Frequent Monitoring in Repeated Games under Brownian Uncertainty

This paper studies frequent monitoring in a simple infinitely repeated game with imperfect public information and discounting, where players observe the state of a continuous time Brownian process at moments in time of length Δ. It shows that efficient strongly symmetric perfect public equilibrium payoffs can be achieved with imperfect public monitoring when players monitor each other at the highest frequency, i.e. Δ→0. The approach proposed places distinct initial conditions on the process, which depend on the unknown action profile simultaneously and privately decided by the players at the beginning of each period of the game. The strong decreasing effect on the expected immediate gains from deviation when the interval between actions shrinks, and the associated increase precision of the public signals, make the result possible in the limit. The existence of a positive monotonic relation between payoffs and monitoring intensity is also found.Repeated Games; Frequent Monitoring; Imperfect Public Monitoring; Brownian Motion; Moral Hazard

The Macroeconomic Effects of Fiscal Policy in Portugal: a Bayesian SVAR Analysis

In the last twenty years Portugal struggled to keep public finances under control, notably in containing primary spending. We use a new quarterly dataset covering 1979:1-2007:4, and estimate a Bayesian Structural Autoregression model to analyze the macroeconomic effects of fiscal policy. The results show that positive government spending shocks, in general, have a negative effect on real GDP; lead to important “crowding-out” effects, by impacting negatively on private consumption and investment; and have a persistent and positive effect on the price level and the average cost of financing government debt. Positive government revenue shocks tend to have a negative impact on GDP; and lead to a fall in the price level. The evidence also shows the importance of explicitly considering the government debt dynamics in the model. Finally, a VAR counter-factual exercise confirms that unexpected positive government spending shocks lead to important “crowding-out” effects..B-SVAR, fiscal policy, debt dynamics, Portugal.

Assessing Long-Term Fiscal Developments: Evidence from Portugal

Drawing on quarterly data for Portugal, we use a Three-Stage Least Square method and a system of equations to recursively estimate two components of fiscal policy – responsiveness and persistence – and to infer about the sources of fiscal deterioration (improvement). The results suggest that: (i) government spending exhibits higher persistence than government revenue; and (ii) government revenue is more responsive to the business cycle than government spending.Fiscal deterioration; Portugal.

New Methodological Approaches for Change in Traditional Sectors: The Case of the Portuguese Fisheries Socio-Economic System

This paper summarises the methodological approach and main results of the MARHE project (Employment and Human Resources in the Fisheries Socio-Economic System). This project had as its main aim the search for alternative futures for the fisheries sector in Portugal, with particular attention being paid to the human resources situation and the working and living conditions of the fisheries-dependent populations in the coastal areas. This is a particularly interesting case, since fisheries were once an important activity and they are now in deep recession, even though it is generally recognised that the future utilisation of maritime resources offer an immense potential. As part of the research, a Delphi exercise was implemented involving in two successive stages some of the leading actors and experts dealing with the sector in Portugal. Other initiatives were held in the context of the MARHE project providing direct and indirect inputs to the scenarios and recommendations that were put forward in the sequence of the Delphi exercise. Overall the activities described in the paper contributed to the mobilisation of major actors and to discussions that may have practical implication for the future of the sector, if certain conditions are now met in the follow up to the project.Fisheries; Portugal; human resources; scenarios; labour market

Higher Education ‘Market’ in Portugal: a diagnosis

The higher education system in Portugal, in recent decades, experienced profound structural changes, including a substantial increase in the number of higher education institutions, scattered throughout the country, with a growing number of students and teachers. The subject of this study is to examine the characteristics of current supply and demand within the higher education subsystem, in Portugal. The methodological approach includes two steps: first, making a characterization of key variables that shape demand and supply of higher education in Portugal and, second, using spatial econometric analysis, particularly multidimensional scaling, in order to estimate the location of universities.Higher education, Multidimensional scaling, Spatial location.

Consumption, Wealth, Stock and Government Bond Returns: International Evidence

In this paper, we show, from the consumer’s budget constraint, that the residuals of the trend relationship among consumption, aggregate wealth, and labour income should predict both stock returns and government bond yields. We use data for several OECD countries and find that when agents expect future stock returns to be higher, they will temporarily allow consumption to rise. Regarding government bond yields, when bonds are seen as a component of asset wealth, then investors react in the same way. If, however, the increase in the yields is perceived as signalling a future rise in taxes, then they will temporarily reduce their consumption.consumption, wealth, stock returns, bond returns.

Fiscal Policy, Housing and Stock Prices

This paper investigates the link between fiscal policy shocks and movements in asset markets using a Fully Simultaneous System approach in a Bayesian framework. Building on the works of Blanchard and Perotti (2002), Leeper and Zha (2003), and Sims and Zha (1999, 2006), the empirical evidence for the U.S., the U.K., Germany, and Italy shows that it is important to explicitly consider the government debt dynamics when assessing the macroeconomic effects of fiscal policy and its impact on asset markets. In addition, the results from a VAR counter-factual exercise suggest that: (i) fiscal policy shocks play a minor role in the asset markets of the U.S. and Germany; (ii) they substantially increase the variability of housing and stock prices in the U.K..; and (iii) government revenue shocks have apparently contributed to an increase of volatility in Italy.Bayesian Structural VAR; fiscal policy; housing prices; stock prices.

Consumption, Wealth, Stock and Government Bond Returns: International Evidence

In this paper, we show, from the consumer’s budget constraint, that the residuals of the trend relationship among consumption, aggregate wealth, and labour income should predict both stock returns and government bond yields. We use data for several OECD countries and find that when agents expect future stock returns to be higher, they will temporarily allow consumption to rise. Regarding government bond yields, when bonds are seen as a component of asset wealth, then investors react in the same way. If, however, the increase in the yields is perceived as signalling a future rise in taxes, then they will temporarily reduce their consumption.consumption, wealth, stock returns, bond returns.

The Macroeconomic Effects of Fiscal Policy in Portugal: a Bayesian SVAR Analysis

In the last twenty years Portugal struggled to keep public finances under control, notably in containing primary spending. We use a new quarterly dataset covering 1979:1-2007:4, and estimate a Bayesian Structural Autoregression model to analyze the macroeconomic effects of fiscal policy. The results show that positive government spending shocks, in general, have a negative effect on real GDP; lead to important "crowding-out" effects, by impacting negatively on private consumption and investment; and have a persistent and positive effect on the price level and the average cost of financing government debt. Positive government revenue shocks tend to have a negative impact on GDP; and lead to a fall in the price level. The evidence also shows the importance of explicitly considering the government debt dynamics in the model. Finally, a VAR counter-factual exercise confirms that unexpected positive government spending shocks lead to important "crowding-out" effects.B-SVAR, fiscal policy, debt dynamics, Portugal.