Firm dynamics support the importance of the embodied question

This paper contributes to the literature on both embodied technical progress and firm dynamics, by formulating an endogenous growth model where selection and imitation play a fundamental role in helping capital good producers to learn about the productivity of technologies embodied in new plants. By calibrating the model to some key aggregates particularly relevant for the embodied capital literature, among them the growth rate of the relative investment price, the model quantitatively replicates the main facts associated to firm dynamics, such as the entry rate and the tail index of the establishment size distribution. In line with the previous literature, it also predicts a contribution to productivity growth of embodied technical progress and selection of around 60%

Trade, firm selection, and innovation: the competition channel

The availability of rich firm-level data sets has recently led researchers to uncover new evidence on the effects of trade liberalization. First, trade openness forces the least productive firms to exit the market. Secondly, it induces surviving firms to increase their innovation efforts and thirdly, it increases the degree of product market competition. In this paper we propose a model aimed at providing a coherent interpretation of these findings. We introducing firm heterogeneity into an innovation-driven growth model, where incumbent firms operating in oligopolistic industries perform cost-reducing innovations. In this framework, trade liberalization leads to higher product market competition, lower markups and higher quantity produced. These changes in markups and quantities, in turn, promote innovation and productivity growth through a direct competition effect, based on the increase in the size of the market, and a selection effect, produced by the reallocation of resources towards more productive firms. Calibrated to match US aggregate and firm-level statistics, the model predicts that a 10 percent reduction in variable trade costs reduces markups by 1:15 percent, firm surviving probabilities by 1 percent, and induces an increase in productivity growth of about 13 percent. More than 90 percent of the trade-induced growth increase can be attributed to the selection effect.

Sectoral composition and macroeconomic dynamics

We analyze the transitional dynamics of a model with heterogeneous consumption goods. In this model, convergence is driven by two different forces: the typical diminishing returns to capital and the sectoral change inducing the variation in relative prices. We show that this second force affects the growth rate if the two consumption goods are not Edgeworth independent and if these two goods are produced with technologies exhibiting different capital intensities. Because the afore mentioned dynamic sectoral change arises only under heterogeneous consumption goods, the transitional dynamics of this model exhibits striking differences with the growth model with a single consumption good. We also show that these differences in the transitional dynamics can give raise to large discrepancies in the welfare cost of shocks between the economy with a unique consumption good and the economy with multiple consumption goods.

Tax evasion, technology shocks, and the cyclicality of government revenues

This paper analyzes the behavior of the tax revenue to output ratio over the business cycle. In order to replicate the empirical evidence, we develop a simple model combining the standard Ak growth model with the tax evasion phenomenon. When individuals conceal part of their true income from the tax authority, they face the risk of being audited and hence of paying the corresponding fine. Under the empirically plausible assumptions that the intertemporal elasticity of substitution exhibits a sufficiently small value and that productivity shocks are serially correlated, we show that the elasticity of government revenue with respect to output is larger than one, which agrees with the empirical evidence. This result holds even if the tax system displays flat tax rates. We extend the previous setup to generate larger fiscal deficits when the economy experiences a recession.

The Network Company in Catalonia : ICT, Productivity, Competitiveness, Salaries and Performance in Catalonia's Companies. Research report (synthesis document)

Resum en anglès del projecte de recerca L'empresa xarxa a Catalunya. TIC, productivitat, competitivitat, salaris i beneficis a l'empresa catalana té com a objectiu principal constatar que la consolidació d'un nou model estratègic, organitzatiu i d'activitat empresarial, vinculat amb la inversió i l'ús de les TIC (o empresa xarxa), modifica substancialment els patrons de comportament dels resultats empresarials, en especial la productivitat, la competitivitat, les retribucions dels treballadors i el benefici. La contrastació empírica de les hipòtesis de treball l'hem feta per mitjà de les dades d'una enquesta a una mostra representativa de 2.038 empreses catalanes. Amb la perspectiva de l'impacte de la inversió i l'ús de les TIC no s'aprecia una relació directa entre els processos d'innovació digital i els resultats de l'activitat de l'empresa catalana. En aquest sentit, hem hagut de segmentar el teixit productiu català per a buscar les organitzacions en què el procés de coinnovació tecnològica digital i organitzativa és més present i en què la intensitat de l'ús del coneixement és un recurs molt freqüent per a poder copsar impactes rellevants en els principals resultats empresarials. Això és així perquè l'economia catalana, avui, presenta una estructura productiva dual.

Metamorphism and kinetics in the Torres del Paine contact aureole

Contact aureoles provide an excellent geologic environment to study the mechanisms of metamorphic reactions in a natural system. The Torres del Paine (TP) intrusion is one of the most spectacular natural laboratories because of its excellent outcrop conditions. It formed in a period from 12.59 to 12.43 Ma and consists of three large granite and four smaller mafic batches. The oldest granite is on top, the youngest at the bottom of the granitic complex, and the granites overly the mafic laccolith. The TP intruded at a depth of 2-3 km into regional metamorphic anchizone to greenschist facies pelites, sandstones, and conglomerates of the Cerro Toro and Punta Barrosa formations. It formed a thin contact aureole of 150-400 m width. This thesis focuses on the reaction kinetics of the mineral cordierite in the contact aureole using quantitative textural analysis methods. First cordierite was formed from chlorite break¬down (zone I, ca. 480 °C, 750 bar). The second cordierite forming reaction was the muscovite break-down, which is accompanied by a modal decrease in biotite and the appearance of k- feldspar (zone II, 540-550 °C, 750 bar). Crystal sizes of the roundish, poikiloblastic cordierites were determined from microscope thin section images by manually marking each crystal. Images were then automatically processed with Matlab. The correction for the intersection probability of each crystal radius yields the crystal size distribution in the rock. Samples from zone I below the laccolith have the largest crystals (0.09 mm). Cordierites from zone II are smaller, with a maximum crystal radius of 0.057 mm. Rocks from zone II have a larger number of small cordierite crystals than rocks from zone I. A combination of these quantitative analysis with numerical modeling of nucleation and growth, is used to infer nucleation and growth parameters which are responsible for the observed mineral textures. For this, the temperature-time paths of the samples need to be known. The thermal history is complex because the main body of the intrusion was formed by several intrusive batches. The emplacement mechanism and duration of each batch can influence the thermal structure in the aureole. A possible subdivision of batches in smaller increments, so called pulses, will focus heat at the side of the intrusion. Focusing all pulses on one side increases the contact aureole size on that side, but decreases it on the other side. It forms a strongly asymmetric contact aureole. Detailed modeling shows that the relative thicknesses of the TP contact aureole above and below the intrusion (150 and 400 m) are best explained by a rapid emplacement of at least the oldest granite batch. Nevertheless, temperatures are significantly too low in all models, compared to observed mineral assemblages in the hornfelses. Hence, an other important thermal mechanisms needs to take place in the host rock. Clastic minerals in the immature sediments outside the contact aureole are hydrated due to small amounts of expelled fluids during contact metamorphism. This leads to a temperature increase of up to 50 °C. The origin of fluids can be traced by stable isotopes. Whole rock stable isotope data (6D and δ180) and chlorine concentrations in biotite document that the TP intrusion induced only very small amounts of fluid flow. Oxygen whole rock data show δ180 values between 9.0 and 10.0 %o within the first 5 m of the contact. Values increase to 13.0 - 15.0 %o further away from the intrusion. Whole rock 6D values display a more complex zoning. First, host rock values (-90 to -70 %o) smoothly decrease towards the contact by ca. 20 %o, up to a distance of ca. 150 m. This is followed by an increase of ca. 20 %o within the innermost 150 m of the aureole (-97.0 to -78 %o at the contact). The initial decrease in 6D values is interpreted to be due to Rayleigh fractionation accompanying the dehydration reactions forming cordierite, while the final increase reflects infiltration of water-rich fluids from the intrusion. An over-estimate on the quantity and the corresponding thermal effect yields a temperature increase of less than 30 °C. This suggests that fluid flow might have contributed only for a small amount to the thermal evolution of the system. A combination of the numerical growth model with the thermal model, including the hydration reaction enthalpies but neglecting fluid flow and incremental growth, can be used to numerically reproduce the observed cordierite textures in the contact aureole. This yields kinetic parameters which indicate fast cordierite crystallization before the thermal peak in the inner aureole, and continued reaction after the thermal peak in the outermost aureole. Only small temperature dependencies of the kinetic parameters seem to be needed to explain the obtained crystal size data. - Les auréoles de contact offrent un cadre géologique privilégié pour l'étude des mécanismes de réactions métamorphiques associés à la mise en place de magmas dans la croûte terrestre. Par ses conditions d'affleurements excellentes, l'intrusion de Torres del Paine représente un site exceptionnel pour améliorer nos connaissances de ces processus. La formation de cette intrusion composée de trois injections granitiques principales et de quatre injections mafiques de volume inférieur couvre une période allant de 12.50 à 12.43 Ma. Le plus vieux granite forme la partie sommitale de l'intrusion alors que l'injection la plus jeune s'observe à la base du complexe granitique; les granites recouvrent la partie mafique du laccolite. L'intrusion du Torres del Paine s'est mise en place a 2-3 km de profondeur dans un encaissant métamorphique. Cet encaissant est caractérisé par un métamorphisme régional de faciès anchizonal à schiste vert et est composé de pélites, de grès, et des conglomérats des formations du Cerro Toro et Punta Barrosa. La mise en place des différentes injections granitiques a généré une auréole de contact de 150-400 m d'épaisseur autour de l'intrusion. Cette thèse se concentre sur la cinétique de réaction associée à la formation de la cordiérite dans les auréoles de contact en utilisant des méthodes quantitatives d'analyses de texture. On observe plusieurs générations de cordiérite dans l'auréole de contact. La première cordiérite est formée par la décomposition de la chlorite (zone I, environ 480 °C, 750 bar), alors qu'une seconde génération de cordiérite est associée à la décomposition de la muscovite, laquelle est accompagnée par une diminution modale de la teneur en biotite et l'apparition de feldspath potassique (zone II, 540-550 °C, 750 bar). Les tailles des cristaux de cordiérites arrondies et blastic ont été déterminées en utilisant des images digitalisées des lames minces et en marquant individuellement chaque cristal. Les images sont ensuite traitées automatiquement à l'aide du programme Matlab. La correction de la probabilité d'intersection en fonction du rayon des cristaux permet de déterminer la distribution de la taille des cristaux dans la roche. Les échantillons de la zone I, en dessous du lacolite, sont caractérisés par de relativement grands cristaux (0.09 mm). Les cristaux de cordiérite de la zone II sont plus petits, avec un rayon maximal de 0.057 mm. Les roches de la zone II présentent un plus grand nombre de petits cristaux de cordiérite que les roches de la zone I. Une combinaison de ces analyses quantitatives avec un modèle numérique de nucléation et croissance a été utilisée pour déduire les paramètres de nucléation et croissance contrôlant les différentes textures minérales observées. Pour développer le modèle de nucléation et de croissance, il est nécessaire de connaître le chemin température - temps des échantillons. L'histoire thermique est complexe parce que l'intrusion est produite par plusieurs injections successives. En effet, le mécanisme d'emplace¬ment et la durée de chaque injection peuvent influencer la structure thermique dans l'auréole. Une subdivision des injections en plus petits incréments, appelés puises, permet de concentrer la chaleur dans les bords de l'intrusion. Une mise en place préférentielle de ces puises sur un côté de l'intrusion modifie l'apport thermique et influence la taille de l'auréole de contact produite, auréole qui devient asymétrique. Dans le cas de la première injection de granite, une modélisation détaillée montre que l'épaisseur relative de l'auréole de contact de Torres del Paine au-dessus et en dessous de l'intrusion (150 et 400 m) est mieux expliquée par un emplacement rapide du granite. Néanmoins, les températures calculées dans l'auréole de con¬tact sont trop basses pour que les modèles thermiques soient cohérants par rapport à la taille de cette auréole. Ainsi, un autre mecanisme exothermique est nécessaire pour permettre à la roche encais¬sante de produire les assemblages observés. L'observation des roches encaissantes entourant les granites montre que les minéraux clastiques dans les sédiments immatures au-dehors de l'auréole sont hydratés suite à la petite quantité de fluide expulsée durant le métamorphisme de contact et/ou la mise en place des granites. Les réactions d'hydratation peuvent permettre une augmentation de la température jusqu'à 50 °C. Afin de déterminer l'origine des fluides, une étude isotopique de roches de l'auréole de contact a été entreprise. Les isotopes stables d'oxygène et d'hydrogène sur la roche totale ainsi que la concentration en chlore dans la biotite indiquent que la mise en place des granites du Torres del Paine n'induit qu'une circulation de fluide limitée. Les données d'oxygène sur roche totale montrent des valeurs δ180 entre 9.0 et 10.0%o au sein des cinq premiers mètres du contact. Les valeurs augmentent jusqu'à 13.0 - 15.0 plus on s'éloigne de l'intrusion. Les valeurs 5D sur roche totale montrent une zonation plus complexe. Les valeurs de la roche encaissante (-90 à -70%o) diminuent progressivement d'environ 20%o depuis l'extérieur de l'auréole jusqu'à une distance d'environ 150 m du granite. Cette diminution est suivie par une augmentation d'environ 20%o au sein des 150 mètres les plus proches du contact (-97.0 à -78%o au contact). La diminution initiale des valeurs de 6D est interprétée comme la conséquence du fractionnement de Rayleigh qui accompagne les réactions de déshydratation formant la cordiérite, alors que l'augmentation finale reflète l'infiltration de fluide riche en eau venant de l'intrusion. A partir de ces résultats, le volume du fluide issu du granite ainsi que son effet thermique a pu être estimé. Ces résultats montrent que l'augmentation de température associée à ces fluides est limitée à un maximum de 30 °C. La contribution de ces fluides dans le bilan thermique est donc faible. Ces différents résultats nous ont permis de créer un modèle thermique associé à la for¬mation de l'auréole de contact qui intègre la mise en place rapide du granite et les réactions d'hydratation lors du métamorphisme. L'intégration de ce modèle thermique dans le modèle numérique de croissance minérale nous permet de calculer les textures des cordiérites. Cepen¬dant, ce modèle est dépendant de la vitesse de croissance et de nucléation de ces cordiérites. Nous avons obtenu ces paramètres en comparant les textures prédites par le modèle et les textures observées dans les roches de l'auréole de contact du Torres del Paine. Les paramètres cinétiques extraits du modèle optimisé indiquent une cristallisation rapide de la cordiérite avant le pic thermique dans la partie interne de l'auréole, et une réaction continue après le pic thermique dans la partie la plus externe de l'auréole. Seules de petites dépendances de température des paramètres de cinétique semblent être nécessaires pour expliquer les don¬nées obtenues sur la distribution des tailles de cristaux. Ces résultats apportent un éclairage nouveau sur la cinétique qui contrôle les réactions métamorphiques.

The Labor Market Effects of Technology Shocks

We analyze the labor market effects of neutral and investment-specific technology shocks along the intensive margin (hours worked) and the extensive margin (unemployment). We characterize the dynamic response of unemployment in terms of the job separation and the job finding rate. Labor market adjustments occur along the extensive margin in response to neutral shocks, along the intensive margin in response to investment specific shocks. The job separation rate accounts for a major portion of the impact response of unemployment. Neutral shocks prompt a contemporaneous increase in unemployment because of a sharp rise in the separation rate. This is prolonged by a persistent fall in the job finding rate. Investment specific shocks rise employment and hours worked. Neutral shocks explain a substantial portion of the volatility of unemployment and output; investment specific shocks mainly explain hours worked volatility. This suggests that neutral progress is consistent with Schumpeterian creative destruction, while investment-specific progress operates as in a neoclassical growth model.

Nonlinear models and small sample performance of the generalized method of moments

In this paper I explore the issue of nonlinearity (both in the datageneration process and in the functional form that establishes therelationship between the parameters and the data) regarding the poorperformance of the Generalized Method of Moments (GMM) in small samples.To this purpose I build a sequence of models starting with a simple linearmodel and enlarging it progressively until I approximate a standard (nonlinear)neoclassical growth model. I then use simulation techniques to find the smallsample distribution of the GMM estimators in each of the models.

Falling real wages during an industrial revolution

The Industrial Revolution was characterized by technologicalprogress and an increasing capital intensity. Why did real wages stagnateor fall in the beginning? I answer this question by modeling the IndustrialRevolution as the introduction of a relatively more capital intensiveproduction method in a standard neoclassical framework. I show that{\sl real wages fall in the beginning of an industrial revolution if andonly if technological progress in the relatively more capital intensivesector is relatively fast.}

International capital flows and credit market imperfections: A tale of two frictions

The financial crisis of 2007-08 has underscored the importance of adverse selection in financialmarkets. This friction has been mostly neglected by macroeconomic models of financialimperfections, however, which have focused almost exclusively on the effects of limited pledgeability.In this paper, we fill this gap by developing a standard growth model with adverseselection. Our main results are that, by fostering unproductive investment, adverse selection:(i) leads to an increase in the economy s equilibrium interest rate, and; (ii) it generates a negativewedge between the marginal return to investment and the equilibrium interest rate. Underfinancial integration, we show how this translates into excessive capital inflows and endogenouscycles. We also extend our model to the more general case in which adverse selection and limitedpledgeability coexist. We conclude that both frictions complement one another and show thatlimited pledgeability exacerbates the effects of adverse selection.

Tax reforms and inequality: theoretical and empirical implications

In this paper we examine the effect of tax policy on the relationship between inequality and growth in a two-sector non-scale model. With non-scale models, the longrun equilibrium growth rate is determined by technological parameters and it is independent of macroeconomic policy instruments. However, this fact does not imply that fiscal policy is unimportant for long-run economic performance. It indeed has important effects on the different levels of key economic variables such as per capita stock of capital and output. Hence, although the economy grows at the same rate across steady states, the bases for economic growth may be different.The model has three essential features. First, we explicitly model skill accumulation, second, we introduce government finance into the production function, and we introduce an income tax to mirror the fiscal events of the 1980¿s and 1990¿s in the US. The fact that the non-scale model is associated with higher order dynamics enables it to replicate the distinctly non-linear nature of inequality in the US with relative ease. The results derived in this paper attract attention to the fact that the non-scale growth model does not only fit the US data well for the long-run (Jones, 1995b) but also that it possesses unique abilities in explaining short term fluctuations of the economy. It is shown that during transition the response of the relative simulated wage to changes in the tax code is rather non-monotonic, quite in accordance to the US inequality pattern in the 1980¿s and early 1990¿s.More specifically, we have analyzed in detail the dynamics following the simulation of an isolated tax decrease and an isolated tax increase. So, after a tax decrease the skill premium follows a lower trajectory than the one it would follow without a tax decrease. Hence we are able to reduce inequality for several periods after the fiscal shock. On the contrary, following a tax increase, the evolution of the skill premium remains above the trajectory carried on by the skill premium under a situation with no tax increase. Consequently, a tax increase would imply a higher level of inequality in the economy

Technological Change and Immigration

We develop a simple model where two technologies are available to produce the same good, and we study under what conditions both will be used. We use the model to analyze the consequences of the simultaneous use of two different technologies for the economic variables and economic growth. Finally, we explore how migrations of factors affect the technological change and the performance of the economy.

Tax reforms and inequality: theoretical and empirical implications

In this paper we examine the effect of tax policy on the relationship between inequality and growth in a two-sector non-scale model. With non-scale models, the longrun equilibrium growth rate is determined by technological parameters and it is independent of macroeconomic policy instruments. However, this fact does not imply that fiscal policy is unimportant for long-run economic performance. It indeed has important effects on the different levels of key economic variables such as per capita stock of capital and output. Hence, although the economy grows at the same rate across steady states, the bases for economic growth may be different.The model has three essential features. First, we explicitly model skill accumulation, second, we introduce government finance into the production function, and we introduce an income tax to mirror the fiscal events of the 1980¿s and 1990¿s in the US. The fact that the non-scale model is associated with higher order dynamics enables it to replicate the distinctly non-linear nature of inequality in the US with relative ease. The results derived in this paper attract attention to the fact that the non-scale growth model does not only fit the US data well for the long-run (Jones, 1995b) but also that it possesses unique abilities in explaining short term fluctuations of the economy. It is shown that during transition the response of the relative simulated wage to changes in the tax code is rather non-monotonic, quite in accordance to the US inequality pattern in the 1980¿s and early 1990¿s.More specifically, we have analyzed in detail the dynamics following the simulation of an isolated tax decrease and an isolated tax increase. So, after a tax decrease the skill premium follows a lower trajectory than the one it would follow without a tax decrease. Hence we are able to reduce inequality for several periods after the fiscal shock. On the contrary, following a tax increase, the evolution of the skill premium remains above the trajectory carried on by the skill premium under a situation with no tax increase. Consequently, a tax increase would imply a higher level of inequality in the economy

Technological Change and Immigration

We develop a simple model where two technologies are available to produce the same good, and we study under what conditions both will be used. We use the model to analyze the consequences of the simultaneous use of two different technologies for the economic variables and economic growth. Finally, we explore how migrations of factors affect the technological change and the performance of the economy.

The Network Company in Catalonia : ICT, Productivity, Competitiveness, Salaries and Performance in Catalonia's Companies. Research report (synthesis document)

Resum en anglès del projecte de recerca L'empresa xarxa a Catalunya. TIC, productivitat, competitivitat, salaris i beneficis a l'empresa catalana té com a objectiu principal constatar que la consolidació d'un nou model estratègic, organitzatiu i d'activitat empresarial, vinculat amb la inversió i l'ús de les TIC (o empresa xarxa), modifica substancialment els patrons de comportament dels resultats empresarials, en especial la productivitat, la competitivitat, les retribucions dels treballadors i el benefici. La contrastació empírica de les hipòtesis de treball l'hem feta per mitjà de les dades d'una enquesta a una mostra representativa de 2.038 empreses catalanes. Amb la perspectiva de l'impacte de la inversió i l'ús de les TIC no s'aprecia una relació directa entre els processos d'innovació digital i els resultats de l'activitat de l'empresa catalana. En aquest sentit, hem hagut de segmentar el teixit productiu català per a buscar les organitzacions en què el procés de coinnovació tecnològica digital i organitzativa és més present i en què la intensitat de l'ús del coneixement és un recurs molt freqüent per a poder copsar impactes rellevants en els principals resultats empresarials. Això és així perquè l'economia catalana, avui, presenta una estructura productiva dual.