Competitive equilibrium hyperinflation under rational expectations

This paper shows that a competitive equilibrium model, where a representative agent maximizes welfare, expectations are rational and markets are in equilibrium can account for several hyperinflation stylized facts. The theory is built by combining two hypotheses, namely, a fiscal crisis that requires printing money to finance an increasing public deficit and a predicted change in an unsustainable fiscal regime.

A comment on "Rational learning lead to nash equilibrium" by professors Ehud Kalai and Ehud Lehrer

Kalai and Lebrer (93a, b) have recently show that for the case of infinitely repeated games, a coordination assumption on beliefs and optimal strategies ensures convergence to Nash equilibrium. In this paper, we show that for the case of repeated games with long (but finite) horizon, their condition does not imply approximate Nash equilibrium play. Recently Kalai and Lehrer (93a, b) proved that a coordination assumption on beliefs and optimal strategies, ensures that pIayers of an infinitely repeated game eventually pIay 'E-close" to an E-Nash equilibrium. Their coordination assumption requires that if players believes that certain set of outcomes have positive probability then it must be the case that this set of outcomes have, in fact, positive probability. This coordination assumption is called absolute continuity. For the case of finitely repeated games, the absolute continuity assumption is a quite innocuous assumption that just ensures that pIayers' can revise their priors by Bayes' Law. However, for the case of infinitely repeated games, the absolute continuity assumption is a stronger requirement because it also refers to events that can never be observed in finite time.

Decision making naturalized: the interweaving of the unconscious, the emotional and the rational in decisions taken in a contigent world

Dadas as limitações e inadequações presentes, tanto no arquétipo do tomador de decisão como um agente racional, adotado nas teorias econômicas e gerenciais, quanto no estereótipo de um ser transcendental, tão presente na vida prosaica, se faz necessário substituí-los por uma nova perspectiva: onde o tomador de decisão é um animal emocional, frágil diante do acaso, e fruto de um processo evolutivo.

Rational expectations and the service of public debt: a recursive approach

This paper uses dynamic programming to study the time consistency of optimal macroeconomic policy in economies with recurring public deficits. To this end, a general equilibrium recursive model introduced in Chang (1998) is extended to include govemment bonds and production. The original mode! presents a Sidrauski economy with money and transfers only, implying that the need for govemment fmancing through the inflation tax is minimal. The extended model introduces govemment expenditures and a deficit-financing scheme, analyzing the SargentWallace (1981) problem: recurring deficits may lead the govemment to default on part of its public debt through inflation. The methodology allows for the computation of the set of alI sustainable stabilization plans even when the govemment cannot pre-commit to an optimal inflation path. This is done through value function iterations, which can be done on a computeI. The parameters of the extended model are calibrated with Brazilian data, using as case study three Brazilian stabilization attempts: the Cruzado (1986), Collor (1990) and the Real (1994) plans. The calibration of the parameters of the extended model is straightforward, but its numerical solution proves unfeasible due to a dimensionality problem in the algorithm arising from limitations of available computer technology. However, a numerical solution using the original algorithm and some calibrated parameters is obtained. Results indicate that in the absence of govemment bonds or production only the Real Plan is sustainable in the long run. The numerical solution of the extended algorithm is left for future research.

H-infinity control design for time-delay linear systems: a rational transfer function based approach

Fundação de Amparo à Pesquisa do Estado de São Paulo (FAPESP)

As zonas de processamento de exportação como instrumento de desenvolvimento e redução das desigualdades regionais

The existence of inequalities among the Brazilian regions is an indeed fact along the country s history. Before this reality the constitutional legislator inserted into the Federal Constitution of 1988, as a purpose of the Federative Republic of Brazil, the reduction of regional inequalities. The development has also been included as a purpose from the State, because there is an straight relation with the reduction of regional inequalities. In both situations is searched the improvement of people s living conditions. . In pursuit of this achievement, the State must implement public policy, and, for this to happen, it needs the ingress of income inside of the public coffers and support of economic agents, therefore the importance of constitucionalization of the economic policy. The 1988 s Constitution adopted a rational capitalism regime consentaneous with current legal and social conceptions, that s why it enabled the State s intervention into economy to correct the so-called market failures or to make the established objectives fulfilled. About this last one, the intervention may happen by induction through the adoption of regulatory Standards of incentive or disincentive of economic activity. Among the possible inductive ways there are the tax assessments that aim to stimulate the economic agents behavior in view of finding that the development doesn t occur with the same intensity in all of the country s regions. Inside this context there are the Export Processing Zones (EPZs) which are special areas with different customs regime by the granting of benefits to the companies that are installed there. The EPZs have been used, by several countries, in order to develop certain regions, and economic indicators show that they promoted economic and social changes in the places where they are installed, especially because, by attracting companies, they provide job creation, industrialization and increased exports. In Brazil, they can contribute decisively to overcome major obstacles or decrease the attraction of economic agents and economic development of the country. In the case of an instrument known to be effective to achieve the goals established by the Constitution, it is duty of the Executive to push for the law that governs this customs regime is effectively applied. If the Executive doesn t fulfill this duty, incurs into unjustifiable omission, correction likely by the Judiciary, whose mission is to prevent acts or omissions contrary to constitutional order