A note on an application of Arrow's theorem: sufficient conditions for Lucas' inflation and welfare

Bellman's methods for dynamic optimization constitute the present mainstream in economics. However, some results associated with optimal controI can be particularly usefuI in certain problems. The purpose of this note is presenting such an example. The value function derived in Lucas' (2000) shopping-time economy in Infiation and Welfare need not be concave, leading this author to develop numerical analyses to determine if consumer utility is in fact maximized along the balanced path constructed from the first order conditions. We use Arrow's generalization of Mangasarian's results in optimal control theory and develop sufficient conditions for the problem. The analytical conclusions and the previous numerical results are compatible .

Financial integration and public financial institutions

This article highlights the problems associated with the existence of financiai institutions owned by a State which is a member of a federation. We show that these financiai institutions allow the States to transfer deficits to the federal government. This possibility creates incentives to higher deficits at State and federal leveis, implying an inefficiently high inflation rate. The main policy implication is that stabilization policies are more difficult to be implemented in countries such as Brazil, and Argentina which allow the members of the federation to own financiai institutions. A second policy implication is that Economic Blocks such as the European Community or Mercosur should not allow regional central banks if they create a monetary authority to help the members in financiai difficulty.

A resposta japonesa aos choques de oferta: 1973/1981

This paper discusses some theoretical aspects of supply shocks and describes the impact of supply shocks on the japanese economy using some comparasions with USA and Brazil. The outstanding results on adjusting on "Oil shocks were due to a tight and orthodox monetary policy associate with some peculiarites of the japanese labor market .

Laws of large numbers for non-additive probabilities

We apply the concept of exchangeable random variables to the case of non-additive robability distributions exhibiting ncertainty aversion, and in the lass generated bya convex core convex non-additive probabilities, ith a convex core). We are able to rove two versions of the law of arge numbers (de Finetti's heorems). By making use of two efinitions. of independence we rove two versions of the strong law f large numbers. It turns out that e cannot assure the convergence of he sample averages to a constant. e then modal the case there is a true" probability distribution ehind the successive realizations of the uncertain random variable. In this case convergence occurs. This result is important because it renders true the intuition that it is possible "to learn" the "true" additive distribution behind an uncertain event if one repeatedly observes it (a sufficiently large number of times). We also provide a conjecture regarding the "Iearning" (or updating) process above, and prove a partia I result for the case of Dempster-Shafer updating rule and binomial trials.

Common cycles in macroeconomic aggregates

Reduced form estimation of multivariate data sets currently takes into account long-run co-movement restrictions by using Vector Error Correction Models (VECM' s). However, short-run co-movement restrictions are completely ignored. This paper proposes a way of taking into account short-and long-run co-movement restrictions in multivariate data sets, leading to efficient estimation of VECM' s. It enables a more precise trend-cycle decomposition of the data which imposes no untested restrictions to recover these two components. The proposed methodology is applied to a multivariate data set containing U.S. per-capita output, consumption and investment Based on the results of a post-sample forecasting comparison between restricted and unrestricted VECM' s, we show that a non-trivial loss of efficiency results whenever short-run co-movement restrictions are ignored. While permanent shocks to consumption still play a very important role in explaining consumption’s variation, it seems that the improved estimates of trends and cycles of output, consumption, and investment show evidence of a more important role for transitory shocks than previously suspected. Furthermore, contrary to previous evidence, it seems that permanent shocks to output play a much more important role in explaining unemployment fluctuations.

As deliberações sobre atos de concentração : o caso brasileiro

Neste artigo elabora-se sobre as sentenças que os organismos antitrustes brasileiros têm aplicado nas deliberações sobre atos de concentração. Na busca de um padrão de comportamento, observa-se que no julgamento de dois dos mais importantes casos, GerdaulPains e ColgatelKolynos, o CADE optou por uma decisão que levaria à eliminação do que o órgão entendeu como sendo barreiras à entrada da concorrência. Em seguida, apresentam-se opções de veredicto com as quais as agências antitruste poderiam fomentar o bem-estar social. O artigo sugere que ao criar uma jurisprudência nas resoluções sobre atos de concentração, o CADE contemple uma acentuada valorização das eficiências.