Microentrepreneurship and the business cycle: is self-employment a desired outcome?

Should a central bank accommodate energy price shocks? Should the central bank use core inflation or headline inflation with the volatile energy component in its Taylor rule? To answer these questions, we build a dynamic stochastic general equilibrium model with energy use, durable goods, and nominal rigidities to study the effects of an energy price shock and its impact on the macroeconomy when the central bank follows a Taylor rule. We then study how the economy performs under alternative parameterizations of the rule with different weights on headline and core inflation after an increase in the energy price. Our simulation results indicate that a central bank using core inflation in its Taylor rule does better than one using headline inflation because the output drop is less severe. In general, we show that the lower the weight on energy price inflation in the Taylor rule, the impact of an energy price increase on gross domestic product and inflation is also lower.

Who benefits from reducing the cost of formality? Quantile regression discontinuity analysis

This paper studies the effects of increasing formality via tax reduction and simplification schemes on micro-firm performance. It uses the 1997 Brazilian SIMPLES program. We develop a simple theoretical model to show that SIMPLES has an impact only on a segment of the micro-firm population, for which the effect of formality on firm performance can be identified, and that can be analyzed along the single dimensional quantiles of the conditional firm revenues. To estimate the effect of formality, we use an econometric approach that compares eligible and non-eligible firms, born before and after SIMPLES in a local interval about the introduction of SIMPLES. We use an estimator that combines both quantile regression and the regression discontinuity identification strategy. The empirical results corroborate the positive effect of formality on microfirms' performance and produce a clear characterization of who benefits from these programs

Can foreign lobbying enhance development ? The case of tourism in the Caribbean

There exist legal channels for informational lobbying of U.S. policymakers by foreign principals. Foreign governments and private sector principals frequently and intensively use this institutional channel to lobby on trade and tourism issues. The authors empirically study whether such lobbying effectively achieves its goal of trade promotion in the context of Caribbean tourism and it is the first paper to examine the potential for using foreign lobbying as a vehicle for development. They use panel data to explore and quantify the association between foreign lobbying by Caribbean principals and U.S. tourist arrivals to Caribbean destinations. A variety of sensitivity analyses support the finding of a strong association. The policy implications are obvious and potentially important for developing countries.Tourism and Ecotourism,Economic Theory&Research,Accommodation&Tourism Industry,Political Systems and Analysis,Politics and Government

Releasing constraints to growth or pushing on a string ? the impact of credit, training, business associations, and taxes on the performance of Mexican micro-firms

The authors employ propensity score matching and a traditional control function approach to examine the impact of participation in various societal institutions on microfirm performance in Mexico. They find that firms that participate in credit markets, receive training,pay taxes, and belong to business associations exhibit significantly higher profits, even after controlling for the various factors that drive participation in those institutions. They also find that firms that borrow from formal or informal sources and those that pay taxes are significantly more likely to stay in business, but firms that received credit exhibit lower rates of income growth. Overall, the results suggest that even if the best performing micro-firms are more likely to be selected into participating in societal institutions, causality also runs in the opposite direction. In particular, increases in strictly or broadly defined formality have the potential for increasing profits and survival rates, and appear to bring micro-firms closer to their optimal sizes.Economic Theory&Research,Science Education,Scientific Research&Science Parks,Investment and Investment Climate,Educational Sciences

Does Formality Improve Micro-Firm Performance? Quasi-Experimental Evidence from the Brazilian SIMPLES Program

This paper employs regression discontinuity methods to identify the effect of formality on Brazilian micro-firm performance. The SIMPLES program introduced in November 1996 consolidated multiple taxes and social security contributions into a single payment and reduced taxes for eligible small firms. This provides a quasi-natural experiment that allows us to eliminate many of the endogeneity issues surrounding the impact of formality, measured across several dimensions, on firm performance. We find that SIMPLES had a significant effect on the proportion of firms that have a license to operate, are registered as a legal entity, pay taxes and make social security contributions. Moreover, newly created firms that opt for operating formally achieve higher levels of revenue and profits, employ more workers and are more capital intensive (only for those firms that have employees). The channel through which this occurs is not access to credit or contracts with larger firms. Rather, it appears that the lower cost of contracting labor leads to adopting production techniques that involve greater permanence and a larger paid labor force.micro-firms, self-employment, informality

Phase and Charge reentrant phase transitions in two capacitively coupled Josephson arrays with ultra-small junction

We have studied the phase diagram of two capacitively coupled Josephson junction arrays with charging energy, $E_c$, and Josephson coupling energy, $E_J$. Our results are obtained using a path integral Quantum Monte Carlo algorithm. The parameter that quantifies the quantum fluctuations in the i-th array is defined by $\alpha_i\equiv \frac{E_{{c}_i}}{E_{J_i}}$. Depending on the value of $\alpha_i$, each independent array may be in the semiclassical or in the quantum regime: We find that thermal fluctuations are important when $\alpha \lesssim 1.5$ and the quantum fluctuations dominate when $2.0 \lesssim \alpha$. We have extensively studied the interplay between vortex and charge dominated individual array phases. The two arrays are coupled via the capacitance $C_{{\rm inter}}$ at each site of the lattices. We find a {\it reentrant transition} in $\Upsilon(T,\alpha)$, at low temperatures, when one of the arrays is in the semiclassical limit (i.e. $\alpha_{1}=0.5$) and the quantum array has $2.0 \leq\alpha_{2} \leq 2.5$, for the values considered for the interlayer capacitance. In addition, when $3.0 \leq \alpha_{2} < 4.0$, and for all the inter-layer couplings considered above, a {\it novel} reentrant phase transition occurs in the charge degrees of freedom, i.e. there is a reentrant insulating-conducting transition at low temperatures. We obtain the corresponding phase diagrams and found some features that resemble those seen in experiments with 2D JJA.Comment: 25 Latex pages including 8 encapsulated poscript figures. Accepted for publication in Phys. Rev B (Nov. 2004 Issue

Influence of the photon - neutrino processes on magnetar cooling

The photon-neutrino processes $\gamma e^{\pm} \to e^{\pm} \nu \bar \nu$, $\gamma \to \nu \bar \nu$ and $\gamma \gamma \to \nu \bar \nu$ are investigated in the presence of a strongly magnetized and dense electron-positron plasma. The amplitudes of the reactions $\gamma e^{\pm} \to e^{\pm} \nu \bar \nu$ and $\gamma \gamma \to \nu \bar \nu$ are obtained. In the case of a cold degenerate plasma contributions of the considering processes to neutrino emissivity are calculated. It is shown that contribution of the process $\gamma \gamma \to \nu \bar \nu$ to neutrino emissivity is supressed in comparision with the contributions of the processes $\gamma e^{\pm} \to e^{\pm} \nu \bar \nu$ and $\gamma \to \nu \bar \nu$. The constraint on the magnetic field strength in the magnetar outer crust is obtained.Comment: 8 pages, LaTeX, 2 PS figures, based on the talk presented by D.A. Rumyantsev at the XV International Seminar Quarks'2008, Sergiev Posad, Moscow Region, May 23-29, 2008, to appear in the Proceeding