Investment coordination failures and the confidence channel of fiscal policy

Este trabalho desenvolve um novo "canal de Confiança" da política fiscal e caracteriza a política ótima quando esse canal é levado em consideração. Para esse objetivo, utilizamos um modelo estático com (i) concorrência monopolística, (ii) custos de ajustamento fixos para investir, (iii) complementaridade estratégica devido a informação imperfeita com respeito a produtividade agregada, e (iv) bens privados como substitutos imperfeitos de bens privados. Este arcabouço acomoda a possibilidade de falhas de coordenação nos investimentos, mas apresenta um equilíbrio único. Mostramos que a política fiscal tem efeitos importantes na coordenação. Um aumento dos gastos do governo leva a uma maior demanda por bens privados. Mais importante, este também afeta as expectativas de ordem superior com relação a demanda das demais firmas, que amplifica os efeitos do aumento inicial da demanda devido a complementaridade estratégica nas decisões de investimento. Como as demais firmas estão se deparam com uma demanda maior, espera-se que estas invistam mais, que por sua vez, aumenta a demanda individual de cada firma, que aumenta os incentivos a investir. Denominamos isto como o "canal de confiança" da política fiscal. Sob a ameaça de falhas de coordenação, a política fiscal ótima prescreve produzir além do ponto em que o benefício marginal resultante do consumo de bens públicos é igual ao custo marginal desses bens. Este benefício adicional vem do fato de que a política fiscal pode ampliar a coordenação dos investimentos.

Essays on the credit channel of monetary policy: a case study for Brazil

The onset of the financial crisis in 2008 and the European sovereign crisis in 2010 renewed the interest of macroeconomists on the role played by credit in business cycle fluctuations. The purpose of the present work is to present empirical evidence on the monetary policy transmission mechanism in Brazil with a special eye on the role played by the credit channel, using different econometric techniques. It is comprised by three articles. The first one presents a review of the literature of financial frictions, with a focus on the overlaps between credit activity and the monetary policy. It highlights how the sharp disruptions in the financial markets spurred central banks in developed and emerging nations to deploy of a broad set of non conventional tools to overcome the damage on financial intermediation. A chapter is dedicated to the challenge face by the policymaking in emerging markets and Brazil in particular in the highly integrated global capital market. This second article investigates the implications of the credit channel of the monetary policy transmission mechanism in the case of Brazil, using a structural FAVAR (SFAVAR) approach. The term “structural” comes from the estimation strategy, which generates factors that have a clear economic interpretation. The results show that unexpected shocks in the proxies for the external finance premium and the credit volume produce large and persistent fluctuations in inflation and economic activity – accounting for more than 30% of the error forecast variance of the latter in a three-year horizon. Counterfactual simulations demonstrate that the credit channel amplified the economic contraction in Brazil during the acute phase of the global financial crisis in the last quarter of 2008, thus gave an important impulse to the recovery period that followed. In the third articles, I make use of Bayesian estimation of a classical neo-Keynesian DSGE model, incorporating the financial accelerator channel developed by Bernanke, Gertler and Gilchrist (1999). The results present evidences in line to those already seen in the previous article: disturbances on the external finance premium – represented here by credit spreads – trigger significant responses on the aggregate demand and inflation and monetary policy shocks are amplified by the financial accelerator mechanism. Keywords: Macroeconomics, Monetary Policy, Credit Channel, Financial Accelerator, FAVAR, DSGE, Bayesian Econometrics

Effects of trade policy on technology adoption and investment

This paper studies the consequences of trade policy for the adoption of new technologies. It develops a dynamic international trade model with two sectors. Workers in manufacturing decide if new technologies are used, capital owners then choose investment. We analyze three different arrangements: free trade, tariffs, and quotas. In the model economy, free trade as well as tariffs guarantee that the most productive technology available will be used. In contrasL under a quota the most productive technology available will not be used at all times. Further, in the latter case investment and the capital stock are smaller than in the former one. Finally, there exists parameter values for which the computed difference in GDP is a factor of thirty.

About DAPP: Meet the Department of Public Policy Analysis

The Department of Public Policy Analysis of Getulio Vargas Foundation (DAPP-FGV) is a research boutique concerned with the innovation of state structures and the relations between these and Civil Society, based on an interdisciplinary approach of applied social science, together with Information and Communication Technologies.

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.

Firm financial constraints and the impact of monetary policy: evidence from financial conglomerates

Building on recent evidence on the functioning of internal capital markets in financial conglomerates, this paper conducts a novel test of the balance sheet channel of monetary policy. It does so by comparing monetary policy responses of small banks that are affiliated with the same bank holding company, and this arguably face similar constraints in accessing internal/external sources of funds, but that operate in different geographical regions, and thus face different pools of borrowers. Because these subsidiaries typically concentrate their lending with small local businesses, we can use cross-sectional differences in state-level economic indicators at the time of changes of monetary policy to study whether or not the strength of borrowers' balance sheets influences the response of bank lending. We find evidence that the negative response of bank loan growth to a monetary contraction is significantly stronger when borrowers have 'weak balance sheets. Our evidence suggests that the monetary authority should consider the amplification effects that financial constraints play following changes in basic interest rates and the role of financial conglomerates in the transmission of monetary policy.

Morphological aspects of cluster formation in the germarium of the sugarcane borer Diatraea saccharalis Fabricius (Lepidoptera : Pyralidae)

Diatraea saccharalis F. is one of the greatest pests of the sugar cane culture. This report aimed to characterize the germanium region of the sugarcane borer by light and transmission electron microscopy, emphasizing the morphological steps of the ovarian cluster formation. In the germanium of this insect, four zones could be morphologically identified during the cluster formation. In the most apical end of each ovariole - Zone I - the germ line stem cells undergo complete mitotic division, originating the cystoblasts. In the Zone II, each cystoblast produces a group of eight cells, the cystocytes, which are interconnected by the ring canals. Clusters containing all the cystocytes in the meiosis, characterizes the Zone III. Germ cells with ultrastructural features of apoptosis are also detected in this Zone. In the Zone IV the cystocytes differentiate, morphologically, into one oocyte and seven nurse cells. Interstitial somatic cells and pre-follicle cells exhibit, in their cytoplasm, heterogeneous vacuoles containing degenerated cellular fragments, characterized as apoptotic bodies. Our results pointed out to the morphological evidences related with important control mechanisms for new clusters/follicles production and for the cellular arrangement into the germanium, resulting from the programmed cell death. We believe that the morphological characterization of ovarian cluster formation in D. saccharalis provided valuable information for the understanding of the initial steps of oogenesis and contributed for the knowledge of the cellular mechanisms related with the oocyte production and with reproduction in insects.

Dynamic behavior of cluster observables for the 2d Ising model

We present results of our numerical study of the critical dynamics of percolation observables for the two-dimensional Ising model. We consider the (Monte Carlo) short-time evolution of the system with small initial magnetization and heat-bath dynamics. We find qualitatively different dynamic behaviors for the magnetization M and for Ω, the so-called strength of the percolating cluster, which is the order parameter of the percolation transition. More precisely, we obtain a (leading) exponential form for Ω as a function of the Monte Carlo time t, to be compared with the power-law increase encountered for M at short times. Our results suggest that, although the descriptions in terms of magnetic or percolation order parameters may be equivalent in the equilibrium regime, greater care must be taken to interpret percolation observables at short times.

Evolution of fiscal policy in the Caribbean: based on data for the period 1987-1996

Includes bibliography

Distributive impact of public policy

Includes bibliography

The Role of Tax Policy in the Context of the Global Crisis: consequences and prospects

Includes bibliography

The role of tax policy in the context of the crisis: possibilities and limitations

Includes bibliography

Theory and practice of industrial policy: evidence from the Latin American experience

Includes bibliography