deficit finance and monetary dynamics in brazil and mexico abstract the paper develops a model of seigniorage in an open economy linking inflation the government budget and the external balance it introduces financial markets and interest rates in the traditional cagan style model of inflationary dynamics and it evaluates the experiences of brazil and mexico the model relates inflation in the 1980s to interest payments on the external public debt the paper also argues that inflationary finance has been combined with very fast growth of domestic debt setting the stage in brazil for unsustainable domestic debt growth in the sargent wallace style the collor plan stopped this process temporarily

assessing the effects of wives earnings on family income inequality we argue that the effect of wives earnings can be assessed meaningfully only by comparing the observed distribution of income with a reference distribution the components of the standard decomposition of the gini coefficient have no implicit reference distribution and therefore should not be interpreted as a measure of the effect of an income source on inequality we suggest several intuitive counterfactual reference distributions and illustrate their use with 1979 and 1989 u s data we conclude that wives earnings reduced inequality in that the income distribution would have been less equal in their absence alternative measures of the impact have mixed results

the resurgence of inflation in brazil 1974 1986 abstract this paper examines various factors which contributed to the resurgence of inflation in brazil in the 1970s and 1980s and the reasons for the failure of ortodox austerity programs to control it the evidence seems to black the school of thought which considers the best explanation for the recent inflationary experience to lie with the spread of formal and informal indexing leading to an inertial type of inflation the latter has led some economists to recommend heterodox methods of inflation control an epilogue briefly describes brazil s recent attempt to apply such methods

a dynamic approach to the environmental kuznets curve hypothesis abstract the environmental kuznets curve ekc hypothesis states that pollution levels increase as a country develops but begin to decrease as rising incomes pass beyond a turning point in ekc analyses the relationship between environmental degradation and income is usually expressed as a quadratic function with the turning point occurring at a maximum pollution level other explanatory variables have been included in these models but income regularly has had the most significant effect on indicators of environmental quality one variable consistently omitted in these relationships is the price of energy this paper analyzes previous models to illustrate the importance of prices in these models and then includes prices in an econometric ekc framework testing energy income and co2 income relationships these long run price income models find that income is no longer the most relevant indicator of environmental quality or energy demand indeed we find no significant evidence for the existence of an ekc within the range of current incomes for energy in the presence of price and trade variables

the brazilian economy in 1994 1999 from the real plan to inflation targets this paper investigates the three main events that shook the brazilian economy in 1994 1999 a period that represented a turning point in the country s economic history these events were the implementation of the real plan in 1994 the devaluation crisis in 1999 and the subsequent adoption of inflation targets the principal contributions of this period were the drastic reduction of high inflation rates the biggest problem in brazil since the 1970s and the reorientation towards economic growth which were also supported by a privatisation programme the openness of the economy to foreign capital a trade liberalisation process and the ongoing fiscal adjustments nevertheless the period also left its scars such as high budget and current account deficits accompanied by a policy of elevated interest rates and until 1999 a highly appreciated exchange rate the paper concludes with a cautiously optimistic evaluation of the country s economic future based on the accomplishments of the 1990s and the possibility of a long term commitment to low inflation targets

on the indeterminacy of capital accumulation paths abstract in neoclassical optimal growth models the stability of the accumulation paths depends on the discount parameter we prove that for discount factors small enough the policy function which describes an optimal path can be of any type the result is achieved using the notion of concavity we adopt a constructive approach given any twice differentiable map we show how to construct an optimal growth problem which produces that map as the optimal policy function a consequence is that chaos can appear in these models we also provide bounds on the values of the discount parameter for which indeterminacy is possible

optimal growth with many consumers abstract a method is described for constructing all pareto optimal allocations for a dynamic economy with many heterogeneous consumers under certainty in which both the technology and consumer preferences are recursive but preferences need not be additively separable over time optimal perfect foresight competitive equilibrium allocations are obtained through the study of a dynamic program for an economy with one consumption good sufficient conditions are given for the existence of a unique interior stationary distribution of consumption and wealth for a two person exchange economy sufficient conditions are given for the global asymptotic stability of the unique interior stationary point

avoiding some costs of inflation and crawling toward hyperinflation the case of the brazilian domestic currency substitute the pattern of a classical hyperinflation is an acute acceleration of the inflation level accompanied by rapid substitution away from domestic currency until the real plan 1 july 1994 however brazil experienced inflation levels well above 1000 a year since 1988 without entering the classical hyperinflation path two elements played key roles in differentiating the brazilian case from the classical hyperinflations indexation and the provision of a reliable domestic currency substitute i e the provision of liquidity to interest bearing assets this paper claims that the existence of this domestic currency substitute was the main source of both the inability of the brazilian central bank to fight inflation and of the unwillingness of brazilians to face the costs of such a fight the provision of the domestic currency substitute through the banking sector is modeled and the main macroeconomic consequences of this monetary regime are derived those are the lack of a nominal anchor for the price system due to the passive monetary policy and the non controllability of seigniorage unlike traditional models of hyperinflations

global equilibrium dynamics with stationary recursive preferences abstract we study the global dynamics of capital accumulation for a general two sector model which is not necessarily convex and where preferences of an infinitely lived agent are stationary but not additively separable we obtain monotonicity and convergence results for capital under normality assumptions on preferences and factor intensity assumptions on technology we then derive results on oscillatory dynamics under alternative factor intensity conditions or under the assumption of inferiority of future utilities finally in an exchange model with two agents we show that utilities will be monotonic or oscillatory depending on the normality or inferiority of the preferences

monetary policy strategies for latin america the authors examine possible monetary policy strategies for latin america that may help lock in the gains the region attained in the fight against inflation in the 1990s instead of focusing the debate about the conduct of monetary policy on whether the nominal exchange rate should be fixed or flexible the focus should be on whether the monetary policy regime appropriately constrains discretion in monetary policymaking three basic frameworks deserve serious discussion as possible long run strategies for monetary policy in latin america the authors examine the advantages and disadvantages of a hard exchange rate peg monetary targeting and inflation targeting in light of monetary policy s recent track record in several latin american countries looking for clues about which of the strategies might be best suited to economies in the region the answer it depends on the country s institutional environment some countries appear not to have the institutions to constrain monetary policy if discretion is allowed in those countries there is a strong argument for hard pegs including full dollarization that allow little or no discretion to monetary authorities in countries such as chile which can constrain discretion inflation targeting is likely to produce a monetary policy that keeps inflation low yet appropriately copes with domestic and foreign shocks monetary targeting as a strategy for latin america is not viable because of the likely instability of the relationship between inflation and monetary aggregates of which there is ample international evidence no monetary strategy can solve the basic problems that have existed in latin american economies for a long time the authors welcome the recent move in latin american countries toward inflation targeting but say no policy will succeed unless government policies also create the right institutional environment

rising u s earnings inequality and family labor supply the covariance structure of intrafamily earnings this paper studies the labor supply contributions to individual and family earnings inequality during the period of rising wage inequality in the early 1980 s working couples have positively correlated labor market outcomes which are almost entirely attributable to permanent factors an intertemporal family labor supply model with this feature is used to estimate labor supply elasticities for husbands of 0 05 and wives of 0 40 this implies that labor supply explains little of the rising annual earnings inequality for married men but over 20 percent of the rise in family inequality and 50 percent of the modest rise in female inequality

why shops close again an evolutionary perspective on the deregulation of shopping hours this paper introduces a new perspective on the deregulation of shopping hours based on ideas from evolutionary game theory we study a retail economy where shopping hours have been deregulated recently it is argued that first the deregulation leads to a coordination problem between store owners and customers and second the solution to this problem depends on the specific cost structure of stores and the preferences of customers in particular it may happen that even if extended shopping hours are pareto efficient stores and customers do not succeed in coordinating on this equilibrium the analysis explains the observation in germany where shopping hours have been deregulated recently that store owners tend to go back to the former shopping hours again moreover it emphasizes the important role of advertisement campaigns as a signalling device

environmental kuznets curves real progress or passing the buck abstract recent research has examined the hypothesis of an environmental kuznets curve ekc the notion that environmental impact increases in the early stages of development followed by declines in the later stages these studies have focused on the relationship between per capita income and a variety of environmental indicators results imply that ekcs may exist for a number of cases however the measures of environmental impact used generally focus on production processes and reflect environmental impacts that are local in nature and for which abatement is relatively inexpensive in terms of monetary costs and or lifestyle changes significantly more consumption based measures such co2 emissions and municipal waste for which impacts are relatively easy to externalize or costly to control show no tendency to decline with increasing per capita income by considering consumption and trade patterns the author re examines the concept of the ekc and proposes the use of alternative consumption based measures of environmental impact the author speculates that what appear to be improvements in environmental quality may in reality be indicators of increased ability of consumers in wealthy nations to distance themselves from the environmental degradation associated with their consumption

on measuring child costs with applications to poor countries the theoretical basis for measuring child costs is discussed and detailed consideration is given to two straightforward procedures for calculation engel s food share method and rothbarth s adult good method each of these methods embodies different definitions of child costs so that the same empirical evidence can generate quite different estimates depending on the method used it is shown that true costs are generally overstated by engel s method and understated by rothbarth s procedure although the latter unlike the former can provide a sensible starting point for cost measurement our estimates from sri lankan and indonesian data suggest that children cost their parents about 30 40 percent of what they spend on themselves

deregulation of shopping hours the impact on independent retailers and chain stores this paper studies shopping hour decisions by retail chains and independent competitors we use a salop type model where retailers compete in prices and shopping hours our results depend significantly on efficiency differences between retail chain and independent retailer if the efficiency difference is small the independent retailer may choose longer shopping hours than the retail chain and may gain from deregulation at the expense of the retail chain the opposite result emerges when the efficiency difference is large then the retail chain may benefit whereas the independent retailer loses from deregulation

inertial inflation and the cruzado plan abstract on 28 january 1986 the brazilian goverment decided to freeze all prices this article examines the heterodox shock and the development by brazilian economist of the theory of inertial inflation which served as a theoretical basis for the shock

balanced growth consistent recursive utility abstract koopmans s recursive utility has proven useful in a number of dynamic modelling contexts nonetheless recursive utility has not made significant inroads into what one would expect to be a natural haven models of balanced growth whether exogenous or endogenous mainly this is due to the dearth of interesting recursive utilities which are consistent with balanced growth in this paper i provide conditions on the aggregator which guarantee the existence of a recursive utility function which is consistent with balanced growth the result in turn shows how a family of such utility functions may be constructed i also provide a generalization of jones and manuelli s theorem on the existence of optimal endogenous growth

shopping hours and price levels in the retailing industry a theoretical and empirical analysis i introduction the debate surrounding shopping laws is very much the same regardless of the country in which it occurs the traditional objectives of regulating store opening hours can be divided into four categories i to guarantee access to essential goods and services ii to promote and protect a certain way of life iii to protect small businesses and iv to assure a day of rest for everyone despite these concerns the recent trend in canadian provinces is to extend store opening hours in the retailing industry for instance in july 1990 the quebec government allowed retail stores to stay open on wednesday nights and on sundays the recent deregulation was prompted by changes in lifestyles and increasing constraints on the time people can devote to shopping activities perhaps the most significant are that the number of one parent families is increasing as is the number of couples in which both spouses work there is evidence that changes in opening hours influence the structure of the retailing industry morrison and newman 1983 show that there is a redistribution of sales from small stores to large stores after deregulation an empirical study by moorehouse 1984 shows that in the united states those states that strictly regulate store opening hours do have a smaller proportion of large stores building on their work we examine the short term impact of extended shopping hours on prices at large stores to determine whether consumers have to pay higher prices for greater shopping flexibility to our knowledge this issue has not been addressed in the literature first we develop an extension of morrison and newman s 1983 theoretical model inspired by becker 1965 and location models pioneered by hotelling 1929 chamberlin 1951 1962 lancaster 1966 and salop 1977 we deem the price of a good to have two components the price itself and the time spent by the consumer to purchase the good thus opening hours and store location play a role in the determination of prices we explore the effect of increased opening hours on the demand faced by stores of different sizes and thus on their price levels among other things our model predicts that after deregulation price levels at large stores will increase because of a demand shift in favor of large stores at the expense of small stores we then test this prediction using pooled time series and cross section data prices of five products for thirty one weeks collected before and after the deregulation of store hours in quebec on july 8 1990 the data were collected at three major food stores in the montreal area we obtain estimates of price equations using the pooling method developed by kmenta 1986 the results support our view that prices have increased at large stores since the deregulation the rest of the paper is organized as follows in section ii we develop our analytical framework section iii presents the data and the estimation strategy since a price increase may signal an increase in costs rather than an increase in demand we deal explicitly with this issue in that section of the paper we discuss the empirical results in section iv and we conclude in section v ii the model the following analysis extends that of morrison and newman 1983 a brief initial overview of their work is needed to develop the necessary notation and to set up the problem in their model morrison and newman make two simplifying yet standard assumptions they assume a single perfectly divisible homogeneous commodity and only two types of stores large and small thus consumers choose to shop at small or large stores to minimize the total cost tc of purchasing the commodity on a given shopping trip the total cost includes the cost of the bundle of goods p sub j b where p sub j is the price per unit at store j and b is the bundle size a consumer intends to buy and his own valuation of the time needed to travel to the store a

anchoring inflation expectations in the face of oil shocks in the proximity of zlb a tale of two targeters this paper applies a n ardl framework to two longstanding inflation targeting policy regimes in order to assess the relation between oil prices dynamics and inflation expectations and the further consequences created by a proximal zlb situation the application is based on data from january 1994 to june 2018 for new zealand and the uk we focus on oil price shocks as a variable of interest and this was found to have an asymmetric effect on inflation expectations one further key finding is that the real effective exchange rate has significant impacts on inflation expectations and this is indicative of an exchange rate pass through to inflation via an inflation expectations channel in general we find that inflation exchange rate money supply output growth unemployment and fiscal deficit surplus have significant implications for inflation expectations inflation expectations are also influenced by their past behaviour indicating adaptive inflation expectations this study contributes to the debate on the inflation targeting at zlb

changes in the distribution of household income in brazil the role of male and female earnings summary annual survey data spanning three decades and a non parametric technique for constructing counterfactual distributions are employed to analyze the relationship between earnings and the distribution of household income in brazil results show that significant changes in the structure of female earnings reflecting rising wages and participation rates had limited equalizing consequences but considerable poverty reducing effects these developments counterbalanced poverty increasing changes in the structure of male earnings a stable macroeconomic environment was associated with a consistent but a limited fall in inequality and a strong decline in poverty mainly related to rising earnings among women at the lower end of the household income distribution

economic growth and emissions reconsidering the empirical basis of environmental kuznets curves abstract recent empirical research indicates that certain types of emissions follow an inverted u or environmental kuznets curve ekc as income grows this regularity has been interpreted as a possible de linking of economic growth and patterns of certain pollutants for developed economies in this paper the empirical basis of this result is investigated by considering some statistical particularities of the various ekc studies performed it is argued that the inverted u relationship between income and emissions estimated from panel data need not hold for specific individual countries over time based on insights from intensity of use analysis in resource economics an alternative growth model is specified and estimated for three types of emissions co2 nox and so2 in four countries netherlands uk usa and western germany it is found that the time patterns of these emissions correlate positively with economic growth and that emission reductions may have been achieved as a result of structural and technological changes in the economy sustainable growth is defined as the rate of economic growth that does not lead to growth in emissions its rate is calculated for each type of emission and country based on estimated parameter values the resulting indicators reflect a balance between the positive influence of growth and negative influence of structural change and technological progress on emission levels

inflation targeting does not matter another look at oecd sacrifice ratios recently in this journal goncalves and carvalho 2009 concluded that inflation targeters were able to bring inflation down at less cost than nontargeters p 242 this comment shows that their conclusion is not robust but instead is the result of comparing a particular subset of inflation targeting it disinflations with nonsimultaneous disinflations that occurred under very different macroeconomic conditions in their sample simple extensions such as justifiably varying the treatment group of it disinflations to control for common time varying effects or to control for the maastricht treaty effects suggest that it does not matter

monetary policy and inflation expectations in latin america long run effects and volatility spillovers this paper uses multiple cointegration analysis to estimate simultaneously a monetary reaction function and the determinants of expected inflation for brazil chile colombia and mexico in addition m garch modeling is used to test for the presence of volatility spillovers between the monetary stance and inflation expectations the analysis shows that there are long term relationships between the interest rate expected inflation and the inflation target and that greater volatility in the monetary stance increases the volatility of expected inflation in brazil colombia and mexico

the illusion of stability the brazilian economy under cardoso abstract this paper begins with a description of the main characteristics of brazil s real stabilization program and its initial success in eliminating inflation it then examines the use of the exchange rate to keep inflation in check and the problems which overvaluation created it also focuses on the structural desequilibria it faced and the various artifices that were used to deal with them but which ultimately led to a set of contradictions that brought about its collapse

estimating the genuine progress indicator gpi for brazil from 1970 to 2010 this paper estimates the genuine progress indicator gpi for brazil from 1970 to 2010 as an alternative indicator to the gross domestic product gdp after a growing disparity between these two indicators in the 1980s when brazil s per capita gpi featured a 35 decline there was a relative catch up in per capita gpi but not one sufficiently strong enough to reduce the historical gpi gdp gap the recent trend of rapidly increasing environmental and social costs along with the decline in unpaid labour and infrastructure services poses concerns about the sustainability of an increasing gpi for brazil into the future policies aimed at reducing environmental costs are necessary if brazil is to enjoy a sustainable pattern of non declining economic welfare brazil must pursue a higher rate of productivity in material and energy consumption in order to keep environmental pressures to a minimum level

shopping hours and price competition abstract this paper develops an argument why retail prices may rise in response to the deregulation of opening hours we make this point in a model of imperfect duopolistic competition in a deregulated market retailers view the choice of opening hours as a means to increase the degree of perceived product differentiation thus relaxing price competition if the consumers preference intensity for time is sufficiently high the equilibrium configuration has asymmetric shopping hours where one retailer stays open for longer than the other both retailers charge higher prices than under regulation and both are strictly better off

brazil s tropical plan this paper highlights the institutional features of the inflation process and contrasts two stabilization efforts in 1964 66 and in 1986 the inflation process in brazil is highly institutional it does not resemble hyperinflations where pricing and wage setting are geared to the exchange rate by the hour making it possible to stop inflation by simply containing money creation and fixing the exchange rate the two stabilization programs demonstrate that an incomes policy is an essential ingredient to non recessionary stabilization but they also show that demand restraint is inevitable if disinflation is to be viable the 1964 program was gradualist and two handed relying on the supply side on wage repression the 1986 plan was a heterodox shock treatment centered around an uncompromising price freeze and paying insufficient attention to the need for fiscal restraint this abstract was borrowed from another version of this item

anchors away the cost and benefits of brazil s devaluation abstract this paper analyzes the impact of brazil s devaluation in 1999 this event represents an abandonment of the exchange rate anchor which had been used as a stabilization plan since the introduction of the real plan in 1994 the reasons behind the abandonment of the exchange rate anchor are determined as well as the explanation for its benign impact

economic growth and environmental degradation the environmental kuznets curve and sustainable development abstract in this paper we critically examine the concept of the environmental kuznets curve ekc it proposes that there is an inverted u shape relation between environmental degradation and income per capita so that eventually growth reduces the environmental impact of economic activity the concept is dependent on a model of the economy in which there is no feedback from the quality of the environment to production possibilities and in which trade has a neutral effect on environmental degradation the actual violation of these assumptions gives rise to fundamental problems in estimating the parameters of an ekc the paper identifies other econometric problems with estimates of the ekc and reviews a number of empirical studies the inference from some such ekc estimates that further development will reduce environmental degradation is dependent on the assumption that world per capita income is normally distributed when in fact median income is far below mean income we carry out simulations combining ekc estimates from the literature with world bank forecasts for economic growth for individual countries aggregating over countries to derive the global impact within the horizon of the bank s forecast 2025 global emissions of so 2 continue to increase forest loss stabilizes before the end of the period but tropical deforestation continues at a constant rate throughout the period

the fourth commandment is it pareto efficient a bill to legalise sunday trading has recently been defeated in the british parliament an argument commonly advanced by traders opposing liberalisation starts by observing that if a few shops were to choose to open on sunday they would attract so much business from retailers trading only on weekdays that soon all shops would be forced to open on sunday some customers might find this convenient but to the extent they were merely induced to change their shopping day no new demand would be created without an increase in weekly turnover the additional costs of sunday opening would bankrupt some shops and the survivors would have to raise prices thus there is no guarantee that on balance consumers will gain a counter argument denies that all shops would be forced to open on sundays insofar as consumers really prefer lower prices to the convenience of sunday opening then a shop which closed on sunday and used a fraction of the cost saving to reduce prices for the rest of the week could maintain its sales and increase its profit giving retailers the option of sunday opening therefore enables them to respond more sensitively to consumers preferences as between the convenience of sunday shopping and lower prices this seems to be the position taken by tullock i975 pp 673 4 my guess is that most economists would feel sympathetic to this argument as i certainly am however matters are not entirely straightforward the retail trade can hardly be regarded as perfectly competitive and starting from a second best equilibrium there is no guarantee that permitting more competition in one dimension of the characteristic space yields a potential pareto gain these considerations suggest that the argument be pursued at a more formal level the following section examines sunday opening in the context of a standard model of imperfect competition the principal results are that the removal of the restrictions may result in a social loss with a loss being less likely the more competitive is the market an informal preview of the argument may be helpful given that travel costs must be incurred to make a purchase customers who live close to a shop cannot easily be enticed away by competitors the real fight is for buyers located approximately equi distant from two neighbouring stores ideally each shop would like to offer price cuts to these distant customers only but this is not feasible however for customers who go out to work the opportunity cost of shopping time may well be lowest on sunday so for at least some customers sunday opening results in a fall in transport costs thereby offering more to

the existence of steady states in multisector capital accumulation models with recursive preferences abstract this paper proves the existence of a non trivial stationary optimal path in a multi sectoral capital accumulation model with recursive preferences the reduced form recursive preferences are represented by an aggregator funtion i introduce a new form of normality that is appropriate for use with recursive preferences under some mild conditions on the aggregator non trivial steady states exist when the technology is bounded and normal journal of economic literatureclassification numbers d90 c61 c62

mass democracy the real reason that brazil ended inflation summary populism and expanded democratic participation often have been painted as the enemy of sane macroeconomics yet brazil s experience suggests possibly benign implications of stable mass democracy for national economic management in developing countries prior to 1930 agrarian elites ruled brazil as political participation gradually expanded policymakers elaborated the regulatory framework of import substituting industrialization isi isi not only generated strong growth but also chronically high and volatile inflation with costs falling most heavily on the disenfranchised a poor majority the advent of mass democracy in the mid 1980s gave the poor a political voice for the first time and plausibly was the crucial cause for the demise of hyperinflation a decade later

a generalized model of horizontal product differentiation a famous result in the literature on horizontal product differentiation is due to c d aspremont j j gabszewicz and j f thisse 1979 they show that in a slightly modified hotelling model profit maximizing firms choose maximum instead of minimum differentiation the aim of this paper is to show that the result of maximum differentiation is not robust the author provides provide an example for a wide class of markets where firms will choose interior solutions if consumers have an outside option for their use of money copyright 1994 by blackwell publishing ltd

seasonal fluctuations and the demand for money the reaction of money holders to the systematic seasonal changes in the level of transactions represents an interesting experiment for learning about the money demand function an analysis of the seasonal fluctuations of the real quantity of money and several measures of transactions in the united states germany the united kingdom and canada reveals the following first consumption expenditures in semidurables nondurables and services appears to be a good proxy for transactions in a money demand function and superior to gross domestic product or consumption expenditures second the transactions elasticity of the demand for money is substantially lower than one

the rate of time preference and dynamic economic analysis strong restrictions on the structure of preferences are a central feature in the received theory of intertemporal allocation in fact most of the modern literature concerned with capital theoretic problems represents preferences by a functional in which an additive utility function is discounted by a constant rate of time preference this specification is attractive because it is analytically tractable in dynamic models and it clearly delineates how tastes and opportunities interact to determine an economy s household s paths of consumption and capital formation however its rigid structure constancy of time preference severely limits the conclusions and explanatory power of the corresponding models this paper considers a class of utility functionals in continuous time which have the appealing feature that the rate of time preference depends systematically on an index of aggregate future consumption the more flexible structure embodied in these functionals leads to important generalizations and

are there limits to growth a simple theoretical model of pollution is developed that generates an inverted u shape relationship between per capita income and environmental quality this model is then used to study long run growth the same inverted u shape is shown to appear in time series and the prospects for sustained growth are shown to hinge on whether increasingly strict environmental regulation is compatible with a constant rate of return on capital implementation is also studied tax and voucher schemes are shown to have an advantage over direct regulation because they provide the correct incentives for capital accumulation copyright 1998 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

demographic variables in demand analysis in this paper the authors discuss five procedures for incorporating demographic variables into theoretically plausible demand systems translating scaling and the gorman reverse gorman and implicit prais houthakker procedures these five procedures are used to incorporate a single demographic variable the number of children in a household into the generalized ces demand system using household budget data for the united kingdom for the period 1966 1972 excerpt

after work shopping employment effects of a deregulation of shop opening hours in the german retail sector abstract this study investigates the impact of a deregulation of shop opening laws on employment in the german retail sector exploiting the gradual change in the opening times of shops across states and using data from the german socio economic panel difference in differences estimates indicate an average increase in the employment probability driven by a rise in the likelihood of working marginal part time hours workers in small firms are likely to experience a reduction of their propensity to work for individuals facing high family related supply side constraints the change in shop opening hours has opposing effects on employment positive on lower and negative on upper parts of the hours distribution overall the deregulation is estimated to have raised the likelihood of working fewer hours than desired by the workers

the entry of the wife into the labor force in response to the husband s unemployment a study of the added worker effect in brazilian metropolitan areas abstract the temporary participation in the labor force of wives whose husbands have become unemployed has been referred to in the literature as the added worker effect awe previous research conducted using data from the united states has found only a small awe a result that accords with life cycle models with perfect capital markets the current article uses panel data obtained using a short recall period to evaluate the awe in the six major brazilian metropolitan areas our results show a positive awe that is much more substantial than those found for the u s economy the finding of an important awe for brazil suggests that liquidity constraints may prevent brazilian households from sufficiently smoothing income and consumption in periods when the male head of the family is unemployed alternatively the significant awe may indicate that the husband s unemployment signals household members that there may be a substantial reduction in future income flow

externalities and nonlinear discounting indeterminacy abstract this paper studies a one sector model with externalities and nonlinear discounting loosely if the bellman equation for a standard model is written as v k max u v k then the bellman equation for our model is written as v k max u b v k for some concave function b our model assumes that period utility u is linear in consumption and leisure and the production function exhibits increasing social returns and nonincreasing private returns we establish the existence of a steady state under fairly general conditions and give a necessary and sufficient condition for local indeterminacy we show that regardless of the degrees of increasing returns and externalities there exists a discount function b such that indeterminacy arises we also show that in a certain sense as the degree of increasing returns converges to zero the variability of discounting the second derivative of b required to generate indeterminacy also converges to zero numerical examples are provided the main results are also extended to a one sector model with fixed labor supply

monetary policy and macroeconomic stability in latin america the cases of brazil chile colombia and mexico abstract in 1999 new monetary policy regimes were adopted in brazil chile colombia and mexico combining inflation targeting with floating exchange rates these regime changes have been accompanied by lower volatility in the monetary stance in brazil colombia and mexico despite higher inflation volatility in brazil and colombia this paper estimates a conventional new keynesian model for these four countries and shows that i the post 1999 regime has been associated with greater responsiveness by the monetary authority to changes in expected inflation in brazil and chile while in colombia and mexico monetary policy has become less counter cyclical ii lower interest rate volatility in the post 1999 period owes more to a benign economic environment than to a change in the policy setting and iii the change in the monetary regime has not yet resulted in a reduction in output volatility in these countries

balancing the budget with implicit domestic default the case of brazil in the 1980s abstract this paper examines the breakdown of the brazilian government s budget balance mechanism which began in the mid 1980s the brazilian government became unable to balance its budget through tax increases or expenditure decreases evidence presented in this paper suggests that the government began to rely on unannounced reductions in the indexed inflation compensation on its debt these reductions can be thought of as an implicit default on domestically held debt while the temporary asset freeze of the march 1990 collor plan was a highly publicized instance of such a default it was not the first

distinguished lecture on economics in government exchange rate regimes is the bipolar view correct the choice of appropriate exchange rate regime which for economies with access to international capital markets increasingly means a move away from the middle ground of pegged but adjustable fixed exchange rates towards the two corner regimes of either flexible exchange rates or a fixed exchange rate supported if necessary by a commitment to give up altogether an independent monetary policy lawrence h summers 2000 p 8

on the interaction between vertical and horizontal product differentiation an application to banking the author studies the conditions under which banks offer remote access note there exists interaction between location and taste for remote access offering remote access is an instrument to partially segment depositors according to their taste for that technology the interaction between location and taste for remote access enhances this effect different equilibria emerge as the result of two effects first introducing remote access steals depositors from the opponent as the product specification becomes more appealing second deposit rate competition is affected as remote access determines the substitutability of banks copyright 1996 by blackwell publishing ltd

competitive equilibrium cycles recently there has been a surge of interest in endogenous business cycles that arise in competitive laissez faire economies in the context of standard overlapping generations economies conditions for the existence of equilibrium cycles have been given by grandmont 1983 and by benhabib and day 1982 models of the economy with extrinsic uncertainty or sunspots that have been developed by shell 1977 and by cass and shell 1983 see also balasko 1983 can also lead to equilibrium cycles

sticky price and limited participation models of money a comparison abstract we provide new evidence that models of the monetary transmission mechanism should be consistent with at least the following facts after a contractionary monetary policy shock the aggregate price level responds very little aggregate output falls interest rates initially rise real wages decline by a modest amount and profits fall we compare the ability of sticky price and limited participation models with frictionless labor markets to account for these facts the key failing of the sticky price model lies in its counterfactual implications for profits the limited participation model can account for all the above facts but only if one is willing to assume a high labor supply elasticity 2 percent and a high markup 40 percent the shortcomings of both models reflect the absence of labor market frictions such as wage contracts or factor hoarding which dampen movements in the marginal cost of production after a monetary policy shock 1997 elsevier science b v

on the credibility of inflation targeting regimes in latin america inflation targeting has been adopted in a set of emerging economies including eight countries in latin america the success of this regime may depend critically on the credibility of the target and the expectation that the authorities will take appropriate actions if the target is breached this paper exploits a database of inflation expectations and attempts to measure whether for a set of inflation targeters in latin america expectations are well anchored a tighter anchoring of expectations is interpreted as a gain in credibility also considered are the effects on the credibility of the regime if the inflation target is breached the results indicate that while inflation expectations have not been fully anchored over the whole sample period credibility has risen but at the same time the cost of breaching the target has grown

on the size of u s government political economy in the neoclassical growth model we study a dynamic version of meltzer and richard s median voter model of the size of government taxes are proportional to total income and they are redistributed as equal lump sum transfers voting takes place periodically over time and each consumer votes for the tax rate that maximizes his equilibrium utility we calibrate the model to u s data key elements in the calibration are the income and wealth distribution and the parameters governing the leisure and consumption choices the total size of transfers predicted by our political economy model is quite close to the size of transfers in the data

inequality and poverty in united states the effects of rising dispersion of men s earnings and changing family behaviour using semiparametric density estimation techniques we analyse the effect of rising dispersion of men s earnings and related changes in family behaviour on increasing inequality in the distribution of family income in the united states for the period 1969 1989 the growing dispersion of men s earnings and changing family structure can account for most of the rise in family income inequality by contrast the increase in labour force participation by women offset this trend inequality grew at a slower rate in the 1990s than in earlier decades largely because of stabilization in the relative earnings of men from low income families

parametric equivalence scales and scale relativities we respond to banks and johnson s 1994 comment on coulter et al 1992 drawing on a more general discussion of parametric equivalence scale and scale relativity issues and new empirical results we show that criticisms of our earlier work are unfounded when the mcclements scale is properly characterised the scale does indeed provide lower estimates of poverty and inequality levels than most other scales we reiterate our conclusion that relationships between scale relativities and inequality and poverty indices may be index specific moreover the picture about distributional trends may differ from that about levels

the economic efficiency of sunday trading restrictions restriction of shop opening hours is current but controversial pr actice in britain and much of europe the economic case presented for such restrictions is that given the constraint that individual shop s may not vary their price by time of day competitive pressures woul d induce excessive opening at times when high costs would be incurred such as on sundays the authors show that such inefficient equilib ria are a theoretical possibility empirical evidence on retail costs and demand in the united kingdom shows that this case does not arise in practice and that deregulation of opening hours would lead to low er costs and prices copyright 1987 by blackwell publishing ltd

inflation targeting in brazil chile and mexico performance credibility and the exchange rate inflation targeting it has been adopted by a growing number of countries and latin america has been part of this world trend this paper reviews the recent it experiences of brazil chile and mexico applying a common empirical framework to the three country cases inflation performance under it and its associated output costs are reported and compared favorably to a control group of other countries the paper analyzes ways by which it has contributed to strengthen credibility the effect of targets on inflation expectations and on actual inflation the low influence of inflation shocks on core inflation and the decline in inflation forecast errors do the three inflation targeters exhibit fear of floating no considering their relatively large exchange rate volatility and moderate international reserve holdings no considering strongly declining inflation to devaluation passthrough coefficients and little evidence for monetary policy reaction to exchange rate shocks yes considering the frequency and intensity of sterilized exchange interventions in comparison to other inflation targeters that float more cleanly

hours of operation restrictions and competition aming retail firms this study examines the redistributive effects of government regulations concerning the hours in which retail stores may remain open for business throughout canada municipal by laws restrict nighttime shopping hours to a few specified days of the week in analyzing the outcome of these restrictions a model of consumer behaviour is used which emphasizes the consumers s decision concerning the allocation of purchases between small and large retail outlets the empirical results are consistant with the theoretical model indicating that such market intervention redistributes sales from large to small stores

declining inequality in schooling in brazil and its effects on inequality in earnings abstract household survey data demonstrate that brazilian males born between 1925 and 1963 experienced steady increases in mean schooling and significant declines in schooling inequality the variance in years of schooling increased for cohorts born up until 1950 with steady declines for more recent cohorts decomposition of a standard human capital earnings equation indicates that trends in schooling tended to reduce earnings inequality from 1976 to 1985 due to reductions in both the variance of schooling and in returns to schooling these improvements were more than offset however by increases in other sources of inequality although the net increase in earnings inequality from 1976 to 1985 is disturbing the reduction in schooling inequality represents a fundamental improvement in the determinants of earnings inequality in brazil that will have beneficial effects for decades

a picture of wage inequality and the allocation of labor through a period of trade liberalization the case of brazil this paper constructs a picture of the labor market impact of trade liberalization in brazil we examine the level and dispersion of wages the skilled wage premium and employment composition before and after trade liberalization after trade reform there was a rise in the returns to college education which since the share of college workers also rose is attributable to rising demand this change did not increase overall wage dispersion because of the small share of college educated workers and because of decreasing returns to intermediate levels of education

the distribution of household income in brazil unequal and immutable summary after a period of rapid growth in the 1970s a macroeconomically turbulent decade of the 1980s the achievement of price stability during the 1990s and an impressive expansion of educational opportunities long term trends do not show an unambiguous increase or decline in brazilian household income inequality however behind the apparently invariable state of affairs one finds a marked decline in the proportion of households with incomes below 1 5 times the poverty line the use of a semi parametric procedure for constructing counterfactual income densities establishes that while advances in education were almost wholly associated with growth in absolute incomes they had little impact on their dispersion

an exact discount factor restriction for period three cycles in dynamic optimization models consider a standard aggregative dynamic optimization framework u where is the transition possibility technology set u is a reduced form utility function defined on this set and 0 1 a discount factor can an optimal program in this framework exhibit a period three cycle

a unified approach to incorporating demographic or other effects into demand systems a general method of introducing demographic effects into any demand system using modifying functions is described which permits complicated interactions of demographic variables with prices and expeditures theorems give properties the modifying functions must have to ensure integrability of the resulting system demand equations of the new system are given explicitly as functions of the original demand equations and the modifying functions the procedure is interpreted as altering a households technology and is shown to encompass adult equivalent scales and related methods examples of modifying functions are derived and applications of the technique to uses other than demographic variation are considered excerpt

non sequential consumer search and the consequences of a deregulation of trading hours abstract this paper analyzes the consequences of a liberalization of shopping hours in a market where consumers collect price information through non sequential search it is first shown that with as well as without restrictions on search time an equilibrium price distribution and possibly a single price equilibrium with the monopoly price exist then it is demonstrated that a liberalization is either ineffective or leads to price reductions increases in consumer welfare and larger market shares of more efficient firms

income inequality and pollution a reassessment of the environmental kuznets curve abstract improvements in some measures of air and water quality can accompany rising per capita income as illustrated by the so called environmental kuznets curve for pollution variables which show such a relationship we hypothesize that a more equitable distribution of power contributes to these outcomes by enhancing the influence on policy of those who bear the costs of pollution relative to the influence of those who benefit from pollution generating activities an empirical analysis of international variations in seven indicators of air and water quality supports this hypothesis literacy political rights and civil liberties are found to have particularly strong effects on environmental quality in low income countries

on impatience economic growth and the environmental kuznets curve a dynamic analysis of resource management the paper presents a dynamic analysis of natural resource management and investigates some key factors that affect optimal management and resource conservation using a recursive specification of time preferences we show how endogenous discounting and impatience can affect the motivation for both capital investments and environmental preservation we examine the relationships between economic growth and environmental quality endogenous discounting provides new insights in the economic dynamics underlying the environmental kuznets curve by treating growth as endogenous we examine how externalities and economic growth interact with each other we investigate how economic development can contribute to an increased demand for environmental preservation as an important new result we also show how poverty can contribute to environmental degradation

the environmental kuznets curve does one size fit all abstract this paper uses a new panel data set on state level sulfur dioxide and nitrogen oxide emissions from 1929 1994 to test the appropriateness of the one size fits all reduced form regression approach commonly used in the environmental kuznets curve literature empirical results provide initial evidence that an inverted u shape characterizes the relationship between per capita emissions and per capita incomes at the state level parameter estimates suggest however that previous studies which restrict cross sections to undergo identical experiences over time may be presenting statistically biased results

product line rivalry with brand differentiation competition with product rivalry is examined in a model where products are differentiated by both quality and brand name with no commitment firms produce a full product line when firms can commit to restrict their product offerings firms specialize if the degree of brand specific differentiation is small and they produce a full product line if brand specific differentiation is large relative to intrafirm differentiation firms may crowd a product space when all competitors would be better off with specialization brand proliferation is a credible entry deterring strategy if the degree of brand specific differentiation is not too large copyright 1993 by blackwell publishing ltd

inflation targeting in brazil constructing credibility under exchange rate volatility abstract this paper assesses the challenges faced by the inflation targeting regime in brazil the inflation targeting framework has played a critical role in macroeconomic stabilization we stress two important challenges construction of credibility and exchange rate volatility the estimations indicate the following results i the inflation targets have worked as an important coordinator of expectations ii the central bank has reacted strongly to inflation expectations iii there has been a reduction in the degree of inflation persistence and iv the exchange rate pass through for administered or monitored prices is two times higher than for market prices

education and changes in brazilian wage inequality 1976 2001 in countries with high levels of inequality progress in education has often been placed high in the list of policy proposals designed to change the unequal state of affairs this study uses brazilian annual data to chart the trends in wage inequality and a decomposition procedure to ascertain how wage distribution was affected by advances in education that doubled the median schooling level of prime age men during the sample period the results show that while falling returns to education were an equalizing factor across the wage distribution changes in the educational composition of the work force exerted a disequalizing influence that was strongest at the top of the distribution the net result was a fall in wage dispersion that was not as dramatic as might have been hoped

canaries and vultures a quantitative history of monetary mismanagement in brazil during the last two decades of the twentieth century brazil went through a sequence of failed stabilization plans that tried to cope with an enduring hyperinflation this paper uses a money demand model to evaluate monetary policies during those episodes consistency between money supply and expected conditional money demand growth rates is considered for each plan it is shown that unsuccessful programs were marked by excessive liquidity the results not only suggest that monetary mismanagement led to the failure of the plans but also that the excessive liquidity could have been predicted