Asymmetric information and trade policy

Economists understand protectionism as a costly mechanism to redistribute from the average citizen to special-interest groups; yet political platforms that deviate from free trade have surprising popular appeal. I present an explanation based on heterogeneous information across citizens whose voting decision has an intensive margin. For each politician and each sector, the optimal trade-policy choice caters to the preferences of those voters who are more likely to be informed of that proposal. An overall protectionist bias emerges because in every industry producers are better informed than consumers. This asymmetry emerges in equilibrium because co-workers share industry-specific knwoledge, and because producers have greater incentives to engage in costly learning about their sector. My model implies that more widespread information about trade policy for an industry is associated with lower protection. Cross-sectoral evidence on U.S. non-tariff barriers and newspaper coverage is consistent with this prediction.

Judicial presence and rent extraction

We estimate the effect of state judiciary presence on rent extraction in Brazilian local governments.We measure rents as irregularities related to waste or corruption uncovered by auditors.Our unique dataset at the level of individual inspections allows us to separately examine extensiveand intensive margins of rent extraction. The identification strategy is based on an institutionalrule of state judiciary branches according to which prosecutors and judges tend to be assigned tothe most populous among contiguous counties forming a judiciary district. Our research designexploits this rule by comparing counties that are largest in their district to counties with identicalpopulation size from other districts in the same state, where they are not the most populous. IVestimates suggest that state judiciary presence reduces the share of inspections with irregularitiesrelated to waste or corruption by about 10 percent or 0.3 standard deviations. In contrast, we findno effect on the intensive margin of rent extraction. Finally, our estimates suggest that judicialpresence reduces rent extraction only for first-term mayors.

Adoption of financial technologies: Implications for money demand and monetary policy

In this paper we argue that inventory models are probably not usefulmodels of household money demand because the majority of households does nothold any interest bearing assets. The relevant decision for most people is notthe fraction of assets to be held in interest bearing form, but whether to holdany of such assets at all. The implications of this realization are interesting and important. We find that(a) the elasticity of money demand is very small when the interest rate is small,(b) the probability that a household holds any amount of interest bearing assetsis positively related to the level of financial assets, and (c) the cost ofadopting financial technologies is positively related to age and negatively relatedto the level of education. Unlike the traditional methods of money demand estimation, our methodology allowsfor the estimation of the interest--elasticity at low values of the nominalinterest rate. The finding that the elasticity is very small for interest ratesbelow 5 percent suggests that the welfare costs of inflation are small. At interest rates of 6 percent, the elasticity is close to 0.5. We find thatroughly one half of this elasticity can be attributed to the Baumol--Tobin orintensive margin and half of it can be attributed to the new adopters or extensivemargin. The intensive margin is less important at lower interest rates and moreimportant at higher interest rates.

Voting with preferences over margins of victory

This paper analyzes a two-alternative voting model with the distinctive feature that voters have preferences over margins of victory. We study voting contests with a finite as well as an infinite number of voters, and with and without mandatory voting. The main result of the paper is the existence and characterization of a unique equilibrium outcome in all those situations. At equilibrium, voters who prefer a larger support for one of the alternatives vote for such alternative.The model also provides a formal argument for the conditional sincerity voting condition in Alesina and Rosenthal (1995) and the benefit of voting function in Llavador (2006). Finally, we offer new insights on explaining why some citizens may vote strategically for an alternative different from the one declared as the most preferred.

Schumpeterian technology shocks

We analyze the labor market effects of neutral and investment-specific technologyshocks along the intensive margin (hours worked) and the extensive margin(unemployment). We characterize the dynamic response of unemploymentin terms of the job separation and the job finding rate. Labor market adjustmentsoccur along the extensive margin in response to neutral shocks, along theintensive margin in response to investment specific shocks. The job separationrate accounts for a major portion of the impact response of unemployment. Neutralshocks prompt a contemporaneous increase in unemployment because of asharp rise in the separation rate. This is prolonged by a persistent fall in thejob finding rate. Investment specific shocks rise employment and hours worked.Neutral shocks explain a substantial portion of the volatility of unemploymentand output; investment specific shocks mainly explain hours worked volatility.This suggests that neutral progress is consistent with Schumpeterian creative destruction,while investment-specific progress operates as in a neoclassical growthmodel.

Endogenous labor market participation and the business cycle

Existing models of equilibrium unemployment with endogenous labor market participation are complex, generate procyclical unemployment rates and cannot match unemployment variability relative to GDP. We embed endogenous participation in a simple, tractable job market matching model, show analytically how variations in the participation rate are driven by the cross-sectional density of home productivity near the participation threshold, andhow this density translates into an extensive-margin labor supply elasticity. A calibration of the model to macro data not only matches employment and participation variabilities but also generates strongly countercyclical unemployment rates. With some wage rigidity the model also matches unemployment variations well. Furthermore, the labor supply elasticity implied by our calibration is consistent with microeconometric evidence for the US.

Organizational capital and employment fluctuations

In this paper I present a model in which production requires two types of labor inputs: regular productive tasks and organizational capital, which is accumulated by workers performing organizational tasks. By allocating more workers from organizational to productive tasks, firms can temporarily increase production without hiring. The availability of this intensive margin of labor adjustment, in combination with adjustment costs along the extensive margin (search frictions, firing costs, training costs), makes it optimal to delay employment adjustments. Simulations indicate that this mechanism is quantitatively important even if only a small fraction of workers perform organizational tasks, and explains why the hiring rate is persistent and why employment is slow to recover after the end of a recession.

Incentives and pharmaceutical reimbursement reforms in Spain

The aim of this paper is to assess whether cost-containment has beenaffected by recent pharmaceutical reimbursement reforms that have beenintroduced in the Spanish health care system over the period 1996-2002,under the conservative Popular Party government. Four main reimbursementpolicies can be observed in the Spanish pharmaceutical market after1996, each of them largely unintegrated with the other three. First, asecond supplementary negative list of excluded pharmaceutical productswas introduced in 1998. Second, a reference pricing system wasintroduced in December 2000, with annual updating and enlargement.Third, the pharmacies payment system has moved from the traditionalset margin on the consumer price to a margin that varies according tothe consumer price of the product, the generic status of the product,and the volume of sales by pharmacies. And fourth, general agreementsbetween the government and the industry have been reached with costcontainment objectives. In the final section of this paper we presentan overall assessment of the impact of these pharmaceuticalreimbursement policies on the behaviour of the agents in thepharmaceutical market.

Declining labor force attachment and downward trends in unemployment and participation

The US labor market witnessed two apparently unrelated secular movements in thelast 30 years: a decline in unemployment between the early 1980s and the early 2000s,and a decline in participation since the early 2000s. Using CPS micro data and a stock-flow accounting framework, we show that a substantial, and hitherto unnoticed, factorbehind both trends is a decline in the share of nonparticipants who are at the margin ofparticipation. A lower share of marginal nonparticipants implies a lower unemploymentrate, because marginal nonparticipants enter the labor force mostly through unemployment,while other nonparticipants enter the labor force mostly through employment.

Ophiolite-related ultramafic rocks (Serpentinites) in the Caribbean region: a review of their occurrence, composition, origin, emplacements and Ni-Laterite soil formation

Ultramafic rocks, mainly serpentinized peridotites of mantle origin, are mostly associated with the ophiolites of Mesozoic age that occur in belts along three of the margins of the Caribbean plate. The most extensive exposures are in Cuba. The ultramafic-mafic association (ophiolites) were formed and emplaced in several different tectonic environments. Mineralogical studies of the ultramafic rocks and the chemistry of the associated mafic rocks indicate that most of the ultramafic-mafic associations in both the northern and southern margins of the plate were formed in arc-related environments. There is little mantle peridotite exposed in the ophiolitic associations of the west coast of Central America, in the south Caribbean in Curacao and in the Andean belts in Colombia. In these occurrences the chemistry and age of the mafic rocks indicates that this association is mainly part of the 89 Ma Caribbean plateau province. The age of the mantle peridotites and associated ophiolites is probably mainly late Jurassic or Early Cretaceous. Emplacement of the ophiolites possibly began in the Early Cretaceous in Hispaniola and Puerto Rico, but most emplacement took place in the Late Cretaceous to Eocene (e.g. Cuba). Along the northern South America plate margin, in the Caribbean mountain belt, emplacement was by major thrusting and probably was not completed until the Oligocene or even the early Miocene. Caribbean mantle peridotites, before serpentinization, were mainly harzburgites, but dunites and lherzolites are also present. In detail, the mineralogical and chemical composition varies even within one ultramafic body, reflecting melting processes and peridotite/melt interaction in the upper mantle. At least for the northern Caribbean, uplift (postemplacement tectonics) exposed the ultramafic massifs as a land surface to effective laterization in the beginning of the Miocene. Tectonic factors, determining the uplift, exposing the peridotites to weathering varied. In the northern Caribbean, in Guatemala, Jamaica, and Hispaniola, uplift occurred as a result of transpresional movement along pre-existing major faults. In Cuba, uplift occurred on a regional scale, determined by isostatic adjustment. In the south Caribbean, uplift of the Cordillera de la Costa and Serrania del Interior exposing the peridotites, also appears to be related to strike-slip movement along the El Pilar fault system. In the Caribbean, Ni-laterite deposits are currently being mined in the central Dominican Republic, eastern Cuba, northern Venezuela and northwest Colombia. Although apparently formed over ultramafic rocks of similar composition and under similar climatic conditions, the composition of the lateritic soils varies. Factors that probably determined these differences in laterite composition are geomorphology, topography, drainage and tectonics. According to the mineralogy of principal ore-bearing phases, Dominican Ni-laterite deposits are classified as the hydrous silicate-type. The main Ni-bearing minerals are hydrated Mg-Ni silicates (serpentine and ¿garnierite¿) occurring deeper in the profile (saprolite horizon). In contrast, in the deposits of eastern Cuba, the Ni and Cooccurs mainly in the limonite zone composed of Fe hydroxides and oxides as the dominant mineralogy in the upper part of the profile, and are classified as the oxide-type.

Is there a connection between the tax administration and the political power?

This paper offers empirical evidence from Spain of a connection between the tax administration and the political power. Firstly, the regional tax administration is not immune to the budgetary situation of regional government, and tends to exert a greater (or lesser) effort in tax collection the greater (or lower) the (expected) public deficit. At the same time, the system of unconditional grants from the central layer of government provokes an ¿income effect¿ which disincentivises the efforts of the tax administration. Secondly, these efforts also decrease when the margin to lose a parliamentary seat in an electoral district is cut, although the importance of this disincentive decreases according to the parliamentary strength of the incumbent

Lobbying, political competition, and local land supply: recent evidence from Spain

We analyze whether local land supply is influenced by the degree of political competition, and interpret the findings as being indicative of the influence wielded by land development lobbies. We use a new database including both political and land supply data for more than 2,000 Spanish municipalities for the period 2003-2007. In Spain, land use policies are largely a local responsibility with municipalities having periodically to pass compre- hensive land use plans. The main policy variable in these plans, and the one analyzed here, is the amount of land classified for potential development. We measure local political competition as the margin of victory of the incumbent government. We instrument this variable using the number of votes obtained by parties represented in local government when standing at the first national legislative elections following the re-establishment of democracy, and the number of votes they actually obtained regionally at the national legislative elections. The results indicate that stiffer political competition does indeed reduce the amount of new land designated for development. This effect is found to be most marked in suburbs, in towns with a high percent of commuters and homeowners, and in municipalities governed by the left.

Lobbying, political competition, and local land supply: recent evidence from Spain

We analyze whether local land supply is influenced by the degree of political competition, and interpret the findings as being indicative of the influence wielded by land development lobbies. We use a new database including both political and land supply data for more than 2,000 Spanish municipalities for the period 2003-2007. In Spain, land use policies are largely a local responsibility with municipalities having periodically to pass compre- hensive land use plans. The main policy variable in these plans, and the one analyzed here, is the amount of land classified for potential development. We measure local political competition as the margin of victory of the incumbent government. We instrument this variable using the number of votes obtained by parties represented in local government when standing at the first national legislative elections following the re-establishment of democracy, and the number of votes they actually obtained regionally at the national legislative elections. The results indicate that stiffer political competition does indeed reduce the amount of new land designated for development. This effect is found to be most marked in suburbs, in towns with a high percent of commuters and homeowners, and in municipalities governed by the left.

Is there a connection between the tax administration and the political power?

This paper offers empirical evidence from Spain of a connection between the tax administration and the political power. Firstly, the regional tax administration is not immune to the budgetary situation of regional government, and tends to exert a greater (or lesser) effort in tax collection the greater (or lower) the (expected) public deficit. At the same time, the system of unconditional grants from the central layer of government provokes an ¿income effect¿ which disincentivises the efforts of the tax administration. Secondly, these efforts also decrease when the margin to lose a parliamentary seat in an electoral district is cut, although the importance of this disincentive decreases according to the parliamentary strength of the incumbent

On the origin of the North Pacific arcs

We present a new hypothesis that relates global plate tectonics to the formation of marginal basins, island arcs, spreading ridges and arc-shaped mountain belts around the North Pacific Ocean. According to our model, the ellipsoidal-shaped Paleogene basins of the South China Sea, Parece-Vela Basin, Shikoku Basin, Sea of Japan and the Sea of Okhotsk in addition to those of the North American Cordillera can be attributed to the change in plate convergence direction at 42 Ma between the Indoaustralian and Eurasian plates. The new direction of convergence was parallel to the eastern continental margin of Asia and resulted in widespread extension perpendicular to this margin and to the western margin of North America. Both margins form part of a circle parallel to the Indoaustralian-Eurasian direction of convergence.