Feasibility analysis for biofuel production and investment recommendation

A FGV Projetos posiciona-se com destaque no desenvolvimento de projetos e estudos sobre biocombustíveis. Especialistas no assunto apontam para a viabilidade da produção de biocombustíveis em diversos países, e recomendam investimentos em toda a cadeia produtiva, específicos para cada localidade. Isso permitirá aos países que desejam reduzir a dependência por combustíveis fósseis, tais como o petróleo, a diversificação da matriz energética, o aumento do emprego no campo, e uma melhora do saldo comercial. Este documento apresenta síntese dos trabalhos realizados e em desenvolvimento, e tem como base os estudos de viabilidade para a produção de biocombustíveis de El Salvador e da República Dominicana.

Effects of trade policy on technology adoption and investment

This paper studies the consequences of trade policy for the adoption of new technologies. It develops a dynamic international trade model with two sectors. Workers in manufacturing decide if new technologies are used, capital owners then choose investment. We analyze three different arrangements: free trade, tariffs, and quotas. In the model economy, free trade as well as tariffs guarantee that the most productive technology available will be used. In contrasL under a quota the most productive technology available will not be used at all times. Further, in the latter case investment and the capital stock are smaller than in the former one. Finally, there exists parameter values for which the computed difference in GDP is a factor of thirty.

Using a panel structure to discuss the Feldstein-Horioka puzzle in developing countries

The purpose of this paper is to test the implications of current account solvency for the savinginvestment correlation in developing countries. Since solvency is a long-run phenomenon, and given that the power of the standard unit root and cointegration tests is low, we exploit the panel structure of the sample of 29 developing countries. We find evidence that saving and investment are cointegrated and that the current account is stationary. Therefore, the Feldstein-Horioka correlations are not a puzzle in the sense they reflect the intertemporal budget constraint. The same results are obtained for different subsamples (Africa, Asia, and Latin America) and for different periods of time (1960-74 and 1975-96). We, then, suggest that an error correction model should distinguish between the long-run correlation, which reflects the solvency condition, and the short-run correlation, which could measure capital mobility.

The impact of public capital and public investment on economic growth: an empirical investigation

in this anicle we measure the impact of public sector capital and investment on economic growth. Initially, traditional growth accounting regressions are run for a cross-country data set. A simple endogenous growth model is then constructed in order to take into account the determinants of labor, private capital and public capital. In both cases, public capital is a separate argument of the production function. An additional data-set constructed with quarterly American data was used in the estimations of the growth mode!. The results indicate lhat public capital and public investment play a significant role in determining growth rates and have a significant impact on capital and labor returns. Furthermore, the impact of public investment on productivity growth was found to be positive and always significant for bolh samples. Hence. in a fully optimizing modelo we confmn previous results in the literature that lhe failure of public investment to keep pace with output growlh during the Seventies and Eighties may have played a major role in the slowdown of lhe productivity growth in the period. Anolher main outcome concems the output elasticity wilh respect to public capital. The coefficiem estimates are always positive and significant but magnitudes depend on each of lhe two data set used.

Public expenditures taxation and welfare measurement

this article addresses the welfare and macroeconomics effects of fiscal policy in a frarnework where govemment chooses tax rates and the distribution of revenues between consumption and investment. We construct and simulate a model where public consumption affects individuaIs' utility and public capital is an argument of the production function. The simulations suggest that by simply reallocating expenditures from consumption to investment, the govemment can increase the equilibrium leveIs of capital stock, hours worked, output and labor productivity. Funhennore, we 'show that the magnitude and direction of the long run impact of fiscal policy depends on the size of the elasticity of output to public capital. If this parameter is high enough, it may be the case that capital stock, within limits, increases with tax rates.

Common currency and economic integration in Mercosur

A América Latina tem uma longa história de tentativas de alcançar uma integração regional, embora seu sucesso tenha sido modesto. Este trabalho procura mostrar que isso essencialmente ocorre não tanto pelas práticas protecionistas nos vários países, mas devido à falta de uma moeda comum, ou, pelo menos, de uma taxa de câmbio rigorosamente administrada. Os autores analisaram o critério da área ótima de moeda que mostra ser prudente aumentar a integração econômica antes de tentar implementar a coordenação das taxas de câmbio. Entretanto, nós mostramos que no Mercosul já existem as condições mínimas para começar a trabalhar nessa direção. A diminuição da instabilidade cambial pode encorajar a entrada de investimentos e o comércio nas economias latino-americanas. Os autores também desenvolveram um exercício simplificado para entender como poderia ser viável alcançar estabilidade da taxa de câmbio em nos dois maiores países da região (Brasil e Argentina) e avançar na adoção de uma moeda comum.

Efeitos dinâmicos de programas de estabilização

Com o emprego do modelo de dois setores de acumulação ótima de capital em economia aberta, determina-se o impacto sobre a trajetória do câmbio, dos salários, do investimento, da poupança e, portanto, da dívida externa e do estoque de capital, de uma elevação permanente e não antecipada da produtividade da economia. Em geral, após um choque positivo permanente de produtividade há redução da poupança, piora do balanço de pagamentos em transações correntes e valorização do câmbio. Todos fenômenos que do ponto de vista do modelo são de equilíbrio intertemporal, conseqüência da elevação da renda permanente e do excesso de demanda por bens domésticos que sucede o ganho de produtividade. Supondo que os programas de estabilização elevaram a produtividade da economia é possível com a estrutura analítica construída racionalizar qualitativamente os fenômenos observados após estes planos.

A study of behavioral finance: background, theories and application

Behavioral finance, or behavioral economics, consists of a theoretical field of research stating that consequent psychological and behavioral variables are involved in financial activities such as corporate finance and investment decisions (i.e. asset allocation, portfolio management and so on). This field has known an increasing interest from scholar and financial professionals since episodes of multiple speculative bubbles and financial crises. Indeed, practical incoherencies between economic events and traditional neoclassical financial theories had pushed more and more researchers to look for new and broader models and theories. The purpose of this work is to present the field of research, still ill-known by a vast majority. This work is thus a survey that introduces its origins and its main theories, while contrasting them with traditional finance theories still predominant nowadays. The main question guiding this work would be to see if this area of inquiry is able to provide better explanations for real life market phenomenon. For that purpose, the study will present some market anomalies unsolved by traditional theories, which have been recently addressed by behavioral finance researchers. In addition, it presents a practical application of portfolio management, comparing asset allocation under the traditional Markowitz’s approach to the Black-Litterman model, which incorporates some features of behavioral finance.

Aggregate uncertainty, disappointment aversion and the business cycle

We investigate the eff ect of aggregate uncertainty shocks on real variables. More speci fically, we introduce a shock in the volatility of productivity in an RBC model with long-run volatility risk and preferences that exhibit generalised disappointment aversion. We find that, when combined with a negative productivity shock, a volatility shock leads to further decline in real variables, such as output, consumption, hours worked and investment. For instance, out of the 2% decrease in output as a result of both shocks, we attribute 0.25% to the e ffect of an increase in volatility. We also fi nd that this e ffect is the same as the one obtained in a model with Epstein-Zin- Weil preferences, but higher than that of a model with expected utility. Moreover, GDA preferences yield superior asset pricing results, when compared to both Epstein-Zin-Weil preferences and expected utility.

Uncertainty of aid inflows and the growth relationship

This paper contributes to the literature on aid and economic growth. We posit that it is not the levei of aid flows per se but the stability of such flows that determines the impact of aid on economic growth. Three measures of aid instability are employed. One is a simple deviation from trend, and measures overall instability. The other measures are based on auto-regressive estimates to capture deviations from an expected trend. These measures are intended to proxy for uncertainty in aid receipts. We posit that such uncertainty will influence the relationship between aid and investment and how recipient governments respond to aid, and will therefore affect how aid impacts on growth. We estimate a standard cross-country growth regression including the leveI of aid, and find aid to be insignificant (in line with other results in the literature). We then introduce measures of instability. Aid remains insignificant when we account for overall instability. However, when we account for uncertainty (which is negative and significant), we find that aid has a significant positive effect on growth. We conduct stability tests that show that the significance of aid is largely due to its effect on the volume of investment. The finding that uncertainty of aid receipts reduces the effectiveness of aid is robust. When we control for this, aid appears to have a significant positive influence on growth. When the regression is estimated for the sub-sample of African countries these findings hold, although the effectiveness of aid appears weaker than for the full sample.

Ajustamento de uma economia após uma elevação da produtividade

Employing the two sector model of capital accumulation in an open economy, the impact on the path of the following variables: exchange rate, wages, investment, saving, and consequently externaI debt and capital stock afier a permanent and non expected elevation of the economy productivity is determinated. Afier this positive shock, saving rate decreases, current transaction deteriorates and the exchange rate appreciates. Those are equilibrium phenomena from 3D intertemporaI point of view due to the permanent income raise and to the domestic good excess demand that follows the productivity increase. Assuming that the stabilization programa augment the economy productivity, the model could rationalize qualitatively the stylized facts witnessed after those programa.

The BRICS: some historical experiences, growth challenges and opportunities

The acronym BRICS was a fad among the media and global investors. Now, the acronym sounds passé. However, the group of countries remains important, from both political and economic reasons. They have a large aggregate size, 28% of the global GDP and 42% of the world’s population, high growth potential due to the current significant misallocation of resources and relatively low stock of human capital, structural transformation is in progress and one of them, China, is taking steps to become a global power and a challenger to the US dominance. This paper provides a brief overview of the five economies, Brazil, Russia, India, China and South Africa. We focus on some aspects of their history, the Chinese initiatives in international finance and geopolitical strategic moves, their growth experience and structural transformation over the last 35 years, trade and investment integration into the global economy and among themselves, the growth challenges faced by their economies and the potential gains to the Brazilian economy from a stronger integration with the other BRICS. In association with its efforts to be a global power, China aims to become a major player in global finance and to achieve the status of global currency for the renminbi, which would be the first currency of an emerging economy to attain such position. Despite the similarities, the BRICS encompass very diverse economies. In the recent decades, China and India showed stellar growth rates. On the other hand, Brazil, Russia and South Africa have expanded just in line with global output growth with the Russian economy exhibiting high volatility. China is by far the largest economy, and South Africa the smallest, the only BRICS economy with a GDP lower than US$ 1 trillion. Russia abandoned communism almost 25 years ago, but reversed many of the privatizations of 90’s. China is still ruled by communism, but has a vibrant private sector and recently has officially declared market forces to play a dominant role in its economy. Brazil, Russia and South Africa are global natural resources powerhouses and commodity exporters while China and India are large commodity importers. Brazil is relatively closed to international trade of goods and services, in marked contrast to the other four economies. Brazil, India and South Africa are dependent on external capital flows whereas China and Russia are capital exporters. India and South Africa have younger populations and a large portion living below the poverty line. Despite its extraordinary growth experience that lifted many millions from poverty, China still has 28% of its population classified as poor. Russia and China have much older populations and one of their challenges is to deal with the effects of a declining labor force in the near future. India, China and South Africa face a long way to urbanization, while Brazil and Russia are already urbanized countries. China is an industrial economy but its primary sector still absorbs a large pool of workers. India is not, but the primary sector employs also a large share of the labor force. China’s aggregate demand structure is biased towards investment that has been driving its expansion. Brazil and South Africa have an aggregate demand structure similar to the developed economies, with private consumption accounting for approximately 70%. The same similarity applies to the supply side, as in both economies the share of services nears 70%. The development problem is a productivity problem, so microeconomic reforms are badly needed to foster long-term growth of the BRICS economies since they have lost steam due a variety of factors, but fundamentally due to slower total factor productivity growth. China and India are implementing ambitious reform programs, while Brazil is dealing with macroeconomic disequilibria. Russia and South Africa remain mute about structural reforms. There are some potential benefits to Brazil to be extracted from a greater economic integration with the BRICS, particularly in natural resources intensive industries and services. Necessary conditions to the materialization of those gains are the removal of the several sources of resource misallocation and strong investment in human capital.

Mhealth entrepreneurship: an exploratory research for a managerial model for mhealth start ups in low and middle income countries

Since some years, mobile technologies in healthcare (mHealth) stand for the transformational force to improve health issues in low- and middle-income countries (LMICs). Although several studies have identified the prevailing issue of inconsistent evidence and new evaluation frameworks have been proposed, few have explored the role of entrepreneurship to create disruptive change in a traditionally conservative sector. I argue that improving the effectiveness of mHealth entrepreneurs might increase the adoption of mHealth solutions. Thus, this study aims at proposing a managerial model for the analysis of mHealth solutions from the entrepreneurial perspective in the context of LMICs. I identified the Khoja–Durrani–Scott (KDS) framework as theoretical basis for the managerial model, due to its explicit focus on the context of LMICs. In the subsequent exploratory research I, first, used semi-structured interviews with five specialists in mHealth, local healthcare systems and investment to identify necessary adaptations to the model. The findings of the interviews proposed that especially the economic theme had to be clarified and an additional entrepreneurial theme was necessary. Additionally, an evaluation questionnaire was proposed. In the second phase, I applied the questionnaire to five start-ups, operating in Brazil and Tanzania, and conducted semi-structured interviews with the entrepreneurs to gain practical insights for the theoretical development. Three of five entrepreneurs perceived that the results correlated with the entrepreneurs' expectations of the strengths and weaknesses of the start-ups. Main shortcomings of the model related to the ambiguity of some questions. In addition to the findings for the model, the results of the scores were analyzed. The analysis suggested that across the participating mHealth start-ups the ‘behavioral and socio-technical’ outcomes were the strongest and the ‘policy’ outcomes were the weakest themes. The managerial model integrates several perspectives, structured around the entrepreneur. In order to validate the model, future research may link the development of a start-up with the evolution of the scores in longitudinal case studies or large-scale tests.

5th BRICS Trade and Economic Research Network (TERN) meeting: the impact of mega agreements on BRICS

The BRICS TERN – BRICS Trade and Economics Research Network is a group of independent research institutes established four years ago by five think tanks from Brazil, Russia, India, China and South Africa. The main objective of the network is to study different aspects of trade and economic relations amongst these five countries. The purpose of the V BRICS TERN Meeting was to analyze and debate the effects of the negotiations of the Mega Agreements, mainly those initiated by the US and the EU, already in negotiation, to each of the BRICS Trade Policies. Both Mega Agreements were examined – the Trans Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP). The studies included the main impacts on trade flows and on the international trade rules system, respecting the perspective of each of the countries concerned. This workshop was an initiative of the Center for Global Trade and Investments (CGTI), a think-tank on International Trade held by FGV Sao Paulo School of Economics. Its main objective is the research on trade regulation, preferential trade agreements, trade and currency, trade and global value chains, through legal analysis and economic modelling. One of its main researches, now, is on the potential economic and legal impacts of the Mega Agreements on Brazil and WTO rules. This meeting was organized in March14, 2014, in Rio de Janeiro, in a perfect timing for introducing such issues in the international agenda, in advance of the 6th BRICS Summit scheduled to be held in Brazil in July 2014.