Public and private provision of infrastructure and economic development.

This paper examines the role of infrastructure in long run economic growth. The paper consists of two sections, the first concentrates on the theoretical role of government spending in models of growth and the second details examples of private participation in infrastructure development. Using a simple endogenous growth model we find that while the hypothesized benefits of infrastructure expenditures may be large they require care in matching appropriate financing. As the development and maintenance of infrastructure will continue to be pivotal to the long term success of growing economies, we emphasize the lessons on financing and the caveats of private participation to those who are exploring innovative mechanisms for infrastructure design.

Very high interest rates and the cousin risks: Brazil during the Real Plan

We review the arguments in the finance and open macroeconomics literature relevant for the Central Bank to set the level of the interest rate in an open economy. The two relevant risks are the currency and country risks. The country risk (Brazil Risk) is measured with different financials instruments and the (unobservable) currency risk is estimated via the Kalman Filter. We show that besides the currency risk, which is also relevant in developed economies the country risk is of utmost importance to determine the domestic interest rates. Both risks share a few common causes, which is why we call them the cousin risks. Thus, when and if those common causes are confronted, the fall of domestic interest rates may be substantial, because both currency and Brazil risks will fall simultaneously. Preliminary results identify some components of the Brazil risk, e.g., the fiscal deficits, and the domestic and international financial markets conditions. The convertibility risk, defined as risk associated with possibility of not being able to convert BRLs into foreign currency, showed up as an important cause of the Brazil risk during the international financial crises periods, but is no longer relevant. Nowadays, Brazil risk decreased significantly, but the same did not happen with the currency risk. Therefore, it seems that the main factor precluding the fall in domestic interest rates may be associated with the uncertainty of the future behavior of the balance payments, especially the trade account. In view of this hypothesis, we might speculate that assuring vigorous export growth, without resorting to devaluation, is fundamental to achieve lower real interest rates, compatible with sustained economic growth.

A Risk Management Approach to Emerging Market’s Sovereign Debt Sustainability with an Application to Brazilian Data

In this paper we study the question of debt sustainability from a risk management perspective. The debt accumulation equation for any country involves variables that are stochastic and closely intertwined. When these aspects are taken into consideration the notion of debt sustainability is expanded to studying the stochastic properties of the debt dynamics. We illustrate the methodology by studying the Brazilian case. We find that even though the debt could be sustainable in the absence of risk, there are paths in which it is clearly unsustainable. Furthermore, we show that properties of the debt dynamics are closely related to the spreads on sovereign dollar denominated debt.Public Debt, Debt Sustainability, Country Risk, Brazil JEL Codes: F34, F37, G15

Banks, domestic debt intermediation and confidence crises: the recent Brazilian experience

This paper examines the recent evolution of the Brazilian public domestic debt and interprets it in light of the confidence crisis literature. The analysis of the recent developments in the Brazilian public domestic debt market shows that the likelihood of a default must not be assessed only using simple summary aggregate measures of public domestic debt size and maturity, but must also take into consideration other structural aspects. Our analysis emphasizes the two main pillars of the Brazilian public domestic debt market: home-bias and the role of the banking sector in intermediating the debt. Evidence from yields of a perfectly indexed bond shows that the rollover premium was very small when the devaluation occurred, and is still fairly small by October, 1999, indicating that the rollover of the public domestic debt has not, so far, constituted a serious problem. Positive prospects for the public domestic debt market will depend, however, on the Brazilian government maintaining the current fiscal austerity program.

A RMSM-X model for Turkey

To improve the Bank's macroeconomic modeling capabilities, a continuum of macro models referred to as RMSM-X and RMSM-XX are being developed. These models share a common accounting framework that ensures economic consistency among economic sectors. This paper shows how to specify the budget constraints and market clearing conditions in a RMSM-X model for Turkey. An overview of the system defined by the RMSM-X model, the debt module (DM) and the data base is presented, along with a detailed explanation of the theoretical model. Alternative closure rules are discussed and the debt model is presented. This paper also includes annexes which present a complete set of historical data and an explanation of how the data was constructed.Economic Theory&Research,Environmental Economics&Policies,Banks&Banking Reform,Economic Stabilization,Financial Intermediation

Variational solution of the Gross-Neveu model at finite temperature in the large N limit

We use a nonperturbative variational method to investigate the phase transition of the Gross-Neveu model. It is shown that the variational procedure can be generalized to the finite temperature case. The large N result for the phase transition is correctly reproduced.Comment: 12 p., 1 fig, this is the version which will appear in the Phys Lett B, it differs from the previous one in what concerns the introduction and conclusions (re written), several references have been adde

The impact of the air-fluorescence yield on the reconstructed shower parameters of ultra-high energy cosmic rays

An accurate knowledge of the fluorescence yield and its dependence on atmospheric properties such as pressure, temperature or humidity is essential to obtain a reliable measurement of the primary energy of cosmic rays in experiments using the fluorescence technique. In this work, several sets of fluorescence yield data (i.e. absolute value and quenching parameters) are described and compared. A simple procedure to study the effect of the assumed fluorescence yield on the reconstructed shower parameters (energy and shower maximum depth) as a function of the primary features has been developed. As an application, the effect of water vapor and temperature dependence of the collisional cross section on the fluorescence yield and its impact on the reconstruction of primary energy and shower maximum depth has been studied.Comment: Accepted in Astroparticle Physic