Real exchange rate and elasticity of labour supply in a balance-of-payments-constrained macrodynamics

A macrodynamic model is proposed in which the real exchange rate and the elasticity of labour supply interact defining different trajectories of growth and income distribution in a developing economy. Growth depends on imports of capital goods which are paid with exports (there are no capital flows) and hence is constrained by equilibrium in current account. The role of the elasticity of labour supply is to prevent the real exchange rate from appreciating as the economy grows, thereby sustaining international competitiveness. The model allows for endogenous technological change and considers the impact of migration from the subsistence to the modern sector on the cumulative (Kaldor-Verdoorn) process of learning.

A note on the multiple partners assignment game

In the assignment game of Shapley and Shubik [Shapley, L.S., Shubik, M., 1972. The assignment game. I. The core, International journal of Game Theory 1, 11-130] agents are allowed to form one partnership at most. That paper proves that, in the context of firms and workers, given two stable payoffs for the firms there is a stable payoff which gives each firm the larger of the two amounts and also one which gives each of them the smaller amount. Analogous result applies to the workers. Sotomayor [Sotomayor, M., 1992. The multiple partners game. In: Majumdar, M. (Ed.), Dynamics and Equilibrium: Essays in Honor to D. Gale. Mcmillian, pp. 322-336] extends this analysis to the case where both types of agents may form more than one partnership and an agent`s payoff is multi-dimensional. Instead, this note concentrates in the total payoff of the agents. It is then proved the rather unexpected result that again the maximum of any pair of stable payoffs for the firms is stable but the minimum need not be, even if we restrict the multiplicity of partnerships to one of the sides. (C) 2009 Elsevier B.V. All rights reserved.

Stability property of matchings is a natural solution concept in coalitional market games

Stability of matchings was proved to be a new cooperative equilibrium concept in Sotomayor (Dynamics and equilibrium: essays in honor to D. Gale, 1992). That paper introduces the innovation of treating as multi-dimensional the payoff of a player with a quota greater than one. This is done for the many-to-many matching model with additively separable utilities, for which the stability concept is defined. It is then proved, via linear programming, that the set of stable outcomes is nonempty and it may be strictly bigger than the set of dual solutions and strictly smaller than the core. The present paper defines a general concept of stability and shows that this concept is a natural solution concept, stronger than the core concept, for a much more general coalitional game than a matching game. Instead of mutual agreements inside partnerships, the players are allowed to make collective agreements inside coalitions of any size and to distribute his labor among them. A collective agreement determines the level of labor at which the coalition operates and the division, among its members, of the income generated by the coalition. An allocation specifies a set of collective agreements for each player.

Transport-Regional Equity Issue Revisited

Almeida E. S. de, Haddad E. A. and Hewings G. J. D. Transport-regional equity issue revisited, Regional Studies. The objective of this paper is to analyse the relationship between transport and regional equity in Minas Gerais, Brazil. Furthermore, the existence of a trade-off between economic performance and regional equity is investigated as well. To do so, the paper develops a spatial computable general equilibrium model based on Brocker and Schneider`s approach of 2002 to implement comparative static analysis, explicitly incorporating iceberg transportation costs. Four activities are modelled, namely production, final demand, transportation and exports. Two production factors are assumed: labour and other factors. The model has 12 domestic regions and three external regions. Four counterfactual experiments are developed based on decreases in transportation costs due to a `distance shortening`. The main findings indicate that if the transport infrastructure improvement is focused only among poor regions, the promotion of regional equity is insignificant. If the transport infrastructure improvement links are concentrated among rich regions, there is an increase in regional income inequalities. However, if the improvements are targeted to the roads linking poor regions and rich ones, there is greater promotion of regional equity. The same result will occur when improvements are made to all road links of the state. [image omitted] Almeida E. S. de, Haddad E. A. et Hewings G. J. D. La question du rapport entre le transport et l`equilibre regional vue sous un jour nouveau, Regional Studies. Cet article cherche a analyser le rapport entre le transport et l`equilibre regional en Minas Gerais au Bresil. En outre, on examine la presence d`un echange entre la performance economoique et l`equilibre regional. Pour le faire, on construit un modele geographique de l`equilibre general a utiliser sur ordinateur fonde sur l`approche de Brockner et Schneider en 2002 afin de mettre en oeuvre une analyse statique comparative qui comprend explicitement les frais de transport iceberg. On modelise quatre activites, a savoir, la production, la demande finale, le transport et l`exportation. On fait deux suppositions quant aux facteurs de production: la main-d`oevre et d`autres facteurs. Le modele embrasse douze regions internes et trois regions externes. On fait quatre experiences paradoxales fondees sur la baisse des frais de transport due a une `reduction des distances`. Les principaux resultats indiquent que si l`amelioration de l`equipement de transport ne porte que sur les regions defavorisees, la promotion de l`equilibre regional s`avere negligeable. Si l`amelioration de l`equipement de transport focalise les regions riches, il s`avere un creusement des ecarts des revenus regionaux. Cependant, si les ameliorations ciblent les routes qui relient les regions defavorisees aux regions riches, il s`avere une plus grande promotion de l`equilibre regional. Il en va de meme pour la situation ou on a apporte des amenagements a toutes les liaisons routieres de l`etat. Modele geographique de l`equilibre general a utiliser sur ordinateur Equilibre regional Peformance economique Frais de transport Almeida E. S. de, Haddad E. A. und Hewings G. J. D. Die Wiederaufnahme der Frage von Verkehrswesen im Verhaltnis zu regionaler Fairness, Regional Studies. Dieser Aufsatz beabsichtigt, die Beziehung zwischen Verkehrswesen und regionaler Fairness in Minas Gerais (Brasilien) zu analysieren und zugleich auch das Vorkommen von Einbussen entweder bei wirtschaftlicher Leistung der regionaler Fairness zu untersuchen. Zu diesem Zwecke wird ein auf dem Ansatz von Brocker und Schneider (2002) aufbauendes raumliches komputables allgemeines Gleichgewichtsmodell entwickelt, um vergleichende statistische Analysen durchzufuhren, wobei verborgene `Eisberg`-Transportkosten ausdrucklich berucksichtigt werden. Es werden vier Unternehmenstatigk eiten aufgefuhrt: Herstellung, Nachfrage, Transportwesen und Exporte, und zwei Produktionsfaktoren vorausgesetzt: Arbeitskrafte und andere Faktoren. Das Modell umfasst zwolf Inlandsregionen und drei externe Regionen. Es werden vier gegensatzliche Experimente entwickelt, die auf einer Abnahme der Transportkosten infolge einer `Verkurzung der Entfernungen` beruhen. Die Hauptbefunde weisen darauf hin, dass die Forderung regionaler Fairness unbedeutend bleibt, wenn die Verbesserungen der Transportinfrastruktur sich nur auf minderbemittelte Regionen konzentrieren; werden die Verbesserungen der Verbindungen der Transportinfrastruktur in wohlhabenden Regionen durchgefuhrt, so nehmen regionale Einkommensunterschiede zu. Wenn die Verbesserungen jedoch auf Strassen abzielen, die wohlhabende Regionen mit weniger bemittelten verbinden, wird regionale Fairness starker gefordert. Das gleiche Ergebnis wird sich einstellen, wenn Verbesserungen an allen Strassenverbindungen des Staates vorgenommen werden. Raumliches, komputables, allgemeines Gleichgewichtsmodell Regionale Fairness Wirtschaftsleistung Transportkosten Almeida E. S. de, Haddad E. A. y Hewings G. J. D. Revisando el tema de la igualdad del transporte en las regiones, Regional Studies. El objetivo de este documento es analizar la relacion entre el transporte y la igualdad regional en Minas Gerais, Brasil. Asimismo investigamos la existencia de una compensacion entre el rendimiento economico y la igualdad regional. Para ello desarrollamos un modelo de equilibrio general computable y espacial basado en el enfoque de Brocker y Schneider en 2002 para hacer un analisis estatico y comparativo, explicitamente incorporando los costes ocultos de transporte. Se modelan cuatro actividades: la produccion, la demanda final, el transporte y las exportaciones. Suponemos que existen dos factores de produccion: mano de obra y otros factores. En este modelo, existen doce regiones internas y tres regiones externas. Desarrollamos cuatro experimentos contrafactuales basados en la disminucion de los costes de transporte debido a una `acortamiento de las distancias`. Los principales resultados indican que si la mejora de la infraestructura del transporte se centra solo entre las regiones mas pobres, el fomento de la igualdad regional es insignificante. Si los enlaces de la mejora de la infraestructura del transporte se concentran en las regiones ricas, aumentan las desigualdades de ingresos regionales. Sin embargo, si se mejoran los enlaces de carreteras entre las regiones pobres y ricas, se fomenta mejor la igualdad regional. El mismo resultado ocurre cuando se mejoran los enlaces de todas las carreteras del estado. Modelo de equilibrio general computable y espacial Igualdad regional Rendimiento economico Costes de transporte.

Price dispersion and price indexes

The traditional theory of price index numbers is based on the law of one price. But in the real world, we frequently observe the existence of an equilibrium price dispersion instead of one price of equilibrium. This article discusses the effects of price dispersion on two price indexes: the cost of living index and the consumer price index. With price dispersion and consumer searching for the lowest price, these indexes cannot be interpreted as deterministic indicators, but as stochastic indicators, and they can be biased if price dispersion is not taken into account. A measure for the bias of the consumer price index is proposed and the article ends with an estimation of the bias based on data obtained from the consumer price index calculated for the city of Sao Paulo, Brazil, from January 1988 through December 2004. The period analysed is very interesting, because it exhibits different inflationary environments: high levels and high volatility of the rates of inflation with great price dispersion until July 1994 and low and relatively stable rates of inflation with prices less dispersed after August 1994.

Debt Maturity: Is Long-Term Debt Optimal?

We model and calibrate the arguments in favor and against short-term and long-term debt. These arguments broadly include: maturity premium, sustainability, and service smoothing. We use a dynamic-equilibrium model with tax distortions and government outlays uncertainty, and model maturity as the fraction of debt that needs to be rolled over every period. In the model, the benefits of defaulting are tempered by higher future interest rates. We then calibrate our artificial economy and solve for the optimal debt maturity for Brazil as an example of a developing country and the US as an example of a mature economy. We obtain that the calibrated costs from defaulting on long-term debt more than offset costs associated with short-term debt. Therefore, short-term debt implies higher welfare levels.

Adjusting prices in the multiple-partners assignment game

Starting with an initial price vector, prices are adjusted in order to eliminate the excess demand and at the same time to keep the transfers to the sellers as low as possible. In each step of the auction, to which set of sellers should those transfers be made is the key issue in the description of the algorithm. We assume additively separable utilities and introduce a novel distinction by considering multiple sellers owing multiple identical objects and multiple buyers with an exogenously defined quota, consuming more than one object but at most one unit of a seller`s good and having multi-dimensional payoffs. This distinction induces a necessarily more complicated construction of the over-demanded sets than the constructions of these sets for the other assignment games. For this approach, our mechanism yields the buyer-optimal competitive equilibrium payoff, which equals the buyer-optimal stable payoff. The symmetry of the model allows to getting the seller-optimal stable payoff and the seller-optimal competitive equilibrium payoff can then be also derived.

Heterogeneity, saving-investment dynamics and capital mobility in Latin America

The purpose of this paper is to analyze the dynamics of national saving-investment relationship in order to determine the degree of capital mobility in 12 Latin American countries. The analytically relevant correlation is the short-term one, defined as that between changes in saving and investment. Of special interest is the speed at which variables return to the long run equilibrium relationship, which is interpreted as being negatively related to the degree of capital mobility. The long run correlation, in turn, captures the coefficient implied by the solvency constraint. We find that heterogeneity and cross-section dependence completely change the estimation of the long run coefficient. Besides we obtain a more precise short run coefficient estimate compared to the existent estimates in the literature. There is evidence of an intermediate degree of capital mobility, and the coefficients are extremely stable over time.

Optimal reserve management and sovereign debt

Most models currently used to determine optimal foreign reserve holdings take the level of international debt as given. However, given the sovereign`s willingness-to-pay incentive problems, reserve accumulation may reduce sustainable debt levels. In addition, assuming constant debt levels does not allow addressing one of the puzzles behind using reserves as a means to avoid the negative effects of crisis: why do not sovereign countries reduce their sovereign debt instead? To study the joint decision of holding sovereign debt and reserves, we construct a stochastic dynamic equilibrium model calibrated to a sample of emerging markets. We obtain that the reserve accumulation does not play a quantitatively important role in this model. In fact, we find the optimal policy is not to hold reserves at all. This finding is robust to considering interest rate shocks, sudden stops, contingent reserves and reserve dependent output costs. (c) 2008 Elsevier B.V. All rights reserved.

Assessing the ex ante economic impacts of transportation infrastructure policies in Brazil

This paper uses a fully operational inter-regional computable general equilibrium (CGE) model implemented for the Brazilian economy, based on previous work by Haddad and Hewings, in order to assess the likely economic effects of road transportation policy changes in Brazil. Among the features embedded in this framework, modelling of external scale economies and transportation costs provides an innovative way of dealing explicitly with theoretical issues related to integrated regional systems. The model is calibrated for 109 regions. The explicit modelling of transportation costs built into the inter-regional CGE model, based on origin-destination flows, which takes into account the spatial structure of the Brazilian economy, creates the capability of integrating the inter-regional CGE model with a geo-coded transportation network model enhancing the potential of the framework in understanding the role of infrastructure on regional development. The transportation model used is the so-called Highway Development and Management, developed by the World Bank, implemented using the software TransCAD. Further extensions of the current model specification for integrating other features of transport planning in a continental industrialising country like Brazil are discussed, with the goal of building a bridge between conventional transport planning practices and the innovative use of CGE models. In order to illustrate the analytical power of the integrated system, the authors present a set of simulations, which evaluate the ex ante economic impacts of physical/qualitative changes in the Brazilian road network (for example, a highway improvement), in accordance with recent policy developments in Brazil. Rather than providing a critical evaluation of this debate, they intend to emphasise the likely structural impacts of such policies. They expect that the results will reinforce the need to better specifying spatial interactions in inter-regional CGE models.

Nominal versus indexed debt: A quantitative horse race

The main arguments in favor and against nominal and indexed debts are the incentive to default through inflation versus hedging against unforeseen shocks. We model and calibrate these arguments to assess their quantitative importance. We use a dynamic equilibrium model with tax distortion, government outlays uncertainty, and contingent-debt service. Our framework also recognizes that contingent debt can be associated with incentive problems and lack of commitment. Thus, the benefits of unexpected inflation are tempered by higher interest rates. We obtain that costs from inflation more than offset the benefits from reducing tax distortions. We further discuss sustainability of nominal debt in developing (volatile) countries. (C) 2010 Elsevier Ltd. All rights reserved.

Regional Effects of Port Infrastructure: A Spatial CGE Application to Brazil

This article attempts to elucidate one of the mechanisms that link trade barriers, in the form of port costs, and subsequent growth and regional inequality. Prior attention has focused on inland or link costs, but port costs can be considered as a further barrier to enhancing trade liberalization and growth. In contrast to a highway link, congestion at a port may have severe impacts that are spread over space and time whereas highway link congestion may be resolved within several hours. Since a port is part of the transportation network, any congestion/disruption is likely to ripple throughout the hinterland. In this sense, it is important to model properly the role nodal components play in the context of spatial models and international trade. In this article, a spatial computable general equilibrium (CGE) model that is integrated to a transport network system is presented to simulate the impacts of increases in port efficiency in Brazil. The role of ports of entry and ports of exit are explicitly considered to grasp the holistic picture in an integrated interregional system. Measures of efficiency for different port locations are incorporated in the calibration of the model and used as the benchmark in our simulations. Three scenarios are evaluated: (1) an overall increase in port efficiency in Brazil to achieve international standards; (2) efficiency gains associated with decentralization in port management in Brazil; and (3) regionally differentiated increases in port efficiency to reach the boundary of the national efficiency frontier.

Flex cars and the alcohol price

We build a model that incorporates the effect of the innovative ""flex"" car, an automobile that is able to run with either gasoline or alcohol, on the dynamics of fuel prices in Brazil. Our model shows that differences regarding fuel prices will now depend on the proportions of alcohol, gasoline and flex cars in the total stock. Conversely, the demand for each type of car will also depend on the expected future prices of alcohol and gasoline (in addition to the car prices). The model reflects our findings that energy prices are tied in the long run and that causality runs stronger from gasoline to alcohol. The estimated error correction parameter is stable, implying that the speed of adjustment towards equilibrium remains unchanged. The latter result is probably due to a still small fraction of flex cars in the total stock (approx. 5%), despite the fact that its sales nearly reached 100% in 2006. (C) 2009 Elsevier B.V. All rights reserved.

Forward-looking versus recursive-dynamic modeling in climate policy analysis: A comparison

This paper develops a multi-regional general equilibrium model for climate policy analysis based on the latest version of the MIT Emissions Prediction and Policy Analysis (EPPA) model. We develop two versions so that we can solve the model either as a fully inter-temporal optimization problem (forward-looking, perfect foresight) or recursively. The standard EPPA model on which these models are based is solved recursively, and it is necessary to simplify some aspects of it to make inter-temporal solution possible. The forward-looking capability allows one to better address economic and policy issues such as borrowing and banking of GHG allowances, efficiency implications of environmental tax recycling, endogenous depletion of fossil resources, international capital flows, and optimal emissions abatement paths among others. To evaluate the solution approaches, we benchmark each version to the same macroeconomic path, and then compare the behavior of the two versions under a climate policy that restricts greenhouse gas emissions. We find that the energy sector and CO(2) price behavior are similar in both versions (in the recursive version of the model we force the inter-temporal theoretical efficiency result that abatement through time should be allocated such that the CO(2) price rises at the interest rate.) The main difference that arises is that the macroeconomic costs are substantially lower in the forward-looking version of the model, since it allows consumption shifting as an additional avenue of adjustment to the policy. On the other hand, the simplifications required for solving the model as an optimization problem, such as dropping the full vintaging of the capital stock and fewer explicit technological options, likely have effects on the results. Moreover, inter-temporal optimization with perfect foresight poorly represents the real economy where agents face high levels of uncertainty that likely lead to higher costs than if they knew the future with certainty. We conclude that while the forward-looking model has value for some problems, the recursive model produces similar behavior in the energy sector and provides greater flexibility in the details of the system that can be represented. (C) 2009 Elsevier B.V. All rights reserved.

Real-time monitoring and kinetic parameter estimation of the affinity interaction of jArtinM and rArtinM with peroxidase glycoprotein by the electrogravimetric technique

ArtinM is a D-mannose binding lectin that has been arousing increasing interest because of its biomedical properties, especially those involving the stimulation of Th1 immune response, which confers protection against intracellular pathogens The potential pharmaceutical applications of ArtinM have motivated the production of its recombinant form (rArtinM) so that it is important to compare the sugar-binding properties of jArtinM and rArtinM in order to take better advantage of the potential applications of the recombinant lectin. In this work, a biosensor framework based on a Quartz Crystal Microbalance was established with the purpose of making a comparative study of the activity of native and recombinant ArtinM protein The QCM transducer was strategically functionalized to use a simple model of protein binding kinetics. This approach allowed for the determination of the binding/dissociation kinetics rate and affinity equilibrium constant of both forms of ArtinM with horseradish peroxidase glycoprotein (HRP), a N-glycosylated protein that contains the trimannoside Man alpha 1-3[Man alpha 1-6]Man, which is a known ligand for jArtinM (Jeyaprakash et al, 2004). Monitoring of the real-time binding of rArtinM shows that it was able to bind HRP, leading to an analytical curve similar to that of jArtinM, with statistically equivalent kinetic rates and affinity equilibrium constants for both forms of ArtinM The lower reactivity of rArtinM with HRP than jArtinM was considered to be due to a difference in the number of Carbohydrate Recognition Domains (CRDs) per molecule of each lectin form rather than to a difference in the energy of binding per CRD of each lectin form. (C) 2010 Elsevier B V. All rights reserved