Low expectations, low demand : when should the government intervene?

Este trabalho estuda o impacto de diferentes políticas que procuram mitigar falhas de coordenação em um ambiente macroeconômico. Abordamos questões relativas ao timing dos estímulos econômicos. Quando o governo deveria começar a incentivar a economia? Deveria gastar mais para prevenir crises ou para tirar a economia da recessão quando os fundamentos estão melhorando? Como o estímulo deve alterar a complementaridade estratégica? Para responder a estas perguntas, construímos um modelo macroeconômico dinâmico com concorrência monopolística e decisões de investimento sequenciais. Aplicando resultados da literatura teórica de jogos dinâmicos com fricções, selecionamos um único equilíbrio neste modelo, nos dando um instrumental tratável para a análise de políticas. Nossos resultados sugerem que o governo não deveria viesar incentivos nem para a prevenção de crises nem para resgatar a economia quando esta já está em crise.

Non-durable consumption and real-estate prices in Brazil: panel-data analysis at the state level

Housing is an important component of wealth for a typical household in many countries. The objective of this paper is to investigate the effect of real-estate price variation on welfare, trying to close a gap between the welfare literature in Brazil and that in the U.S., the U.K., and other developed countries. Our first motivation relates to the fact that real estate is probably more important here than elsewhere as a proportion of wealth, which potentially makes the impact of a price change bigger here. Our second motivation relates to the fact that real-estate prices boomed in Brazil in the last five years. Prime real estate in Rio de Janeiro and São Paulo have tripled in value in that period, and a smaller but generalized increase has been observed throughout the country. Third, we have also seen a recent consumption boom in Brazil in the last five years. Indeed, the recent rise of some of the poor to middle-income status is well documented not only for Brazil but for other emerging countries as well. Regarding consumption and real-estate prices in Brazil, one cannot imply causality from correlation, but one can do causal inference with an appropriate structural model and proper inference, or with a proper inference in a reduced-form setup. Our last motivation is related to the complete absence of studies of this kind in Brazil, which makes ours a pioneering study. We assemble a panel-data set for the determinants of non-durable consumption growth by Brazilian states, merging the techniques and ideas in Campbell and Cocco (2007) and in Case, Quigley and Shiller (2005). With appropriate controls, and panel-data methods, we investigate whether house-price variation has a positive effect on non-durable consumption. The results show a non-negligible significant impact of the change in the price of real estate on welfare consumption), although smaller then what Campbell and Cocco have found. Our findings support the view that the channel through which house prices affect consumption is a financial one.

Temporal causality between the exchange rate and the trade balance : the case of Brazil

The paper assesses the impact of intemational relative prices and domestic expenditure variables on Brazil' s foreign trade performance in the first half of the 1990s. It has been argued that the appreciation of the Real since 1994 has had a detrimental impact of the country's trade balance. However, using temporal precedence analysis, our results do not indicate that the trade balance is strongly affected by intemational rei ative prices, such as the exchange rate. Instead, domestic expenditure variables appear to be more powerful determinant of the country' s trade performance in recent years. Granger and error correction causality techniques are used to determine temporal precedence between the trade balance and the exchange rate in the period under examination. Our findings shed light on the debate over the sustainability of recent exchange rate-anchored macroeconomic stabilisation programmes, which is a topic that has encouraged a lot of debate among academics and practitioners.

Phase transition of demand explained by the heterogeneity of consumers' intrinsic preferences

In 1991 Gary S. Becker presented A Note on Restaurant Pricing and Other Examples of Social In uences on Price explaining why many successful restaurants, plays, sporting events, and other activities do not raise their prices even with persistent excess demand. The main reason for this is due to the discontinuity of stable demands, which is explained in Becker's (1991) analysis. In the present paper we construct a discrete time stochastic model of socially interacting consumers deciding for one of two establishments. With this model we show that the discontinuity of stable demands, proposed by Gary S. Becker, depends crucially on an additional factor: the dispersion of the consumers' intrinsic preferences for the establishments.

Deunionization in the US: a panel data analysis from 1973 to 1999

There are four different hypotheses analyzed in the literature that explain deunionization, namely: the decrease in the demand for union representation by the workers; the impaet of globalization over unionization rates; teehnieal ehange and ehanges in the legal and politieal systems against unions. This paper aims to test alI ofthem. We estimate a logistie regression using panel data proeedure with 35 industries from 1973 to 1999 and eonclude that the four hypotheses ean not be rejeeted by the data. We also use a varianee analysis deeomposition to study the impaet of these variables over the drop in unionization rates. In the model with no demographic variables the results show that these economic (tested) variables can account from 10% to 12% of the drop in unionization. However, when we include demographic variables these tested variables can account from 10% to 35% in the total variation of unionization rates. In this case the four hypotheses tested can explain up to 50% ofthe total drop in unionization rates explained by the model.

The Brazilian and the french private equity sectors from 2006 to present: a comparative analysis

Private equity, ou o ato de fundos ou investidores de investir em empresas não cotadas em bolsa pública, assumiu uma importância crescente no mundo financeiro nos últimos anos. De fato, enquanto o surgimento de um setor de private equity (PE) tem sido um grande fenômeno em mercados emergentes desde meados dos anos 2000, a crise financeira mundial enfraqueceu private equity no mundo desenvolvido. Assim, esta pesquisa vai se concentrar em dois países com dinâmicas supostamente muito diferentes em relação a este sector: França e Brasil. O objetivo será o de discernir padrões gerais de comportamento em ambos os sectores de PE durante todo o período compreendido 2006-2013, e tentar determinar em que medida eles são comparáveis. Utilizando a literatura como fonte conceitual para o quadro comparativo a ser desenvolvido, será analisado se as condições do mercado e do ambiente institucional evoluíram durante o período estudado na França e no Brasil, se comparar, e se eles impactaram o nível de atividade de private equity - oferta e demanda de fundos - em ambos os países. Para identificar esses padrões, a pesquisa contará com uma análise de dados exploratória qualitativa, com base em um quadro dos determinantes do setor de PE identificados e retirados da literatura acadêmica. Esta pesquisa trazera sua contribuição para o trabalho acadêmico existente sobre private equity, graças à sua natureza comparativa e para a sua conclusão sobre a relevância dos determinantes acima mencionados sobre a atividade de private equity na França e no Brasil.

Microinsurance: income risk, social security and the demand for private onsurance by low-income families

Insurance provision against uncertainties is present in several dimensions of peoples´s lives, such as the provisions related to, inter alia, unemployment, diseases, accidents, robbery and death. Microinsurance improves the ability of low-income individuals to cope with these risks. Brazil has a fairly developed financial system but still not geared towards the poor, especially in what concerns the insurance industry. The evaluation of the microinsurance effects on well-being, and the demand for different types of microinsurance require an analysis of the dynamics of the individual income process and an assessment of substitutes and complementary institutions that condition their respective financial behavior. The evaluation of the microinsurance effects on well-being, and the demand for different types of microinsurance require an analysis of the dynamics of the individual income process and an assessment of substitutes and complementary institutions that condition their respective financial behavior. The Brazilian government provides a relatively developed social security system considering other countries of similar income level which crowds-out the demand for insurance and savings. On the other hand, this same public infrastructure may help to foster microfinance products supply. The objective of this paper is to analyze the demand for different types of private insurance by the low-income population using microdata from a National Expenditure Survey (POF/IBGE). The final objective is to help to understand the trade-offs faced for the development of an emerging industry of microinsurance in Brazil.

The economics of wage-led recovery: analysis and policy recommendations

The financial crisis and Great Recession have been followed by a jobs shortage crisis that most forecasts predict will persist for years given current policies. This paper argues for a wage-led recovery and growth program which is the only way to remedy the deep causes of the crisis and escape the jobs crisis. Such a program is the polar opposite of the current policy orthodoxy, showing how much is at stake. Winning the argument for wage-led recovery will require winning the war of ideas about economics that has its roots going back to Keynes’ challenge of classical macroeconomics in the 1920s and 1930s. That will involve showing how the financial crisis and Great Recession were the ultimate result of three decades of neoliberal policy, which produced wage stagnation by severing the wage productivity growth link and made asset price inflation and debt the engine of demand growth in place of wages; showing how wage-led policy resolves the current problem of global demand shortage without pricing out labor; and developing a detailed set of policy proposals that flow from these understandings. The essence of a wage-led policy approach is to rebuild the link between wages and productivity growth, combined with expansionary macroeconomic policy that fills the current demand shortfall so as to push the economy on to a recovery path. Both sets of measures are necessary. Expansionary macro policy (i.e. fiscal stimulus and easy monetary policy) without rebuilding the wage mechanism will not produce sustainable recovery and may end in fiscal crisis. Rebuilding the wage mechanism without expansionary macro policy is likely to leave the economy stuck in the orbit of stagnation.