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.

The trade-off between incentives and endogenous risk

Standard models of moral hazard predict a negative relationship between risk and incentives, but the empirical work has not confirmed this prediction. In this paper, we propose a model with adverse selection followed by moral hazard, where effort and the degree of risk aversion are private information of an agent who can control the mean and the variance of profits. For a given contract, more risk-averse agents suppIy more effort in risk reduction. If the marginal utility of incentives decreases with risk aversion, more risk-averse agents prefer lower-incentive contractsj thus, in the optimal contract, incentives are positively correlated with endogenous risk. In contrast, if risk aversion is high enough, the possibility of reduction in risk makes the marginal utility of incentives increasing in risk aversion and, in this case, risk and incentives are negatively related.

Essays on asymmetric information problems without the single-crossing property: applications to corporate finance

The objective of this dissertation is to re-examine classical issues in corporate finance, applying a new analytical tool. The single-crossing property, also called Spence-irrlees condition, is not required in the models developed here. This property has been a standard assumption in adverse selection and signaling models developed so far. The classical papers by Guesnerie and Laffont (1984) and Riley (1979) assume it. In the simplest case, for a consumer with a privately known taste, the single-crossing property states that the marginal utility of a good is monotone with respect to the taste. This assumption has an important consequence to the result of the model: the relationship between the private parameter and the quantity of the good assigned to the agent is monotone. While single crossing is a reasonable property for the utility of an ordinary consumer, this property is frequently absent in the objective function of the agents for more elaborate models. The lack of a characterization for the non-single crossing context has hindered the exploration of models that generate objective functions without this property. The first work that characterizes the optimal contract without the single-crossing property is Araújo and Moreira (2001a) and, for the competitive case, Araújo and Moreira (2001b). The main implication is that a partial separation of types may be observed. Two sets of disconnected types of agents may choose the same contract, in adverse selection problems, or signal with the same levei of signal, in signaling models.

Contractual solutions to the holdup problem: a survey

In this survey, we presented the general idea and main results from what we understand that are the most important contributions to contractual solutions to the holdup problem literature. The aim of this paper is to push the previous analysis, uniform the notation and provide a snapshot on the most recent literature, as well as bring topics for future inquires on this issue.

Adenopatia cervical tuberculosa em crianças: aspectos epidemiológicos, clínicos e laboratoriais

A tuberculose constitui um sério problema de saúde pública, sendo o M. tuberculosis o principal agente da doença no Brasil. Entre as formas extra pulmonares, a ganglionar periférica é uma das mais freqüentes na infância, apesar de pouco estudada. Com o objetivo de avaliar a incidência e conhecer os aspectos epidemiológicos, clínicos e laboratoriais da tuberculose ganglionar foram atendidas no ambulatório do Hospital Ofir Loiola, no período de janeiro de 1995 a dezembro de 1996, 73 crianças entre 0-14 anos, de ambos os sexos, portadoras de linfadenopatia cervical. A amostra foi dividida em dois grupos: o primeiro constituído por 61 crianças com adenopatias de outras etiologias e o segundo formado de 12 pacientes com etiologia tuberculosa. Nesse período, para as adenopatias tuberculosas, a taxa anual de incidência na área metropolitana de Belém, por 100 mil habitantes, foi de 1,03 e para o grupo de outras etiologias a incidência foi de 4,27 e 6,15 para os anos de 1995 e 1996, respectivamente. Verificou-se que a maioria das adenopatias na infância foram inespecíficas (64,4%), entretanto, quando consideradas somente as de etiologia conhecida, o risco relativo de ser tuberculose foi de 1,17. A análise comparativa entre os dois grupos não revelou diferença estatisticamente significativa no que tange à faixa etária, sexo, estado nutricional, apresentação clínica inicial, cadeias ganglionares comprometidas e características dos linfonodos. Em ambos foi observado maior incidência em pré-escolares e no sexo masculino. O comprometimento do estado nutricional pode ter contribuído para o aumento da morbidade em 41,7% dos casos de tuberculose. A presença de massa cervical constitui a queixa principal nos dois grupos embora durante o exame tenha sido constatado comprometimento ganglionar generalizado em 75,1% das crianças com adenopatia tuberculosa. Quanto à duração dos sintomas, os casos de adenopatia tuberculosa foram atendidos a partir do primeiro mês de doença e tiveram como manifestação clínica abscesso frio em 25% dos casos. A fonte de infecção foi identificada em 1/3 dos pacientes. A reação tuberculínica com leitura >10mm foi positiva em 63,6% das crianças tuberculosas. Entre os exames bacteriológicos realizados, a cultura constituiu o elemento fundamental para o diagnóstico de tuberculose, obtendo-se 100% de positividade nos exames realizados; a baciloscopia foi de menor importância. O exame histopatológico com lesão granulomatosa compatível com tuberculose foi observado em 88,9% dos casos. O comprometimento pulmonar associado esteve presente em 27, 3% das crianças tuberculosas. A resposta à terapêutica com esquema padronizado pelo Ministério da Saúde foi satisfatória, não tendo sido observados efeitos colaterais aos medicamentos utilizados.

Contractual Difficulties in Environmental Management and the Protection of Biodiversity: The Case of Conservation and Mitigation Banking

This paper offers a principal-agent model of feasible private contracting in mitigation and conservation banking aimed at the protection of natural habitat and bio-diversity of US wetlands and uplands. It is shown that while it is straightforward to design an incentive contract, such a contract may not achieve the federally mandated objective of no net loss of habitat. This is because the minimum payment required as an economic incentive to private agents may be greater than what they should receive for the habitat values that they actually created in the field. This possible problem is shown to derive from nonconvexity in the production possibility set between the biological value of land as natural habitat and in non-habitat uses such as in urban development. The paper concludes with a consideration of several institutional devises that may promote the convergence of private contracting and the attainment of no net loss. These include the payment of subsidies, greater accuracy in the identification of actual quality by the principal, and the use of several incentive alignment devises.

El cooperativismo y la financiación agrícola en Baja California, México (1930-1950) : Una aproximación inicial

Para la teoría neoclásica convencional el funcionamiento de los mercados de crédito soporta dos dificultades básicas: la información imperfecta o asimétrica y la selección adversa del prestatario aunada al riesgo del no pago. En el otro extremo, más heterodoxo, el colectivismo, el capital social y la formación de redes informales y sociedades de crédito suelen reducir los costes de transacción ligados al problema de la financiación. Este tipo de organización facilita el desenvolvimiento del cooperativismo en la economía. En México, después de la Revolución y la conformación de un régimen político autoritario y vertical, el cooperativismo se constituyó en uno de los referentes de la organización campesina para conseguir crédito de la banca pública y privada. En el noroeste del país y la península de Baja California, la existencia de cooperativas pesqueras, ganaderas, agrícolas y de transporte significó un despunte de la actividad económica y uno de los canales del desarrollo de la región. El propósito del artículo es perfilar qué tipo de cooperativismo se articuló en el Distrito Norte de la península de Baja California y qué tipo de relación guardó con el movimiento cooperativista nacional entre 1930 y 1950

El cooperativismo y la financiación agrícola en Baja California, México (1930-1950) : Una aproximación inicial

Para la teoría neoclásica convencional el funcionamiento de los mercados de crédito soporta dos dificultades básicas: la información imperfecta o asimétrica y la selección adversa del prestatario aunada al riesgo del no pago. En el otro extremo, más heterodoxo, el colectivismo, el capital social y la formación de redes informales y sociedades de crédito suelen reducir los costes de transacción ligados al problema de la financiación. Este tipo de organización facilita el desenvolvimiento del cooperativismo en la economía. En México, después de la Revolución y la conformación de un régimen político autoritario y vertical, el cooperativismo se constituyó en uno de los referentes de la organización campesina para conseguir crédito de la banca pública y privada. En el noroeste del país y la península de Baja California, la existencia de cooperativas pesqueras, ganaderas, agrícolas y de transporte significó un despunte de la actividad económica y uno de los canales del desarrollo de la región. El propósito del artículo es perfilar qué tipo de cooperativismo se articuló en el Distrito Norte de la península de Baja California y qué tipo de relación guardó con el movimiento cooperativista nacional entre 1930 y 1950

El cooperativismo y la financiación agrícola en Baja California, México (1930-1950) : Una aproximación inicial

Para la teoría neoclásica convencional el funcionamiento de los mercados de crédito soporta dos dificultades básicas: la información imperfecta o asimétrica y la selección adversa del prestatario aunada al riesgo del no pago. En el otro extremo, más heterodoxo, el colectivismo, el capital social y la formación de redes informales y sociedades de crédito suelen reducir los costes de transacción ligados al problema de la financiación. Este tipo de organización facilita el desenvolvimiento del cooperativismo en la economía. En México, después de la Revolución y la conformación de un régimen político autoritario y vertical, el cooperativismo se constituyó en uno de los referentes de la organización campesina para conseguir crédito de la banca pública y privada. En el noroeste del país y la península de Baja California, la existencia de cooperativas pesqueras, ganaderas, agrícolas y de transporte significó un despunte de la actividad económica y uno de los canales del desarrollo de la región. El propósito del artículo es perfilar qué tipo de cooperativismo se articuló en el Distrito Norte de la península de Baja California y qué tipo de relación guardó con el movimiento cooperativista nacional entre 1930 y 1950

Analysis of the Optimal Sharing of Construction Risk in Public Procurement Contracts

This paper discusses a model based on the agency theory to analyze the optimal transfer of construction risk in public works contracts. The base assumption is that of a contract between a principal (public authority) and an agent (firm), where the payment mechanism is linear and contains an incentive mechanism to enhance the effort of the agent to reduce construction costs. A theoretical model is proposed starting from a cost function with a random component and assuming that both the public authority and the firm are risk averse. The main outcome of the paper is that the optimal transfer of construction risk will be lower when the variance of errors in cost forecast, the risk aversion of the firm and the marginal cost of public funds are larger, while the optimal transfer of construction risk will grow when the variance of errors in cost monitoring and the risk aversion of the public authority are larger

A novel information theory method for filter feature selection

In this paper, we propose a novel filter for feature selection. Such filter relies on the estimation of the mutual information between features and classes. We bypass the estimation of the probability density function with the aid of the entropic-graphs approximation of Rényi entropy, and the subsequent approximation of the Shannon one. The complexity of such bypassing process does not depend on the number of dimensions but on the number of patterns/samples, and thus the curse of dimensionality is circumvented. We show that it is then possible to outperform a greedy algorithm based on the maximal relevance and minimal redundancy criterion. We successfully test our method both in the contexts of image classification and microarray data classification.

Discretion and Accountability: The ESMA Judgment and the Meroni Doctrine. Bruges European Economic Research (BEER) Papers 30/2014

This paper assesses the effectiveness of the Meroni doctrine in the light of the recent judgment in the ESMA case. The first part explains in detail the problem of delegation of powers in the EU from the perspective of the principal-agent theory and complements it with the analysis of the trade-off between different levels of independence and accountability of agencies. A simple economic model is developed to illustrated the relationship between the independence and accountability of an agency. It shows that it is the accountability mechanism that induces the agent to act, rather than the extent of his independence. The paper also explains the inter-temporal interactions between the principal and the agent on the basis of the incentives in place for the different players. The second part is devoted to analysis of the functioning of ESMA in the context of its delegated powers. After the presentation of main aspects of the regulatory framework establishing ESMA, the paper continuous with an analysis and interpretation of the discretionary powers of ESMA. The rather rigid position of the Court of Justice in relation to the Meroni doctrine seems to be unsuitable to delegation of complex regulatory tasks. This is particularly evident in the case of financial markets. Finally, the judgment does not examine in any detail whether and how the principals - i.e. the EU and Member States - are best able to evaluate the quality of ESMA decisions and regulations and whether there are different but more effective accountability mechanisms.

Determination whether the causal agent for Mussel die-offs in the Mississippi River is of chemical or biological origin : final report /

"ILENR/RE-WR-90/09."

Speciális kockázatok és kockázatkezelés a kockázatitőke-finanszírozásban (The special risks and risk management of venture capital)

A tanulmányban a szerzők arra a kérdésre keresik a választ, hogy az aszimmetrikus információk hatására a vállalkozók és a befektetők között kialakuló megbízó-ügynök viszonynak melyek a speciális vetületei a kockázatitőke-finanszírozás vonatkozásában. A szerzők arra a következtetésre jutottak, hogy a hiányos információk, a megbízó-ügynök viszony, illetve az ügyletek speciális jellege miatt fokozottan jelentkező ügynökprobléma kezelésére a kockázatitőke-finanszírozás szereplői speciális kockázatkezelési technikákat alkalmaznak. Ilyenek a magas elvárt hozamok, a szigorú kiválasztási kritériumok, a speciális befektetési vagy szindikátusi szerződések, a befektetést követő monitoring tevékenység, a több lépcsőben történő finanszírozás és a portfólióvállalatok hálózatba szervezése. A speciális kockázati megközelítés következtében a befektetéseket opciós szemlélet is áthatja. _____ This paper focuses on the special aspects of imperfect information in case of venture capital financing including principal-agent relationship between entrepreneurs and investors as well as adverse selection that evolves as a result of information asymmetries. The authors’ finding is that venture capital is able to manage the problems caused by imperfect information via applying divers risk management techniques such as high profit expectations, scrutiny of portfolio-companies, the use of special contracting stipulations and syndicate agreements, the monitoring of investments, multi-staged financing of companies and the integration of portfolio-companies into networks. In addition to the risk management techniques the authors also give the interpretation of the unique attitude of venture capital toward uncertainty and its special real option-like risk valuation approach that makes venture capitalists capable of handling high uncertainty under imperfect information.

Sales tax enforcement: An empirical analysis of compliance enforcement methodologies and pathologies

Most research on tax evasion has focused on the income tax. Sales tax evasion has been largely ignored and dismissed as immaterial. This paper explored the differences between income tax and sales tax evasion and demonstrated that sales tax enforcement is deserving of and requires the use of different tools to achieve compliance. Specifically, the major enforcement problem with sales tax is not evasion: it is theft perpetrated by companies that act as collection agents for the state. Companies engage in a principal-agent relationship with the state and many retain funds collected as an agent of the state for private use. As such, the act of sales tax theft bears more resemblance to embezzlement than to income tax evasion. It has long been assumed that the sales tax is nearly evasion free, and state revenue departments report voluntary compliance in a manner that perpetuates this myth. Current sales tax compliance enforcement methodologies are similar in form to income tax compliance enforcement methodologies and are based largely on trust. The primary focus is on delinquent filers with a very small percentage of businesses subject to audit. As a result, there is a very large group of noncompliant businesses who file on time and fly below the radar while stealing millions of taxpayer dollars. ^ The author utilized a variety of statistical methods with actual field data derived from operations of the Southern Region Criminal Investigations Unit of the Florida Department of Revenue to evaluate current and proposed sales tax compliance enforcement methodologies in a quasi-experimental, time series research design and to set forth a typology of sales tax evaders. This study showed that current estimates of voluntary compliance in sales tax systems are seriously and significantly overstated and that current enforcement methodologies are inadequate to identify the majority of violators and enforce compliance. Sales tax evasion is modeled using the theory of planned behavior and Cressey’s fraud triangle and it is demonstrated that proactive enforcement activities, characterized by substantial contact with non-delinquent taxpayers, results in superior ability to identify noncompliance and provides a structure through which noncompliant businesses can be rehabilitated.^