Quasi-integration in less-than-truckload trucking

This work studies the organization of less-than-truckload trucking from a contractual point of view. We show that the huge number of owner-operators working in the industry hides a much less fragmented reality. Most of those owner-operators are quasi-integrated in higher organizational structures. This hybrid form is generally more efficient than vertical integration because, in the Spanish institutional environment, it lessens serious moral hazard problems, related mainly to the use of the vehicles, and makes it possible to reach economies of scale and density. Empirical evidence suggests that what leads organizations to vertically integrate is not the presence of such economies but hold-up problems, related to the existence of specific assets. Finally, an international comparison hints that institutional constraints are able to explain differences in the evolution of vertical integration across countries.

Adaptive learning in models with lagged variables

In this work I study the stability of the dynamics generated by adaptivelearning processes in intertemporal economies with lagged variables. Iprove that determinacy of the steady state is a necessary condition for the convergence of the learning dynamics and I show that the reciprocal is not true characterizing the economies where convergence holds. In the case of existence of cycles I show that there is not, in general, a relationship between determinacy and convergence of the learning process to the cycle. I also analyze the expectational stability of these equilibria.

The optimum quantity of money: Theory and evidence

In this paper we propose a simple and general model for computing the Ramsey optimal inflation tax, which includes several models from the previous literature as special cases. We show that it cannot be claimed that the Friedman rule is always optimal (or always non--optimal) on theoretical grounds. The Friedman rule is optimal or not, depending on conditions related to the shape of various relevant functions. One contribution of this paper is to relate these conditions to {\it measurable} variables such as the interest rate or the consumption elasticity of money demand. We find that it tends to be optimal to tax money when there are economies of scale in the demand for money (the scale elasticity is smaller than one) and/or when money is required for the payment of consumption or wage taxes. We find that it tends to be optimal to tax money more heavily when the interest elasticity of money demand is small. We present empirical evidence on the parameters that determine the optimal inflation tax. Calibrating the model to a variety of empirical studies yields a optimal nominal interest rate of less than 1\%/year, although that finding is sensitive to the calibration.

Crises and growth: A re-evaluation

We address the question of whether growth and welfare can be higher in crisis prone economies. First, we show that there is a robust empirical link between per-capita GDP growth and negative skewness of credit growth across countries with active financial markets. That is, countries that have experienced occasional crises have grown on average faster than countries with smooth credit conditions. We then present a two-sector endogenous growth model in which financial crises can occur, and analyze the relationship between financial fragility and growth. The underlying credit market imperfections generateborrowing constraints, bottlenecks and low growth. We show that under certain conditions endogenous real exchange rate risk arises and firms find it optimal to take on credit risk in the form of currency mismatch. Along such a risky path average growth is higher, but self-fulfilling crises occur occasionally. Furthermore, we establish conditions under which the adoption of credit risk is welfare improving and brings the allocation nearer to the Pareto optimal level. The design of the model is motivated by several features of recent crises: credit risk in the form of foreign currency denominated debt; costly crises that generate firesales and widespread bankruptcies; and asymmetric sectorial responses, wherethe nontradables sector falls more than the tradables sector in the wake of crises.

Adverse selection, credit and efficiency: The case of the missing market

We analyze a standard environment of adverse selection in credit markets. In our environment,entrepreneurs who are privately informed about the quality of their projects need toborrow from banks. Conventional wisdom says that, in this class of economies, the competitiveequilibrium is typically inefficient.We show that this conventional wisdom rests on one implicit assumption: entrepreneurscan only borrow from banks. If an additional market is added to provide entrepreneurs withadditional funds, efficiency can be attained in equilibrium. An important characteristic of thisadditional market is that it must be non-exclusive, in the sense that entrepreneurs must be ableto simultaneously borrow from many different lenders operating in it. This makes it possible toattain efficiency by pooling all entrepreneurs in the new market while separating them in themarket for bank loans.

Value and depreciation of mineral resources over the very long run: An empirical contrast of different methods

The paper contrasts empirically the results of alternative methods for estimating thevalue and the depreciation of mineral resources. The historical data of Mexico andVenezuela, covering the period 1920s-1980s, is used to contrast the results of severalmethods. These are the present value, the net price method, the user cost method andthe imputed income method. The paper establishes that the net price and the user costare not competing methods as such, but alternative adjustments to different scenariosof closed and open economies. The results prove that the biases of the methods, ascommonly described in the theoretical literature, only hold under the most restrictedscenario of constant rents over time. It is argued that the difference between what isexpected to happen and what actually did happen is for the most part due to a missingvariable, namely technological change. This is an important caveat to therecommendations made based on these models.

Tax incentives and the city

It is difficult to justify tax incentives within the existing economicsliterature on tax competition. We develop a model in which communitiesare interested in attracting firms not only for their own capital butalso for the concentration externalities, a form of agglomerationeconomies, their location bestows on existing firms. We find that itis efficient in this case for communities to offer tax incentives,defined as a tax rate below the benefit tax level, to firms. We presentthe recent relocation of the Boeing Corporation's headquarters fromSeattle to Chicago as a case study.

Modern perspectives on stabilization policies

The present paper describes recent research on two central themes of Keynes General Theory: (i) the social waste associated with recessions, and (ii) the effectiveness of fiscal policy as a stabilization tool. The paper also discusses some evidence on the extent to which fiscal policy has been used as a stabilizing tool in industrial economies over the past two decades.

It's still 2%: evidence on convergence from 116 years of the US States panel data

A new debate over the speed of convergence in per capita income across economies is going on. Cross sectional estimates support the idea of slow convergence of about two percent per year. Panel data estimates support the idea of fast convergence of five, ten or even twenty percent per year. This paper shows that, if you ``do it right'', even the panel data estimation method yields the result of slow convergence of about two percent per year.

Adverse selection, credit and efficiency: The case of the missing market

We analyze a standard environment of adverse selection in credit markets. In our environment,entrepreneurs who are privately informed about the quality of their projects needto borrow in order to invest. Conventional wisdom says that, in this class of economies, thecompetitive equilibrium is typically inefficient.We show that this conventional wisdom rests on one implicit assumption: entrepreneurscan only access monitored lending. If a new set of markets is added to provide entrepreneurswith additional funds, efficiency can be attained in equilibrium. An important characteristic ofthese additional markets is that lending in them must be unmonitored, in the sense that it doesnot condition total borrowing or investment by entrepreneurs. This makes it possible to attainefficiency by pooling all entrepreneurs in the new markets while separating them in the marketsfor monitored loans.

Unemployment vs. mismatch of talents: Reconsidering unemployment benefits

We develop an equilibrium search-matching model with risk-neutral agentsand two-sided ex-ante heterogeneity. Unemployment insurance has thestandard effect of reducing employment, but also helps workers to get a suitable job. The predictions of our simple modelare consistent with the contrasting performance of the labor market in Europeand US in terms of unemployment, productivity growth and wage inequality.To show this, we construct two fictitious economies with calibratedparameters which only differ by the degree of unemployment insurance andassume that they are hit by a common technological shock which enhancesthe importance of mismatch. This shock reduces the proportion of jobs whichworkers regards as acceptable in the economy with unemployment insurance(Europe). As a result, unemployment doubles in this economy.In the laissez-faire economy (US), unemployment remains constant,but wage inequality increases more and productivity grows less due to largermismatch. The model can be used to address a number of normative issues.

Banks, liquidity crises and economic growth

How do the liquidity functions of banks affect investment and growth at different stages ofeconomic development? How do financial fragility and the costs of banking crises evolve with the level of wealth of countries? We analyze these issues using an overlapping generations growth model where agents, who experience idiosyncratic liquidity shocks, can invest in a liquid storage technology or in a partially illiquid Cobb Douglas technology. By pooling liquidity risk, banks play a growth enhancing role in reducing inefficient liquidation of long term projects, but they may face liquidity crises associated with severe output losses. We show that middle income economies may find optimal to be exposed to liquidity crises, while poor and rich economies have more incentives to develop a fully covered banking system. Therefore, middle income economies could experience banking crises in the process of their development and, as they get richer, they eventually converge to a financially safe long run steady state. Finally, the model replicates the empirical fact of higher costs of banking crises for middle income economies.

Capital formation in machinery in Latin America, 1890-1930

Investment in machinery is a key aspect in the analysis of long-term economic growth during the era of the spread of industrialisation. But, historiography has only revealed what the pace of capital accumulation was in a few Latin American economies. This article offers continuous (annual) and consistent series on the magnitude of this investment in all of the Latin American countries for the period at the height of the first globalisation, 1890-1930. The paper gives special attention to comparative analysis, showing the differences that exist at the heart of the Latin American community, in the levels of capital formation in machinery as well as in the national development of this over time. The differences in the levels appear very indicative of the unequal degree of development reached by these economies. This article puts to test the hypothesis of intraregional divergence, obtaining the tentative result that there was divergence until 1913, but that there was convergence from 1914-1930.

The rise and decline of children's labour participation levels during the early stages of industrialisation. Catalonia (1850-1925)

This article aims to analyse the reasons for the intensive use of childlabour in the 19th century and its subsequent decline in the first thirdof the 20th century in the context of an economy with a highly flexiblelabour supply like that of Catalonia. During the second half of the 19thcentury,factors relating to family economies, such as numerous familiesand low wages for adults, along with the technologies of the time thatrequired manual labour resources, would appear to explain the intensiveuse of child labour to the detriment of schooling. The technologicalchanges that occurred during the first third of the 20th century, thedemographic transition and adult wage increase (for both men and women)explain the schooling of children up to the age of 15 and theconsequent practical abolition of child labour in that new era ofeconomic modernisation.

The economic tragedy of the XXth Century: Growth in Africa

The dismal growth performance of Africa is the worst economic tragedy ofthe XXth century. We document the evolution of per capita GDP for thecontinent as a whole and for subset of countries south of the Saharadesert. We document the worsening of various income inequality indexesand we estimate poverty rates and headcounts. We then analyze some ofthe central robust determinants of economic growth reported bySala-i-Martin, Doppelhofer and Miller (2003) and project the annual growthrates Africa would have enjoyed if these key determinants had taken OECDrather than African values. Expensive investment goods, low levels ofeducation, poor health, adverse geography, closed economies, too muchpublic expenditure and too many military conflicts are seen as keyexplanations of the economic tragedy.