The Adequacy of the Traditional Econometric Approach to Nonlinear Cycles

To show that the traditional econometric approach is not able to deal with deterministic chaos, we use an extension of Goodwin.s growth cycle model to generate arti.cial data for output. An EGARCH model is estimated to describe the data generation process. Although using some traditional econometric tests no evidence of misspeci.- cation is found the estimated process is qualitatively wrong: it is dynamically stable when the true process is unstable. We present a speci.c econometric procedure de- veloped to deal with deterministic chaos: the BDS statistics. Also an explanation for the little evidence of deterministic chaos in aggregated macroeconomic time series is suggested.

The Stability Properties of Goodwin's Growth Cycle Model

It is known that Goodwin.s Predator-Prey model suffers from structural instability. In its pure form the model has a neutral equilibrium. Ploeg (1985) showed that if the hypothesis of fixed proportions technology was relaxed then the equilibrium would become stable. We show here that the equilibrium becomes unstable when some sort of endogenous cyclical labour productivity is considered. Then we will study the consequences of considering both effects concluding that the stabilizing effect of considering a flexible technology is much stronger than the destabilizing effect of endogenizing labour productivity.

O contributo da auditoria pública para a Good Governance

Dissertação de Mestrado em Gestão e Políticas PúblicasEste trabalho visa discutir o papel das ISC enquanto entidades de auditoria pública, e qual o seu contributo para a good governance. Das diversas pesquisas bibliográficas efetuadas, apurou-se que a good governance é tida como uma forma de governação, boa, que assenta em participação pública, em transparência, responsabilização, respeito, cumprimento da lei e satisfação das necessidades das populações, onde se basearia a força do desenvolvimento social. Face aos objetivos de trabalho definidos, foi assim produzido e aplicado um guião de entrevista a vários intervenientes qualificados de auditoria pública, tendo-se recolhido opinião, experiências e visão sobre o modo como a good governance acontece hoje em Portugal, nomeadamente quanto à transparência da governação, quanto acautela os riscos da atividade pública e quanto permite a aplicação da accountability. A utilização e aplicação de auditoria pública, facilitará o processo de criação de valor e confiança pública de toda uma comunidade. De acordo com a literatura de referência e com os entrevistados, a auditoria de contexto público tem um papel determinante na concretização da good governance. De resto, vários organismos internacionais de referência (OCDE, ONU, FMI, Banco Mundial, entre outros) perseguem e fomentam a prática da good governance, não só, mas também, com recurso ao reforço de práticas e procedimentos de auditoria pública, fazendo relevar o papel complementar entre a produção de auditorias de compliance e de auditorias de performance. Das entrevistas aos intervenientes qualificados nestas matérias, foram obtidos importantes contributos, em especial de reforço da prática da good governance através da auditoria pública e dos relatórios produzidos por esta, reforçando assim a cidadania.This paper aims to discuss the role of SAIs as public audit entities, and is contribution to good governance. From the various bibliographical studies carried out, it was found that good governance is considered as a good form of governance, based on public participation, transparency, accountability, respect, compliance with the law and meeting the needs of the population for social development. In view of the defined work objectives, an interview guide was produced and applied to a number of qualified interviewees which used public audit. Their opinions, experiences and insights were collected on how good governance occurs; how it is transparent and of much to guard against the risks of public activity and how much it allows the application of accountability today in Portugal. The public audit outcome will be to create public value and trust for an entire community. According to the reference literature and the interviewees, the public context audit plays a decisive role in the achievement of good governance. In addition, several international reference organizations (OECD, UN, IMF, World Bank, among others) pursue and foster good governance not only, but also through the reinforcement of public auditing practices and procedures, regarding the complementary role between the production of compliance audits and performance audits. From the interviews with the qualified actors in these matters, important contributions were obtained, in particular to reinforce the practice of good governance through public auditing and the reports produced by it, thus reinforcing citizenship.N/

Public vs Private Schooling in an Endogenous Growth Model

I present an overlapping generations model, with formal education as the engine of growth, close to Glomm and RaviKumar (1992). Contrary to Glomm and Ravikumar, I Show that public schooling, when compared to a private system, may stimulate economic growth.

OPEC´s Oil Exporting Strategy and Macroeconomic (In)Stability

Aguiar-Conraria and Wen (2008) argued that dependence on foreign oil raises the likelihood of equilibrium indeterminacy (economic instability) for oil importing countries. We argue that this relation is more subtle. The endogenous choices of prices and quantities by a cartel of oil exporters, such as the OPEC, can affect the directions of the changes in the likelihood of equilibrium indeterminacy. We show that fluctuations driven by self-fulfilling expectations under oil shocks are easier to occur if the cartel sets the price of oil, but the result is reversed if the cartel sets the quantity of production. These results offer a potentially interesting explanation for the decline in economic volatility (i.e., the Great Moderation) in oil importing countries since the mid-1980s when the OPEC cartel changed its market strategies from setting prices to setting quantities, despite the fact that oil prices are far more volatile today than they were 30 years ago.

The Continuous Wavelet Transform: A Primer

Wavelet analysis is becoming more popular in the Economics discipline. Until recently, most works have made use of tools associated with the Discrete Wavelet Transform. However, after 2005, there has been a growing body of work in Economics and Finance that makes use of the Continuous Wavelet Transform tools. In this article, we give a self-contained summary on the most relevant theoretical results associated with the Continuous Wavelet Transform, the Cross-Wavelet Transform, the Wavelet Coherency and the Wavelet Phase-Difference. We describe how the transforms are usually implemented in practice and provide some examples. We also introduce the Economists to a new class of analytic wavelets, the Generalized Morse Wavelets, which have some desirable properties and provide an alternative to the Morlet Wavelet. Finally, we provide a user friendly toolbox which will allow any researcher to replicate our results and to use it in his/her own research.Economic cycles; ContinuousWavelet Transform, Cross-Wavelet Transform, Wavelet Coherency, Wavelet Phase-Difference; The Great Moderation.

Understanding the Impact of Oil Shocks

This paper provides new empirical evidence on and theoretical support for the close link between oil prices and aggregate macroeconomic performence in the 1970s. Although this link has been well documented in the empirical literature and is further confirmed in this paper, standard economic models are not able to replicate this link when actual oil prices are used to stimulate the models. In particular, standard models cannot explain the depht of the recession in 1974-75 and the strong revival in 1976-78 based on the oil price movements in that period. This paper argues that a missing multiplier-accelerator mechanism from standard models may hold the key. This multipliplier-accelerator mechanism not only exacerbated the impact of the oil schocks in 1973-74 but also helped create the temporary recovery in 1976-1978. This paper derives the missing multiplier-accelarator mechanism from externalities in general equilibrium. Our calibrated model can explain both the recession in 1974-75 and revival in 1976-78.Oil price shocks, Real business cycle, indeterminacy, capacity utilization, externalities, monopolistic competition.

Foreign Trade and Equilibrium Indeterminacy

We show that dependence of production on foreign inputs (or non-producible natural resources) can significantly increase the likelihood of indeterminacy. Payment of imported foreign factors of production may act as a semi-fixed cost, amplifying production externalities and returns to scale, making selffulfilling expectations driven busyness cycles easier to arise. This is demonstrated using a standard neoclassical growth model. Calibration exercise shows that the required increasing returns to scale can be reduced by as much as 64% based on estimated share of foreign inputs in production for OECD countries.Indeterminacy, Factor Imports, Natural Resources, Capacity Utilization, Externality, Returns to Scale, Open Economy, Sunspots, Self- Fulfilling Expectations.

How quorum rules distort referendum outcomes: evidence from a pivotal voter model

In many jurisdictions, whether referendum results are binding depend on certain legally defined quorum requirements. With a pivotal-voter model, we examine how quorum requirements affect voter’s behavior. We conclude that quorums can be the cause of lower turnout and that they can deliver outcomes that are an inadequate basis to make inferences about collective preferences. We further conclude that quorums may help minorities to impose their will on majorities and that they may create a bias against the status quo. Finally, they generate situations under which the secrecy of the vote is called into question.

Oil Dependence and Economic Instability

We show that dependence on foreign energy can increase economic instability by raising the likelihood of equilibrium indeterminacy, hence making fluctuations driven by self-fulfilling expectations easier to occur. This is demonstrated in a standard neoclassical growth model. Calibration exercises, based on the estimated share of imported energy in production for several countries, show that the degree of reliance on foreign energy for many countries can easily make an otherwise determinate and stable economy indeterminate and unstable.Indeterminacy, Energy Imports, Externality, Returns to Scale, Sunspots, Self-Fulfilling Expectations.