Ricardian Equivalence Proposition in a NK DSGE Model for two Large Economies: The EU and the US

This paper examines the macroeconomic effects of active fiscal policy management coupled with a monetary policy that follows the Taylor principle. The objective is to investigate the relevance of the Ricardian Equivalence Proposition (REP) in a framework where two large open economies interact and a fraction of the consumers is financially constrained. According to an estimated vector autoregressive model, a positive shock in government expenditure leads to an increase in private consumption (at odds with the permanent income hypothesis). The channels are studied in a fully microfounded dynamic stochastic general equilibrium model economy calibrated for the Euro Area (EU-12) and for the United States. The crucial parameter that drives the break of the REP is the share of financially constrained consumers. Firms produce tradable varieties in a monopolistic competition framework and pricing is à la Calvo, which leads to nominal price stickiness. Labor varieties are immobile across countries and are demanded in an aggregated fashion by firms. Fiscal policy is specified as a time-consistent rule. We simulate through impulseresponse functions parameterizations that yield results consistent with the REP, and estimate a subset of deep parameters employing Bayesian techniques.

Sectoral productivity and spillover effects of FDI in Latin America

Empirical studies analysing productivity effects of inward FDI in Latin America (LA) are inconclusive. We argue that investigating aggregate FDI masks interesting effects of FDI that take place within and across sectors. Moreover, the potential of FDI to generate productivity effects differs across sectors. For these reasons and because sectoral FDI intensities vary significantly among LA countries and change over time, we investigate the productivity effects of FDI in eight different sectors including the primary sector, manufacturing and services. Besides FDI, sector-specific institutional factors, education and a sector‘s export share are considered as control variables. Given the likely endogeneity of variables, a GMM system estimation approach is used. The results indicate that positive productivity effects can be found in all sectors, although they may depend on specific conditions or are limited to a certain time period. Direct productivity effects are highest in the primary sector (agriculture, mining and petroleum production) and in financial services. In contrast, FDI in manufacturing and in transport and telecommunications generates productivity spillovers to nearly all other sectors.FDI, productivity, sector level, Latin America

Reforming labor markets: reflections of an economist who (unexpectedly) became the Italian Minister of Labor

Technocratic Minister of Labor in an economic emergency, with the assignment to devise two key reforms (pension system and labor market): a unique, though hard experience for an academic, confirming the gap between economic research and real life. This paper gives an account of the Italian labor market reform, an attempt to reconcile economic logic, social expectations, requests from European institutions and financial constraints. This reform survived difficult social dialogue and long Parliamentary debates and had severe communication problems; resulting however in a comprehensive law aiming at inclusion, dynamism and higher productivity and representing a chance of better prospects for the young

A Microfounded Sectoral Model for Open Economies

Numerical simulations of the two-country sectoral model are provided for a relatively large number of structural shocks as domestic and foreign productivity shocks in final tradables and non-tradables, money demand shocks and a shock in the exchange rate. Such a model is well suited for monetary policy analysis at the international level and risk analysis.New Keynesian open economy model;tradable and non-tradable sectors;final and intermediate goods;log-linearization

Non-Ricardian Aspects of Fiscal Policy in Chile

This paper examines non-Ricardian effects of government spending shocks in the Chilean economy. We first provide evidence on those effects based on vector autoregressions. We then show that such evidence can be accounted for by a model that features: (i) a sizeable share of non-Ricardian households (i.e. households which do not make use of financial markets and just consume their current labor income); (ii) nominal price and wage rigidities; (iii) an inflation targeting scheme, and (iv) a structural balance fiscal rule that represents the particular Chilean fiscal rule. The model is estimated employing Bayesian techniques. Finally, we use model simulations to demonstrate the countercyclical effects of the Chilean fiscal rule as compared with a zero-deficit rule.

A Microfounded Sectoral Model for Open Economies

In this paper we derive a microfounded macro New Keynesian model for open economies, be them large or small. We consider habit formation in consumption, sectoral linkages for tradable and non-tradable goods, capital stock investments with variable capital utilization, domestic and foreign governments, imperfect (exchange rate) pass-through in import prices and incomplete international financial markets. Sticky nominal prices and wages are modeled in Calvo and Taylor staggered ways. The model economy is composed of a continuum of infinitely-lived consumers and producers of final and intermediate goods. We provide a very general log-linearization method, from which we can easily obtain various special cases, as trend inflation or steady-state log-linearizations.Numerical simulations of the two-country sectoral model are provided for a relatively large number of structural shocks as domestic and foreign productivity shocks in final tradables and non-tradables, money demand shocks and a shock in the exchange rate. Such a model is well suited for monetary policy analysis at the international level and risk analysis.New Keynesian open economy model, tradable and non-tradable sectors, final and intermediate goods, log-linearization

Animal spirits : ¿qué significa en Keynes, y antes y después de Keynes?

Se plantea de modo panorámico el recorrido y el alcance de la expresión animal spirits (espíritus animales), que fue introducida por John M. Keynes en la economía en 1936 para referirse al “optimismo espontáneo" de los hombres de negocios, el cual influye en el nivel y el ritmo de la inversión. La novedad en ese momento no fue incluir ese aspecto conductual (que casi todos habían considerado antes, y muy explícitamente Marshall y Schumpeter), sino la propia expresión. Esta, sin embargo, tiene una larga historia en la ciencia y la filosofía, desde Galeno a Descartes y Hume; y también en el uso corriente durante varios siglos. Después de Keynes, animal spirits se usa en economía para evocar los matices sociales y emocionales del comportamiento, vinculados a la confianza y las expectativas autocumplidas. Durante bastante tiempo, animal spirits queda sólo como una expresión relativamente ambigua que se usa de vez en cuando, y sin demasiada insistencia. George Akerlof y Robert Shiller, en su libro publicado en 2009 (que se titula, justamente, Animal Spirits), de algún modo cambian esto, ya que consideran que la expresión es un equivalente genérico del “papel de la psicología humana en la economía". En su bosquejo de una macroeconomía conductual explotan las muchas connotaciones que puede tener la expresión. El énfasis que ponen en ella, y el carácter multifacético de su planteo, requiere una reflexión acerca de las precauciones para su uso prudente (al estilo del prospecto de un medicamento); que es justamente lo que en ese libro falta.Fil: Fornero, Ricardo A.. Universidad Nacional de Cuyo. Facultad de Ciencias Económica

Simulation, estimation and welfare implications of monetary policies in a 3-country NOEM model

In this paper we derive a microfounded macro New Keynesian model for open economies, be them large or small. We consider habit formation in consumption, sectoral linkages, domestic and foreign governments, tradable and non-tradable final and intermediate goods and imperfect pass-through in these sectors. Sticky nominal prices and wages are modeled in a Calvo way. The model economy is composed of a continuum of infinitely-lived consumers and producers for three regions (countries). Numerical simulations and econometric estimations are presented with a focus on a small open economy member of the EMU. Welfare implications of the involved price and wage rigidities are discussedNew Keynesian open economy model, tradable and non-tradable sectors, final and intermediate goods, monetary policy rules, numerical simulations, Bayesian estimation, welfare implications

Improving the Cathode Conditions by Pressurizing and Carbon Dioxide Addition to Enhance the Practicality of MFC Treatment of Wastewater

An increasing global energy demand coupled with a more rigorous governmental regulatory environment: including identifying carbon dioxide as a pollutant) is becoming more and more incompatible with engineering practices that were developed in an era of lower energy costs and less regulation. It is, therefore, not a surprise that researchers are looking towards bioelectrochemical systems: BESs) as a potential superior technology to produce environmentally-benign and sustainable energy, replace energy intensive processes, and/or produce chemical products. The overall tenet of my thesis-based research was to understand the important mechanisms that limit the power output for BESs during wastewater treatment and to use this understanding to enhance power output and add practicality. Chapter 1 of my thesis is an introduction and shares the individual aims and organization of the thesis. In chapter 2, I evaluated the quantity of stored chemical energy in wastewater and the microbial metabolic processes, which are used to metabolize organic substrates into electricity. In addition, wastewater pre-acidification was identified as necessary to initiate waste hydrolysis into soluble substrates, which are more easily consumed by the BES anodic microbial community. In chapter 3, I developed an engineering evaluation of a laboratory-scale BES, which developed a better understanding of BES rate limitations by the ion fluxes. This work resulted in several realizations on how the BESs performance could be improved. In chapter 4, I performed a laboratory study to demonstrate that a pressurized BES cathode improved oxygen reduction reaction kinetics and increased power densities. The study also highlighted the influence of importance of transmembrane ion gradients and electroosmotic drag on the BES ion flux. In chapter 5, I used a CO2/bicarbonate buffered water process to maintain a stable acidic BES catholyte pH without adding any other buffer. This also increased the anolyte pH, alkalinity, and conductivity, which aided in a superior performance. By including the CO2/bicarbonate buffering, the study coupled BES wastewater treatment with a potential CO2 remediation technology. Finally, in chapter 6, I summarized my findings and discussed which future activities should be performed to fasten the technology transfer of BESs from the bench to the real world

Introducing Financial Assets into Structural Models

This paper reviews extensively the literature on asset pricing and builds a structural dynamic general equilibrium model with financial assets. We obtain the policy function of the calibrated model and approximate it up to third order. We derive asset pricing and various premiums conditions up to the third order, meaning that returns depend on the first three conditional moments. We obtain a hypothetic yield curve whose curvature increases with the order of approximation because of premiums. In addition, impulse responses of various fundamental shocks illustrate the effects on the level and slope of bond yields with several maturities and on break-even inflation. Important shocks are technology and inflation target shocks.