Strategic adoption in a two-sided market : a study of college applications in Brazil

This paper measures the importance of indirect network effects in the adoption by colleges and students of ENEM, a standardized exam for high-school students in Brazil that can be used in college application processes. We estimate network effects and find that they are economically significant. Students are more likely to take ENEM the larger the number of colleges adopting it. Similarly, colleges are more likely to adopt it the larger the number of students taking the exam. Moreover, we find evidence that colleges play strategically and that heterogeneity determines their decisions. A college is less likely to adopt ENEM the larger the number of competitors adopting it. Colleges’ characteristics such as ownership and organization affect adoption decisions. In a counterfactual exercise we compare colleges’ adoption decisions under competition and under joint colleges’ payoffs maximization. Adoption rates are significantly reduced when colleges internalize the competitive effect, i.e., the effect of their decisions on other colleges’ payoffs. On the other hand, they increase when indirect network effects - the effect of students’ response to their decisions on other colleges’ payoffs - are also internalized. Competitive adoption rates are found to exceed joint optimum rates by a small difference. These results suggest that, without considering students’ welfare, adoption rates are excessive, but close to the joint optimum.

Inglorious revolution : sovereign debt, tropical credibility, and financial underdevelopment in imperial Brazil

In 1824 the creation of institutions that constrained the monarch’s ability to unilaterally tax, spend, and debase the currency put Brazil on a path toward a revolution in public finance, roughly analogous to the financial consequences of England’s Glorious Revolution. This credible commitment to honor sovereign debt resulted in successful long-term funded borrowing at home and abroad from the 1820s through the 1880s that was unrivalled in Latin America. Some domestic bonds, denominated in the home currency and bearing exchange clauses, eventually circulated in European financial markets. The share of total debt accounted for by long-term funded issues grew, and domestic debt came to dominate foreign debt. Sovereign debt yields fell over time in London and Rio de Janeiro, and the cost of new borrowing declined on average. The market’s assessment of the probability of default tended to decrease. Imperial Brazil enjoyed favorable conditions for borrowing, and escaped the strong form of “original sin” stressed by recent work on sovereign debt. The development of vibrant private financial markets did not, however, follow from the enhanced credibility of government debt. Private finance in Imperial Brazil suffered from politicized market interventions that undermined the development of domestic capital markets. Private interest rates remained high, entry into commercial banking was heavily restricted, and limited-liability joint-stock companies were tightly controlled. The Brazilian case provides a powerful counterexample to the general proposition of North and Weingast that institutional changes that credibly commit the government to honor its obligations necessarily promote the development of private finance. The very institutions that enhanced the credibility of sovereign debt permitted the systematic repression of private financial development. In terms of its consequences for domestic capital markets, the liberal Constitution of 1824 represented an “inglorious” revolution.

Exposing corrupt politicians : the effects of Brazil's publicly released audits on electoral

This paper examines whether access to information enhances political accountabil- ity. Based upon the results of Brazil's recent anti-corruption program that randomly audits municipal expenditures of federally-transferred funds, it estimates the e®ects of the disclosure of local government corruption practices upon the re-election success of incumbent mayors. Comparing municipalities audited before and after the elections, we show that the audit policy reduced the incumbent's likelihood of re-election by approximately 20 percent, and was more pronounced in municipalities with radio sta- tions. These ¯ndings highlight the value of information and the role of the media in reducing informational asymmetries in the political process.

Election over, battle for Brazil rages

Last week I sat down with a Brazilian acquaintance who was shaking his head over the state of national politics. A graduate of a military high school, he'd been getting e-mails from former classmates, many of them now retired army officers, who were irate over the recent presidential elections. "We need to kick these no-good Petistas out of office," one bristled, using the derogatory shorthand for members of the ruling Workers Party, or PT in Portuguese.

Brazil's election: as polarized as can be

What you see above is a graphic representation of something anyone who followed the campaign that led to the re-election of Dilma Rousseff as Brazil’s president on October 26 already knows: the election was the most polarised in the country’s history. Brasil was split down the middle, not only numerically (Dilma got 52 per cent, Aécio Neves 48) and geographically (Dilma won in the less developed north, Aécio in the more prosperous south). The twitterspere, too, was divided into two camps. Not only that; they hardly talked to each other at all.

Divided Brazil awaits Rousseff after poll win

In her victory speech, President Dilma Rousseff said she did not believe the nation’s closest election in a generation had divided Brazil. But she only needed to go online to see the civil war raging on social media to see how much the campaign had split Brazil, pitting rich against poor, friend against friend.

How are immigration policies affecting Brazil's economy?

How are current immigration policies for foreign workers affecting Brazil's economy, and what changes should be made? What other issues in the labor market are affecting businesses in the country?

Why merger talks collapse: an exploratory study about contributing factors to ‘wedding cold feet' and deal making failure in mergers and acquisitions from the perspective of active deal making professionals in Brazil

Why merger talks collapse: an exploratory study about contributing factors behind ‘wedding cold feet' and deal making failure in Mergers and Acquisitions from the perspective of active deal making professionals in Brazil. One basic question encouraged this study: after all the effort, expectations and money usually invested in dealmaking, why are so many transactions simply abandoned, even when the benefits are clear for the business, shareholders, customers and employees?

Robustness and stabilization properties of monetary policy rules in Brazil

Based on three versions of a small macroeconomic model for Brazil, this paper presents empirical evidence on the effects of parameter uncertainty on monetary policy rules and on the robustness of optimal and simple rules over different model specifications. By comparing the optimal policy rule under parameter uncertainty with the rule calculated under purely additive uncertainty, we find that parameter uncertainty should make policymakers react less aggressively to the economy's state variables, as suggested by Brainard's "conservatism principIe", although this effect seems to be relatively small. We then informally investigate each rule's robustness by analyzing the performance of policy rules derived from each model under each one of the alternative models. We find that optimal rules derived from each model perform very poorly under alternative models, whereas a simple Taylor rule is relatively robusto We also fmd that even within a specific model, the Taylor rule may perform better than the optimal rule under particularly unfavorable realizations from the policymaker' s loss distribution function.

Line extension influence on brand image: a study on the alcoholic beverage market in Brazil

The present study has the objective of understanding the influence of line extensions on the image of vodka brands. The research was performed by organizing various focus groups with vodka consumers in São Paulo. These focus groups allowed exploring and analyzing how the last line extensions of vodka brands have modified the image the consumers had of the brand. Three hypotheses were distinguished as an outcome of the research: (1) The influence of a line extension on brand image depends heavily on the initial image the consumers have of the brand. For a vodka brand with an average or bad image, launching a line extension with a perceived average or bad quality does not modify the brand image. On the contrary, for a vodka brand with a positive initial brand image, launching a line extension with perceived high quality led to a positive change in the brand image. (2) For vodka brands, a vertical line extension recognized as having high authenticity provokes a transfer of attributes from the extended product to the brand. (3) Among Keller’s (1993) dimensions of brand image, non-product related attributes and especially packaging are the one that are the most influenced by line extensions of vodka brands.

Brazil's middle classes

This paper discusses the Brazilian middle class, its definition, evolution, profile, attitudes and durability. It describes the methodology that uses per capita household income derived from household surveys to determine economic classes. It gauges their respective aggregate trends and gauges individual income risks using longitudinal data. An income-based approach is only the beginning. This initial approach is integrated with subjective data to measure expectations and attitudes of different economic classes combined with a structural approach that takes into account the roles played by human, physical and social capital in the production factors, in terms of income generation and temporal allocation of resources. In all cases, income is the chosen numeraire by which all dimensions analyzed are projected. In the end of the article, all forms of measurement proposed – current income, consumption smoothing (permanent income), productive assets and subjective aspects – are combined to discuss the design of public policies aimed at the Brazilian middle classes.

Old-age benefits and retirement decisions of rural elderly in Brazil

I estimate the impact of social security benefits on retirement decisions of rural workers by studying changes in the roles governing social security in Brazil. I focus on a 1991 reform, which brought a reduction in the minimum eligibility age for males and females, a doubling of benefit values and the extension of benefits to non-heads of households. Because beneficiaries are not subject to means or retirement tests, I estimate apure income effect. I find that a reduction in the minimum eligibility age for old-age benefits was an important determinant in the reduction in labor supply of elderly rural workers in Brazil. Finally, I find that benefit take-up rates are larger among the better educated, but least-schooled workers show the largest labor supply responses to the reform.