A-1 Monthly Public Assistance Statistical Report Family Investment Program, November 2007

A-1 - Monthly Public Assistance Statistical Report Family Investment Program - Nov 2007

Economic growth and investment in the Arab world

This paper analyses the economic growth performance in the Arab world overthe last forty years. The Arab world has managed to reduce povertyperformance despite its relatively disappointing growth performance. Werelate this poor performance of both oil and non-oil producers toinvestment. Contrary to widespread belief, we do not find evidence that lowquantity of investment is the main of low growth. The decline in theinvestment rate followed rather than preceded the reduction in the aggregategrowth rate. We conclude that the low quality of investment projects is thekey determinant of growth. The excessive reliance on public investment, thelow quality of financial institutions, the bad business environment (due topolitical and social instability and to excessive public intervention andoverregulation) and the low quality of human capital are importantdeterminants of systematically unproductive investment decisions and, thus,low economic growth.

Iowa Department of Transportation report on funds received from the Rebuild Iowa Infrastructure Fund, the State Recreational Trails Fund, the Health Restricted Capitals and the Rail Revolving Loan and Grant Program in fiscal year 2007

House file 2782 (2007 Infrastructure Appropriations Act) requires state agencies that receive appropriations from specific funds to report that information. The Iowa Department of Transportation received funds from the Rebuild Iowa Infrastructure Fund, the State Recreational Trails Fund, the Health Restricted Capitals, and the Rail Revolving Loan and Grant Program in FY 2007. These are the status reports for those funds and the status of the FY2006 funds received from the State Recreational Trails Fund, the Rebuild Iowa Infrastructure Fund and the Tobacco Settlement Trust Fund.

FY 2007 Biodiesel Fuel Revolving Fund Expenditures Report

The Seventy-ninth General Assembly of the State of Iowa, 2001 Regular Session, passed Senate File 465 which was signed by the Governor on April 19, 2001. This act created the biodiesel fuel revolving fund (Fund) to be used to purchase biodiesel fuel for use in the Department of Transportation's (DOT) vehicles. The act directed that the Fund receive money from the sale of EPA credits banked by the DOT on the effective date of the act, moneys appropriated by the General Assembly, and any other moneys obtained or accepted by the DOT for deposit in the Fund. The act also directed the DOT to submit an annual report not later than January 31 of the expenditures made from the Fund during the preceding fiscal year. This is the sixth annual report under the act. In FY 2007, the DOT purchased from the Fund 14,958 gallons of neat soy oil for $31,615, or an average of $2.11 per gallon. This yielded 74,791 gallons of B 20, which is 20 percent biodiesel by volume. Since the beginning of FY 2008, the Fund has received deposits totaling $59,000 which are being used for continued biodiesel purchases.

Financial intermediation and equity investment with costly monitoring

This paper studies the efficiency of equilibria in a productive OLG economy where the process of financial intermediation is characterized by costly state verification. Both competitive equilibria and Constrained Pareto Optimal allocations are characterized. It is shown that market outcomes can be socially inefficient, even when a weaker notion than Pareto optimality is considered.

Is lumpy investment really irrelevant for the business cycle?

New-Keynesian (NK) models can only account for the dynamic effects of monetary policy shocks if it is assumed that aggregate capital accumulation is much smoother than it would be the case under frictionless firm-level investment, as discussed in Woodford (2003, Ch. 5). We find that lumpy investment, when combined with price stickiness and market power of firms,can rationalize this assumption. Our main result is in stark contrast with the conclusions obtained by Thomas (2002) in the context of a real business cycle (RBC) model. We use our model to explain the economic mechanism behind this difference in the predictions of RBC and NK theory.

Short-term investment and equilibrium multiplicity

I study the effects of the heterogeneity of traders'horizon in the context of a 2-period NREE model whereall traders are risk averse. Owing to inventory effects,myopic trading behavior generates multiplicity ofequilibria. In particular, two distinct patterns arise.Along the first equilibrium, short term tradersanticipate higher second period price reaction toinformation arrival and, owing to risk aversion,scale back their trading intensity. This, in turn,reduces both risk sharing and information impoundinginto prices enforcing a high returns' volatility-lowprice informativeness equilibrium. In the second one,the opposite happens and a low volatility-high priceinformativeness equilibrium arises.

Does foreign direct investment crowd out domestic entrepreneurship?

In analyzing firm entry and exit across Belgian manufacturing industries,this paper presents evidence that import competition and foreign directinvestment discourage entry and stimulate exit of domestic entrepreneurs.These results are in line with theoretical occupational choice modelsthat predict foreign direct investment would crowd out domesticentrepreneurs through their selections in product and labor markets.However, the empirical results also suggest that this crowding out effectmay be moderated or even reversed in the long-run due to the long termpositive effects of FDI on domestic entrpreneurship as a result oflearning, demonstration, networking and linkage effects between foreignand domestic firms.

A-1 Monthly Public Assistance Statistical Report Family Investment Program, January 2008

A-1 - Monthly Public Assistance Statistical Report Family Investment Program

A-1 Monthly Public Assistance Statistical Report Family Investment Program, Februray 2008

A-1 - Monthly Public Assistance Statistical Report Family Investment Program

A-1 Monthly Public Assistance Statistical Report Family Investment Program, March 2008

A-1 - Monthly Public Assistance Statistical Report Family Investment Program

Financing constraints, irreversibility and investment dynamics

We develop a model of an industry with many heterogeneous firms that face both financingconstraints and irreversibility constraints. The financing constraint implies that firmscannot borrow unless the debt is secured by collateral; the irreversibility constraint thatthey can only sell their fixed capital by selling their business. We use this model to examinethe cyclical behavior of aggregate fixed investment, variable capital investment, and outputin the presence of persistent idiosyncratic and aggregate shocks. Our model yields threemain results. First, the effect of the irreversibility constraint on fixed capital investmentis reinforced by the financing constraint. Second, the effect of the financing constraint onvariable capital investment is reinforced by the irreversibility constraint. Finally, the interactionbetween the two constraints is key for explaining why input inventories and materialdeliveries of US manufacturing firms are so volatile and procyclical, and also why they arehighly asymmetrical over the business cycle.

Testing financing constraints on firm investment using variable capital

We consider a dynamic multifactor model of investment with financing imperfections,adjustment costs and fixed and variable capital. We use the model to derive a test offinancing constraints based on a reduced form variable capital equation. Simulation resultsshow that this test correctly identifies financially constrained firms even when the estimationof firms investment opportunities is very noisy. In addition, the test is well specified inthe presence of both concave and convex adjustment costs of fixed capital. We confirmempirically the validity of this test on a sample of small Italian manufacturing companies.

Firm-specific investment, sticky prices and the Taylor principle

According to the Taylor principle a central bank should adjust the nominal interest rate by more than one-for-one in response to changes in current inflation. Most of the existing literature supports the view that by following this simple recommendation a central bank can avoid being a source of unnecessary fluctuations in economic activity. The present paper shows that this conclusion is not robust with respect to the modelling of capital accumulation. We use our insights to discuss the desirability of alternative interest raterules. Our results suggest a reinterpretation of monetary policy under Volcker and Greenspan: The empirically plausible characterization of monetary policy can explain the stabilization of macroeconomic outcomes observed in the early eighties for the US economy. The Taylor principle in itself cannot.