Nominal debt as a burden on monetary policy

We study the effects of nominal debt on the optimal sequential choice of monetary policy. When the stock of debt is nominal, the incentive to generate unanticipated inflation increases the cost of the outstanding debt even if no unanticipated inflation episodes occur in equilibrium. Without full commitment, the optimal sequential policy is to deplete the outstanding stock of debt progressively until these extra costs disappear. Nominal debt is therefore a burden on monetary policy, not only because it must be serviced, but also because it creates a time inconsistency problem that distorts interest rates. The introduction of alternative forms of taxation may lessen this burden, if there is enough commtiment to fiscal policy. If there is full commitment to an optimal fiscal policy, then the resulting monetary policy is the Friedman rule of zero nominal interest rates.

Monetary policy and unemployment

Much recent research has focused on the development and analysisof extensions of the New Keynesian framework that model labor marketfrictions and unemployment explicitly. The present paper describessome of the essential ingredients and properties of those models, andtheir implications for monetary policy.

Monetary policy and rational asset price bubbles

I examine the impact of alternative monetary policy rules on arational asset price bubble, through the lens of an overlapping generations model with nominal rigidities. A systematic increase in interestrates in response to a growing bubble is shown to enhance the fluctuations in the latter, through its positive effect on bubble growth. Theoptimal monetary policy seeks to strike a balance between stabilization of the bubble and stabilization of aggregate demand. The paper'smain findings call into question the theoretical foundations of the casefor "leaning against the wind" monetary policies.

International debt deleveraging

I provide a framework for understanding debt deleveraging in a group of financiallyintegrated countries. During an episode of international deleveraging world consumptiondemand is depressed and the world interest rate is low, reflecting a high propensity to save.If exchange rates are allowed to float, deleveraging countries can depreciate their nominalexchange rate to increase production and mitigate the fall in consumption associatedwith debt reduction. The key insight of the paper is that in a monetary union thischannel of adjustment is shut off, and therefore the falls in consumption demand and inthe world interest rate are amplified. Hence, monetary unions are especially prone tohit the zero lower bound on the nominal interest rate and enter a liquidity trap duringdeleveraging. In a liquidity trap deleveraging gives rise to a union-wide recession, which isparticularly severe in high-debt countries. The model suggests several policy interventionsthat mitigate the negative impact of deleveraging on output in monetary unions.

How Wages and Employment Adjust to Trade Liberalization: Quasi-Experimental Evidence from Austria

We study the response of regional employment and nominal wages to trade liberalization, exploiting the natural experiment provided by the opening of Central and Eastern European markets after the fall of the Iron Curtain in 1990. Using data for Austrian municipalities, we examine di¤erential pre- and post-1990 wage and employment growth rates between regions bordering the formerly communist economies and interior regions. If the 'border regions'are de...ned narrowly, within a band of less than 50 kilometers, we can identify statistically signi...cant liberalization e¤ects on both employment and wages. While wages responded earlier than employment, the employment e¤ect over the entire adjustment period is estimated to be around three times as large as the wage e¤ect. The implied slope of the regional labor supply curve can be replicated in an economic geography model that features obstacles to labor migration due to immobile housing and to heterogeneous locational preferences.

The effects of monetary policy on stock market bubbles: Some evidence

We estimate the response of stock prices to exogenous monetary policy shocks usinga vector-autoregressive model with time-varying parameters. Our evidence points toprotracted episodes in which, after a a short-run decline, stock prices increase persistently in response to an exogenous tightening of monetary policy. That responseis clearly at odds with the "conventional" view on the effects of monetary policy onbubbles, as well as with the predictions of bubbleless models. We also argue that it isunlikely that such evidence be accounted for by an endogenous response of the equitypremium to the monetary policy shocks.

Standardized enforcement: Access to justice vs. contractual innovation

We model the effect of contract standardization on the development of markets andthe law. In a setting in which biased judges can distort contract enforcement, we findthat the introduction of a standard contract reduces enforcement distortions relative toreliance on precedents, exerting two effects: i) it statically expands the volume of trade,but ii) it crowds out the use of open-ended contracts, hindering legal evolution. We shedlight on the large-scale commercial codification undertaken in the nineteenth centuryin many countries (even common-law ones) during a period of booming commerce andlong-distance trade.

The global welfare impact of China: Trade integration and technological change

This paper evaluates the global welfare impact of China's trade integration and technological change in a multi-country quantitative Ricardian-Heckscher-Ohlin model.We simulate two alternative growth scenarios: a "balanced" one in which China's productivity grows at the same rate in each sector, and an "unbalanced" one in whichChina's comparative disadvantage sectors catch up disproportionately faster to theworld productivity frontier. Contrary to a well-known conjecture (Samuelson 2004),the large majority of countries experience significantly larger welfare gains whenChina's productivity growth is biased towards its comparative disadvantage sectors.This finding is driven by the inherently multilateral nature of world trade.

Political centralization and government accountability

This paper studies fiscal federalism when regions differ in voters' ability to monitor publicofficials. We develop a model of political agency in which rent-seeking politicians providepublic goods to win support from heterogeneously informed voters. In equilibrium, voterinformation increases government accountability but displays decreasing returns. Therefore,political centralization reduces aggregate rent extraction when voter information varies acrossregions. It increases welfare as long as the central government is required to provide publicgoods uniformly across regions. The need for uniformity implies an endogenous trade off between reducing rents through centralization and matching idiosyncratic preferences throughdecentralization. We find that a federal structure with overlapping levels of government canbe optimal only if regional differences in accountability are sufficiently large. The modelpredicts that less informed regions should reap greater benefits when the central governmentsets a uniform policy. Consistent with our theory, we present empirical evidence that lessinformed states enjoyed faster declines in pollution after the 1970 Clean Air Act centralizedenvironmental policy at the federal level.

A Pragmatic Intellectual: Dutch Fabians, Boekman, and Cultural Policy in the Netherlands, 1890-1940

Around 1900, the notion of community art (gemeenschapskunst) served to crystallize Dutch social democratic thinking about the role of the arts in society. Drawing on the pragmatism of leading social democrats like Wibaut, and drawing on his formal education in economics and statistics, the self‐made social democrat Emanuel Boekman redressed the utopian meaning of community art to signify the dissemination of "good" culture over all layers of society in his influential 1939 dissertation on the relation of the state to the arts. Being about facts rather than opinions, Boekman set the boundaries of his work to exclude a substantial discussion of the meaning of "good" culture. On the one hand, this pragmatism helped Boekman to gain support for government intervention for the arts over most of the political spectrum. On the other hand, Boekman thus pre‐empted discussions about the tension between "quality" and "accessibility" of the arts that haunts cultural policy in the Netherlands to this day.

L'approche critique du néolibéralisme dans la perspective de mise en oeuvre des règles GATT/OMC pour sortir les PVD de leur dépendance économique

"Mémoire présenté à la Faculté des Études supérieures En vue de l'obtention du grade de Maîtrise en droit des affaires (LL.M.)"

Domestic policy responses to the food price crisis: The case of Bolivia

In face of the global food crisis of 2007-2008, severe concerns arose about how developing countries would be affected by the extreme short-term fluctuations in international commodity prices. We examine the effects of the crisis on Bolivia, one of the poorest countries of the Americas. We focus on the effectiveness of the domestic policy interventions in preventing spillovers of the development of international food prices to domestic markets. Using a cointegration model, we study price interdependencies of wheat flour, sunflower oil and poultry. The analysis suggests that the policy measures taken had little effect on food security during the food crisis. Throughout the entire period, perfect price transmission between the Bolivian poultry and sunflower oil markets and the respective international reference markets existed. Bolivian prices were determined by international prices and the policy interventions in the markets of these two commodities were not found to have had an effect. The government's large-scale wheat flour imports did not shield Bolivian consumers from the shocks of international prices.

Asymmetries in Business Cycles

Esta disertación busca estudiar los mecanismos de transmisión que vinculan el comportamiento de agentes y firmas con las asimetrías presentes en los ciclos económicos. Para lograr esto, se construyeron tres modelos DSGE. El en primer capítulo, el supuesto de función cuadrática simétrica de ajuste de la inversión fue removido, y el modelo canónico RBC fue reformulado suponiendo que des-invertir es más costoso que invertir una unidad de capital físico. En el segundo capítulo, la contribución más importante de esta disertación es presentada: la construcción de una función de utilidad general que anida aversión a la pérdida, aversión al riesgo y formación de hábitos, por medio de una función de transición suave. La razón para hacerlo así es el hecho de que los individuos son aversos a la pérdidad en recesiones, y son aversos al riesgo en auges. En el tercer capítulo, las asimetrías en los ciclos económicos son analizadas junto con ajuste asimétrico en precios y salarios en un contexto neokeynesiano, con el fin de encontrar una explicación teórica de la bien documentada asimetría presente en la Curva de Phillips.

Exportaciónes de China en Estados Unidos implicaciones comerciales para América Latina

Este trabajo estima el efecto en el nivel de las exportaciones realizadas por América Latina haciaEstados Unidos cuando se asumen los siguientes tres escenarios. Reducción del nivel de precios delos productos de origen chino, Apreciación del veinte por ciento del Renminbi.

Sustitución de importaciones a nivel Subregional (Colombia, Ecuador, Venezuela)

se pretende demostrar que actualmente se presenta sustitución de importaciones a nivel subregional (Colombia, Ecuador y Venezuela) en el Grupo Andino.