real exchange rate dynamics with nominal parities structural change and overshooting abstract the relationship between structural changes that require a modification of the steady state level of the real exchange rate is examined in terms of a model of staggered prices and real wealth effects although wealth effects are necessary for overshooting it is shown that their actual values are of no particular relevance in fact overshooting is shown to be more likely the smaller is the real wealth effect in the demand for tradables a key and counterintuitive result is that overshooting is more likely the higher is the frequency of price changes

technology international trade and pollution from us manufacturing pollution emitted by us manufacturers declined markedly over the past several decades even as real manufacturing output increased i first show that most of the decline in us manufacturing pollution has resulted from changing production processes technology rather than changes in the mix of goods produced i then show that increased net imports of polluting goods international trade accounts for only a small portion of the pollution reductions from the changing mix of goods together these two findings demonstrate that shifting polluting industries overseas explains only a minor part less than 10 percent of the cleanup of us manufacturing jel f18 l23 l60 o30 q52 q53

the role of intermediate trade in the change of carbon flows within china in recent years evaluating the emissions embodied in trade eeit has become an important area of policy and research multiregional input output mrio analysis which links producers and final consumers is a widely used method for quantifying the eeit however the role of intermediate trade in driving changes in the eeit is still not fully incorporated in mrio analysis and as a result poorly understood here we present a framework that separately identifies the drivers of the emissions embodied in the trade of final and intermediate products we implement this framework in a case study in which we analyse the changes in co2 emissions embodied in interprovincial trade in china from 2007 to 2012 we find that the largest changes are a rising final demand which is associated with increased emissions that are to some extent offset by decreasing emissions intensity and changing interregional dependency regionally the rising imports and the growth in final demand in less developed regions in the north and central e g hebei and henan reduced the co2 emissions outsourced by central coastal regions and drove the traded embodied co2 flows between the central and western regions the framework enriches our understanding of the role played by intermediate trade in the relocation of emissions

optimal portfolio choice and the collapse of a fixed exchange rate regime abstract a model is presented that accounts for empirical macroeconomic regularities accompanying exchange rate crises assuming the central bank can surprise the private sector about its monetary policy we solve for agents consumption and portfolio decisions and the economy s equilibrium prices and interest rates using an intertemporal asset pricing model prior to a collapse a peso problem will always exist and the central bank will lose reserves in excess of domestic credit creation at the time of the collapse the exchange rate may depreciate unexpectedly the dynamics of a country s return to fixed exchange rates are also analyzed

rational expectations in microeconomic models an overview abstract this paper is an expository introduction to several topics of current research in the general equilibrium theory of rational expectations more specifically we discuss the existence of exact and approximate rational expectations equilibria the implementation of equilibria the behavior of learning and smoothing processes by which traders construct expectations from repeated observations of the market and the lagged use of the information revealed by prices in an intertemporal sequence of markets the purpose of this discussion is to introduce papers on these topics appearing in the journal of economic theory symposium on rational expectations in microeconomic models

a first look at the impacts of trade liberalization on brazilian manufacturing industry abstract the aim of this paper is to assess the impacts of trade liberalization on brazilian manufacturing industry over the 1989 1996 period to this end a series of indicators was built which shed new light on the technical efficiency and allocative effects of the liberalization the results obtained suggest that the impacts were generally positive and consistent with both the predictions of the international trade literature and the pattern of brazil s industrialization

strict rational expectations equilibria with diffuseness abstract for smooth static pure exchange economies under uncertainty it is shown that a diffuseness condition on the distribution of traders characteristics as the state of the world varies permits one to use only a weak dimensionality restriction in the proof of the genericity of existence of strict rational expectations equilibria a generic result on the amount of information conveyed by equilibrium price functions and comparisons with some examples of nonexistence are given

public sector expenditures and financial crisis in chile abstract working with official government statistics this paper shows that imf stabilization guidelines which blame inflation and balance of payments disequilibrium on fiscal deficits are incorrect in the case of chile there government spending has for the most part been held in check during the military government however there are leading and lagging expenditure areas within the government military spending has steadily increased while social expenditures have been cut the latter point directly contradicts the official government position

inter relationships between spot and sticky price markets for crude oil a diagrammatic analysis abstract transfers of crude oil have generally involved both spot market transactions and sticky price transactions under longer term contractual arrangements or at official opec prices under normal conditions when the opec cartel has been functioning effectively the sticky price market tends to drive the spot market under other conditions like an international supply crisis or weak cohesion in opec spot and sticky prices may deviate considerably and the spot market drives the sticky price market

consumer product export opportunities to liberalizing ldcs a life cycle approach this paper reviews popular and academic literature in order to describe several relationships which appear to exist between liberalization in ldcs and imports of consumer goods based on this review the parameters of a life cycle model are developed for consumer product exports to liberalizing ldcs such exports are hypothesized to 1 be minimal prior to liberalization and 2 rise rapidly in the early stages of liberalization and 3 decline sometimes precipitously several years later these hypotheses are tested using consumer import data from three unique ldcs chile egypt and china finally the implications of the model for ldc governments exporters and foreign investors are explored

a developing country view of the current global crisis what should not be forgotten and what should be done macroeconomic theory will surely be affected by the current global crisis there are signs that some old theories and insights will have a comeback this paper argues that among them economists should not forget the lessons that have been learnt from three decades of several financial crises in developing countries we emphasise two important lessons first preventing crises in developing countries requires not only the regulation of domestic financial systems but also a consistent set of macroeconomic policies in particular we stress the need for consistency between the exchange rate rule the capital account regime and the domestic financial market regulations second financial crises in developing countries tend to worsen both the balance of payments and the fiscal balance traditional adjustment policies tend to exacerbate the recessive trends in output and employment this is just the opposite of what is required and what governments in developed countries are able to do developing countries should push for an agenda that helps them deal with these problems

the welfare effects of trade and capital market liberalization treatise on the welfare effects of trade and capital market liberalization consquenses of the capital account liberalization in the presence of trade restrictions specifies on the liberalization of trade in the presence of foreign borrowing constraints proves superiority of gradual liberalization of trade to an abrupt liberalization

stabilization with liberalization an evaluation of ten years of chile s experience with free market policies 1973 1983 the recent post 1973 economic experience of chile has attracted considerable attention both from professional economists and from the media most observers have been particularly impressed by the sharp contrasts observed in chile in such a short period of time for example in 1973 chile had one of the highest rates of inflation in the world over 600 whereas in 1981 it experienced one of the lowest rates of inflation 9 5 also in 1975 real gnp declined by 12 9 but during 1977 80 real gnp grew at an average rate of 8 5 per annum in 1982 however the country faced a new recession with real gnp dropping by 14 5 in 1983 the gnp was reduced further by 2 3 the fact that these episodes developed while the military government was actively pursuing free market oriented policies that greatly liberalized the economy adds considerable interest to the chilean case 2 the year 1973 marked an important turning point in chile s economic and political history in september of that year the military took over the government from president salvador allende and a period of dramatic economic changes began chile was transformed from an economy isolated from the rest of the world with strong government intervention into a liberalized world integrated economy where market forces were left free to guide most of the economy s decisions the period 1973 81 was characterized by important achievements inflation was greatly reduced the government deficit was virtually eliminated the economy went through a dramatic liberalization of its foreign sector tariffs were reduced to a uniform 10 level and prices including interest rates were full liberalized probably one of the most interesting aspects of the chilean economy during this period is that major

the macroeconomics of populism in latin america by populism this paper refers to an economic approach that emphasizes growth and income redistribution and deemphasizes the risks of inflation and deficit finance external constraints and the reaction of economic agents to aggressive nonmarket policies it analyzes two instances of populism chile under allende and peru under garcia these experiences are described in detail not as a righteous assertion of conservative economics but as a warning that populist policies ultimately fail and always at a frightening cost to the groups they were supposed to benefit this paper explores the question of whether some variant of populist policies could succeed it suggests that populist policies could succeed if they stayed clear of foreign exchange constraints emphasized reactivation for a brief initial period and then shifted to growth policies most important expansionary policies must reflect awareness of capacity constraints and must rely for financing on an extremely orthodox fiscal policy and rigorous tax adminsitration the paper concludes by warning that imf style policies unconcerned with growth of social progress may establish financial stability in the short run but inevitably open the door to yet another round of destructive reaction in the form of populist policies

a firm level chronicle of financial crises in the southern cone abstract this paper chronicles the recent emergence of financial crises in the southern cone countries of south america relying on firm level panel data major changes in the macro and regulatory environments are linked to changes in firms earnings streams and financial structures for each country a boom phase a squeeze phase and a bust phase are identified it is argued that the proximate cause of this pattern was wild fluctuation in the expected real return on financial assets though no formal model is developed it is suggested that these swings were due to the system of incentives created by rapid banking sector deregulation cum exchange rate based stabilization policies

impact of household consumption on co2 emissions danish household consumption increased by 58 over the period 1966 1992 while co2 emissions only increased by 7 using decomposition analysis we investigated the global co2 impact of danish household consumption from 1966 to 1992 our conclusion is that overall growth in private consumption but not changes in the composition of consumption is the key to understanding the increase in co2 emissions however the effect of growth in private consumption has been partly offset by substantial energy conservation in the energy supply and manufacturing sectors

currency substitution and the real exchange rate the utility maximization approach abstract this paper studies the currency substitution hypothesis with rational expectations in terms of a sidrauski type model where domestic and foreign money enter the utility function it shows that contrary to liviatan 1981 the approach does not necessarily contradict calvo and rodriguez 1977 furthermore the impact of monetary stabilization policy is fully characterized with flexible and pre fixed rates for an extension of dornbusch and mussa 1975 a brief analysis of the optimal quantity of money is also provided

financial crises and balance of payments crises a simple model of the southern cone experience abstract this paper starts from a simple model of the domestic banking sector and develops the potentially destabilizing macroeconomic consequences of its role in intermediating foreign capital inflows both financial and balance of payments crises may result reminiscent of the southern cone experience

domestic prices of importable goods in chile and the law of one price 1975 1982 abstract this paper tries to explain observed deviations from the law of one price in chile during the 1975 1982 period in order to do this we develop a microeconomic model where typical final goods are non tradeable and are produced by combining tradeable importable goods and commercial or intermediation services the empirical results reported later in the paper tend to support our model and are consistent with the hypothesis that an important proportion of variations in retail and wholesale prices of selected imported goods is explained by changes in the cost of domestic distribution a very important implication of our findings is that it would not make sense to invoke disaggregated perfect commodity arbitrage to support the assumption of purchasing power parity at the macro level

temporary stabilization predetermined exchange rates the paper analyzes the impact of a stabilization policy based on a temporary reduction in the rate of devaluation against a background in which a constant rate of devaluation has no real effects it is shown that the temporary policy does and furthermore that the real effects tend to become bigger in absolute value as the horizon of the temporary policy is shortened the central discussion is carried out in terms of a one good cash in advance model with perfect capital mobility and ramsey type consumers results are extended to account for home goods and variable velocity the roles of capital mobility and banking liberalization are briefly discussed

on the costs of temporary policy abstract the effects and costs of a temporary trade liberalization experiment are studied in terms of a model with an infinitely lived individual under perfect capital mobility and no static gains from trade it is shown that the current account deteriorates during liberalization and becomes more negative the shorter is the liberalization period the costs are non monotonic with respect to the latter and timing of their maximum varies widely with parameters the analysis is extended to include durable and home goods money and static gains from trade

material implication of chile s economic growth combining material flow accounting mfa and structural decomposition analysis sda abstract over the last three decades the economic integration of the chilean economy into global markets has been taking place at a rapid pace for example in 1986 exports represented 29 of gdp while in 1996 they had increased to 38 of gdp this period of time was characterized by strong economic growth with an average annual growth rate of about 10 from a physical perspective material requirements more than doubled from 220 to 500 million tons of direct material inputs dmi during the same decade the rate of material growth requirements was around 13 per year the main objective of this study is to explain the changes in dmi by using a structural decomposition analysis sda the changes in material flow accounting mfa were broken down into the effects caused by changes in resource use per unit of output material intensity effect changes between and within sectors structural change effect changes in the composition of final demand mix effect changes due to shifting shares of domestic final demand and export categories category effect and finally changes in the overall level of economic activities level effects the results as a percentage of the total level of dmi used in 1986 indicate that economic growth was the major source of material changes 109 the material intensity and category effects explained 31 and 14 of the increase respectively the increase in the material intensity is mainly due to a declining quality of ores in copper production however these components were partly compensated by the structure 14 and mix 13 effects therefore for a southern american country such as chile the main causes of these changes in material consumption have been a combination of the nature of economic growth along with an increase in export production and material intensity of production

the dynamics of real asset prices the real exchange rate trade reforms and foreign capital inflows abstract this paper explores the dynamics of real asset prices in chile in the last 15 years in a framework where a central role is played by the real exchange rate tariffs and foreign capital inflows working with time series models the real prices of land capital stocks and housing the empirical results show that at a time when structural reforms took place 1976 1982 including a trade liberalization tariffs contributed significantly to explain the real price of land while macroeconomic conditions were dominated by foreign capital inflows after 1982 the real exchange rate plays a key role in many respects

self fulfilling mechanisms in bayesian games abstract amechanismfor a bayesian gamegis a mapping from the set of states of nature to the set of players actions isself fulfillingif players are truthful at the communication stage and given the information revealed by no player can gain in unilaterally deviating from the action prescribed by the mechanism we investigate the properties of self fulfilling mechanisms and we show in particular that they correspond to inert solutions of the infinitely repeated game generated byg we also discuss applications to market games regulation and r d games journal of economic literatureclassification numbers d82 c72

income growth and atmospheric pollution in spain an input output approach abstract the relationships between economic growth and environmental pressures are complex since the early nineties the debate on these relationships has been strongly influenced by the environmental kuznets curve hypothesis which states that during the first stage of economic development environmental pressures increase as per capita income increases but once a critical turning point has been reached these pressures diminish as income levels continue to increase however to date such a delinking between economic growth and emission levels has not happened for most atmospheric pollutants in spain the aim of this paper is to analyse the relationship between income growth and nine atmospheric pollutants in spain in order to obtain empirical outcomes for this analysis we adopt an input output approach and use namea data for the nine pollutants first we undertake a structural decomposition analysis for the period 1995 2000 to estimate the contribution of various factors to changes in the levels of atmospheric emissions and second we estimate the emissions associated with the consumption patterns of different groups of households classified according to their level of expenditure

the rip tide of privatization lessons from chile abstract chile is one of the rare exceptions where the voluble enthusiasm for privatization has been put into effect of the 500 companies that were under state ownership in the early 1970s only 19 remained under public control at the end of the decade moreover a land reform which had affected 43 of the country s cultivable area was rolled back by almost 40 privatization indisputably increased the economic power of a number of conglomerates and fostered the concentration of assets however the complexity of the liberalization package that accompanied privatization makes it difficult to establish strict causality for the economic collapse that followed in the early 1980s the chilean experience with privatization reveals some interesting lessons that other countries may wish to consider

stabilization and recession in a transitional economy the case of poland abstract this paper analyzes the polish experiences in 1990 of the stabilization shock therapy implemented simultaneously with the set of system transforming reforms the orthodox exchange rate based stabilization program brought about a substantial reduction in inflation and the establishment of market clearing prices but the economy fell into unexpectedly deep recession our findings suggest that the recession which has been common to all postsocialist countries was mainly caused by a system specific output decline related to the dismantling of a centrally planned system and the transition to market economy

the capital inflows problem revisited a stylized model of southern cone disinflation in the late 1970s countries in latin america s southern cone initiated attempts to lower domestic inflation rates through the progressive reduction of a preannounced rate of exchange rate devaluation the stabilization programs gave rise to massive capital inflows real exchange rate appreciation and current account deficits this paper develops a stylized intertemporal framework in which the effects of a credible preannounced disinflation scheme can be studied it is shown that even when agents have perfect foresight and markets clear continuously the capital inflows phenomenon and the associated real appreciation may result while unanticipated permanent inflation changes are neutral in the paper anticipated inflation is neutral only in exceptional circumstances a preannounced disinflation operates by altering the path of an expenditure based real domestic interest rate that depends on expected changes in the prices of liquidity services and nontradable consumption goods

an historical decomposition of the great depression to determine the role of money abstract the innovation accounting technique of historical decomposition seems ideally suited as a vehicle for a re examination of money s role during the depression its application using u s monthly data for 1919 to 1941 reveals that innovations in money exerted a considerable influence on prices and output after october 1929 although the depth of the depression and the extent of the subsequent recovery cannot be attributed solely to monetary factors an important albeit occasionally diminished monetary effect is also identified even when a passive contemporaneous response by money to price and output fluctuations is assumed not to contribute to the effect

accounting for nitrogen in denmark a structural decomposition analysis abstract this paper examines the environmental economic cycle for nitrogen in denmark based on nitrogen input and output from different economic sectors an input output model is employed together with a nitrogen mass balance to apportion total nitrogen loading by final demand and estimate export and import of nitrogen from foreign trade the changes in agricultural and industrial nitrogen loading from the mid 1960s to the late 1980s are broken down into changes related to different technological and economic factors the analysis reveals that technological change intensified agricultural production and economic growth especially rising exports are the key factors structural shifts changes in commodity mix in the household and production sectors generally being of less importance

information aggregation in debate who should speak first abstract privately informed individuals speak openly in front of other members of a committee about the desirability of a public decision each individual wishes to appear well informed for any given order of speech committee members may herd by suppressing their true information with individuals of heterogeneous expertise optimizing over the order of speech can improve the extraction of information but not perfectly so it is not always optimal to use the common anti seniority rule whereby experts speak in order of increasing expertise a committee with more able experts may be afflicted by greater herding problems yielding a worse outcome

on the optimality of the patent renewal system the patent system is mainly a renewal system the patent life is chosen by the patentee in return for fees i ask whether such a system can be justified by asymmetric information on costs and benefits of research in such a model i show that renewal mechanisms possibly with subsidies are equivalent to direct revelation mechanisms and therefore cannot be improved on regardless of the objective function under plausible circumstances patents should have a uniform life rather than varying in length as typically occurs under a renewal system

an overview of the driving forces behind energy demand in china s construction industry evidence from 1990 to 2012 abstract the rapid urbanization in china has produced a large demand for energy in the past decades it is therefore urgent to have an understanding of the driving forces behind the energy increase in the construction industry this study applies structural decomposition analysis sda to quantify the effects of driving factors from insight into consumption and production the results show that the energy consumption trajectory of china s construction industry is the result of competition between the effect of increasing final demand and improvement in energy efficiency although the effect of consistent efforts in structure optimization by the central government was significant from 2007 to 2012 the potential to save much energy still lies in structure optimization in energy production and final demand according to the projection structural upgrades in economy would be the most important factor for energy reduction in 2020 scenario analysis further indicated that the percentage change of energy increments in 2020 can be reduced at 22 of 2010 level under the optimistic scenario sector aggregation analysis revealed that more aggregates would increase uncertainty to some extent and result in a misinterpretation of the importance of the underlying factors according to the quantitative analysis in this study the percentage change of total embodied energy consumption in the construction industry should be limited below 25 of 2010 level at the end of the 13th five year plan

ex post regret and the decentralized sharing of information abstract firms reveal private information about the value of investment through their investment decisions as a consequence they may have ex post regret once they see other firms investments we define a notion of rational expectations equilibrium for games which imposes a no regret property in this equilibrium all firms make the same investment decision but despite the absence of ex post regret the investment herd can be inefficient in addition equilibrium might not exist we introduce a notion of probabilistic existence and identify conditions under which if the number of firms is large enough information comes out so that investment herds are first best efficient with high probability and equilibrium exists with high probability journal of economic literatureclassification numbers c7 d8

domestic currency appreciation and foreign capital inflows what comes first chile 1977 1982 abstract the purpose of this paper is to find granger causality relations between the real exchange rate the inflow of foreign capital interest rate arbitrage and the terms of trade in a representative indebted developing country chile this is done for a time period in which chile went from an unprecedented expansion 1977 1981 to a severe recession 1982 the paper confronts two competing hypotheses that purport to explain such behavior hypothesis one claims that causality went from the real exchange rate affected by nominal exchange rate policy to capital inflows in what could be termed a current account deficit induced demand for foreign funds hypothesis two posits a causality that ran the other way from capital inflows to the real exchange rate in which case the exogenous inflows of foreign money implied a current account deficit special attention is paid to the role played by two other related factors interest rate arbitrage and terms of trade variations by applying innovation accounting techniques based on estimated vector autoregressions support is found for the second of these hypotheses thus the real issue in chile and in many other currently indebted latin american countries should be the timing and extent of the capital account liberalization process carried out during the period

exchange rate based stabilization in latin america abstract this paper examines the use of the exchange rate as a nominal anchor for achieving price stability in latin america it will explore the impact of exchange rate anchoring on the real sector by analyzing five stabilization programs the paper will identify conditions that make exchange rate based stabilization successful and those that lead to its failure it will also demonstrate that while the income effect can be instrumental in describing consumption booms associated with exchange rate based stabilizations the popular view based on the credibility hypothesis fails to explain key events associated with such programs

credibility real interest rates and the optimal speed of trade liberalization abstract this paper investigates the effects of imperfectly credible trade liberalization programs on welfare and the allocation of resources we present a rational expectations model in which a government with limited access to international borrowing will abort a liberalization program if hard currency reserves are depleted too quickly the liberalization s lack of perfect credibility acts as a distortion which becomes rationally intensified under the typical first best policy of immediate liberalization a more gradual lowering of trade barriers leads to higher welfare and a greater probability that the program succeeds we derive the optimal speed of liberalization and the endogenous level of credibility

targeting the real exchange rate theory and evidence abstract this paper presents a theoretical and empirical analysis of policies aimed at setting a more depreciated level of the real exchange rate an intertemporal optimizing model suggests that in the absence of changes in fiscal policy a more depreciated level of the real exchange rate can only be attained temporarily this can be achieved by means of higher inflation and or higher real interest rates depending on the degree of capital mobility evidence for brazil chile and colombia supports the model s prediction that undervalued real exchange rates are associated with higher inflation

the pricing of manufactured goods during trade liberalization evidence from chile israel and korea this paper is an investigation of price setting behavior in chile israel and korea when each of these countries moved from a fairly closed to a more open international trade regime in some cases the intensification of the opening resulted from real appreciation rather than from a formal adjustment in tariff rates as in chile 1980 82 and israel 1983 84 the central thesis of this paper is that the structural price equation for import competing manufactured goods changes with the degree of openness to trade when the economy is fairly closed the main weight is commanded by domestic cost variables and excess demand and foreign prices only affect pricing through their effects on imported material prices during trade liberalization the rate of change of prices of an increasing proportion of manufacturing goods begins to be influenced by the landed cost of similar imports but domestic variables still have a role because selected domestic manufactured goods are considered imperfect substitutes for internationally traded products empirical results from time varying parameter estimation show that domestic currency prices of imports become progressively more important during the liberalization processes in the three countries

india s trade balance in the 1980s an econometric analysis the paper is an examination of india s trade balance in the 1980s the approach attempted is of examining the bilateral trade balances of india with nine trading partners from the non communist bloc the long run equilibrium relations are studied via two var models in johansen s multivariate cointegration framework five hypotheses of interest are singled out for attention the nominal and real exchange rates consistently emerge as important influences on the trade balance however as the exchange rates fail weak exogeneity tests policy implications are not clear cut

money real interest rates and output a reinterpretation of postwar u s data this paper reexamines both monthly and quarterly u s postwar data to investigate if the observed comovements between money real interestrates prices and output are compatible with the money real interest output link suggested by existing monetary theories of output which include both keynesian and equilibrium models the major empirical findings are these 1 in both monthly and quarterly data we cannot reject the hypothesis that the ex ante real rate is exogenous or granger causally prior in the context of a four variable system which contains money prices nominal interest rates and industrial production 2 in quarterly data there is significantly more information con tained in either the levels of expected inflation or the innovationof this variable for predicting future output given current and lagged output than in any other variable examined money actualinflation nominal interest rates or ex ante real rates the effect of an inflation innovation on future output is unambiguously negative the first result casts strong doubt on the empirical importance of existing monetary theories of output which imply that money should have a causal role on the ex ante real rates the second result would appear incompatible with most demand driven models of output in light of these results we propose an alternative structural model which can account for the major dynamic interactions among the variables this model has two central features i output is unaffected by money supply and ii the money supply process is motivated by short run price stability this abstract was borrowed from another version of this item

structural change and energy use the case of the manufacturing sector in taiwan abstract this paper examines the role of sectoral shift and improvements in energy intensity of individual industries in aggregate manufacturing sector energy intensity changes in taiwan during 1971 1985 the divisia index approach is employed to decompose sectoral shift and energy intensity effects a major finding of this analysis is that changes in energy intensities of individual industries were the main influence in changes in aggregate manufacturing sector fuel and electricity intensities during the period sectoral shifts were found to contribute very little to the energy intensity changes

savings in chile what went right abstract in the last 10 years chile s overall economic performance has been remarkable in many respects including a significant and sustained increase in domestic savings to figures around 26 of gdp this paper empirically assesses the reasons behind such notable behavior of savings by applying co integration models to check for long run relationships and error correction models to verify short run adjustments the emphasis is on annual private savings data span from 1960 to 1995 which as it turns out depend more than proportionally on an adjusted measure of gdp and less than proportionally on foreign savings and public savings private savings are also positively affected by economic growth and a dummy reflecting the effect of pension funds most of the adjustment between short run and long run is completed in less than 3 years where the variable representing income bears the bulk of such adjustment in comparing two episodes of good economic performance in the last 20 years 1976 1981 and 1986 till present it is found that three basic differences arise concerning private savings sustainability of growth different access to foreign savings during the recovery from recession and different scenarios with respect to the development of long run capital markets in particular a relevant role played the move to a fully funded social security system in the early 1980s

the monetarist experiment in chile a critical survey abstract chile constitutes the most outstanding case of implementation of an extreme market economy model during nine years between 1973 and 1982 a model was implemented that for its pureness deepness and extension induced a drastic transformation of the chilean economy the main features of the model are examined focusing on the anti inflationary policy the reform of the financial system and the external opening then the global results concerning output income distribution and saving investment are studied the paper shows that the balance of the results was clearly negative during the 1973 1981 period output stagnated the concentration of wealth was spectacular and saving and investment rates fell significantly the characteristics themselves of the model and the weakening of the productive apparatus that they originated additionally explain that the international recession was multiplied during 1982 within the domestic economy the paper concludes with an attempt to interpret the main causes of the failure of this experiment

information revelation and strategic delay in a model of investment we model investment as an n player game with a pure informational externality each player s payoff depends only on his own action and the state of nature however because a player s action reveals his private information players wait to see what other players will do equilibrium is inefficient because delay is costly and information is imperfectly revealed we characterize the unique symmetric perfect bayesian equilibrium and study the robustness of delay which turns out to be sensitive to the reaction speed and the number of players we establish the following results i when the period length is very short the game ends very quickly and there is a form of herding or informational cascade which results in a collapse of investment ii as the period length increases the possibility of herding disappears iii as the number of players increases the rate of investment and the information flow are eventually independent of the number of players adding more players simply increases the number who delay iv in the limit the time profile of investment is extreme a period of low investment followed either by an investment surge or a collapse

on the existence of rational expectations equilibrium abstract we prove a theorem on the existence of rational expectations general economic equilibrium when agents condition on prices as well as on private information and maximize the expectation of a state dependent utility function the key to the result is a new idealization of what it means for a set of empirical distributions to support agents expectations this idealization depends on the notion that agents compare their expectations with continuous versions of the random empirical distributions that are generated by the workings of the economy the existence theorem covers all strictly concave utility functions arbitrary distributions of the state variable and situations in which the dimension of the state variable is large relative to the number of commodities

macroeconomic issues for latin america abstract recent macroeconomic issues in latin america are reviewed with an emphasis on theory topics covered include multiple equilibria from hysteresis or increasing returns exchange rate management and the output and asset market effects of devaluation speculation interest rate management and financial reform government behavior income distribution and growth inertial inflation and heterodox policy shocks and disequilibrium theories

structural decomposition analysis of physical flows in the economy many environmental problems can be attributedto the extraction and emissions of physicalsubstances increasing our understanding of theeconomic and technological driving forcesbehind these physical flows can contribute tosolving the environmental problems related tothem the input output framework is a usefulsetting in which to integrate detailedinformation about economic structure andphysical flows in this article a specificmethod in input output analysis is reviewed namely structural decomposition analysis sda it is based on comparative static analysis which decomposes historical changes of a policyvariable into determinant effects sda has beenapplied for example to analyze the demand andtechnological driving forces of energy use co2 emissions and various other pollutantsand resources this article examines thetheoretical aspects of structuraldecomposition in particular those concerningphysical flows and environmental issues furthermore the article includes an extensivesurvey of empirical studies

testing capital account liberalization without forward rates another look at chile 1979 1982 abstract the paper offers a way to test the impact of capital account liberalization on domestic interest rates when proxies for expectations of depreciation are unavailable the model is tested on the well understood japanese experience in 1979 1980 and then applied to the chilean liberalization from 1979 1982 the evidence points to chilean monetary authorities retaining significant control over interest rates across the period and offers support to an evolving interpretation of the period that stresses the excessive optimism about the reforms rather than their lack of credibility as the source of their ultimate collapse

stabilization crises and the breakdown of military authoritarianism in latin america over the last five years military authoritarian regimes broke down consistently throughout latin america the return to democratic government has had less to do with the internal political situation in these countries than with the economic crises faced by the military regimes the military regimes collapsed primarily because of the external debt crisis that emerged in the early 1980s there were two characteristic patterns in the macroeconomic policy of the military authoritarian systems according to one pattern the regimes attempted to maintain growth rates through reflation which led to chronic trade deficits that had to be covered through continuous reserve inflows alternatively particularly in the southern cone the regimes attempted disinflation through the heterodox strategy of underdevaluation of exchange rates although this slowed inflation this was achieved only at the cost of serious balance of payments disequilibrium and a decrease in external competitiveness which limited the ability