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.

Trade policy in a dynamic Heckscher-Ohlin model

The Import Substitution Process in Latin Amer ica was an attempt to enhance GDP growth and productivity by rising trade barriers upon capital-intensive products. Our main goal is to analyze how an increase in import tariff on a particular type of good affects the production choices and trade pattern of an economy. We develop an extension of the dynamic Heckscher-Ohlin model – a combination of a static two goods, two-factor Heckscher-Ohlin model and a two-sector growth model – allowing for import tariff. We then calibrate the closed economy model to the US. The results show that the economy will produce less of both consumption and investment goods under autarky for low and high levels of capital stock per worker. We also find that total GDP may be lower under free trade in comparison to autarky.

A new institutional approach to Japanese firms' foreign direct investment under free trade agreements

This paper examines the determinants of foreign direct investment (FDI) under free trade agreements (FTAs) from a new institutional perspective. First, the determinants of FDI are theoretically discussed from a new institutional perspective. Then, FDI is statistically analyzed at the aggregate level. Kernel density estimation of firm-size reveals some evidence of "structural changes" after FTAs, as characterized by the investing firms' paid-up capital stock. Statistical tests of the average and variance of the size distribution confirm this in the case of FTAs with Asian partner countries. For FTAs with South American partner countries, the presence of FTAs seems to promote larger-scale FDIs. These results remain correlational instead of causal, and more statistical analyses would be needed to infer causality. Policy implications suggest that participants should consider "institutional" aspects of FTAs, that is, the size matters as a determinant of FDI. Future work along this line is needed to study "firm heterogeneity."

Income tax procedure ... /

Edition for 1926, v. 2 with title: Excess profits, estate, gift, capital stock procedure, also published separately.

The value of dividend imputation tax credits in Australia

A dividend imputation tax system provides shareholders with a credit (for corporate tax paid) that can be used to offset personal tax on dividend income. This paper shows how to infer the value of imputation tax credits from the prices of derivative securities that are unique to Australian retail markets. We also test whether a tax law amendment that was designed to prevent the trading of imputation credits affected their economic value. Before the amendment, tax credits were worth up to 50% of face value in large, high-yielding companies, but Subsequently it is difficult to detect any value at all. (C) 2003 Elsevier B.V. All rights reserved.

On measuring wealth: A case study on the state of Queensland

In order for policy makers to plan effectively for sustainable development, there is a need for measures of welfare that consider changes in the natural capital stock. Current measures based on conventional national accounting are flawed because they are based solely on flow measures and do not account for environmental effects. In this paper, we use an expanded measure of wealth to estimate the value of natural capital for Queensland. The state's stock of natural capital is valued at A$355.6 billion, of which non-timber forest resources account for 45.3%, ecosystem services 20.0%, and mineral resources 17.6%. This figure is a conservative estimate of the true value since some significant components such as the ecological and life-support functions of the environment are excluded. The estimates highlight the relative importance of different forms of natural capital and can be used to draw the attention of policymakers to the need to give adequate weight to the value of such services in decision-making processes. (c) 2005 Elsevier Ltd. All rights reserved.

Measurement of productivity index with dynamic DEA

Fare, Grosskopf, Norris and Zhang developed a non-parametric productivity index, Malmquist index, using data envelopment analysis (DEA). The Malmquist index is a measure of productivity progress (regress) and it can be decomposed to different components such as 'efficiency catch-up' and 'technology change'. However, Malmquist index and its components are based on two period of time which can capture only a part of the impact of investment in long-lived assets. The effects of lags in the investment process on the capital stock have been ignored in the current model of Malmquist index. This paper extends the recent dynamic DEA model introduced by Emrouznejad and Thanassoulis and Emrouznejad for dynamic Malmquist index. This paper shows that the dynamic productivity results for Organisation for Economic Cooperation and Development countries should reflect reality better than those based on conventional model.

A mathematical model for dynamic efficiency using data envelopment analysis

In this paper we propose a data envelopment analysis (DEA) based method for assessing the comparative efficiencies of units operating production processes where input-output levels are inter-temporally dependent. One cause of inter-temporal dependence between input and output levels is capital stock which influences output levels over many production periods. Such units cannot be assessed by traditional or 'static' DEA which assumes input-output correspondences are contemporaneous in the sense that the output levels observed in a time period are the product solely of the input levels observed during that same period. The method developed in the paper overcomes the problem of inter-temporal input-output dependence by using input-output 'paths' mapped out by operating units over time as the basis of assessing them. As an application we compare the results of the dynamic and static model for a set of UK universities. The paper is suggested that dynamic model capture the efficiency better than static model. © 2003 Elsevier Inc. All rights reserved.

Classical and technological convergence:beyond the Solow-Swann model

Recent investigations into cross-country convergence follow Mankiw, Romer, and Weil (1992) in using a log-linear approximation to the Swan-Solow growth model to specify regressions. These studies tend to assume a common and exogenous technology. In contrast, the technology catch-up literature endogenises the growth of technology. The use of capital stock data renders the approximations and over-identification of the Mankiw model unnecessary and enables us, using dynamic panel estimation, to estimate the separate contributions of diminishing returns and technology transfer to the rate of conditional convergence. We find that both effects are important.

Essays in open economy macroeconomics

Research macroeconomists have witnessed remarkable methodological developments in mathematical, statistical, and computational tools during the last two decades. The three essays in this dissertation took advantage of these advances to analyze important macroeconomic issues. ^ The first essay, “ Habit Formation, Adjustments Costs, and International Business Cycle Puzzles” analyzes the extent to which incorporating habit formation and adjustment costs in investment in a one-good two-country general equilibrium model would help overcome some of the international business cycle puzzles. Unlike standard results in the literature, the model generates persistent, cyclical adjustment paths in response to shocks. It also yields positive cross-country correlations in consumption, employment, investment, and output. Cross-country correlations in output are higher than the ones in consumption. This is qualitatively consistent with the stylized facts. These results are particularly striking given the predicted negative correlations in investment, employment, and output that are typically found in the literature. ^ The second essay, “Comparison Utility, Endogenous Time Preference, and Economic Growth,” uses World War II as a natural experiment to analyze the degree to which a model where consumers' preferences exhibit comparison-based utility and endogenous discounting is able to improve upon existing models in mimicking the transitional dynamics of an economy after a shock that destroys part of its capital stock. The model outperforms existing ones in replicating the behavior of the saving rate (both on impact and along the transient paths) after this historical event. This result brings additional support to the endogenous rate of time preference being a crucial element in growth models. ^ The last essay, “Monetary Policy under Fear of Floating: Modeling the Dominican Economy,” presents a small scale macroeconomic model for a country (Dominican Republic) characterized by a strong presence of fear of floating (reluctance to have a flexible exchange rate regime) in the conduct of monetary policy. The dynamic responses of this economy to external shocks that are of interest for monetary policy purposes are analyzed under two alternative interest rate policy rules: One being the standard Taylor rule and another that responds explicitly to deviations of the exchange rate with respect to its long-term trend. ^

Essays on political economy

The first chapter analizes conditional assistance programs. They generate conflicting relationships between international financial institutions (IFIs) and member countries. The experience of IFIs with conditionality in the 1990s led them to allow countries more latitude in the design of their reform programs. A reformist government does not need conditionality and it is useless if it does not want to reform. A government that faces opposition may use conditionality and the help of pro-reform lobbies as a lever to counteract anti-reform groups and succeed in implementing reforms.^ The second chapter analizes economies saddled with taxes and regulations. I consider an economy in which many taxes, subsidies, and other distortionary restrictions are in place simultaneously. If I start from an inefficient laissez-faire equilibrium because of some domestic distortion, a small trade tax or subsidy can yield a first-order welfare improvement, even if the instrument itself creates distortions of its own. This may result in "welfare paradoxes". The purpose of the chapter is to quantify the welfare effects of changes in tax rates in a small open economy. I conduct the simulation in the context of an intertemporal utility maximization framework. I apply numerical methods to the model developed by Karayalcin. I introduce changes in the tax rates and quantify both the impact on welfare, consumption and foreign assets, and the path to the new steady-state values.^ The third chapter studies the role of stock markets and adjustment costs in the international transmission of supply shocks. The analysis of the transmission of a positive supply shock that originates in one of the countries shows that on impact the shock leads to an inmediate stock market boom enjoying the technological advance, while the other country suffers from depress stock market prices as demand for its equity declines. A period of adjustment begins culminating in a steady state capital and output level that is identical to the one before the shock. The the capital stock of one country undergoes a non-monotonic adjustment. The model is tested with plausible values of the variables and the numeric results confirm the predictions of the theory.^

Essays in Open Economy Macroeconomics

Research macroeconomists have witnessed remarkable methodological developments in mathematical, statistical, and computational tools during the last two decades. The three essays in this dissertation took advantage of these advances to analyze important macroeconomic issues. The first essay, “ Habit Formation, Adjustments Costs, and International Business Cycle Puzzles” analyzes the extent to which incorporating habit formation and adjustment costs in investment in a one-good two-country general equilibrium model would help overcome some of the international business cycle puzzles. Unlike standard results in the literature, the model generates persistent, cyclical adjustment paths in response to shocks. It also yields positive cross-country correlations in consumption, employment, investment, and output. Cross-country correlations in output are higher than the ones in consumption. This is qualitatively consistent with the stylized facts. These results are particularly striking given the predicted negative correlations in investment, employment, and output that are typically found in the literature. The second essay, “Comparison Utility, Endogenous Time Preference, and Economic Growth,” uses World War II as a natural experiment to analyze the degree to which a model where consumers' preferences exhibit comparison-based utility and endogenous discounting is able to improve upon existing models in mimicking the transitional dynamics of an economy after a shock that destroys part of its capital stock. The model outperforms existing ones in replicating the behavior of the saving rate (both on impact and along the transient paths) after this historical event. This result brings additional support to the endogenous rate of time preference being a crucial element in growth models. The last essay, “Monetary Policy under Fear of Floating: Modeling the Dominican Economy,” presents a small scale macroeconomic model for a country (Dominican Republic) characterized by a strong presence of fear of floating (reluctance to have a flexible exchange rate regime) in the conduct of monetary policy. The dynamic responses of this economy to external shocks that are of interest for monetary policy purposes are analyzed under two alternative interest rate policy rules: One being the standard Taylor rule and another that responds explicitly to deviations of the exchange rate with respect to its long-term trend.

Essays On Political Economy

The first chapter analizes conditional assistance programs. They generate conflicting relationships between international financial institutions (IFIs) and member countries. The experience of IFIs with conditionality in the 1990s led them to allow countries more latitude in the design of their reform programs. A reformist government does not need conditionality and it is useless if it does not want to reform. A government that faces opposition may use conditionality and the help of pro-reform lobbies as a lever to counteract anti-reform groups and succeed in implementing reforms. The second chapter analizes economies saddled with taxes and regulations. I consider an economy in which many taxes, subsidies, and other distortionary restrictions are in place simultaneously. If I start from an inefficient laissez-faire equilibrium because of some domestic distortion, a small trade tax or subsidy can yield a first-order welfare improvement, even if the instrument itself creates distortions of its own. This may result in "welfare paradoxes". The purpose of the chapter is to quantify the welfare effects of changes in tax rates in a small open economy. I conduct the simulation in the context of an intertemporal utility maximization framework. I apply numerical methods to the model developed by Karayalcin. I introduce changes in the tax rates and quantify both the impact on welfare, consumption and foreign assets, and the path to the new steady-state values. The third chapter studies the role of stock markets and adjustment costs in the international transmission of supply shocks. The analysis of the transmission of a positive supply shock that originates in one of the countries shows that on impact the shock leads to an inmediate stock market boom enjoying the technological advance, while the other country suffers from depress stock market prices as demand for its equity declines. A period of adjustment begins culminating in a steady state capital and output level that is identical to the one before the shock. The the capital stock of one country undergoes a non-monotonic adjustment. The model is tested with plausible values of the variables and the numeric results confirm the predictions of the theory.

O processo de organização social do Grupo Herança Viva de Chapecó-SC e suas estratégias de ação conjunta

The consequences resulting from economic modernization model generated social and environmental imbalances, resulting in the exclusion and social isolation, perceived consequences in the agricultural sector. When studying social organizations, tends to see how they keep their forward cooperation processes all a company incorporated by the appreciation of individualism and competition. The overall objective for this research was to analyze the organizational dynamics of Agroecology Group Heritage Viva Chapecó, Santa Catarina, in order to identify the strengths and threats and collaborate in this way for preparation of action strategies for sustainability. The selected group is based on the principles of agroecology for the conduct of their agricultural production systems, avoiding the use of agrochemicals, proven through the use of participatory certification seal Ecovida Network, and the products sold mainly in street fairs in the city of chapecó. To fulfill such a proposal were consulted the minutes of meetings and questionnaires with farmers to assess the dynamics of cooperation among its members, through the understanding of their social capital and social network analysis (SNA). To extend the study of the group and its members was adopted methodological approach of action research where activities were developed to identify strengths and weaknesses and contribute to its organizational restructuring, resulting in the construction, carried out by farmers, the guiding principles of the Living Heritage Group will contribute to the decision-making and strengthen their identity. The survey also brought the group is inserted in the Social Transition Agroecology therefore change the current paradigm is not inserted only in the alternative model of production, but in the form of organization of social actors and their role in the marketing process of their products, in discussing the scenario of food supply chains.

Explaining economic growth in developed economies after 1980

We use the Aguion and Howitt (2009) theoretical model of endogenous economic growth to explain the declining economic growth in developed economies in the period 1981-2009. Aguion and Howitt theoretical framework combines Solownian and Schumpeterian elements in a single scenario, so that labor-augmenting technological progress and capital accumulation per efficiency unit of labor are both caused not only by exogenous changes in the investment rate but also by shocks to the degree of efficiency in the Research and Development (R&D) expenditure process. Empirical results revealed that per worker output growth rates and capital stock per efficiency unit of labor growth rates both have a common panel unit root. Since the panel cointegration tests and estimates revealed a statistical significant negative long-run relationship between per worker output growth rate and capital stock per efficiency unit of labor, the interpretation of the econometric results analized from the Aguion and Howitt ́s theoretical perspective is that labor-augmenting technological progress is endogenously falling over time mainly because of an exogenous deterioration of the environment conditions for the transformation of the investment rate and R&D expenditures in technological progress.