Fiscal Policy in Brazil through the Lens of an Estimated DSGE Model

This paper takes Brazilian data to an open economy DSGE model that features realistic aspects of fiscal policy in Brazil. The model incorporates primary surplus targets, cyclical expenditures and social programs in the form of public transfers, public investment and distortive taxation. We test for two competing specifications of the role of public capital in the real economy. Bayesian model comparison favors the infrastructure approach to public capital. The presence of non-Ricardian households allows fiscal policy shocks to affect real economy aggregates and distribution. The model is used to address questions regarding the effect of shocks to different fiscal policy instruments upon the business cycle. We also investigate whether recent fiscal policy in Brazil has exerted significant inflationary pressures.

Education policy and early fertility: lessons from an expansion of upper secondary schooling

This paper studies effects of education policy on early fertility. We study a major educational reform in Sweden in which vocational tracks in upper secondary school were prolonged from two to three years and the curricula were made more academic. Our identification strategy takes advantage of cross-regional and cross-time variation in the implementation of a pilot scheme preceding the reform in which several municipalities evaluated the new policy. The empirical analysis draws on rich population micro data. We find that women who enrolled in the new program were significantly less likely to give birth early in life and that this effect is driven by women with higher opportunity costs of child rearing. There is however no statistically significant effect on men’s fertility decisions. Our results suggest that the social benefits of changes in education policy may extend beyond those usually claimed.Schooling reform; teenage childbearing; fertility

Education policy and early fertility: Lessons from an expansion of upper secondary schooling

This paper studies effects of education policy on early fertility. We study a major educational reform in Sweden in which vocational tracks in upper secondary school were prolonged from two to three years and the curricula were made more academic. Our identification strategy takes advantage of cross-regional and cross-time variation in the implementation of a pilot scheme preceding the reform in which several municipalities evaluated the new policy. The empirical analysis draws on rich population micro data. We find that women who enrolled in the new program were significantly less likely to give birth early in life and that this effect is driven by women with higher opportunity costs of child rearing. There is however no statistically significant effect on mens fertility decisions. Our results suggest that the social benefits of changes in education policy may extend beyond those usually claimed.Schooling reform; teenage childbearing; fertility

Health Insurance Take-up by the Near Elderly

This study examines the effect of price on the demand for health insurance by early retirees between the ages of 55 and 64. The analysis is based on administrative data from a medium sized employer and takes advantage of a natural experiment created by the firm's health insurance contribution policy. The amount the firm contributes toward retiree health insurance coverage depends on when a person retired and her years of service at that date. As a result of this policy, there is considerable variation in out-of-pocket premiums faced by individuals in the data, but this variation is independent of the non-price attributes of the health insurance plans offered, and plausibly exogenous to individual characteristics that are likely to affect the demand for insurance. We find that price has a statistically significant but small effect on the decision to take up coverage. The implied elasticities are very similar to results found in previous studies using very different data.

USING THE RANDOM PARAMETERS LOGIT MODEL TO COMBINE REVEALED AND STATED PREFERENCE DATA

Recent literature has combined Revealed (RP) and Stated Preference (SP) data in the Multinomial Logit Model (MNL) to estimate the value of environmental goods. However, emerging research has identified that a limitation of the MNL is the assumption of Independently and Identically Distributed (IID) errors, resulting in inaccurate model predictions and inconsistent utility parameters. Our analysis applies an alternative method to combine RP and SP data that takes into account the heterogeneity in both the observable and unobservable components of utility. This allows us to test whether such heterogeneity has an important effect on predicting behavioral choices.Revealed and Stated Preference Data, Scale Factor, Environmental Economics and Policy,

Exchange Rate Volatility and Export Margins.

This paper examines the effect of real exchange rate volatility on the intensive margin and the extensive margin of exports. Using highly disaggregated U.S. import data by product and country of origin, and a methodology that takes into account the possible endogeneity of volatility to trade, this paper finds that exchange rate volatility hinders trade by reducing the number of goods exported by countries. This result suggests that exchange rate volatility can make countries more dependent on a narrower set of export goods, particularly in developing economies with export concentration. Policy makers should take this effect into account when deciding their exchange rate regimes.

Does Inflation Targeting Improve Fiscal Discipline? An Empirical Investigation

Based on panel data of 58 countries, of which 22 Inflation Targeters and 36 non Inflation Targeters, over the period 1980-2003, this paper highlights the effect of Inflation Targeting – IT- on Fiscal Discipline –FD-. We make four contributions to the literature. Firstly, by applying the 2SLS on the data, we estimate the effect of IT on central government FD as measured by Structural Primary Fiscal Balances. Secondly, we found that the effect of IT on FD takes place only on the Developing Countries sub-sample. Thirdly, the positive effect of IT on FD is stronger when the Central Bank –CB- adopts “Partial” IT rather than Full-Fledged IT –FFIT-. Fourthly, the positive effect of IT on FD is heterogeneous: it is conditional to the degree of CB independence, the level of financial deepening, the instability in the terms of trade and the length of exposure to IT -the effect is not immediate but cumulative over time-. Our results are robust to alternative specifications - using Propensity Score Matching Method, "System GMM" estimator, LAD estimator and applying 2SLS on annual data rather than triennial averages data- Our results could contribute importantly to the debate about the relevance of IT adoption by Developing Countries -due to their bad fiscal stances-.The results suggest that these countries could successfully adopt IT and improve their fiscal stances, provided that they adopt it gradually, establish flexible framework allowing them to react temporally to short-term external shocks and accompanies it with a greater independence of their CB and a deepening of their financial systems.Inflation Targeting, Fiscal Discipline, Central Bank, Monetary Policy, Fiscal Policy, Public Debt Monetization, Developing Countries.

Does Inflation Targeting Improve Fiscal Discipline? An Empirical Investigation

Based on panel data of 58 countries, of which 22 Inflation Targeters and 36 non Inflation Targeters, over the period 1980-2003, this paper highlights the effect of Inflation Targeting – IT- on Fiscal Discipline –FD-. We make four contributions to the literature. Firstly, by applying the 2SLS on the data, we estimate the effect of IT on central government FD as measured by Structural Primary Fiscal Balances. Secondly, we found that the effect of IT on FD takes place only on the Developing Countries sub-sample. Thirdly, the positive effect of IT on FD is stronger when the Central Bank –CB- adopts “Partial” IT rather than Full-Fledged IT –FFIT-. Fourthly, the positive effect of IT on FD is heterogeneous: it is conditional to the degree of CB independence, the level of financial deepening, the instability in the terms of trade and the length of exposure to IT -the effect is not immediate but cumulative over time-. Our results are robust to alternative specifications - using Propensity Score Matching Method, "System GMM" estimator, LAD estimator and applying 2SLS on annual data rather than triennial averages data- Our results could contribute importantly to the debate about the relevance of IT adoption by Developing Countries -due to their bad fiscal stances-.The results suggest that these countries could successfully adopt IT and improve their fiscal stances, provided that they adopt it gradually, establish flexible framework allowing them to react temporally to short-term external shocks and accompanies it with a greater independence of their CB and a deepening of their financial systems.Inflation Targeting;Fiscal Discipline;Central Bank;Monetary Policy;Fiscal Policy;Public Debt Monetization;Developing Countries.

Competition and growth: reconciling theory and evidence

From book description: Though competition occupies a prominent place in the history of economic thought, among economists today there is still a limited, and sometimes contradictory, understanding of its impact. In Competition and Growth, Philippe Aghion and Rachel Griffith offer the first serious attempt to provide a unified and coherent account of the effect competition policy and deregulated entry has on economic growth. The book takes the form of a dialogue between an applied theorist calling on "Schumpeterian growth" models and a microeconometrician employing new techniques to gauge competition and entry. In each chapter, theoretical models are systematically confronted with empirical data, which either invalidates the models or suggests changes in the modeling strategy. Aghion and Griffith note a fundamental divorce between theorists and empiricists who previously worked on these questions. On one hand, existing models in industrial organization or new growth economics all predict a negative effect of competition on innovation and growth: namely, that competition is bad for growth because it reduces the monopoly rents that reward successful innovators. On the other hand, common wisdom and recent empirical studies point to a positive effect of competition on productivity growth. To reconcile theory and evidence, the authors distinguish between pre- and post-innovation rents, and propose that innovation may be a way to escape competition, an idea that they confront with microeconomic data. The book's detailed analysis should aid scholars and policy makers in understanding how the benefits of tougher competition can be achieved while at the same time mitigating the negative effects competition and imitation may have on some sectors or industries

Exploring the Fairness and Resource Distribution in an Apache Mesos Environment

Apache Mesos, a cluster-wide resource manager, is widely deployed in massive scale at several Clouds and Data Centers. Mesos aims to provide high cluster utilization via fine grained resource co-scheduling and resource fairness among multiple users through Dominant Resource Fairness (DRF) based allocation. DRF takes into account different resource types (CPU, Memory, Disk I/O) requested by each application and determines the share of each cluster resource that could be allocated to the applications. Mesos has adopted a two-level scheduling policy: (1) DRF to allocate resources to competing frameworks and (2) task level scheduling by each framework for the resources allocated during the previous step. We have conducted experiments in a local Mesos cluster when used with frameworks such as Apache Aurora, Marathon, and our own framework Scylla, to study resource fairness and cluster utilization. Experimental results show how informed decision regarding second level scheduling policy of frameworks and attributes like offer holding period, offer refusal cycle and task arrival rate can reduce unfair resource distribution. Bin-Packing scheduling policy on Scylla with Marathon can reduce unfair allocation from 38\% to 3\%. By reducing unused free resources in offers we bring down the unfairness from to 90\% to 28\%. We also show the effect of task arrival rate to reduce the unfairness from 23\% to 7\%