Towards a measure of income inequality freed from the volatility caused by variations in the rate of unemployment

By mixing together inequalities based on cyclical variables, such as unemployment, and on structural variables, such as education, usual measurements of income inequality add objects of a di§erent economic nature. Since jobs are not acquired or lost as fast as education or skills, this aggreagation leads to a loss of relavant economic information. Here I propose a di§erent procedure for the calculation of inequality. The procedure uses economic theory to construct an inequality measure of a long-run character, the calculation of which can be performed, though, with just one set of cross-sectional observations. Technically, the procedure is based on the uniqueness of the invariant distribution of wage o§ers in a job-search model. Workers should be pre-grouped by the distribution of wage o§ers they see, and only between-group inequalities should be considered. This construction incorporates the fact that the average wages of all workers in the same group tend to be equalized by the continuous turnover in the job market.

Equilibria in security markets with a continuum of agents

We prove the existence of a competitive equilibrium for exchange economies with a measure space of agents and for which the commodity space is ` p, 1 < p < +∞. A vector x = (xn) in ` p may be interpreted as a security which promises to deliver xn units of numeraire at state (or date) n. Under assumptions imposing uniform bounds on marginal rates of substitution, positive results on core-Walras equivalence were established in Rustichini–Yannelis [21] and Podczeck [20]. In this paper we prove that under similar assumptions on marginal rates of substitution, the set of competitive equilibria (and thus the core) is non-empty.

On a uniform turnpike of the third kind in the Robinson-Solow-Srinivasan model

On using McKenzie’s taxonomy of optimal accumulation in the longrun, we report a “uniform turnpike” theorem of the third kind in a model original to Robinson, Solow and Srinivasan (RSS), and further studied by Stiglitz. Our results are presented in the undiscounted, discrete-time setting emphasized in the recent work of Khan-Mitra, and they rely on the importance of strictly concave felicity functions, or alternatively, on the value of a “marginal rate of transformation”, ξσ, from one period to the next not being unity. Our results, despite their specificity, contribute to the methodology of intertemporal optimization theory, as developed in economics by Ramsey, von Neumann and their followers.

Non-monotone insurance contracts and their empirical consequences

The goal of this paper is to show the possibility of a non-monotone relation between coverage ans risk which has been considered in the literature of insurance models since the work of Rothschild and Stiglitz (1976). We present an insurance model where the insured agents have heterogeneity in risk aversion and in lenience (a prevention cost parameter). Risk aversion is described by a continuous parameter which is correlated with lenience and for the sake of simplicity, we assume perfect correlation. In the case of positive correlation, the more risk averse agent has higher cosr of prevention leading to a higher demand for coverage. Equivalently, the single crossing property (SCP) is valid and iplies a positive correlation between overage and risk in equilibrium. On the other hand, if the correlation between risk aversion and lenience is negative, not only may the SCP be broken, but also the monotonocity of contracts, i.e., the prediction that high (low) risk averse types choose full (partial) insurance. In both cases riskiness is monotonic in risk aversion, but in the last case there are some coverage levels associated with two different risks (low and high), which implies that the ex-ante (with respect to the risk aversion distribution) correlation between coverage and riskiness may have every sign (even though the ex-post correlation is always positive). Moreover, using another instrument (a proxy for riskiness), we give a testable implication to desentangle single crossing ans non single croosing under an ex-post zero correlation result: the monotonicity of coverage as a function os riskiness. Since by controlling for risk aversion (no asymmetric information), coverage is monotone function of riskiness, this also fives a test for asymmetric information. Finally, we relate this theoretical results to empirical tests in the recent literature, specially the Dionne, Gouruéroux and Vanasse (2001) work. In particular, they found an empirical evidence that seems to be compatible with asymmetric information and non single crossing in our framework. More generally, we build a hidden information model showing how omitted variables (asymmetric information) can bias the sign of the correlation of equilibrium variables conditioning on all observable variables. We show that this may be the case when the omitted variables have a non-monotonic relation with the observable ones. Moreover, because this non-dimensional does not capture this deature. Hence, our main results is to point out the importance of the SPC in testing predictions of the hidden information models.

Do dividends signal more earnings?

Signaling models have contributed to the corporate finance literature by formalizing "the informational content of dividends" hypothesis. However, these models are under criticism of empirical literature, as weak evidences were found supporting one of the main predicitions: the positive relation between changes in dividends and changes in earnings. We claim thaht the failure to verify this prediction does not invalidate the signaling approach. The models developed up to now assume or derive utility functions with the single-crossing property. We show thaht signaling is possible in the absence of this property and, in this case, changes in dividend and changes in earnings can be positively or negatively related.

Why foreign savings fail to cause growth

Este artigo é uma formalização da crítica à estratégia do crescimento com poupança externa que um de seus autores vem sendo fazendo nos últimos anos. Apesar dos países de renda média serem pobres de capital, os déficits em conta corrente (poupança externa), financiado seja por empréstimos ou por investimentos externos diretos, não irá aumentar a taxa de acumulação de capital ou terá pouco impacto sobre ela, uma vez que os déficits de conta corrente estarão associados taxas de câmbio apreciadas, ordenados e salários aumentados artificialmente e altos níveis de consumo. Consequentemente, a taxa de substituição da poupança externa pela interna será relativamente alta, e o país será obrigado não a investir e crescer, mas a consumir. Apenas quando há grandes oportunidades de investimento, estimuladas por uma ampla diferença entre a taxa de lucro esperada e a taxa de juros de longo prazo, a propensão marginal ao consumo diminuirá suficientemente, a ponto de o lucro adicional originário do fluxo de capital estrangeiro ser usado para investimento, ao invés de para consumo. Neste caso especial, a taxa de substituição de poupança externa pela interna tenderá a ser menor e a poupança interna contribuirá positivamente para o crescimento

Non-monotone insurence contracts and their empirical consequences

The goal of t.his paper is to show the possibility of a non-monot.one relation between coverage and risk which has been considered in the literature of insurance models since the work of Rothschild and Stiglitz (1976). We present an insurance model where the insured agents have heterogeneity in risk aversion and in lenience (a prevention cost parameter). Risk aversion is described by a continuou.'l parameter which is correlated with lenience and, for the sake of simplicity, we assume perfect correlation. In the case of positive correlation, the more risk averse agent has higher cost of prevention leading to a higher demand for coverage. Equivalently, the single crossing property (SCP) is valid and implies a positive correlation between coverage and risk in equilibrium. On the other hand, if the correlation between risk aversion and lenience is negative, not only may the sep be broken, but also the monotonicity of contracts, i.e., the prediction that high (Iow) risk averse types choose full (partial) insurance. In both cases riskiness is monotonic in risk aversion, but in the last case t,here are some coverage leveIs associated with two different risks (low and high), which implies that the ex-ante (with respect to the risk aversion distribution) correlation bet,ween coverage and riskiness may have every sign (even though the ex-post correlation is always positive). Moreover, using another instrument (a proxy for riskiness), we give a testable implication to disentangle single crossing and non single crossing under an ex-post zero correlation result: the monotonicity of coverage as a function of riskiness. Since by controlling for risk aversion (no asymmetric informat, ion), coverage is a monotone function of riskiness, this also gives a test for asymmetric information. Finally, we relate this theoretical results to empirica! tests in the recent literature, specially the Dionne, Gouriéroux and Vanasse (2001) work. In particular, they found an empirical evidence that seems to be compatible with asymmetric information and non single crossing in our framework. More generally, we build a hidden information model showing how omitted variabIes (asymmetric information) can bias the sign of the correlation of equilibrium variabIes conditioning on ali observabIe variabIes. We show that this may be t,he case when the omitted variabIes have a non-monotonic reIation with t,he observable ones. Moreover, because this non-monotonic reIat,ion is deepIy reIated with the failure of the SCP in one-dimensional screening problems, the existing lit.erature on asymmetric information does not capture t,his feature. Hence, our main result is to point Out the importance of t,he SCP in testing predictions of the hidden information models.

Elasticity of substitution between capital and labor: a panel data approach

This paper estimates the elasticity of substitution of an aggregate production function. The estimating equation is derived from the steady state of a neoclassical growth model. The data comes from the PWT in which different countries face different relative prices of the investment good and exhibit different investment-output ratios. Then, using this variation we estimate the elasticity of substitution. The novelty of our approach is that we use dynamic panel data techniques, which allow us to distinguish between the short and the long run elasticity and handle a host of econometric and substantive issues. In particular we accommodate the possibility that different countries have different total factor productivities and other country specific effects and that such effects are correlated with the regressors. We also accommodate the possibility that the regressors are correlated with the error terms and that shocks to regressors are manifested in future periods. Taking all this into account our estimation resuIts suggest that the Iong run eIasticity of substitution is 0.7, which is Iower than the eIasticity that had been used in previous macro-deveIopment exercises. We show that this lower eIasticity reinforces the power of the neoclassical mo deI to expIain income differences across countries as coming from differential distortions.

The marginal cost of funds from public sector borrowing

An expression for the welfare cost of a marginal increase in the public debt is derived using a simple AK endogenous growth model. This measure of the marginal cost of public funds (MCF) can be interpreted as the marginal benefit-cost ratio that a debtfinanced public project needs in order to generate a net social gain. The model predicts an increase in the public debt ratio will have little effect on the optimal public expenditure ratio and that most of the adjustment will occur on the tax side of the budget.

Do dividends signal more earnings? a theoretical analysis

The signaling models have contributed to the literature of corporate finance by the formalization of "the informational content of dividends hypothesis". However, these models are under criticism of empirical works, as weak evidences were found supporting one of the main predictions: the positive relation between changes in dividends and changes in earnings. We claim that the failure to verify this prediction does not invalidate the signaling approach. The mo deIs developed up to now assume or derive utility functions with the single-crossing property. We show that signaling is possible in the absence of this property and, in this case, changes in dividend and changes in earnings can be positively or negatively related.

Effect of breed and corpus luteum on pregnancy rate of bovine embryo recipients

The objective of this study was to evaluate pregnancy rates of recipients of different breed groups (Nellore and crossbreed), as well as the effects of size and type of the corpus luteum (CL) on plasmatic concentrations of progesterone and pregnancy rates of embryo recipients. A total of 152 heifers were synchronized with progesterone implants and on the day of embryo transfer, previously obtained by superovulation and frozen in ethylene glycol, the diameter and type of the corpus luteum (cavitary and compact) was measured and blood was collected for progesterone measurement. The pregnancy rate was 44.1%, with a diameter of corpus luteum higher in recipients that became pregnant (2.03±0.41) compared with non-pregnant ones (1.86±0.34 cm). Plasmatic concentrations of progesterone did not differ between pregnant (1.50±1.05) and non-pregnant (1.31±0.91 ng/mL) animals. The type of corpus luteum did not influence the pregnancy rates. Only Angus and crossbred Marchigiana differ among themselves in pregnancy rates (33.3 and 59.2%, respectively). The pregnancy probability was affected only by CL diameter, but not by P4 plasmatic concentration. Selection of the corpus luteum size at the time of embryo transfer is an important factor to increase pregnancy rates in recipients, and compact and cavitary corpora lutea do not influence the pregnancy rates of bovine embryo recipients. Nellore recipients have pregnancy rates that are satisfactory and comparable to crossbred (Bos taurus × Bos indicus) recipients.

Effect of vesicles of dimethyldioctadecylammonium chloride and phospholipids on the rate of decarboxylation of 6-nitrobenzisoxazole-3-carboxylate

Sonicated mixtures of dimethyldioctadecylammonium chloride (DODAC), egg phosphatidylcholine (PC), dimyristoyl phosphatidylcholine (DMPC), and dipalmitoyl phosphatidylcholine (DPPC) were used to analyze vesicle effects on the rate of decarboxylation of 6-nitrobenzisoxazol-3-carboxylic acid (Nboc). Electron microscopic images of the vesicles were obtained with trehalose, a know cryoprotector. Phase diagrams and phase transitions temperatures of the vesicle bilayers were determined. Nboc decarboxylation rates increased in the presence of vesicles prepared with both phospholipids and DODAC/phospholipid mixtures. Quantitative analysis of vesicular effects was done using pseudophase models. Phospholipids catalyzed up to 140-fold while the maximum catalysis by DODAC/lipid vesicles reached 800-fold. Acceleration depends on alkyl chain length, fatty acid insaturation of the lipids, and the DODAC/phospholipid molar ratio. Catalysis is not related to the liquid crystalline-gel state of the bilayer and may be related to the relative position of Nboc with respect to the interface.

Towards coherent optical control of a single hole spin: Rabi rotation of a trion conditional on the spin state of the hole

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