Financial transaction tax: Small is beautiful

The case for taxing financial transactions merely to raise more revenues from the financial sector is not particularly strong. Better alternatives to tax the financial sector are likely to be available. However, a tax on financial transactions could be justified in order to limit socially undesirable transactions when more direct means of doing so are unavailable for political or practical reasons. Some financial transactions are indeed likely to do more harm than good, especially when they contribute to the systemic risk of the financial system. However, such a financial transaction tax should be very small, much smaller than the negative externalities in question, because it is a blunt instrument that also drives out socially useful transactions. There is a case for taxing over-the-counter derivative transactions at a somewhat higher rate than exchange-based derivative transactions. More targeted remedies to drive out socially undesirable transactions should be sought in parallel, which would allow, after their implementation, to reduce or even phase out financial transaction taxes.

The political economy of sovereign debt

This dissertation examines international lending arrangements between a competitive foreign investor and a less-developed country. Given that the benefits and costs of borrowing are distributed unequally across society, it is of interest to examine the conditions under which borrowing occurs and how the borrowed funds are allocated. Three theoretical models are developed to consider optimal lending arrangements in the presence of sovereign risk. The models show how a society's level and distribution of wealth influences its access to loans and the terms of the loan agreements. Optimal loan contracts are established, which place either a debt ceiling or a debt floor on the amount of the loan that, will be offered. ^

Essays in open economy macroeconomics

Research macroeconomists have witnessed remarkable methodological developments in mathematical, statistical, and computational tools during the last two decades. The three essays in this dissertation took advantage of these advances to analyze important macroeconomic issues. ^ The first essay, “ Habit Formation, Adjustments Costs, and International Business Cycle Puzzles” analyzes the extent to which incorporating habit formation and adjustment costs in investment in a one-good two-country general equilibrium model would help overcome some of the international business cycle puzzles. Unlike standard results in the literature, the model generates persistent, cyclical adjustment paths in response to shocks. It also yields positive cross-country correlations in consumption, employment, investment, and output. Cross-country correlations in output are higher than the ones in consumption. This is qualitatively consistent with the stylized facts. These results are particularly striking given the predicted negative correlations in investment, employment, and output that are typically found in the literature. ^ The second essay, “Comparison Utility, Endogenous Time Preference, and Economic Growth,” uses World War II as a natural experiment to analyze the degree to which a model where consumers' preferences exhibit comparison-based utility and endogenous discounting is able to improve upon existing models in mimicking the transitional dynamics of an economy after a shock that destroys part of its capital stock. The model outperforms existing ones in replicating the behavior of the saving rate (both on impact and along the transient paths) after this historical event. This result brings additional support to the endogenous rate of time preference being a crucial element in growth models. ^ The last essay, “Monetary Policy under Fear of Floating: Modeling the Dominican Economy,” presents a small scale macroeconomic model for a country (Dominican Republic) characterized by a strong presence of fear of floating (reluctance to have a flexible exchange rate regime) in the conduct of monetary policy. The dynamic responses of this economy to external shocks that are of interest for monetary policy purposes are analyzed under two alternative interest rate policy rules: One being the standard Taylor rule and another that responds explicitly to deviations of the exchange rate with respect to its long-term trend. ^

Essays on political economy

The first chapter analizes conditional assistance programs. They generate conflicting relationships between international financial institutions (IFIs) and member countries. The experience of IFIs with conditionality in the 1990s led them to allow countries more latitude in the design of their reform programs. A reformist government does not need conditionality and it is useless if it does not want to reform. A government that faces opposition may use conditionality and the help of pro-reform lobbies as a lever to counteract anti-reform groups and succeed in implementing reforms.^ The second chapter analizes economies saddled with taxes and regulations. I consider an economy in which many taxes, subsidies, and other distortionary restrictions are in place simultaneously. If I start from an inefficient laissez-faire equilibrium because of some domestic distortion, a small trade tax or subsidy can yield a first-order welfare improvement, even if the instrument itself creates distortions of its own. This may result in "welfare paradoxes". The purpose of the chapter is to quantify the welfare effects of changes in tax rates in a small open economy. I conduct the simulation in the context of an intertemporal utility maximization framework. I apply numerical methods to the model developed by Karayalcin. I introduce changes in the tax rates and quantify both the impact on welfare, consumption and foreign assets, and the path to the new steady-state values.^ The third chapter studies the role of stock markets and adjustment costs in the international transmission of supply shocks. The analysis of the transmission of a positive supply shock that originates in one of the countries shows that on impact the shock leads to an inmediate stock market boom enjoying the technological advance, while the other country suffers from depress stock market prices as demand for its equity declines. A period of adjustment begins culminating in a steady state capital and output level that is identical to the one before the shock. The the capital stock of one country undergoes a non-monotonic adjustment. The model is tested with plausible values of the variables and the numeric results confirm the predictions of the theory.^

Three essays on labor liberalization and its effects on world economy

This dissertation consists of three theoretical essays on immigration, international trade and political economy. The first two essays analyze the political economy of immigration in developed countries. The third essay explores new ground on the effects of labor liberalization in developing countries. Trade economists have witnessed remarkable methodological developments in mathematical and game theoretical models during the last seventy years. This dissertation benefits from these advances to analyze economic issues related to immigration. The first essay applies a long run general equilibrium trade model similar to Krugman (1980), and blends it with the median voter ala-Mayer (1984) framework. The second essay uses a short run general equilibrium specific factor trade model similar to Jones (1975) and incorporates it with the median voter model similar to Benhabib (1997). The third essay employs a five stage game theoretical approach similar to Vogel (2007) and solves it by the method of backward induction. The first essay shows that labor liberalization is more likely to come about in societies that have more taste for varieties, and that workers and capital owners could share the same positive stance toward labor liberalization. In a dynamic model, it demonstrates that the median voter is willing to accept fewer immigrants in the first period in order to preserve her domestic political influence in the second period threatened by the naturalization of these immigrants. The second essay shows that the liberalization of labor depends on the host country's stock and distribution of capital, and the number of groups of skilled workers within each country. I demonstrate that the more types of goods both countries produce, the more liberal the host country is toward immigration. The third essay proposes a theory of free movement of goods and labor between two economies with imperfect labor contracts. The heart of my analysis lies in the determinants of talent development where individuals' decisions to emigrate are related to the fixed costs of emigration. Finally, free trade and labor affect income via an indirect effect on individuals' incentives to invest in the skill levels and a direct effect on the prices of goods.

Essays in Open Economy Macroeconomics

Research macroeconomists have witnessed remarkable methodological developments in mathematical, statistical, and computational tools during the last two decades. The three essays in this dissertation took advantage of these advances to analyze important macroeconomic issues. The first essay, “ Habit Formation, Adjustments Costs, and International Business Cycle Puzzles” analyzes the extent to which incorporating habit formation and adjustment costs in investment in a one-good two-country general equilibrium model would help overcome some of the international business cycle puzzles. Unlike standard results in the literature, the model generates persistent, cyclical adjustment paths in response to shocks. It also yields positive cross-country correlations in consumption, employment, investment, and output. Cross-country correlations in output are higher than the ones in consumption. This is qualitatively consistent with the stylized facts. These results are particularly striking given the predicted negative correlations in investment, employment, and output that are typically found in the literature. The second essay, “Comparison Utility, Endogenous Time Preference, and Economic Growth,” uses World War II as a natural experiment to analyze the degree to which a model where consumers' preferences exhibit comparison-based utility and endogenous discounting is able to improve upon existing models in mimicking the transitional dynamics of an economy after a shock that destroys part of its capital stock. The model outperforms existing ones in replicating the behavior of the saving rate (both on impact and along the transient paths) after this historical event. This result brings additional support to the endogenous rate of time preference being a crucial element in growth models. The last essay, “Monetary Policy under Fear of Floating: Modeling the Dominican Economy,” presents a small scale macroeconomic model for a country (Dominican Republic) characterized by a strong presence of fear of floating (reluctance to have a flexible exchange rate regime) in the conduct of monetary policy. The dynamic responses of this economy to external shocks that are of interest for monetary policy purposes are analyzed under two alternative interest rate policy rules: One being the standard Taylor rule and another that responds explicitly to deviations of the exchange rate with respect to its long-term trend.

Essays On Political Economy

The first chapter analizes conditional assistance programs. They generate conflicting relationships between international financial institutions (IFIs) and member countries. The experience of IFIs with conditionality in the 1990s led them to allow countries more latitude in the design of their reform programs. A reformist government does not need conditionality and it is useless if it does not want to reform. A government that faces opposition may use conditionality and the help of pro-reform lobbies as a lever to counteract anti-reform groups and succeed in implementing reforms. The second chapter analizes economies saddled with taxes and regulations. I consider an economy in which many taxes, subsidies, and other distortionary restrictions are in place simultaneously. If I start from an inefficient laissez-faire equilibrium because of some domestic distortion, a small trade tax or subsidy can yield a first-order welfare improvement, even if the instrument itself creates distortions of its own. This may result in "welfare paradoxes". The purpose of the chapter is to quantify the welfare effects of changes in tax rates in a small open economy. I conduct the simulation in the context of an intertemporal utility maximization framework. I apply numerical methods to the model developed by Karayalcin. I introduce changes in the tax rates and quantify both the impact on welfare, consumption and foreign assets, and the path to the new steady-state values. The third chapter studies the role of stock markets and adjustment costs in the international transmission of supply shocks. The analysis of the transmission of a positive supply shock that originates in one of the countries shows that on impact the shock leads to an inmediate stock market boom enjoying the technological advance, while the other country suffers from depress stock market prices as demand for its equity declines. A period of adjustment begins culminating in a steady state capital and output level that is identical to the one before the shock. The the capital stock of one country undergoes a non-monotonic adjustment. The model is tested with plausible values of the variables and the numeric results confirm the predictions of the theory.

Small-scale Fisheries and the Global Economy: Understanding Common-pool Resource Governance in the Context of Market Pressures, Neoliberal Policies, and Transnational Institutions

The purpose of this dissertation is to contribute to a better understanding of how global seafood trade interacts with the governance of small-scale fisheries (SSFs). As global seafood trade expands, SSFs have the potential to experience significant economic, social, and political benefits from participation in export markets. At the same time, market connections that place increasing pressures on resources pose risks to both the ecological and social integrity of SSFs. This dissertation seeks to explore the factors that mediate between the potential benefits and risks of global seafood markets for SSFs, with the goal of developing hypotheses regarding these relationships.

The empirical investigation consists of a series of case studies from the Yucatan Peninsula, Mexico. This is a particularly rich context in which to study global market connections with SSFs because the SSFs in this region engage in a variety of market-oriented harvests, most notably for octopus, groupers and snappers, lobster, and sea cucumber. Variation in market forms and the institutional diversity of local-level governance arrangements allows the dissertation to explore a number of examples.

The analysis is guided primarily by common-pool resource (CPR) theory because of the insights it provides regarding the conditions that facilitate collective action and the factors that promote long-lasting resource governance arrangements. Theory from institutional economics and political ecology contribute to the elaboration of a multi-faceted conceptualization of markets for CPR theory, with the aim of facilitating the identification of mechanisms through which markets and CPR governance actually interact. This dissertation conceptualizes markets as sets of institutions that structure the exchange of property rights over fisheries resources, affect the material incentives to harvest resources, and transmit ideas and values about fisheries resources and governance.

The case studies explore four different mechanisms through which markets potentially influence resource governance: 1) Markets can contribute to costly resource governance activities by offsetting costs through profits, 2) markets can undermine resource governance by generating incentives for noncompliance and lead to overharvesting resources, 3) markets can increase the costs of resource governance, for example by augmenting monitoring and enforcement burdens, and 4) markets can alter values and norms underpinning resource governance by transmitting ideas between local resource users and a variety of market actors.

Data collected using participant observation, survey, informal and structured interviews contributed to the elaboration of the following hypotheses relevant to interactions between global seafood trade and SSFs governance. 1) Roll-back neoliberalization of fisheries policies has undermined cooperatives’ ability to achieve financial success through engagement with markets and thus their potential role as key actors in resource governance (chapter two). 2) Different relations of production influence whether local governance institutions will erode or strengthen when faced with market pressures. In particular, relations of production in which fishers own their own means of production and share the collective costs of governance are more likely to strengthen resource governance while relations of production in which a single entrepreneur controls capital and access to the fishery are more likely to contribute to the erosion of resource governance institutions in the face of market pressures (chapter three). 3) By serving as a new discursive framework within which to conceive of and talk about fisheries resources, markets can influence norms and values that shape and constitute governance arrangements.

In sum, the dissertation demonstrates that global seafood trade manifests in a diversity of local forms and effects. Whether SSFs moderate risks and take advantage of benefits depends on a variety of factors, and resource users themselves have the potential to influence the outcomes of seafood market connections through local forms of collective action.

Drug prescribing patterns in the General Medical Services Scheme in Ireland and projected costs to 2026

The primary objective is to investigate the main factors contributing to GMS expenditure on pharmaceutical prescribing and projecting this expenditure to 2026. This study is located in the area of pharmacoeconomic cost containment and projections literature. The thesis has five main aims: 1. To determine the main factors contributing to GMS expenditure on pharmaceutical prescribing. 2. To develop a model to project GMS prescribing expenditure in five year intervals to 2026, using 2006 Central Statistics Office (CSO) Census data and 2007 Health Service Executive{Primary Care Reimbursement Service (HSE{PCRS) sample data. 3. To develop a model to project GMS prescribing expenditure in five year intervals to 2026, using 2012 HSE{PCRS population data, incorporating cost containment measures, and 2011 CSO Census data. 4. To investigate the impact of demographic factors and the pharmacology of drugs (Anatomical Therapeutic Chemical (ATC)) on GMS expenditure. 5. To explore the consequences of GMS policy changes on prescribing expenditure and behaviour between 2008 and 2014. The thesis is centered around three published articles and is located between the end of a booming Irish economy in 2007, a recession from 2008{2013, to the beginning of a recovery in 2014. The literature identified a number of factors influencing pharmaceutical expenditure, including population growth, population aging, changes in drug utilisation and drug therapies, age, gender and location. The literature identified the methods previously used in predictive modelling and consequently, the Monte Carlo Simulation (MCS) model was used to simulate projected expenditures to 2026. Also, the literature guided the use of Ordinary Least Squares (OLS) regression in determining demographic and pharmacology factors influencing prescribing expenditure. The study commences against a backdrop of growing GMS prescribing costs, which has risen from e250 million in 1998 to over e1 billion by 2007. Using a sample 2007 HSE{PCRS prescribing data (n=192,000) and CSO population data from 2008, (Conway et al., 2014) estimated GMS prescribing expenditure could rise to e2 billion by2026. The cogency of these findings was impacted by the global economic crisis of 2008, which resulted in a sharp contraction in the Irish economy, mounting fiscal deficits resulting in Ireland's entry to a bailout programme. The sustainability of funding community drug schemes, such as the GMS, came under the spotlight of the EU, IMF, ECB (Trioka), who set stringent targets for reducing drug costs, as conditions of the bailout programme. Cost containment measures included: the introduction of income eligibility limits for GP visit cards and medical cards for those aged 70 and over, introduction of co{payments for prescription items, reductions in wholesale mark{up and pharmacy dispensing fees. Projections for GMS expenditure were reevaluated using 2012 HSE{PCRS prescribing population data and CSO population data based on Census 2011. Taking into account both cost containment measures and revised population predictions, GMS expenditure is estimated to increase by 64%, from e1.1 billion in 2016 to e1.8 billion by 2026, (ConwayLenihan and Woods, 2015). In the final paper, a cross{sectional study was carried out on HSE{PCRS population prescribing database (n=1.63 million claimants) to investigate the impact of demographic factors, and the pharmacology of the drugs, on GMS prescribing expenditure. Those aged over 75 (ẞ = 1:195) and cardiovascular prescribing (ẞ = 1:193) were the greatest contributors to annual GMS prescribing costs. Respiratory drugs (Montelukast) recorded the highest proportion and expenditure for GMS claimants under the age of 15. Drugs prescribed for the nervous system (Escitalopram, Olanzapine and Pregabalin) were highest for those between 16 and 64 years with cardiovascular drugs (Statins) were highest for those aged over 65. Females are more expensive than males and are prescribed more items across the four ATC groups, except among children under 11, (ConwayLenihan et al., 2016). This research indicates that growth in the proportion of the elderly claimants and associated levels of cardiovascular prescribing, particularly for statins, will present difficulties for Ireland in terms of cost containment. Whilst policies aimed at cost containment (co{payment charges, generic substitution, reference pricing, adjustments to GMS eligibility) can be used to curtail expenditure, health promotional programs and educational interventions should be given equal emphasis. Also policies intended to affect physicians prescribing behaviour include guidelines, information (about price and less expensive alternatives) and feedback, and the use of budgetary restrictions could yield savings.

The Impact on Canada of the Rise of the Chinese Economy: Good, Bad or Indifferent? (Working Paper 50)

From humble beginnings less than twenty years ago, the economic relationship between Canada and the Chinese has flourished so that China is now Canada’s second most important trading partner after the United States. The Chinese demand for Canada’s exports, in particular in the natural resource sectors, has been a clear win for Canada, especially during the recent Great Recession where demand from other countries dropped sharply. But other aspects of the relationship have led to suggestions of costs. Canada’s large trade deficit with China at least looks superficially as a drag on the Canadian economy. It has been suggested the greater exposure to a low cost producer has displaced Canadian production and jobs and lowered wages. We find that each argument for costs to the relationship ignores important factors. On balance we conclude the relationship has been good for Canada, and it could be even better in the future.

Measurement of the Ocean Economy From National Income Accounts to the Sustainable Blue Economy

The widespread efforts to incorporate the economic values of oceans into national income accounts have reached a stage where coordination of national efforts is desirable. A symposium held in 2015 began this process by bringing together representatives from ten countries. The symposium concluded that a definition of core ocean industries was possible but beyond that core the definition of ocean industries is in flux. Better coordination of ocean income accounts will require addressing issues of aggregation, geography, partial ocean industries, confidential, and imputation is also needed. Beyond the standard national income accounts, a need to incorporate environmental resource and ecosystem service values to gain a complete picture of the economic role of the oceans was identified. The U.N. System of Environmental and Economic Accounts and the Experimental Ecosystem Service Accounts provide frameworks for this expansion. This will require the development of physical accounts of environmental assets linked to the economic accounts as well as the adaptation of transaction and welfare based economic valuation methods to environmental resources and ecosystem services. The future development of ocean economic data is most likely to require cooperative efforts at development of metadata standards and the use of multiple platforms of opportunity created by policy analysis, economic development, and conservation projects to both collect new economic data and to sustain ocean economy data collection into the future by building capacity in economic data collection and use..

The Political Economy of Reproduction: Motherhood, Work and the Home in Neoliberal Britain

This thesis investigates how the processes and practices of reproduction have been transformed not only by the ascendant political rationality of neoliberalism but also by women’s struggles that have reconfigured motherhood, the domestic home and the gendered organisation of employment. Through exploring both the 1970s feminist demand for “free 24- hour nurseries” and the contemporary provision of extended, overnight and flexible childcare, care that is often referred to as “24-hour childcare”, the research contributes to feminist understandings of the gendered and racialised class dynamics inside and outside the home and the wage. The research repositions the ‘Woman Question’ as, yet again unavoidable and necessary for comprehending and intervening in the brutalising consequences of capitalist accumulation. Situated within the Marxist feminist tradition, the work of reproduction is understood as a cluster of tasks, affective relations and employment that have historically been constructed and experienced as ‘women’s work’. The interrelation between the subjectivity of motherhood and the political economy of reproduction is analysed through a feminist genealogy of 24-hour childcare in Britain. Using ethnographic encounters, archival research and interview data with mothers and childcare workers, the research tells a story about the women who have worked both inside and outside the home, raised children, cooked and cleaned, and who, both historically and in the present, continue to create an immense amount of wealth and value. As women's labour market participation has steadily increased over the last 40 years, the discourse of reproduction has shifted to one in which motherhood is increasingly constructed as a choice. Within neoliberal discourse the decision to have a child is constructed as a private matter for which individuals bear the costs and responsibility. The thesis argues that, as a result of motherhood being constructed more and more as something that is chosen, the spaces of resistance and opposition towards motherhood have been limited and resistance has been individuated and privatised.

Predicting the metabolic energy costs of bipedalism using evolutionary robotics

To understand the evolution of bipedalism among the homnoids in an ecological context we need to be able to estimate theenerrgetic cost of locomotion in fossil forms. Ideally such an estimate would be based entirely on morphology since, except for the rare instances where footprints are preserved, this is hte only primary source of evidence available. In this paper we use evolutionary robotics techniques (genetic algoritms, pattern generators and mechanical modeling) to produce a biomimentic simulation of bipedalism based on human body dimensions. The mechnaical simulation is a seven-segment, two-dimensional model with motive force provided by tension generators representing the major muscle groups acting around the lower-limb joints. Metabolic energy costs are calculated from the muscel model, and bipedal gait is generated using a finite-state pattern generator whose parameters are produced using a genetic algorithm with locomotor economy (maximum distance for a fixed energy cost) as the fitness criterion. The model is validated by comparing the values it generates with those for modern humans. The result (maximum efficiency of 200 J m-1) is within 15% of the experimentally derived value, which is very encouraging and suggests that this is a useful analytic technique for investigating the locomotor behaviour of fossil forms. Initial work suggests that in the future this technique could be used to estimate other locomotor parameters such as top speed. In addition, the animations produced by this technique are qualitatively very convincing, which suggests that this may also be a useful technique for visualizing bipedal locomotion.

The introduction of a financial transaction tax in Italy

Mestrado em Finanças