits, and buyers’ surplus.

The Impact of Firm Level Contracting on Wage Levels and Inequality: Spain 1995-2002

This paper provides microeconomic evidence on the variation over time of the firm-specific wage premium in Spain from 1995 to 2002, and its impact on wage inequality. We make use of two waves of a detailed linked employer-employee data set. In addition, a new data set with financial information on firms is used for 2002 to control as flexibly as possible for differences in the performance of firms (aggregated at industry level). To our knowledge, there is no microeconomic evidence on the dynamics of the firm-specific wage premium for Spain or for any other country with a similar institutional setting. Our results suggest that there is a clear tendency towards centralization in the collective bargaining process in Spain over this seven-year period, that the firm-level contract wage premium undergoes a substantial decrease, particularly for women, and finally that the "centralization" observed in the collective bargaining process has resulted in a slight decrease in wage inequality.

R&D Policy in Economies with Endogenous Growth and Non-Renewable Resources

The aim of this paper is to analyze how active R&D policies affect the growth rate of an economy with endogenous growth and non-renewable resources. We know from Scholz and Ziemens (1999) and Groth (2006) that in infinitely lived agents (ILA) economies, any active R&D policy increases the growth rate of the economy. To see if this result also appears in economies with finite lifetime agents, we developed an endogenous growth overlapping generations (OLG) economy à la Diamond which uses non-renewable resources as essential inputs in final good’s production. We show analytically that any R&D policy that reduces the use of natural resources implies a raise in the growth rate of the economy. Numerically we show that in economies with low intertemporal elasticity of substitution (IES), active R&D policies lead the economy to increase the depletion of non-renewable resources. Nevertheless, we find that active R&D policies always imply increases in the endogenous growth rate, in both scenarios. Furthermore, when the IES coefficient is lower (greater) than one, active R&D policies affect the growth rate of the economy in the ILA more (less) than in OLG economies.

Inequality for Wage Earners and Self-Employed: Evidence from Panel Data

Published as an article in: Oxford Bulletin of Economics and Statistics, 2009, vol. 71, issue 4, pages 491-518.

Optimal fiscal policy in a multisector model with minimum expenditure requirements

This paper investigates optimal fiscal policy in a static multisector model. A Ramsey type planner chooses tax rates on each good type as well as spending levels on each good type subject to an exogenous total expenditure constraint and requirements that some minimum amount of spending be undertaken in each sector. It is shown that optimal policy does not equally spend in each sector but instead results in one of the minimum expenditure constraints binding.

Ceilings and Floors? Gender Wage Gaps by Education in Spain

Revised: 2006-11.-- Published as an article in: Journal of Population Economics, 2007, vol. 21 issue 3, pp. 751-776.

Second-best tax policy in a growing economy with externalities

This paper investigates the exploitation of environmental resources in a growing economy within a second-best scal policy framework. Agents derive utility from two types of consumption goods one which relies on an environmental input and one which does not as well as from leisure and from environmental amenity values. Property rights for the environmental resource are potentially incomplete. We connect second best policy to essential components of utility by considering the elasticity of substitution among each of the four utility arguments. The results illustrate potentially important relationships between environmental amentity values and leisure. When amenity values are complementary with leisure, for instance when environmental amenities are used for recreation, taxes on extractive goods generally increase over time. On the other hand, optimal taxes on extractive goods generally decrease over time when leisure and environmental amenity values are substitutes. Unders some parameterizations, complex dynamics leading to nonmonotonic time paths for the state variables can emerge.

A Measure of Gender Wage Discrimination at Quantiles

Revised: 2006-05.-- Published as an article in: Journal of Population Economics, 2007, vol. 18, issue 1, pp. 165-179.

More on Identification on Detailed Wage Decompositions

Revised: 2006-05.-- Published as an article in: The Review of Economics and Statistics, 2004, vol. 86, issue 4, pp. 1034-1036.

The Weekend-Dividend Effect in the Spanish Market

Revised: 2006-05

The Impact of Gender Segregation on Male-Female Wage Differentials

This paper presents new evidence on the role of gender segregation and pay structure in explaining gender wage differentials of full-time salaried workers in Spain. Data from the 1995 and 2002 Wage Structure Surveys reveal that raw gender wage gaps decreased from 0.24 to 0.14 over the seven-year period. Average differences in the base wage and wage complements decreased from 0.09 to 0.05 and from 0.59 to 0.40, respectively. However, the gender wage gap is still large after accounting for workers’ human capital, job and pay structure characteristics, and female segregation into low-paying industries, occupations, establishments, and occupations within establishments.

How much efficiency gains and price reductions for an efficiency defense? 'Quanto Basta'

Potential efficiency gains due to a merger can be used by competition authorities to judge upon proposed mergers. In a world where agents’ efforts, observable or unobservable, affect the success of a production cost reducing project that may be conducted as a stand-alone firm or in a merger, we characterize the merger decision and the type of errors a competition authority may make when it relies on an efficiency defense. In addition, we show that the occurrence of either type of errors is always smaller under the unobservable efforts assumption, than under the observable efforts one.