Productivity and the welfare of nations

We show that the welfare of a representative consumer can be related to observable aggregatedata. To a first order, the change in welfare is summarized by (the present value of) the Solowproductivity residual and by the growth rate of the capital stock per capita. We also show thatproductivity and the capital stock suffice to calculate differences in welfare across countries, withboth variables computed as log level deviations from a reference country. These results hold forarbitrary production technology, regardless of the degree of product market competition, and applyto open economies as well if TFP is constructed using absorption rather than GDP as the measureof output. They require that TFP be constructed using prices and quantities as perceived byconsumers. Thus, factor shares need to be calculated using after-tax wages and rental rates, andwill typically sum to less than one. We apply these results to calculate welfare gaps and growthrates in a sample of developed countries for which high-quality TFP and capital data are available.We find that under realistic scenarios the United Kingdom and Spain had the highest growth ratesof welfare over our sample period of 1985-2005, but the United States had the highest level ofwelfare.

Endogenous credit cycles

I develop an overlapping-generations framework in which changes in lending standards generateendogenous cycles. In my economy, entrepreneurs who are privately informed about thequality of their projects need to borrow funds. Intermediaries screen entrepreneurs both throughthe amount of investment undertaken and through the level of entrepreneurial net worth.I show that endogenous regime switches in financial contracts from pooling to separatingand vice-versa may generate fluctuations even in the absence of exogenous shocks. Whenthe economy is in the pooling (separating) regime, lending standards seem lax ( tight ) andinvestment is high (low). Differently from the existing literature, my model does not requireentrepreneurial net worth to be counter cyclycal or inconsequential for determining aggregateinvestment.

Research joint ventures in an international economy

D'Aspremont and Jacquemin's (1988) model is extended to studyalternative configurations of research agreements in a two--country integratedworld economy. Under unambiguous conditions on spillovers we show that:1) Allowing national firms to cooperate in R\&D confers them an advantageover foreign rivals, an effect similar to R\&D subsidies. 2) In a policygame, each government would allow national cooperative agreements. 3) Contraryto other trade policies which lead to a ``prisoners' dilemma'' result,welfare in both countries increases when they both allow R\&D cooperation.4) Welfare is even higher if a generalized (international) coalition isformed.

The return of the wage Phillips curve

The standard New Keynesian model with staggered wage settingis shown to imply a simple dynamic relation between wage inflationand unemployment. Under some assumptions, that relation takes aform similar to that found in empirical wage equations-starting fromPhillips' (1958) original work-and may thus be viewed as providingsome theoretical foundations to the latter. The structural wage equation derived here is shown to account reasonably well for the comovement of wage inflation and the unemployment rate in the U.S. economy, even under the strong assumption of a constant natural rate ofunemployment.

Altruism, uncertain lifetime and the distribution of wealth

This paper studies the dynamics of the distribution of wealth in ageneral equilibrium framework. It considers an overlapping generationsmodel with production and altruistic preferences in which individualsface an uncertain lifetime and annuity markets do not exist. Thispaper focuses on the role that accidental bequests, voluntary bequests,and non--negativity constraints on bequests play in the dynamics of thedistribution of wealth. It is proved that the equilibrium interestrate is lower than the one that satisfies the modified goldenrule. In this economy, a social security system not only plays aninsurance role, but also prevents capital overaccumulation. In fact,this paper shows that a pay--as--you--go social security systemdecentralizes the social planner solution as a competitive equilibrium.

Identifying monetary policy shocks in Japan

It is sometimes argued that the central banks influence the private economy in the short run through controlling a specific component of high powered money, not its total amount. Using a structural VAR approach, this paper evaluates this claim empirically, in the context of the Japanese economy. I estimate a model based on the standard view that the central bank controls the total amount of high powered money, and another model based on the alternative view that it controls only a specific component. It is shown that the former yields much more sensible estimates than thelatter.

Solving non-linear stochastic models by parameterizing expectations: An application to asset pricing with production

A new algorithm called the parameterized expectations approach(PEA) for solving dynamic stochastic models under rational expectationsis developed and its advantages and disadvantages are discussed. Thisalgorithm can, in principle, approximate the true equilibrium arbitrarilywell. Also, this algorithm works from the Euler equations, so that theequilibrium does not have to be cast in the form of a planner's problem.Monte--Carlo integration and the absence of grids on the state variables,cause the computation costs not to go up exponentially when the numberof state variables or the exogenous shocks in the economy increase. \\As an application we analyze an asset pricing model with endogenousproduction. We analyze its implications for time dependence of volatilityof stock returns and the term structure of interest rates. We argue thatthis model can generate hump--shaped term structures.

Shared knowledge

Agents use their knowledge on the history of the economy in orderto choose what is the optimal action to take at any given moment of time,but each individual observes history with some noise. This paper showsthat the amount of information available on the past evolution of theeconomy is an endogenous variable, and that this leads to overconcentrationof the investment, which can be interpreted as underinvestment in research.It presents a model in which agents have to invest at each period in one of$K$ sectors, each of them paying an exogenous return that follows a welldefined stochastic path. At any moment of time each agent receives an unbiasednoisy signal on the payoff of each sector. The signals differ across agents,but all of them have the same variance, which depends on the aggregate investmentin that particular sector (so that if almost everybody invests in it theperceptions of everybody will be very accurate, but if almost nobody doesthe perceptions of everybody will be very noisy). The degree of hetereogeneityacross agents is then an endogenous variable, evolving across time determining,and being determined by, the amount of information disclosed.As long as both the level of social interaction and the underlying precisionof the observations are relatively large agents behave in a very preciseway. This behavior is unmodified for a huge range of informational parameters,and it is characterized by an excessive concentration of the investment ina few sectors. Additionally the model shows that generalized improvements in thequality of the information that each agent gets may lead to a worse outcomefor all the agents due to the overconcentration of the investment that thisproduces.

Bowling for fascism: Social capital and the rise of the Nazi Party in Weimar Germany, 1919-33

Social capital a dense network of associations facilitating cooperation within a community typically leads to positive political and economic outcomes, as demonstrated by a large literature following Putnam. A growing literature emphasizes the potentially "dark side" of social capital. This paper examines the role of social capital in the downfall of democracy in interwar Germany by analyzing Nazi party entry rates in a cross-section of towns and cities. Before the Nazi Party's triumphs at the ballot box, it built an extensive organizational structure, becoming a mass movement with nearly a million members by early 1933. We show that dense networks of civic associations such as bowling clubs, animal breeder associations, or choirs facilitated the rise of the Nazi Party. The effects are large: Towns with one standard deviation higher association density saw at least one-third faster growth in the strength of the Nazi Party. IV results based on 19th century measures of social capital reinforce our conclusions. In addition, all types of associations veteran associations and non-military clubs, "bridging" and "bonding" associations positively predict NS party entry. These results suggest that social capital in Weimar Germany aided the rise of the Nazi movement that ultimately destroyed Germany's first democracy.

Bubbly collateral and economic activity

This paper develops a model of the bubbly economy and uses it to study the effects of bailoutpolicies. In the bubbly economy, weak enforcement institutions do not allow firms to pledge futurerevenues to their creditors. As a result, "fundamental" collateral is scarce and this impairs the intermediationprocess that transforms savings into capital. To overcome this shortage of "fundamental"collateral, the bubbly economy creates "bubbly" collateral. This additional collateral supports anintricate array of intra- and inter-generational transfers that allow savings to be transformed intocapital and bubbles. Swings in investor sentiment lead to fluctuations in the amount of bubblycollateral, giving rise to bubbly business cycles with very rich and complex dynamics.Bailout policies can affect these dynamics in a variety of ways. Expected bailouts provideadditional collateral and expand investment and the capital stock. Realized bailouts reduce thesupply of funds and contract investment and the capital stock. Thus, bailout policies tend to fosterinvestment and growth in normal times, but to depress investment and growth during crisis periods.We show how to design bailout policies that maximize various policy objectives.

Aggregate fluctuations and the network structure of intersectoral trade

This paper analyzes the flow of intermediate inputs across sectors by adopting a network perspective on sectoral interactions. I apply these tools to show how fluctuationsin aggregate economic activity can be obtained from independent shocks to individualsectors. First, I characterize the network structure of input trade in the U.S. On thedemand side, a typical sector relies on a small number of key inputs and sectors arehomogeneous in this respect. However, in their role as input-suppliers sectors do differ:many specialized input suppliers coexist alongside general purpose sectors functioningas hubs to the economy. I then develop a model of intersectoral linkages that can reproduce these connectivity features. In a standard multisector setup, I use this modelto provide analytical expressions linking aggregate volatility to the network structureof input trade. I show that the presence of sectoral hubs - by coupling productiondecisions across sectors - leads to fluctuations in aggregates.

Major: Electronics and Communication Engineering

Today, information technology is strategically important to the goals and aspirations of the business enterprises, government and high-level education institutions – university. Universities are facing new challenges with the emerging global economy characterized by the importance of providing faster communication services and improving the productivity and effectiveness of individuals. New challenges such as provides an information network that supports the demands and diversification of university issues. A new network architecture, which is a set of design principles for build a network, is one of the pillar bases. It is the cornerstone that enables the university’s faculty, researchers, students, administrators, and staff to discover, learn, reach out, and serve society. This thesis focuses on the network architecture definitions and fundamental components. Three most important characteristics of high-quality architecture are that: it’s open network architecture; it’s service-oriented characteristics and is an IP network based on packets. There are four important components in the architecture, which are: Services and Network Management, Network Control, Core Switching and Edge Access. The theoretical contribution of this study is a reference model Architecture of University Campus Network that can be followed or adapted to build a robust yet flexible network that respond next generation requirements. The results found are relevant to provide an important complete reference guide to the process of building campus network which nowadays play a very important role. Respectively, the research gives university networks a structured modular model that is reliable, robust and can easily grow.

Supply side interventions and redistribution

In this paper we study the welfare impact of alternative tax schemes on laborand capital. We evaluate the e_ect of lowering capital income taxes on thedistribution of wealth in a model with heterogeneous agents, restricting ourattention to policies with constant tax rates.We calibrate and simulate the economy; we find that lowering capital taxeshas two effects: i) it increases effciency in terms of aggregate production, andii) it redistributes wealth in favor of those agents with a low wage/wealth ratio.We find that the redistributive effect dominates, and that agents with a lowwage wealth ratio would experience a large loss in utility if capital income taxeswere eliminated.