Political budget cycles in a fiscal federation : the effect of partisan voluntary transfers

This article first presents an econometric study suggesting that intergovernmental transfers to Brazilian municipalities are strongly partisan motivated. In light of that stylized fact, it develops an extension to Rogoff (1990)’s model to analyze the effect of partisan motivated transfers into sub-national electoral and fiscal equilibria. The main finding is that important partisan transfers may undo the positive selection aspect of political budget cycles. Indeed, partisan transfers may, on one hand, eliminate the political budget cycle, solving a moral hazard problem, but, on the other hand, they may retain an incompetent incumbent in office, bringing about an adverse selection problem.

Optimal exchange rate policy, optimal incomplete taxation and business cycles

Implementation and collapse of exchange rate pegging schemes are recur- rent events. A currency crisis (pegging) is usually followed by an economic downturn (boom). This essay explains why a benevolent government should pursue Þscal and monetary policies that lead to those recurrent currency crises and subsequent periods of pegging. It is shown that the optimal policy induces a competitive equilibrium that displays a boom in periods of below average de- valuation and a recession in periods of above average devaluation. A currency crisis (pegging) can be understood as an optimal policy answer to a recession (boom).

Business cycles in emerging economies : the role of interest rates

This paper documents the empirical relation between the interest rates that emerging economies face in international capital markets and their business cycles. It shows that the patterns observed in the data can be interpreted as the equilibrium of a dynamic general equilibrium model of a small open economy, in which (i) firms have to pay for a fraction of the input bill before production takes place, and (ii) preferences generate a labor supply that is independent of the interest rate. In our sample, interest rates are strongly countercyclical, strongly positively correlated with net exports, and they lead the cycle. Output is very volatile and consumption is more volatile than output. The sample includes data for Argentina during 1983-2000 and for four other large emerging economies, Brazil, Mexico, Korea, and Philippines, during 1994-2000. The model is calibrated to Argentina’s economy for the period 1983-1999. When the model is fed with actual US interest rates and the actual default spreads of Argentine sovereign interest rates, interest rates alone can explain forty percent of output fluctuations. When simulated technology shocks are added to the model, it can account for the main empirical regularities of Argentina’s economy during the period. A 1% increase in country risk causes a contemporaneous fall in output of 0.5 ’subsequent recovery. An increase in US rates causes output to fall by the same on impact and by almost 2% two years after the shock. The asymetry in the effect of shocks to US rates and country risk is due to the fact that US interest rates are more persistent than country risk and that there is a significant spillover effect from US interest rates to country risk.

Signaling in political budget cycles: How far are you willing to go?

This paper analyzes how heterogeneity in two dimensions, competency and character, a¤ects political budget cycles. Competency is the e¢ciency in running the government. Character is the degree of opportunism. In this expanded space, previous results in the literature on the separating nature of the signaling equilibrium hold if heterogeneity in opportunism is low. With high heterogeneity in opportunism, no separating equilibrium exists. Rather, the equilibrium is partially pooling: only extreme types can be distinguished.

Common factors in Latin America's business cycles

This paper constructs new business cycle indices for Argentina, Brazil, Chile, and Mexico based on common dynamic factors extracted from a comprehensive set of sectoral output, external trade, fiscal and financial variables. The analysis spans the 135 years since the insertion of these economies into the global economy in the 1870s. The constructed indices are used to derive a business cyc1e chronology for these countries and characterize a set of new stylized facts. In particular, we show that ali four countries have historically displayed a striking combination of high business cyc1e volatility and persistence relative to advanced country benchmarks. Volatility changed considerably over time, however, being very high during early formative decades through the Great Depression, and again during the 1970s and ear1y 1980s, before declining sharply in three of the four countries. We also identify a sizeable common factor across the four economies which variance decompositions ascribe mostly to foreign interest rates and shocks to commodity terms of trade.

How the full opening of the capital account to highly liquid financial markets led Latin America to two and a half cycles of ‘mania, panic and crash’

Latin America has recently experienced three cycles of capital inflows, the first two ending in major financial crises. The first took place between 1973 and the 1982 ‘debt-crisis’. The second took place between the 1989 ‘Brady bonds’ agreement (and the beginning of the economic reforms and financial liberalisation that followed) and the Argentinian 2001/2002 crisis, and ended up with four major crises (as well as the 1997 one in East Asia) — Mexico (1994), Brazil (1999), and two in Argentina (1995 and 2001/2). Finally, the third inflow-cycle began in 2003 as soon as international financial markets felt reassured by the surprisingly neo-liberal orientation of President Lula’s government; this cycle intensified in 2004 with the beginning of a (purely speculative) commodity price-boom, and actually strengthened after a brief interlude following the 2008 global financial crash — and at the time of writing (mid-2011) this cycle is still unfolding, although already showing considerable signs of distress. The main aim of this paper is to analyse the financial crises resulting from this second cycle (both in LA and in East Asia) from the perspective of Keynesian/ Minskyian/ Kindlebergian financial economics. I will attempt to show that no matter how diversely these newly financially liberalised Developing Countries tried to deal with the absorption problem created by the subsequent surges of inflow (and they did follow different routes), they invariably ended up in a major crisis. As a result (and despite the insistence of mainstream analysis), these financial crises took place mostly due to factors that were intrinsic (or inherent) to the workings of over-liquid and under-regulated financial markets — and as such, they were both fully deserved and fairly predictable. Furthermore, these crises point not just to major market failures, but to a systemic market failure: evidence suggests that these crises were the spontaneous outcome of actions by utility-maximising agents, freely operating in friendly (‘light-touch’) regulated, over-liquid financial markets. That is, these crises are clear examples that financial markets can be driven by buyers who take little notice of underlying values — i.e., by investors who have incentives to interpret information in a biased fashion in a systematic way. Thus, ‘fat tails’ also occurred because under these circumstances there is a high likelihood of self-made disastrous events. In other words, markets are not always right — indeed, in the case of financial markets they can be seriously wrong as a whole. Also, as the recent collapse of ‘MF Global’ indicates, the capacity of ‘utility-maximising’ agents operating in (excessively) ‘friendly-regulated’ and over-liquid financial market to learn from previous mistakes seems rather limited.

How the full opening of the capital account to highly liquid financial markets led Latin America to two and a half cycles of ‘mania, panic and crash’

Latin America has recently experienced three cycles of capital inflows, the first two ending in major financial crises. The first took place between 1973 and the 1982 ‘debt-crisis’. The second took place between the 1989 ‘Brady bonds’ agreement (and the beginning of the economic reforms and financial liberalisation that followed) and the Argentinian 2001/2002 crisis, and ended up with four major crises (as well as the 1997 one in East Asia) — Mexico (1994), Brazil (1999), and two in Argentina (1995 and 2001/2). Finally, the third inflow-cycle began in 2003 as soon as international financial markets felt reassured by the surprisingly neo-liberal orientation of President Lula’s government; this cycle intensified in 2004 with the beginning of a (purely speculative) commodity price-boom, and actually strengthened after a brief interlude following the 2008 global financial crash — and at the time of writing (mid-2011) this cycle is still unfolding, although already showing considerable signs of distress. The main aim of this paper is to analyse the financial crises resulting from this second cycle (both in LA and in East Asia) from the perspective of Keynesian/ Minskyian/ Kindlebergian financial economics. I will attempt to show that no matter how diversely these newly financially liberalised Developing Countries tried to deal with the absorption problem created by the subsequent surges of inflow (and they did follow different routes), they invariably ended up in a major crisis. As a result (and despite the insistence of mainstream analysis), these financial crises took place mostly due to factors that were intrinsic (or inherent) to the workings of over-liquid and under-regulated financial markets — and as such, they were both fully deserved and fairly predictable. Furthermore, these crises point not just to major market failures, but to a systemic market failure: evidence suggests that these crises were the spontaneous outcome of actions by utility-maximising agents, freely operating in friendly (light-touched) regulated, over-liquid financial markets. That is, these crises are clear examples that financial markets can be driven by buyers who take little notice of underlying values — investors have incentives to interpret information in a biased fashion in a systematic way. ‘Fat tails’ also occurred because under these circumstances there is a high likelihood of self-made disastrous events. In other words, markets are not always right — indeed, in the case of financial markets they can be seriously wrong as a whole. Also, as the recent collapse of ‘MF Global’ indicates, the capacity of ‘utility-maximising’ agents operating in unregulated and over-liquid financial market to learn from previous mistakes seems rather limited.

Analysis of testosterone pulsatility in women with ovulatory menstrual cycles

Objetivo: Avaliar o padrão pulsátil da secreção da testosterona em mulheres normais. Métodos: Oito mulheres saudáveis com ciclos ovulatórios foram selecionadas. Amostras sanguíneas foram coletadas a cada dez minutos durante seis horas, começando entre 7 e 8 h da manhã, após dez horas de jejum, nas três fases do ciclo menstrual: folicular média (Dia 7), folicular tardia (Dia 12) e lútea (Dia 21). Foram mensurados: testosterona, LH e, no basal, também SHBG. Resultados: A frequência dos pulsos de testosterona, média da amplitude do pulso, porcentagem do incremento da amplitude, duração e intervalos dos pulsos foram similares nas três fases (p > 0,05). A pulsatilidade do LH foi estatisticamente diferente entre as três fases (p < 0,001), caracterizando padrão característico do ciclo ovulatório normal. Conclusões: Esses dados aumentam o conhecimento sobre o padrão de secreção da testosterona no ciclo menstrual humano e representam uma contribuição para a investigação clínica, tanto no hiperandrogenismo como na síndrome de insuficiência androgênica __________________________________________________ ABSTRACT Objective: To evaluate the pattern of the pulsatile secretion of testosterone in normal menstrual cycle. Methods: Eight healthy women with ovulatory menstrual cycles were enrolled. Blood samples were collected at ten-minute intervals for six hours, starting between 7 and 8 am, after a ten-hour fasting, in three phases: mid-follicular (Day 7), late follicular (Day 12) and mid-luteal phase (Day 21). Samples were assayed for testosterone, LH and the baseline also for SHBG. Results: Testosterone pulse frequency, mean amplitude pulse, percentage of increment in pulse amplitude, mean duration of pulses and pulse interval were similar in the three phases. LH pulsatility was statistically different among the three phases (p < 0.001) representing normal ovulatory cycles. Conclusions: These data increase the knowledge about the testosterone secretion profile in the human menstrual cycle and can be used as a contribution to clinical investigation in both hyperandrogenism and androgen insufficiency syndrome

Severity of banana leaf spot in an intercropping system in two cycles of banana Prata Ana

Prata Ana is the most planted banana cultivar in northern Minas Gerais, Brazil. It is however susceptible to several pathogens. This study was carried out to evaluate the disease severity of banana leaf spot in the Prata Ana cv. in the first and second cycle under six different planting systems. The randomized block experimental design was used with six treatments and four replications. lit an evaluation of the severity of banana leaf spot, no disease symptoms were found on Thap Maeo and Caipira. The evolution curve of the disease indicated seasonal effects in the first and second cycles. The severity, of banana leaf spot was highest soon after the regional rainy period from November to March. A comparison of the means of the evaluations indicated a reduction in disease severity from the first to the second cycle.

Monitoring ovarian cycles and pregnancy in brown brocket deer (Mazama gouazoubira) by measurement of fecal progesterone metabolites

In the present study, pregnancy and the estrous cycle were monitored in captive brown brocket deer (Mazama gouazoubira) by measuring fecal progestagens with a commercial enzyme immunoassay (EIA), along with behavioral data. Fecal samples were collected twice a week during pregnancy and daily during the estrous cycle and post-partum period. It was possible to distinguish between inter-luteal and luteal phases of the estrous cycle. Behavioral estrus corresponded with low concentrations of fecal progestagens. Samples from two consecutive cycles were available from five hinds, and the mean estrous cycle (n = 10) was 26.9 +/- 1.7 d (mean +/- S.E.M.). However, when two extreme cycles (34 and 37 d) were deleted, the mean estrous cycle was 24.7 +/- 1.2 d. Three animals became pregnant (gestation ranged from 208 to 215 d). After fertile breeding, progestagen concentration in these hinds remained among luteal phase concentrations throughout pregnancy, with the exception of a few peaks. Within 4 d post-partum, two hinds reached interluteal phase values, while one hind maintained luteal concentrations for at least 1 week. (C) 2005 Elsevier B.V. All rights reserved.

Dynamics at infinity and the existence of singularly degenerate heteroclinic cycles in the Lorenz system

In this paper, by using the Poincare compactification in R(3) we make a global analysis of the Lorenz system, including the complete description of its dynamic behavior on the sphere at infinity. Combining analytical and numerical techniques we show that for the parameter value b = 0 the system presents an infinite set of singularly degenerate heteroclinic cycles, which consist of invariant sets formed by a line of equilibria together with heteroclinic orbits connecting two of the equilibria. The dynamical consequences related to the existence of such cycles are discussed. In particular a possibly new mechanism behind the creation of Lorenz-like chaotic attractors, consisting of the change in the stability index of the saddle at the origin as the parameter b crosses the null value, is proposed. Based on the knowledge of this mechanism we have numerically found chaotic attractors for the Lorenz system in the case of small b > 0, so nearby the singularly degenerate heteroclinic cycles.

PERIODIC PERTURBATION of QUADRATIC SYSTEMS WITH TWO INFINITE HETEROCLINIC CYCLES

Conselho Nacional de Desenvolvimento Científico e Tecnológico (CNPq)

LIMIT CYCLES of DISCONTINUOUS PIECEWISE LINEAR DIFFERENTIAL SYSTEMS

Fundação de Amparo à Pesquisa do Estado de São Paulo (FAPESP)

The effect of thermal cycles on the mechanical properties of fiber-metal laminates

The effect of thermal-shock cycles on the mechanical properties of fiber-metal laminates (FMLs) has been evaluated. FML plates were composed by two AA2024 Al sheets (1.6 mm thick) and one composite ply formed by two layers of unidirectional glass fiber epoxy prepreg and two layers of epoxy adhesive tape of glass fiber reinforced epoxy adhesive. The set was manufactured by hand layup and typical vacuum bag technique. The curing cycle was in autoclave at 125 +/- 5 degrees C for 90 min and an autoclave pressure of 400 kPa. FML coupons taken from the manufactured plate were submitted to temperature variations between -50 and +80 degrees C, with a fast transition between these temperatures. Tensile and interlaminar shear strength were evaluated on samples after 1000 and 2000 cycles, and compared to nonexposed samples. 2000 Cycles corresponds to typical C Check interval for commercial aircraft maintenance programs. It was observed that the thermal-shock cycles did not result in significant microstructural changes on the FML, particularly on the composite ply. Similarly, no appreciable effect on the mechanical properties of FML was observed by the thermal-shock cycles. (c) 2012 Elsevier Ltd. All rights reserved.