The structural approach of a natrex model on equilibrium exchange rates

Following a general macroeconomic approach, this paper sets a closed micro-founded structural model to determine the long run real exchange rate of a developed economy. In particular, the analysis follows the structure of a Natrex model. The main contribution of this research paper is the development of a solid theoretical framework that analyse in depth the basis of the real exchange rate and the details of the equilibrium dynamics after any shock influencing the steady state. In our case, the intertemporal factors derived from the stock-flow relationship will be particularly determinant. The main results of the paper can be summarised as follows. In first place, a complete well-integrated structural model for long-run real exchange rate determination is developed from first principles. Moreover, within the concrete dynamics of the model, it is found that some convergence restrictions will be necessary. On one hand, for the medium run convergence the sensitivity of the trade balance to changes in real exchange rate should be higher that the correspondent one to the investment decisions. On the other hand, and regarding long-run convergence, it is also necessary both that there exists a negative relationship between investment and capital stock accumulation and that the global saving of the economy depends positively on net foreign debt accumulation. In addition, there are also interesting conclusions about the effects that certain shocks over the exogenous variables of the model have on real exchange rates.

Can competition in the credit market be excessive?

We study how market power affects investment and welfare when banks choose between restricting loan sizes and monitoring, in order to alleviate an underlying moral hazard problem. The impact of market power on aggregate welfare is the result of two countervailing effects. An increase in banks' market power results in: (i) higher lending rates, which worsens the borrower's incentive problem and reduces investment by unmonitored firms, (ii) higher monitoring effort, which reduces the proportion of credit-constrained firms. Whenever the second effect dominates, it is optimal to provide banks with some degree of market power.

On the relation between tax rates and evasion in a multi-period economy

We extend the basic tax evasion model to a multi-period economy exhibiting sustained growth. 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. Both taxes and fines determine individual saving and the rate of capital accumulation. In this context we show that the sign of the relation between the level of the tax rate and the amount of evaded income is the same as that obtained in static setups. Moreover, high tax rates on income are typically associated with low growth rates as occurs in standard growth models that disregard the tax evasion phenomenon.

Real equilibrium exchange rates. A panel data approach for advanced and emerging economies.

Based on an behavioral equilibrium exchange rate model, this paper examines the determinants of the real effective exchange rate and evaluates the degree of misalignment of a group of currencies since 1980. Within a panel cointegration setting, we estimate the relationship between exchange rate and a set of economic fundamentals, such as traded-nontraded productivity differentials and the stock of foreign assets. Having ascertained the variables are integrated and cointegrated, the long-run equilibrium value of the fundamentals are estimated and used to derive equilibrium exchange rates and misalignments. Although there is statistical homogeneity, some structural differences were found to exist between advanced and emerging economies.

Factors influencing the development of Plasmodium gallinaceum in Aedes fluviatilis

Aedes fluviatilis is susceptible to infection by Plasmodium gallinaceum and is a convenient insect host for the malaria parasite in countries where Aedees aegypti cannot be maintained in laboratories. In South America, for instance, the rearing of A. aegypti the main vector of urban yellow fever, is not advaisable because of the potential health hazard it represents. Our results of the comparative studies carried out between the sporogonic cycle produced with two lines of P. gallinaceum parasites into A. fuviatilis were as follows. As proved for A. aegypti, mosquito infection rates were variable when A. fluviatilis blood-fed on chicks infected with and old syringe-passaged strain of P. gallinaceum. Oocysts developed in 41% of those mosquitos and the mean peak of oocyst production was 56 per stomach. Salivary gland infections developed in about 6% of the mosquitos. The course of sporogony was unrelated to the size of the inoculum administered to chicks or to the route by which the birds were infected. The development of infected salivary glands was unrelated to oocyst production. Sporogony of P. gallinaceum was more uniform when mosquitos blood-fed on chicks infected with a sporozoite-passaged strain. Oocysts developed in about 50% of those mosquitoes and the mean peak of oocyst production was 138 per stomach, with some individuals having as many as 600-800 oocysts. Infected salivary glands developed in a mean of 27% of the mosquitos but, in some batches, was a high as 50%. Patterns of salivary gland parasitism were similar to those of oocyst production. The course of sporogony of P. gallinaceum in A. fluviatilis is analized in relation to degree of parasitemia and gametocytemia in the vertebrate host.

Business-science research collaboration under moral hazard

I analyze, in the context of business and science research collaboration, how the characteristics of partnership agreements are the result of an optimal contract between partners. The final outcome depends on the structure governing the partnership, and on the informational problems towards the efforts involved. The positive effect that the effort of each party has on the success of the other party, makes collaboration a preferred solution. Divergence in research goals may, however, create conflicts between partners. This paper shows how two different structures of partnership governance (a centralized, and a decentralized ones) may optimally use the type of project to motivate the supply of non-contractible efforts. Decentralized structure, however, always choose a project closer to its own preferences. Incentives may also come from monetary transfers, either from partners sharing each other benefits, or from public funds. I derive conditions under which public interventio

Deconstructing Shocks and Persistence in OECD Real Exchange Rates

This paper analyzes the persistence of shocks that affect the real exchange rates for a panel of seventeen OECD developed countries during the post-Bretton Woods era. The adoption of a panel data framework allows us to distinguish two different sources of shocks, i.e. the idiosyncratic and the common shocks, each of which may have di¤erent persistence patterns on the real exchange rates. We first investigate the stochastic properties of the panel data set using panel stationarity tests that simultaneously consider both the presence of cross-section dependence and multiple structural breaks that have not received much attention in previous persistence analyses. Empirical results indicate that real exchange rates are non-stationary when the analysis does not account for structural breaks, although this conclusion is reversed when they are modeled. Consequently, misspecification errors due to the non-consideration of structural breaks leads to upward biased shocks' persistence measures. The persistence measures for the idiosyncratic and common shocks have been estimated in this paper always turn out to be less than one year.

Safety and occlusion rates of surgical treatment of unruptured intracranial aneurysms: a systematic review and meta-analysis of the literature from 1990 to 2011.

BACKGROUND AND PURPOSE: Surgical clipping of unruptured intracranial aneurysms (UIAs) has recently been challenged by the emergence of endovascular treatment. We performed an updated systematic review and meta-analysis on the surgical treatment of UIAs, in an attempt to determine the aneurysm occlusion rates and safety of surgery in the modern era. METHODS: A detailed protocol was developed prior to conducting the review according to the Cochrane Collaboration guidelines. Electronic databases spanning January 1990-April 2011 were searched, complemented by hand searching. Heterogeneity was assessed using I(2), and publication bias with funnel plots. Surgical mortality and morbidity were analysed with weighted random effect models. RESULTS: 60 studies with 9845 patients harbouring 10 845 aneurysms were included. Mortality occurred in 157 patients (1.7%; 99% CI 0.9% to 3.0%; I(2)=82%). Unfavourable outcomes, including death, occurred in 692 patients (6.7%; 99% CI 4.9% to 9.0%; I(2)=85%). Morbidity rates were significantly greater in higher quality studies, and with large or posterior circulation aneurysms. Reported morbidity rates decreased over time. Studies were generally of poor quality; funnel plots showed heterogeneous results and publication bias, and data on aneurysm occlusion rates were scant. CONCLUSIONS: In studies published between 1990 and 2011, clipping of UIAs was associated with 1.7% mortality and 6.7% overall morbidity. The reputed durability of clipping has not been rigorously documented. Due to the quality of the included studies, the available literature cannot properly guide clinical decisions.

Rare chromosome abnormalities, prevalence and prenatal diagnosis rates from population-based congenital anomaly registers in Europe.

The aim of this study is to quantify the prevalence and types of rare chromosome abnormalities (RCAs) in Europe for 2000-2006 inclusive, and to describe prenatal diagnosis rates and pregnancy outcome. Data held by the European Surveillance of Congenital Anomalies database were analysed on all the cases from 16 population-based registries in 11 European countries diagnosed prenatally or before 1 year of age, and delivered between 2000 and 2006. Cases were all unbalanced chromosome abnormalities and included live births, fetal deaths from 20 weeks gestation and terminations of pregnancy for fetal anomaly. There were 10,323 cases with a chromosome abnormality, giving a total birth prevalence rate of 43.8/10,000 births. Of these, 7335 cases had trisomy 21,18 or 13, giving individual prevalence rates of 23.0, 5.9 and 2.3/10,000 births, respectively (53, 13 and 5% of all reported chromosome errors, respectively). In all, 473 cases (5%) had a sex chromosome trisomy, and 778 (8%) had 45,X, giving prevalence rates of 2.0 and 3.3/10,000 births, respectively. There were 1,737 RCA cases (17%), giving a prevalence of 7.4/10,000 births. These included triploidy, other trisomies, marker chromosomes, unbalanced translocations, deletions and duplications. There was a wide variation between the registers in both the overall prenatal diagnosis rate of RCA, an average of 65% (range 5-92%) and the prevalence of RCA (range 2.4-12.9/10,000 births). In all, 49% were liveborn. The data provide the prevalence of families currently requiring specialised genetic counselling services in the perinatal period for these conditions and, for some, long-term care.

On the Relationship between Market Power and Bank Risk Taking

We analyse risk-taking behaviour of banks in the context of spatial competition. Banks mobilise unsecured deposits by offering deposit rates, which they invest either in a prudent or a gambling asset. Limited liability along with high return of a successful gamble induce moral hazard at the bank level. We show that when the market power is low, banks invest in the gambling asset. On the other hand, for sufficiently high levels of market power, all banks choose the prudent asset to invest in. We further show that a merger of two neighboring banks increases the likelihood of prudent behaviour. Finally, introduction of a deposit insurance scheme exacerbates banks’ moral hazard problem.

Are two tax rates better than one?

Abstract: Should two–band income taxes be progressive given a general income distribution? We provide a negative answer under utilitarian and max-min welfare functions. While this result clarifies some ambiguities in the literature, it does not rule out progressive taxes in general. If we maximize total or weighted utility of the poor, as often intended by the society, progressive taxes can be justified, especially when the ‘rich’ are very rich. Under these objectives we obtain new necessary conditions for progressive taxes, which only depend on aggregate features of income distributions. The validity of these conditions is examined using plausible income distributions.

A Bootstrap Neural Network Based Heterogeneous Panel Unit Root Test: Application to Exchange Rates

This paper proposes a bootstrap artificial neural network based panel unit root test in a dynamic heterogeneous panel context. An application to a panel of bilateral real exchange rate series with the US Dollar from the 20 major OECD countries is provided to investigate the Purchase Power Parity (PPP). The combination of neural network and bootstrapping significantly changes the findings of the economic study in favour of PPP.

Nominal Interest Rates and Stationarity

This paper investigates the (break) stationarity null hypothesis using data for 25 interest rates with different maturities and risk characteristics in Canada and the US. In contrast to a large part of the literature, this paper reports strong empirical evidence in favour of the null hypothesis of stationarity for the interest rate series.