Financial Intermediation, Variability and the Development Process

In this paper we build a model of financial intermediation that explains the GDP variability pattern of an economy during the development process. We find evidence that per capita output is more volatile in middle-income economies than in both low and high-income economies. We show that, if the model economy is in the early or in the mature stages of development, there is a unique equilibrium. However, in the middle stages of development, multi-ple equilibria arise. Moreover, we find that in economies with imperfect credit markets, per capita output volatility tends to be higher than in economies with perfect or non-existent credit markets.

Exchange Rate Volatility and Economic Performance in Peru: A Firm Level Analysis

This paper analyzes the impact of the exchange rate volatility on the performance of the Peruvian economy using financial information from 163 non-financial listed firms. We find evidence that, for firms holding dollar-denominated debt, investment decisions are negatively affected by real exchange rate depreciation. The reasons behind this result are: (i) the high degree of liability dollarization and currency mismatch that create the conditions for a balance sheet effect and a financial stress in the aftermath of a currency depreciation, (ii) the strong bank-lending channel that follows and reinforces the balance sheet effect, (iii) the domestic demand shrinkage that affects severely the firms sales, and (iv) the relatively small and poorly diversified export sector.

Exchange Rate and Inflation Dynamics in Dollarized Economies

In this paper we build a model of a dollarized economy with imperfect financial markets to analyze and qualify the common view that countries with higher dollarization exhibit higher pass-through. We show that the classic inflationary effects of a real depreciation -higher internal demand and imported inflation- can be offset or diminished in a dollarized economy by higher financial costs and a balance-sheet effect. Thus, pass-through coefficients could be smaller or even negative in economies with a high degree of dollarization. We test the implications of the model using a panel of a hundred-plus countries with differing degrees of dollarization. The results confirm that pass-through coefficients are higher in more dollarized economies, but they also show that large depreciations tend to generate a negative impact on the pass-through coefficient, this impact being higher the higher the level of dollarization of the economy. Additionally, the exchange rate regime is shown to matter, in that countries with fixed exchange rates suffer larger balance-sheet effects of depreciations.

Multiple equilibrium, variability and the development process.

Per capita output is more volatile in middle-income economies than in both low-income and high-income economies. In this paper, we address this fact in a two-periods overlapping generations model with two productive sectors (a developed sector and a subsistence sector) and a credit sector. In the second period, agents can choose to operate the developed technology. To do so, they can borrow resources to pay an entry cost. Due to the presence of an extemality in the developed sector, as the fraction of managers in this sector increases, its productivity also increases. We show that, if the model economy is in the early or in the mature stages of development, there is a unique equilibrium. However, when the economy is in the middle stages of development, multiple equilibrium arise since the extemality affects the performance of the credit market. The multiplicity of equilibria disappear when the credit market is perfect or it does not exist. Moreover, we fmd that in economies with imperfect credit markets, per cap ita output volatility tends to be higher than in economies with perfect or non-existent credit markets.Multiple equilibrium; Externalities; Market imperfections; Sunspots; Credit market; Development;

EVALUATING LABOR MARKET REFORMS: A GENERAL EQUILIBRIUM APPROACH

Job security provisions are commonly invoked to explain the high and persistent European unemployment rates. This belief has led several countries to reform their labor markets and liberalize the use of fixed-term contracts. Despite how common such contracts have become after deregulation, there is a lack of quantitative analysis of their impact on the economy. To fill this gap, we build a general equilibrium model with heterogeneous agents and firing costs in the tradition of Hopenhayn and Rogerson (1983). We calibrate our model to Spanish data, choosing in part parameters estimated with firm-level longitudinal data. Spain is particularly interesting, since its labor regulations are among the most protective in the OECD, and both its unemployment and its share of fixed-term employment are the highest. We find that fixedterm contracts increase unemployment, reduce output, and raise productivity. The welfare effects are ambiguous.

La protección al empleo en España : evolución y consecuencias

Este trabajo se centra en la influencia de las regulaciones del mercado de trabajo en el funcionamiento de éste. Para ello, describe las reformas laborales ocurridas en Europa en las dos últimas décadas, con especial atención al mercado de trabajo español. A este mercado, que ha registrado históricamente las mayores tasas de paro de la OCDE, su grado de protección al empleo lo ha situado como uno de los mercados de trabajo menos flexible del mundo. Se investigan las consecuencias de la protección al empleo en España tanto a nivel micro como macroeconómico. Asimismo, se describen las principales características de la economía española y los desafíos y problemas a los que se enfrenta su mercado de trabajo en el futuro próximoLos autores agradecen la financiación del Ministerio de Educación y Ciencia a través de los proyectos SEJ2006-05710/ECON y SEJ2005-03470/ECON, respectivamentePublicad

Evaluating Labor Market Reforms: A General Equilibrium Approach

Job security provisions are commonly invoked to explain the high and persistent European unemployment rates. This belief has led several countries to reform their labor markets and liberalize the use of fixed-term contracts. Despite how common such contracts have become after deregulation, there is a lack of quantitative analysis of their impact on the economy. To fill this gap, we build a general equilibrium model with heterogeneous agents and firing costs in the tradition of Hopenhayn and Rogerson (1993). We calibrate our model to Spanish data, choosing in part parameters estimated with firm-level longitudinal data. Spain is particularly interesting, since its labor regulations are among the most protective in the OECD, and both its unemployment and its share of fixed-term employment are the highest. We find that fixed term contracts increase unemployment, reduce output, and raise productivity. The welfare effects are ambiguous.Fixed-term contracts, Firing costs, General equilibrium, Heterogeneous agents

Multiple equilibrium, variability and the development process

Per capita output is more volatile in middle-income economies than in both low-income and high-income economies. In this paper, we address this fact in a two-periods overlapping generations model with two productive sectors (a developed sector and a subsistence sector) and a credit sector. In the second period, agents can choose to operate the developed technology. To do so, they can borrow resources to pay an entry cost. Due to the presence of an extemality in the developed sector, as the fraction of managers in this sector increases, its productivity also increases. We show that, if the model economy is in the early or in the mature stages of development, there is a unique equilibrium. However, when the economy is in the middle stages of development, multiple equilibrium arise since the extemality affects the performance of the credit market. The multiplicity of equilibria disappear when the credit market is perfect or it does not exist. Moreover, we fmd that in economies with imperfect credit markets, per cap ita output volatility tends to be higher than in economies with perfect or non-existent credit markets

Dependence on plasma shape and plasma fueling for small ELM regimes in TCV and ASDEX Upgrade

Within the EUROfusion MST1 Work Package, a series of experiments has been conducted on AUG and TCV devices to disentangle the role of plasma fueling and plasma shape for the onset of small ELM regimes. On both devices, small ELM regimes with high confinement are achieved if and only if two conditions are fulfilled at the same time. Firstly, the plasma density at the separatrix must be large enough (ne,sep/nG ∼ 0.3), leading to a pressure profile flattening at the separatrix, which stabilizes type-I ELMs. Secondly, the magnetic configuration has to be close to a Double Null (DN), leading to a reduction of the magnetic shear in the extreme vicinity of the separatrix. As a consequence, its stabilizing effect on ballooning modes is weakened.EURATOM 63305

How important is firm behaviour to understand employment?: evidence from Spain

Traditional macroeconomic analyses of the Spanish labor market have not beeen successful in accounting for Spain's high unemployment rates. In this paper, we take a micriecono,ic perspective,studying the entry and exit behaviorof Spanish firms and hence,their behavior concering job creation and job destruction. We calibrate a model economy with entry and exit to Spanish data and we find that the reduction of the dismissal tax from the equivalent of one year of wages to zero increase employment by 8.13 per cent, and productivity by 2.28 per cent