Financial Imperfections, Inequality and Capital Accumulation

Aghion, P. and P. Bolton (1997, "A Theory of Trickle-Down Growth and Development," Review of Economic Studies, 59, 151-172) provide a model analyzing the effect of capital accumulation on income inequality. We integrate two additional features to a modified version of this model. The first one is a costly financial contract enforcement which represents the second type of credit market imperfection in addition to moral hazard. The second one is enabling wealthy agents to undertake larger investment projects relatively to other agents. I show that inequality increases in a first stage of development and, contrarily to Aghion and Bolton (1997), remains constant or increases in a second stage (depending on the deposit interest rate ceiling).Financial imperfections, inequality, capital accumulation.

Banking Performance and Speculative Attacks Under Asymmetric Information

The Asian financial crisis of 1997 evolved through many stages. Although there is a consensus among economists on its "ingredients", a disagreement still exists about the exact mechanisms. This paper proposes a model explaining the triggering event of the crisis as represented by the abandon of Thailand and Korea of their fixed exchange rate. The model suggests that an external negative shock to the price of tradable goods can be the detonator of a currency crisis if some ingredients already exist. In this context, I show that the efficiency of the banking system and the speculators-government interaction play crucial roles. Under certain conditions, an efficient banking system enables the economy to resist to even high magnitudes of the shock, while an inefficient one leads to a currency crisis. In this model, abandoning the fixed parity implies a cost to the government and characterizes its type. Speculators infer the government's type when deciding to attack the currency. The paper has the following innovation: it shows that a slight variation in speculators' inference precision causes a sudden change in their sentiment, a speculative attack and the abandon of the parity.Banking, speculative attacks, currency crisis, asymmetric information

The Effect of Financial Liberalization on the Economic Development Process in case of Inefficient Banking

In this essay we develop a stylized model to investigate the role of external financial liberalization in the development process of a small economy. Firstly, we show that there exists an economic development threshold under which the capital account liberalization can not occur. Secondly, we show that in the presence of banking inefficiency, the financial liberalization presents a major risk for the economic development process. Indeed, if the economy is situated in a vulnerability region every bad performance of the investment sector could degenerate in a banking crisis delaying the development process by several periods relatively to the situation of closed economy. Finally, it is also shown that reducing the credit market imperfection decreases the likelihood of a banking crisis.Banking efficiency, capital account liberalization, confidence crisis, economic development

Banking Efficiency and the Economic Transition Process

This paper investigates the role of the banking system in the economic transition process. This is considered in the context of an overlapping generation model with endogenous growth. There are two production technologies, one for the production of a final good and the other for the production of an investment good. The return of caital invested in the investment good technology is stochastic. Banks collect the saving of households and finance the production of the investment good while respecting some prudential rules. We show that the capital accumulation is constituted of several phases and that the economic transition process depends on the fragility of the financial system defined as the degree of the credit market perfection and the bank’s inefficiency. Hence, efficient banks enables the economy to resist to bad performances of the investment good sector. However, in case of inefficient banks, the situation can degenerate in a confidence crisis in the banking system delaying the economic transition process by several years. We show that this negative impact is more severe when the economy is less developed.Banking Efficiency, Confidence Crisis, Transition Process

Banking, Credit Market Imperfection and Growth

We develop a new model that links capital market imperfection to banking emergence and economic growth. It is shown that the banking system emerges endogenously after a first stage of slow economic growth. Interestingly, economic growth increases after the emergence of banking but remains under its potential level. This is due to a credit rationing brake which decreases progressively as the economy develops. Another finding is that a reduction of credit market imperfection reduces the credit rationing stage.endogenous growth, banking emergence, credit rationing, credit market imperfection

External Debt, Informal Economy and Growth

We develop an endogenous growth model with overlapping generations taking into account important characteristics of the developing countries: high public external debt and large informal sector. We show that an increasing of the public external debt has two opposite effects. On the one hand, it enhances growth through a positive externality affecting the productivity of private firms. On the other hand, it inhibits growth by ousting the external financing of private firms and enlarging the less efficient informal sector. These two effects generate a non-linear effect of the public external debt on growth and an optimal share of the public external indebtedness. We also show that, under a certain condition, the enlargement of the informal sector could be accompanied by higher growth.growth, informality, public external debt

Unemployment and Labor Market Institutions: Theory and Evidence from the GCC

The theoretical model delves into the relationship between labor market institutions and unemployment by proving two propositions: (1) allowing informal activity bolsters job creation, and (2) if the institutional environment is initially, sufficiently, weak, then mitigating it will lower unemployment. Simulating the model with the GCC’s unemployment for the period 1990-2007 allows us to decipher the validity of the model. The institutional environment is represented in this simulation by social insurance which is captured through oil prices. Hence, an increase in oil prices is assumed to lead to higher social insurance and, therefore ,to higher cost of hiring labour . The parameters are selected with the objective of minimizing the error gap between the effective unemployment rate and the simulated unemployment rate . The effective unemployment rate is constructed as a weighted average of the unemployment rate of nationals and non-nationals. The weights are the shares of national and non-national labour-force in the GCC countries. Expositional simulations verified the second proposition. Thus, improving labor market institutions, that are initially weak may discernibly alleviate unemployment problems in the GCC.Unemployment; institutions; GCC

The Institutional Environment and the Banking - Growth Nexus: Theory and Investigation for MENA

This paper seeks to provide some theoretical and empirical answers to the following question: Does the institutional environment affect the causality relationship between banking development and economic growth? In the theoretical part, we develop an endogenous growth model where the institutional environment is captured through two indicators: the judicial system efficiency and the easiness of informal trade. We show that an improvement of the institutional environment has two effects. First, it intensifies the causality direction from banking to economic growth through a reduction of defaulting loans. Second, it reduces the interest rate spread. In the empirical part, considering twenty-two MENA countries over the period 1984-2004, we find a bi-directional causality. The first one, which runs from banking development to economic growth, is more intense in countries with a more developed institutional environment. The second causality runs from economic growth to banking and indicates that a more developed economy has a more developed banking system.Banking; Growth; Institutions; MENA

Cloning and expression of a thermostable alpha-amylase gene from Streptomyces thermoviolaceus CUB74

Streptomycetes are aerobic Gram-positive bacteria whose natural habitat is the soil. They have been of general interest because of their ability to produce a variety of secondary metabolites with antibiotic properties. Apart from antibiotic production, streptomycetes produce many extracellular enzymes including amylases, proteases, cellulases and nucleases. Amylases are widely distributed amongst Streptomyces species and have been coming under increasing scrutiny in the past few years. For example, the α-amylase genes of S. hygroscopicus, S. limosus and S. venezuelae have been cloned and sequenced and their predicted amino acid sequences have been compared. The thesis describes the cloning and expression of a thermostable α-amylase gene from S. thermoviolaceus CUB74 into Escherichia coli and S. lividans. When expressed in E. coli, the Streptomyces α-amylase enzyme was found in the periplasmic space and the supernatant. The extracellular enzyme isolated from the parent Streptomyces strain and the new hosts was further analysed by SDS-polyacry1 amide gel electrophoresis. In addition, the product of starch digestion with this enzyme was analysed by paper chromatography. The α-amylase enzyme was reactivated in the SDS protein gel and its activity was visualized using a starch-agarose gel overlay. Stability of this enzyme at high temperatures was determined in the presence and absence of calcium and substrate. Its production in the parent strain and in S. lividans was also studied in the presence of different carbon sources. The gene specifying this enzyme was sequenced and its predicted amino acid sequence was compared with α-amylases isolated from other species. mRNA produced from this gene in different plasmid constructs was detected by Northern blotting and the transcriptional start site was determined by high resolution S mapping

Places that Reflect Beauty

Places are where we live! We call them “interiors.” Thus, “interior design” is the science that describes creating the places; so should interior design reflect beauty? Interior design is the specialization that creates places where people can find beauty, safety and a healthy environment to live in comfortable and sustainable ways. Beauty is one of the essential elements that a designer should consider while creating an environment, but do all users perceive this beauty? Moreover, what do designers have to do, to affect the users’ perception, so they can feel the beauty within their surroundings? Many questions need clarification, from the scientific theory point of views. To do so, the use of case studies will enable proving that these rules are applicable to real projects. This chapter explores the methods of perceiving different types of interiors. Any user living in the selected place or interior will perceive these stimuli reflected in the design. The users do not have the same personality or the same culture, which affects the full scope of the places and their reflection, as well as the messages of the interiors. Therefore, after analysis of these topics, within the places, a clear layout of guidelines could lead to generating an interior design that truly reflects the beauty to the end users