Immigration as a strategic vector for the socio-economic and institutional development of Brazil

Brazil has demonstrated resilience in relation to the recent economic crises and has an auspicious development potential projected for the coming decades, which, linked to the globalization process, provides important opportunities for our people. Gradually we have established ourselves as one of the leading nations in the world and we have become a reference in questions linked to economic equilibrium, development, energy, agriculture and the environment. This international recognition favors the exchange of experiences with other cultures, governments and organizations, bringing with it the possibility of stimulating a dynamic process of development and innovation.

Essays on the general equilibrium effects of barriers to trade on economic growth, foreign trade and the location of economic activity in Brazil

This work presents a fully operational interstate CGE model implemented for the Brazilian economy that tries to quantify both the role of barriers to trade on economic growth and foreign trade performance and how the distribution of the economic activity may change as the country opens up to foreign trade. Among the distinctive features embedded in the model, modeling of external scale economies, port efficiency and land-maritime transport costs provides an innovative way of dealing explicitly with theoretical issues related to integrated regional systems. In order to illustrate the role played by the quality of infrastructure and geography on the country‟s foreign and interregional trade performance, a set of simulations is presented where barriers to trade are significantly reduced. The relative importance of trade policy, port efficiency and land-maritime transport costs for the country trade relations and regional growth is then detailed and quantified, considering both short run as well as long run scenarios. A final set of simulations shed some light on the effects of liberal trade policies on regional inequality, where the manufacturing sector in the state of São Paulo, taken as the core of industrial activity in the country, is subjected to different levels of external economies of scale. Short-run core-periphery effects are then traced out suggesting the prevalence of agglomeration forces over diversion forces could rather exacerbate regional inequality as import barriers are removed up to a certain level. Further removals can reverse this balance in favor of diversion forces, implying de-concentration of economic activity. In the long run, factor mobility allows a better characterization of the balance between agglomeration and diversion forces among regions. Regional dispersion effects are then clearly traced-out, suggesting horizontal liberal trade policies to benefit both the poorest regions in the country as well as the state of São Paulo. This long run dispersion pattern, on one hand seems to unravel the fragility of simple theoretical results from recent New Economic Geography models, once they get confronted with more complex spatially heterogeneous (real) systems. On the other hand, it seems to capture the literature‟s main insight: the possible role of horizontal liberal trade policies as diversion forces leading to a more homogeneous pattern of interregional economic growth.

The implications of embodiment and Putty-Clay to economic development

In this paper we construct and analyze a growth model with the following three ingredients. (i) Technological progress is embodied. (ii) The production function of a firm is such that the firm makes both technology upgrade as well as capital and labor decisions. (iii) The firm’s production technology is putty-clay. We assume that there are disincentives to the accumulation of capital, resulting in a divergence between the social and the private cost of investment. We solve a single firm’s problem in this environment. Then we determine general equilibrium prices of capital goods of different vintages. Using these prices we aggregate firms’ decisions and construct the theoretical analogues of National Income statistics. This generates a relationship between disincentives and per capita incomes. We analyze this relationship and show the quantitative and qualitative roles of embodiment and putty-clay. We also show how the model is taken to data, quantified and used to determine to what extent income gaps across countries can be attributed to disincentives.

Inflationary financing of public investment and economic growth

a theoretical model is constructed in order to explain particular historical experiences in which inflation acceleration apparently helped to spur a period of economic growth. Government financed expenditures affect positively the productivity growth in this model so that the distortionary effect of inflation tax is compensated by the productive effect of public expenditures. We show that for some interval of money creation rates there is an equilibrium where money is valued and where steady state physical capital grows with inflation. It is also shown that zero inflation and growth maximization are never the optimal policies.

The effect of financiaI repression & enforcernent on entrepreneurship and economic deveIopment

This paper studies the effect of financiaI repression and contract enforcement on entrepreneurship and economic development. We construct and solve a general equilibrium mo deI with heterogeneous agents, occupational choice and two financiaI frictions: intermediation costs and financiaI contract enforcement. Occupational choice and firm size are determined endogenously, and depend on agent type (wealth and ability) and the credit market frictions. The mo deI shows that differences across countries in intermediation costs and enforcement generate differences in occupational choice, firm size, credit, output and inequality. Counterfactual experiments are performed for Latin American, European, transition and high growth Asian countries. We use empirical estimates of each country's financiaI frictions, and United States values for all other parameters. The results allow us to isolate the quantitative effect of these financiaI frictions in explaining the performance gap between each country and the United States. The results depend critically on whether à general equilibrium factor price effect is operative, which in turn depends on whether financiaI markets are open or closed. This yields a positive policy prescription: If the goal is to maximize steady-state efficiency, financial reforms should be accompanied by measures to increase financiaI capital mobility.

An economic model of gun control

Guns stolen from law-abiding households provide the principal source of guns for criminals. The lethality of crime instruments increases with the availability of guns, so the gun market is subject to externalities that generate excessive ownership and inadequate spending on protective measures to deter gun theft. One motive for gun ownership is self defense, and the gun market is subject to coordination failure: the more guns purchased lawfully, the more will be stolen by criminals, so the greater the incentive for lawful . consumers to purchase guns for self defense. As a result, there may be multiple equilibria in the gun market and more than one equilibrium crime rate. We show that a simple refundable deposit for guns will internalize the externalities in the gun market and may cause large downward jumps in gun ownership, the lethality of crime instruments, and the social costs of crime.

Affiliation, equilibrium existence and the revenue ranking of auctions

We consider private value auctions where bidders’ types are dependent, a case usually treated by assuming affiliation. We show that affiliation is a restrictive assumption in three senses: topological, measure-theoretic and statistical (affiliation is a very restrictive characterization of positive dependence). We also show that affiliation’s main implications do not generalize for alternative definitions of positive dependence. From this, we propose new approaches to the problems of pure strategy equilibrium existence in first-price auctions (PSEE) and the characterization of the revenue ranking of auctions. For equilibrium existence, we slightly restrict the set of distributions considered, without loss of economic generality, and offer a complete characterization of PSEE. For revenue ranking, we obtain a characterization of the expected revenue differences between second and first price auctions with general dependence of types.

Skilled labor, unskilled labor, and economic growth

We assess the effects of the imperfect substitution between skilled and unskilled labor on economic growth in a model in which physical capital and skilled labor can be accumulated. It is shown that economies with higher substitutability between skilled and unskilled labor have higher levels of income per capita in the transition and in the long-run equilibrium. Furthermore, these economies have a higher level of skilled labor and a higher level of capital intensity in the long-run equilibrium. For certain parameters values, the speed of convergence depends positively on the elasticity of substitution between skilled and unskilled labor.

Economic growth and complementarity between stages of human capital

We study the impact of the different stages of human capital accumulation on the evolution of labor productivity in a model calibrated to the U.S. from 1961 to 2008. We add early childhood education to a standard continuous time life cycle economy and assume complementarity between educational stages. There are three sectors in the model: the goods sector, the early childhood sector and the formal education sector. Agents are homogenous and choose the intensity of preschool education, how long to stay in formal school, labor effort and consumption, and there are exogenous distortions to these four decisions. The model matches the data very well and closely reproduces the paths of schooling, hours worked, relative prices and GDP. We find that the reduction in distortions to early education in the period was large and made a very strong contribution to human capital accumulation. However, due to general equilibrium effects of labor market taxation, marginal modification in the incentives for early education in 2008 had a smaller impact than those for formal education. This is because the former do not decisively affect the decision to join the labor market, while the latter do. Without labor taxation, incentives for preschool are significantly stronger.