Characterization of equilibria at which the advantageous gift phenomenon occurs
N 611, 01/06/2013
Yves Balasko.
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N 611, 01/06/2013
Yves Balasko.
N 610, 30/05/2013
The Heckscher-Ohlin model with arbitrary number of goods, factors and
countries (consumers) and no restrictions on factor trading is shown to be
equivalent to an exchange model whose goods are the productive factors while
consumer’s indirect demands for factors are derived from their actual demands
for consumption goods. This equivalence enables one to import properties like
the pathconnectedness of the equilibrium manifold, the uniqueness of equilibrium
for sufficiently small volumes of trade and discontinuities of equilibrium
selection maps for large volumes of trade into the Heckscher-Ohlin model.
This equivalence also provides the proper theoretical background to the important
but so far purely empirical role played in international trade by the
volume of net trades in factor contents.
Yves Balasko.
N 609, 29/05/2013
Social demand functions result from the budget constrained maximization of “social
preferences” or “other regarding preferences.” These preferences are non-selfish
in the sense that they also depend on other consumers’ wealth. This paper addresses
the robustness to wealth externalities of the classical general equilibrium model with
finite numbers of goods and consumers. The existence of equilibrium, the genericity of
regular economies and, at those regular economies, the finite odd number of equilibria
and the local continuity of equilibrium selection maps, and finally the identification
(or diffeomorphism) of the equilibrium manifold with a Euclidean space are shown
to be satisfied independently of the size of those wealth externalities provided total
resources are variable
Yves Balasko.
N 608, 27/05/2013
It is widely believed that the presence of a large informal sector increases the efficiencycosts of social programs in developing countries. We develop a simple theoretical model of optimal unemployment insurance (UI) that specifies the efficiency–insurance tradeoff in the presence of informal job opportunities. We then combine the model with evidence drawn from 15 years of uniquely comprehensive administrative data to quantify the social costs of the UI program in Brazil. We first show that exogenous extensions of UI benefits led to falls in formal–sector reemployment rates due to offsetting rises in informal employment. However, because reemployment rates in the formal sector are low, most of the extra benefits were actually received by claimants who did not change their employment behavior. Consequently, only a fraction of the cost of UI extensions was due to perverse incentive effects and the efficiency costs were thus relatively small — only 20% as large as in the US, for example. Using variation in the relative size of the formal sector across different regions and over time in Brazil, we then show that the efficiency costs of UI extensions are actually larger in regions with a larger formal sector. Finally, we show that UI exhaustees have relatively low levels of disposable income, suggesting that the insurance value of longer benefits in Brazil may be sizeable. In sum, the results overturn the conventional wisdom, and indicate that efficiency considerations may in fact become more relevant as the formal sector expands.
François Gerard, Gustavo Gonzaga.
N 607, 15/03/2013
We report two results. First, we evaluate the impact of a nationwide anti-firearm legislation passed
by the Brazilian Congress in December 2003 (Estatuto do Desarmamento, henceforth ED). Our identification
strategy hinges on the hypothesis that the law had stronger impact in places where gun prevalence was
higher in the baseline. We find evidence that homicides (reduced form) and firearms prevalence
(mechanism or first-stage) dropped faster in places with higher gun prevalence after the 2003. Using our
preferred estimates, the ED saved between 2,000 and 2,750 lives from 2004 through 2007 in cities with
more than 50,000 inhabitants in the state of São Paulo. Second, assuming the ED causes homicide only
through its impact on firearms prevalence, we recover a causal estimate of the impact of firearms on
homicides. One standard deviation in the prevalence of firearms reduces homicides by quarter of a
standard deviation. We find no impact of both ED and firearms on property crime in general or on
robberies.
João Manoel Pinho de Mello, Daniel Ricardo de Castro Cerqueira.
N 605, 01/01/2013
We use data from a unique survey of members of drug-trafficking gangs in favelas (slums) of Rio de
Janeiro, Brazil, to characterize drug-trafficking jobs and study the selection into gangs, analyzing what
distinguishes gang-members from other youth living in favelas. We also estimate wage regressions for
gang-members and examine their career path: age at entry, progression within the gangs’ hierarchy, and
short- to medium-term outcomes. Individuals from lower socioeconomic background and with no
religious affiliation have higher probability of joining a gang, while those with problems at school and
early use of drugs join the gang at younger ages. Wages within the gang do not depend on education, but
are increasing with experience and involvement in gang-related violence. The two-year mortality rate in
the sample of gang-members reaches 20%, with the probability of death increasing with initial
involvement in gang violence and with personality traits associated with unruliness
Rodrigo Reis Soares, Leandro Siqueira Carvalho.
N 604, 01/10/2012
The literature on excess return prediction has considered a wide array of estimation schemes, among them unrestricted and restricted regression coefficients. We consider bootstrap aggregation (bagging) to smooth parameter restrictions. Two types of restrictions are considered: positivity of the regression coefficient and positivity of the forecast. Bagging constrained estimators can have smaller asymptotic mean-squared prediction errors than forecasts from a restricted model without bagging. Monte Carlo simulations show that forecast gains can be achieved in realistic sample sizes for the stock return problem. In an empirical application using the data set of Campbell, J., and S. Thompson (2008): “Predicting the Equity Premium Out of Sample: Can Anything Beat the Historical Average?”, Review of Financial tudies 21, 1511-1531, we show that we can improve the forecast performance further by smoothing the restriction through bagging.
Eric Hillebrand, Tae-Hwy Lee , Marcelo Medeiros.
N 603, 01/09/2012
Tendo em vista o padrão de comércio da economia brasileira, o aumento paulatino da
participação de bens importados na oferta de produtos industriais no País é simples e
inexorável decorrência lógica do processo de abertura. Mas a resistência política a esse
aumento de participação das importações vem sendo exacerbada pela perda de
competitividade da indústria de transformação que, só muito recentemente, deixou de
ser associada exclusivamente ao câmbio.
Passou agora a ser percebido com mais clareza que o aumento persistente do Custo
Brasil – decorrente, em boa parte, da elevação sem fim da carga tributária e das
deficiências dos três níveis de governo no desempenho das funções que lhes cabem –
vem tendo papel crucial na perda de competitividade. E certamente foi um grande
avanço que, afinal, o governo tenha entendido que algum esforço de desoneração fiscal
se tornara imprescindível. O que é lamentável é que as medidas de desoneração para
fazer face à perda de competitividade da indústria tenham sido tão mal concebidas.
Sem condições de conciliar seu projeto político com um programa de redução
horizontal, efetiva e substancial da carga tributária, o governo vem manipulando uma
política espalhafatosa e pouco transparente de desoneração da folha que, em meio a
muita poeira, pouco desonera. Em vez de simples redução da alíquota de contribuição
patronal, o que vem sendo oferecido é uma injustificável mudança de base fiscal.
Contribuição paga sobre faturamento e não mais sobre a folha de pagamento, com
alguma desoneração embutida na troca, e alíquotas fixadas setor a setor, na medida da
estridência do protesto de cada um. Arranjo peculiar e primitivo que pode transformar
o sistema tributário nacional numa colcha de retalhos ainda mais caótica do que já é.
Rogério Werneck.
N 602, 07/08/2012
We study the asymptotic properties of the Adaptive LASSO (adaLASSO) in sparse,
high-dimensional, linear time-series models. We assume both the number of covariates in the
model and candidate variables can increase with the number of observations and the number of
candidate variables is, possibly, larger than the number of observations. We show the adaLASSO
consistently chooses the relevant variables as the number of observations increases (model selection
consistency,0), and has the oracle property, even when the errors are non-Gaussian and conditionally
heteroskedastic. A simulation study shows the method performs well in very general
settings. Finally, we consider two applications: in the first one the goal is to forecast quarterly
US inflation one-step ahead, and in the second we are interested in the excess return of the S&P
500 index. The method used outperforms the usual benchmarks in the literature.
Marcelo Medeiros, Eduardo F. Mendes.
N 593, 01/08/2012
Versão revista e recebeu o título "Informal Labor and the Cost of Social Programs: Evidence from 15 Years of Unemployment Insurance in Brazil" e difulgada como Texto para Discussão no. 608, 2013.
François Gerard, Gustavo Gonzaga.
N 601, 01/07/2012
This paper analyzes the impact of rainfall fluctuations during the gestational period on health at birth.
We concentrate on the semiarid region of Northeastern Brazil to highlight the role of water scarcity as a determinant of early life health. We find that negative rainfall shocks are robustly correlated with higher infant mortality, lower birth weight, and shorter gestation periods. Mortality effects are concentrated on intestinal infections and malnutrition, and are greatly minimized when the local public health infrastructure is sufficiently developed (municipality coverage of piped water and sanitation). We also find that effects are stronger during the fetal period (2o. trimester of gestation,0), for children born during the dry season, and for mortality in the first 6 months of life. The results seem to be driven by water scarcity per se, and not by reduced agricultural production. Our estimates suggest that expansions in public health infrastructure would be a cost-effective way of reducing the response of infant mortality to rainfall shocks in the Brazilian semiarid.
Rudi Rocha, Rodrigo Reis Soares.
N 600, 01/06/2012
This paper estimates the health dimension of the welfare cost of homicides in Brazil
incorporating age, gender, educational, and regional heterogeneities. We use the marginal
willingness to pay approach from the “value of life” literature to assign monetary values to the
welfare cost of increased mortality due to violence. The results indicate that the present
discounted value of the welfare cost of homicides in Brazil corresponds to roughly 78% of the
GDP or, measured in terms of yearly flow, 2.3%. The analysis also indicates that reliance on
aggregate data to perform such calculations, without taking into account the relevant dimensions
of heterogeneity, can lead to biases of the order of 20% in the estimated social cost of violence.
Daniel Ricardo de Castro Cerqueira, Rodrigo Reis Soares.
N 599, 01/02/2012
This paper investigates the impact of Conditional Cash Transfer (CCT) programs on crime. Making use of a unique dataset combining detailed school characteristics with time and geo-referenced crime information from the city of São Paulo, Brazil, we estimate the contemporaneous effect of the Bolsa Família program on crime. We address the endogeneity of CCT coverage by exploiting the 2008 expansion of the program to adolescents aged 16 and 17. We construct an instrument that combines the timing of expansion and the initial demographic composition of schools to identify plausibly exogenous variations in the number of children covered by Bolsa Família. We find a robust and significant negative impact of Bolsa Família coverage on crime. The evidence suggests that the main effect works through increased household income or changed peer group, rather than from incapacitation from time spent in school.
Laura Chioda, João Manoel Pinho de Mello, Rodrigo Reis Soares.
N 598, 13/12/2011
This paper introduces cash transfers targeting the poor in an incomplete markets model with heterogeneous agents facing idiosyncratic risk. These transfers change the degree of insurance in the economy and affect precautionary motives asymmetrically, leading the poorest households to decrease savings proportionally more than their richer counterparts. In a model economy calibrated to Brazil, once the cash transfer program is adopted, wealth inequality and social welfare increase, poverty decreases, while employment and income inequality remain about the same. Imperfect access to financial markets is important for these results, whereas whether the program is funded with lump sum or distortive taxes is not.
Eduardo Zilberman, Tiago Couto Berriel.
N 597, 01/10/2011
This article is on the activities of British money doctors in South America between the 1890s and the 1930s, hitherto overlooked in the literature. It focuses on Sir Otto Niemeyer’s missions to Brazil and Argentina in the early 1930s compared to his earlier report on New Zealand and Professor Edwin Kemmerer’s report on Chile in the mid-1920s. The impact of their visits on the market evaluation of risk related to bonds floated by the largest South American economies is quantitatively analyzed. Difficulties involved in generalizations about links between policy proposals and market evaluation enhance the interest of studying specific experiences.
Niemeyer’s general proposals to the Brazilian government in mid-1931 advising on a possible return to the gold standard are evaluated. His specific proposals on central banking in New Zealand, Argentina and Brazil are discussed in contrast with Kemmerer’s proposals in Chile. The focus is on the autonomy of central banks, representation of sectoral interests, the role of gold in total foreign exchange reserves, and the exertion of foreign influence though directors, shareholders and permanent experts. Finally, the realism of proposals is evaluated in the context of contemporary economic conditions compared with advice provided by other experts on related issues
Pedro Carvalho Loureiro de Souza, Marcelo de Paiva Abreu.
N 594, 01/10/2011
João Manoel Pinho de Mello, Márcio Garcia.
N 596, 01/10/2011
Marcelo de Paiva Abreu.
N 591, 01/08/2011
Guilherme Finkelfarb Lichand, Rodrigo Reis Soares.
N 551, 01/08/2011
A ser publicado em Journal of Money, Credit and Banking, 2012.
Christiano Arrigoni Coelho, João Manoel Pinho de Mello, Leonardo Rezende.