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

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.

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.

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

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.

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.

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.

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.

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.

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.

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.

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.

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

A ser publicado em Journal of Money, Credit and Banking, 2012.