Welfare Costs, Long Run Consumption Risk, and a Production Economy.

The main goal of this paper is to measure the welfare costs of business cycles in a production economy in which the representative agent has low risk aversion and - at the same time - the equity premium and the co-movements of aggregate quantities and market returns are comparable to what observed in historical data. In order to do so, I consider a production economy in which the representative agent has Epstein-Zin-Weil(1989) preferences, productivity has a Long Run Risk component and there are capital adjustment costs. In this way, I try to bridge the gap between the current Long Run Risk asset pricing literature, in which quantities are taken as exogenous, and the standard macroeconomic business cycle models. Preliminary results from a benchmark exchange economy suggest that when there is a Long Run Consumption Risk and the representative agent prefers early resolution of uncertainty, the implied total welfare costs of the consumption uncertainty range from 12\% to 20\%. (JEL classification: E20, E32, G12, D81)Production Economy, Long-Run Risk, Asset Pricing,

Why is Argentina’s Fiscal Federalism so Inefficient? Entering the Labyrinth

A long-standing concern in political economy is whether outcomes are efficient in political equilibrium. Recent contributions have examined the efficiency/inefficiency of policy choices from a theoretical point of view. The aim of this paper is to examine such issue empirically. Building on existing "economic" diagnoses that highlight the deficient incentives present in Argentina’s Federal Tax-Sharing Agreement the paper will attempt to understand the politics behind its adoption and persistence. We suggest an explanation based on the transaction costs of Argentina’s political market. Although potentially Pareto-improving policies could have been adopted, they were not introduced because of the uncertainty over the future status of today’s bargains, and given the lack of institutions to enforce bargains among the political actors. The paper concludes offering some preliminary ideas for institutional engineering: what governance structures could help reduce these transaction costs? The purpose is to create an institutional framework in which political actors could negotiate among themselves, ensuring the enforceability of agreements, in order to achieve more efficient outcomes.

The Economic and Social Impact of Tourism

This paper analyzes the economic and social impact of tourism in Pagsanjan in which tourism development project is located. Results show that the project’s various significant impacts include increases in employment and income and stimulation of political and women’s participation. While its impact on environment and on the people’s social life has been a mixture of positive and negative results, its impact on income distribution has been trifling. To maximize the tourism multiplier, the paper encourages the collaboration of the tourism project with other programs devised to boost the capacity of the local economy. Tourism manpower training agenda should include training for women skills while tourism promotions should move from sex-oriented markets to prevent several disorientations in the cultural values of the tourism industries.tourism

The trade-offs of social assistance programs in the labor market: The case of the “Seguro Popular” program in Mexico

In 2002, the Mexican government began a tremendous financial effort to provide health insurance, Seguro Popular (SP), to the 50 million uninsured in Mexico. In doing so, the states and municipalities offered virtually free health insurance to uncovered self-employed and informal salaried workers substantially altering the incentives for workers and firms to operate in the formal economy. We take advantage of the staggered implementation of the program across municipalities to estimate the effects of the SP in the labor market. We find that the SP had a negative effect in the creation of formal jobs, especially in small and medium sized firms. According to our estimates, had the program not been in place, 31.000 more employers and 300.000 new formal jobs should have been registered with Mexican social security. These represent 3.8% and 2.4% of the stock of registered employers and employees in 2002 when the program started.social assistance program, informality, labor market, Mexico

A detailed study of the 5 Hz quasi-periodic oscillations in the bright X-ray transient and black-hole candidate GRS 1739-278

We present a detailed study of the 5 Hz quasi-periodic oscillation (QPO) recently discovered in the bright X-ray transient and black-hole candidate GRS 1739-278 (Borozdin & Trudolyubov 2000) during a Rossi X-ray Timing Explorer observation taken on 1996 March 31. In total 6.6 ksec of on-source data were obtained, divided in two data sets of 3.4 and 3.2 ksec which were separated by 2.6 ksec. The 5 Hz QPO was only present during the second data set. The QPO increased in strength from below 2% rms amplitude for photon energies below 4 keV to ~5% rms amplitude for energies above 10 keV. The soft QPO photons (below 5 keV) lagged the hard ones (above 10 keV) by almost 1.5 radian. Besides the QPO fundamental, its first overtone was detected. The strength of the overtone increased with photon energy (from <2% rms below 5 keV to ~8% rms above 10 keV). Although the limited statistics did not allow for an accurate determination of the lags of the first overtone, indications are that also for this QPO the soft photons lagged the hard ones. When the 5 Hz QPO was not detected (i.e., during the first part of the observation), a broad noise component was found for photon energies below 10 keV but it became almost a true QPO (with a Q value of ~1.9) above that energy, with a frequency of ~3 Hz. Its hard photons preceded the soft ones in a way reminiscent of the 5 Hz QPO, strongly suggesting that both features are physically related. We discuss our finding in the frame work of low-frequency QPOs and their properties in BHCs.Comment: Accepted for publication in MNRAS, 2 August 200

Rental Housing Discrimination and the Persistence of Ethnic Enclaves

We conduct a field experiment to show that discrimination in the rental market represents a significant obstacle for the geographical assimilation process by immigrants. We employ the Internet platform to identify vacant rental apartments in different areas of the two largest Spanish cities, Madrid and Barcelona. We send emails showing interest in the apartments and signal the applicants' ethnicity by using native and foreign-sounding names. We find that, in line with previous studies, immigrants face a differential treatment when trying to rent an apartment. Our results also indicate that this negative treatment varies considerably with the concentration of immigrants in the area. In neighborhoods with a low presence of immigrants the response rate is 30 percentage points lower for immigrants than for natives, while this differential disappears when the immigration share reaches 50%. We conclude that discriminatory practices in the rental housing market contribute to perpetuate the ethnic spatial segregation observed in large cities.immigration, discrimination, spatial segregation