The Wage Rate and the Profit Rate in the Price of Production Equation: a New Solution to an Old Problem

The aim of this paper is to demonstrate that, even if Marx's solution to the transformation problem can be modified, his basic concusions remain valid.

Computation and Analysis of Multiple Structural-Change Models

In a recent paper, Bai and Perron (1998) considered theoretical issues related to the limiting distribution of estimators and test statistics in the linear model with multiple structural changes. In this companion paper, we consider practical issues for the empirical applications of the procedures. We first address the problem of estimation of the break dates and present an efficient algorithm to obtain global minimizers of the sum of squared residuals. This algorithm is based on the principle of dynamic programming and requires at most least-squares operations of order O(T 2) for any number of breaks. Our method can be applied to both pure and partial structural-change models. Secondly, we consider the problem of forming confidence intervals for the break dates under various hypotheses about the structure of the data and the errors across segments. Third, we address the issue of testing for structural changes under very general conditions on the data and the errors. Fourth, we address the issue of estimating the number of breaks. We present simulation results pertaining to the behavior of the estimators and tests in finite samples. Finally, a few empirical applications are presented to illustrate the usefulness of the procedures. All methods discussed are implemented in a GAUSS program available upon request for non-profit academic use.

Factor Analysis of a Large DSGE Model

We study the workings of the factor analysis of high-dimensional data using artificial series generated from a large, multi-sector dynamic stochastic general equilibrium (DSGE) model. The objective is to use the DSGE model as a laboratory that allow us to shed some light on the practical benefits and limitations of using factor analysis techniques on economic data. We explain in what sense the artificial data can be thought of having a factor structure, study the theoretical and finite sample properties of the principal components estimates of the factor space, investigate the substantive reason(s) for the good performance of di¤usion index forecasts, and assess the quality of the factor analysis of highly dissagregated data. In all our exercises, we explain the precise relationship between the factors and the basic macroeconomic shocks postulated by the model.

The role of ‘Shared Memories’ in shaping nationalist movements : a comparative historical analysis of the Flemish and Québécois nationalist movements

Les mouvements nationalistes flamands et québécois divergent en concernant leur structure; par exemple le nationalisme flamand s'est développé comme un mouvement chrétien-démocrate, alors que le nationalisme québécois contemporain s’est galvanisé autour d'une idéologie laïque de gauche. Par ailleurs, il existe un contraste entre les poids sociodémographique, politique et économique portés par la région de Flandres en Belgique, et ceux portés dans la province du Québec au Canada. Cependant, malgré les influences divergentes structurelles et systémiques, les mouvements nationalistes flamand et québécois ont développé et maintenu des profils très similaires. Par exemple, les deux mouvements nationalistes se définissent par une distinction ethnolinguistique, les deux ont un discours nationaliste parallèle axé sur la nécessité de préserver et de protéger la langue et la culture de la communauté nationale, et les deux se concentrent sur l'obtention d'une redistribution des pouvoirs culturels et politiques. Dans ce mémoire, nous proposons que le profil nationaliste ressemblant du mouvement nationaliste flamand et québécois puisse être expliqué par le développement d'un « nationalisme ethnolinguistique de contestation », qui était initialement mis en place par les nationalistes flamands et québécois cherchant à corriger les effets d'une « division culturelle du travail ». Ce sentiment d’un nationalisme de contestation ethnolinguistique est instrumentalisé et perpétué par les nationalistes flamands et québécois en évoquant certains « souvenirs partagés », qui sont trouvés dans le récit historique de la communauté nationale. Ces souvenirs partagés, ainsi que leurs représentations symboliques, reflètent les sentiments de protestation, injustice et victimisation, qui sont vitaux pour les nationalistes flamands et québécois dans le maintien de leur expression parallèlement à un nationalisme de contestation ethnolinguistique en Flandres et au Québec.

A Micro-Economic Incidence Analysis of Federal Public Revenues and Spending for Canadian Households and Provinces, 2007.

Rapport de recherche présenté à la Faculté des arts et des sciences en vue de l'obtention du grade de Maîtrise en sciences économiques.

Legal, political and economic aspects of the tragedy in rural Colombia in recent decades: hypothesis for analysis

Editorial

Soft budget constraints in a dynamic general equilibrium model

This paper considers an overlapping generations model in which capital investment is financed in a credit market with adverse selection. Lenders’ inability to commit ex-ante not to bailout ex-post, together with a wealthy position of entrepreneurs gives rise to the soft budget constraint syndrome, i.e. the absence of liquidation of poor performing firms on a regular basis. This problem arises endogenously as a result of the interaction between the economic behavior of agents, without relying on political economy explanations. We found the problem more binding along the business cycle, providing an explanation to creditors leniency during booms in some LatinAmerican countries in the late seventies and early nineties.

Telecommunications and economic growth: an empirical analysis of sub-saharan Africa

We examine the effect on economic growth of mobile cellular phones in sub-Saharan Africa where a marked asymmetry is present between land-line penetration and mobile telecommunications expansion. This study extends previous ones along two important dimensions. First, we allow for the potential endogeneity between economic growth and telecommunications expansion by employing a special linear generalized method of moments (GMM) estimator. Second, we explicitly model for varying degrees of substitutability between mobile cellular and land-line telephony, so that greater expansion of mobile telecommunications can have a different impact whenever the level of land-line penetration differs. We find that mobile cellular phone expansion is an important determinant of the rate of economic growth in Sub-Saharan Africa. Moreover, we find that the contribution of mobile cellular phones to economic growth has been growing in importance in the region, and that the marginal impact of mobile telecommunication services is even greater wherever land-line phones are rare. Given the low cost of mobile telecommunications technology relative to other broad infrastructure projects, especially land-line infrastructure, we advocate that mobile telecommunication services be encouraged in the area.

Conflict, wages, and multiple equilibria

Firms’ compensation practices affect the protection of investors’ interests and the degree of economic inequality by changing the stakes of engaging in appropriation activities versus respecting the status quo. We use a general equilibrium model where workers can either work peacefully or join a guerrilla movement that expropriates entrepreneurs. If workers are peaceful, they receive a competitive wage. If they join a guerrilla movement, they receive a share of the appropriated wealth, which depends positively on the number of guerrilla members. In this framework, we find one low-income, low-wage equilibrium with guerrilla activity and one peaceful, high-income, high-wage equilibrium. The peaceful equilibrium can be reached through redistribution policies, which can be implemented at the firm level. In essence, through their compensation policies entrepreneurs, not the state might be able to protect their assets against expropriation and simultaneously control the internal principal-agent problem.