The demand for money, financial innovation, and the welfare cost of inflation: an analysis with household data

We use microeconomic data on households to estimate the parameters of the demand for currency derived from a generalized Baumol-Tobin model. Our data set contains information on average currency, deposits, and other interest-bearing assets; the number of trips to the bank; the size of withdrawals; and ownership and use of ATM cards. We model the demand for currency accounting for adoption of new transaction technologies and the decision to hold interest-bearing assets. The interest rate and expenditure flow elasticities of the demand for currency are close to the theoretical values implied by standard inventory models. However, we find significant differences between individuals with an ATM card and those without. The estimates of the demand for currency allow us to calculate a measure of the welfare cost of inflation analogous to Bailey's triangle, but based on a rigorous microeconometric framework. The welfare cost of inflation varies considerably within the population but never turns out to be very large (about 0.1 percent of consumption or less). Our results are robust to various changes in the econometric specification. In addition to the main results based on the average stock of currency, the model receives further support from the analysis of the number of trips to and average withdrawals from the bank and the ATM

Building trust? Conditional cash transfers and social capital

In this paper we propose a measure of social capital based on the behaviour in a public good game. We play the public good game within 28 groups in two similar neighborhoods in Cartagena, Colombia, one of which had been targeted for over two years by a conditional cash transfer program that has an important social component. The level of cooperation we observe in the ‘treatment’ community is considerably higher than in the ‘control’ community. The two neighborhoods, however, although similar in many dimensions, turned out to be significantly different in other observable variables. The result we obtain in terms of cooperation, however, is robust to controls for these observable differences. In the last part of the paper we also compare our measure of social capital with other more traditional measures that have been used in the literature

Saving, growth, and investment: a macroeconomic analysis using a panel of countries

This paper provides a descriptive analysis of the long- and short-run correlations among saving, investment, and growth rates for 123 countries over the period 1961-94. Three results are robust across data sets and estimation methods: i) lagges saving rates are positively related to investment rates; ii) investment rates Granger cause growth rates with a negative sign; iii) growth rates Granger-cause investment with a positive sign

The Demographic Transition in Closed and Open Economies: A Tale of Two Regions

This paper constructs a general equilibrium overlapping generation model to evaluate quantitatively how demographic transition (falling mortality and fertility rates) affects aggregate variables (wages, interest rate, output), and inter-generational welfare in closed and open economies. We perform this analysis for two economies calibrated to resemble the North (US and Europe) and Latin America. Our simulations suggest that the demographic transition could have generated income per capita growth up to 0. 5% per year in excess of steady-state growth in the past 50 years in Latin America and 0. 3% in the North.

The demand for money, financial innovation, and the welfare cost of inflation: an analysis with household data

We use microeconomic data on households to estimate the parameters of the demand for currency derived from a generalized Baumol-Tobin model. Our data set contains information on average currency, deposits, and other interest-bearing assets; the number of trips to the bank; the size of withdrawals; and ownership and use of ATM cards. We model the demand for currency accounting for adoption of new transaction technologies and the decision to hold interest-bearing assets. The interest rate and expenditure flow elasticities of the demand for currency are close to the theoretical values implied by standard inventory models. However, we find significant differences between individuals with an ATM card and those without. The estimates of the demand for currency allow us to calculate a measure of the welfare cost of inflation analogous to Bailey's triangle, but based on a rigorous microeconometric framework. The welfare cost of inflation varies considerably within the population but never turns out to be very large (about 0.1 percent of consumption or less). Our results are robust to various changes in the econometric specification. In addition to the main results based on the average stock of currency, the model receives further support from the analysis of the number of trips to and average withdrawals from the bank and the ATM

Interface Transparency of Nb/Pd Layered Systems

We have investigated, in the framework of proximity effect theory, the interface transparency T of superconducting/normal metal layered systems which consist of Nb and high paramagnetic Pd deposited by dc magnetron sputtering. The obtained T value is relatively high, as expected by theoretical arguments. This leads to a large value of the ratio $d_{s}^{cr}/ \xi_{s}$ although Pd does not exhibit any magnetic ordering.Comment: To be published on Eur. Phys. J.

Booms and busts: consumption, house prices and expectations

Over much of the past 25 years, the cycles of house price and consumption growth have been closely synchronised. Three main hypotheses for this co-movement have been proposed in the literature. First, that an increase in house prices raises households’ wealth, particularly for those in a position to trade down the housing ladder, which increases their desired level of expenditure. Second, that house price growth increases the collateral available to homeowners, reducing credit constraints and thereby facilitating higher consumption. And third, that house prices and consumption have tended to be influenced by common factors. This paper finds that the relationship between house prices and consumption is stronger for younger than older households, which appears to contradict the wealth channel. These findings therefore suggest that common causality has been the most important factor behind the link between house price and consumption

Superconducting nanowire quantum interference device based on Nb ultrathin films deposited on self-assembled porous Si templates

Magnetoresistance oscillations were observed on networks of superconducting ultrathin Nb nanowires presenting evidences of either thermal or quantum activated phase slips. The magnetic transport data, discussed in the framework of different scenarios, reveal that the system behaves coherently in the temperature range where the contribution of the fluctuations is important.Comment: accepted for publication on Nanotechnolog

Quantum phase slips in superconducting Nb nanowire networks deposited on self-assembled Si templates

Robust porous silicon substrates were employed for generating interconnected networks of superconducting ultrathin Nb nanowires. Scanning electron microscopy analysis was performed to investigate the morphology of the samples, which constitute of polycrystalline single wires with grain size of about 10 nm. The samples exhibit nonzero resistance over a broad temperature range below the critical temperature, fingerprint of phase slippage processes. The transport data are satisfactory reproduced by models describing both thermal and quantum fluctuations of the superconducting order parameter in thin homogeneous superconducting wires.Comment: accepted for publication on Applied Physics Letter

Challenges to Promoting Social Inclusion of the Extreme Poor: Evidence from a Large-Scale Experiment in Colombia

We evaluate the large scale pilot of an innovative and major welfare intervention in Colom- bia, which combines homes visits by trained social workers to households in extreme poverty with preferential access to social programs. We use a randomized control trial and a very rich dataset collected as part of the evaluation to identify program impacts on the knowledge and take-up of social programs and the labor supply of targeted households. We find no consistent impact of the program on these outcomes, possibly because the way the pilot was implemented resulted in very light treatment in terms of home visits. Importantly, administrative data in- dicates that the program has been rolled out nationally in a very similar fashion, suggesting that this major national program is likely to fail in making a significant contribution to re- ducing extreme poverty. We suggest that the program should undergo substantial reforms, which in turn should be evaluated