The Long-Run Relationship between Money, Nominal GDP, and the Price Level in Venezuela: 1950 to 1996

This paper explores whether a significant long-run relationship exists between money and nominal GDP and between money and the price level in the Venezuelan economy. We apply time-series econometric techniques to annual data for the Venezuelan economy for 1950 to 1996. An important feature of our analysis is the use of tests for unit roots and cointegration with structural breaks. Certain characteristics of the Venezuelan experience suggest that structural breaks may be important. Since the economy depends heavily on oil revenue, oil price shocks have had important influences on most macroeconomic variables. Also since the economy possesses large foreign debt, the world debt crisis that exploded in 1982 had pervasive effects on the Venezuelan economy. Radical changes in economic policy and political instability may have also significantly affected the movement of the macroeconomy. We find that a long-run relationship exists between narrow money (M1) and nominal GDP, the GDP deflator, and the CPI when one makes allowances for one or two structural breaks. We do not find such long-run relationships when broad money (M2) is used.

Equity Markets, the Money Market, and Long-Run Monetary Neutrality

This paper outlines a process for teaching long-run neutrality of money, drawing an analogy between equity markets and the money market. The key points in the discussion include the following: (1) What is the price of money? (2) Why does the long-run demand for money trace out a rectangular hyperbola? (3) Why does the slow adjustment of goods and service prices to changes in the stock of money lead to a different short-run demand for money? and (4) Why does a successful currency reform generate similar short-run movements in the price of money as movements in equity share prices after a change in the supply of shares? I have used this approach successfully for over 30 years at all levels, wherever I need to discuss the money market in a macroeconomic model.

The Long-Run Phillips Curve: A Structural VAR Investigation

Both cointegration methods, and non-cointegrated structural VARs identified based on either long-run restrictions, or a combination of long-run and sign restrictions, are used in order to explore the long-run trade-off between inflation and the unemployment rate in the post-WWII U.S., U.K., Euro area, Canada, and Australia. Overall, neither approach produces clear evidence of a non-vertical trade-off. The extent of uncertainty surrounding the estimates is however substantial, thus implying that a researcher holding alternative priors about what a reasonable slope of the long-run trade-off might be will likely not see her views falsified

The future of the area of freedom, security and justice. Addressing mobility, protection and effectiveness in the long run. EPC Discussion Paper, 23 January 2014

With the Stockholm Programme coming to an end in 2014, the “Brussels Community” is increasing agitated with a recurring question: what will replace the Stockholm Programme? Paradoxically, this uncertainty is fuelled by the existence of a new and clear Treaty provision – Article 68 TFEU – which states “The European Council shall define the strategic guidelines for legislative and operational planning within the area of freedom, security and justice”. Clear in its wording, this provision may lead to different understandings and unclear implications in practice. In order to provide more clarity, the European Policy Centre (EPC) set up a Task Force to reflect on the impact of this provision and more generally the future of the area of freedom, security and justice after 2014. Results of this process are reflected in this discussion paper which addresses the process and content regarding the definition of future strategic guidelines.

Falling Labor Share and Rising Unemployment: Long-Run Consequences of Institutional Shocks? CES Germany & Europe Working Papers, No. 00.2, 1999

The literature on unemployment has mostly focused on labor market issues while the impact of capital foonation is largely neglected Job-creation is often thought to be a matter of encouraging more employment on a given capital stock. In contrast, this paper explicitly deals with the long-run consequences of institutional shocks on capital foonation and employment. It is shown that the usual trade off between employment and wages disappears in the long run. In line with an appropriation model, the estimated values for the long-run elasticities of substitution between capital and labor for Germany and France are substantially greater than one.

Closing the fiscal policy loop : a long-run analysis /

Mode of access: Internet.

An analysis of the automobile market: modeling of the long-run determinants of the demand for automobiles. Volume III: appendices to the Wharton E.F.A. Automobile Demand Model. Final report.

Transportation Department, Washington, D.C.

An analysis of the automobile market: modeling of the long-run determinants of the demand for automobiles. Volume II: simulation analysis using the Wharton E.F.A. Automobile Demand Model. Final report.

Transportation Department, Washington, D.C.

An analysis of the automobile market: modeling of the long-run determinants of the demand for automobiles. Volume I: the Wharton E.F.A. Automobile Demand Model. Final report.

Transportation Department, Washington, D.C.

Financing social security : issues and options for the long run.

"November 1982"--Cover.

Simulating the long-run aggregate economic and intergenerational redistributive effects of social security policy /

"August 1992."

Essays on investment, growth and income distribution

In this dissertation, I examine both theoretically and empirically the relationship between stock prices and income distribution using an endogenous growth model with social status impatience.^ The theoretical part looks into how status impatience and current economic status jointly determine time preference, savings, future economic status, stock prices, growth and wealth distribution in the steady state. This work builds on Burgstaller and Karayalcin (1996).^ More specifically, I look at (i) the effects of the distribution of status impatience levels on the distribution of steady state assets, incomes and consumption and (ii) the effects of changes in relative levels of status impatience on stock prices. Therefore, from (i) and (ii), I derive the correlation between stock prices, incomes and asset distribution. Also, the analysis of the stack market is undertaken in the presence of adjustment costs to investments.^ The empirical chapter looks at (i) the correlation between income inequality and long run economic growth on the one hand and (ii) the correlation between stock market prices and income inequality on the other. The role of stock prices and social status is examined to better understand the forces that enable a country to grow overtime and to determine why output per capita varies across countries. The data are from Summers and Heston (1988), Barro and Wolf (1989), Alesina and Rodrik (1994), Global financial Database (1997) and the World Bank. Data for social status are collected through a primary sample survey on the internet. Twenty-five developed and developing countries are included in the sample.^ The model developed in this study was specified as a system of simultaneous equations, in which per capita growth rate and income inequality were endogenous variables. Additionally, stock price index and social status measures were also incorporated. The results indicate that income inequality is inversely related to economic growth. In addition, increase in income inequality arising from higher stock prices constrains growth. Moreover, where social status is determined by income levels, it influences long run growth. Therefore, these results support findings of Persson and Tabellini (1994) and Alesina and Rodrik (1994). ^

Three Essays on Taxation, Growth and Consumption

The purpose of this dissertation is to examine three distributional issues in macroeconomics. First I explore the effects fiscal federalism on economic growth across regions in China. Using the comprehensive official data set of China for 31 regions from 1952 until 1999, I investigate a number of indicators used by the literature to measure federalism and find robust support for only one such measure: the ratio of local total revenue to local tax revenue. Using a difference-in-difference approach and exploiting the two-year gap in the implementation of a tax reform across different regions of China, I also identify a positive relationship between fiscal federalism and regional economic growth. The second paper hypothesizes that an inequitable distribution of income negatively affects the rule of law in resource-rich economies and provides robust evidence in support of this hypothesis. By investigating a data set that contains 193 countries and using econometric methodologies such as the fixed effects estimator and the generalized method of moments estimator, I find that resource-abundance improves the quality of institutions, as long as income and wealth disparity remains below a certain threshold. When inequality moves beyond this threshold, the positive effects of the resource-abundance level on institutions diminish quickly and turn negative eventually. This paper, thus, provides robust evidence about the endogeneity of institutions and the role income and wealth inequality plays in the determination of long-run growth rates. The third paper sets up a dynamic general equilibrium model with heterogeneous agents to investigate the causal channels which run from a concern for international status to long-run economic growth. The simulation results show that the initial distribution of income and wealth play an important role in whether agents gain or lose from globalization.

Pre-colonial institutions and long-run development in Latin America

The present doctoral thesis studies the association between pre-colonial institutions and long-run development in Latin America. The thesis is organised as follows: Chapter 1 places the motivation of the thesis by underlying relevant contributions in the literature on long-run development. I then set out the main objective of the thesis, followed by a brief outline of it. In Chapter 2, I study the effects of pre-colonial institutions on present-day socioeconomic outcomes for Latin America. The main thesis of this chapter is that more advanced pre-colonial institutions relate to better socioeconomic outcomes today - principally, but not only, through their effects on the Amerindian population. I test such hypothesis with a dataset of 324 sub-national administrative units covering all mainland Latin American countries. The extensive range of controls covers factors such as climate, location, natural resources, colonial activities and pre-colonial characteristics - plus country fixed effects. Results strongly support the main thesis. In Chapter 3, I further analyse the association between pre-colonial institutions and present-day economic development in Latin America by using the historical ethnic homelands as my main unit of analysis. The main hypothesis is that ethnic homelands inhabited by more advanced ethnic groups -as measured by their levels of institutional complexity- relate to better economic development today. To track these long-run effects, I construct a new dataset by digitising historiographical maps allowing me to pinpoint the geospatial location of ethnic homelands as of the XVI century. As a result, 375 ethnic homelands are created. I then capture the levels of economic development at the ethnic homeland level by making use of alternative economic measures --satellite light density data. After controlling for country-specific characteristics and applying a large battery of geographical, locational, and historical factors, I found that the effects of pre-colonial institutions relate to a higher light density --as a proxy for economic activity- in ethnic homelands where more advanced ethnic groups lived. In Chapter 4, I explore a mechanism linking the persistence of pre-colonial institutions in Latin America over the long-run: Colonial and post-colonial strategies along with the ethnic political capacity worked in tandem allowing larger Amerindian groups to "support" the new political systems in ways that would benefit their respective ethnic groups as well as the population at large. This mechanism may have allowed the effects of pre-colonial institutions to influence socioeconomic development outcomes up to today. To shed lights on this mechanism, I combine the index of pre-colonial institutions prepared for the second chapter of the present thesis with individual-level survey data on people's attitudes. By controlling for key observable and unobservable country-specific characteristics, the main empirical results show that areas with a history of more advanced pre-colonial institutions increase the probability of individuals supporting present-day political institutions. Finally, in Chapter 5, I summarise the main findings of the thesis, and emphasise the key weaknesses of the study as well as potential avenues for future research.