DISENTANGLING THE PRODUCTION AND EXPORT CONSEQUENCES OF DIRECT FARM INCOME PAYMENTS

This paper formalizes the production and export consequences of direct farm payments. Taxpayer financed direct payments distort exit and production incentives, while consumer financed subsidies also imply that the risks of domestic and export production differ. Welfare decompostion and empirical calibration illustrate the potential for import barriers to cross-subsidize exports.Agricultural and Food Policy, International Relations/Trade,

Exit and strategic behavior under information and incentive problems in financial markets.

Prior research has documented the impact of firm and industry specific variables in shaping the post-entry exit probability. These studies have found a mixed effect of competition, usually proxied by concentration, upon exit. This paper uses the empirical measure developed by Sundaram, John and John (1996), which captures the theoretical notion of competition in strategic complements versus strategic substitutes. Our results show that the survival of newly established firms is lower when competition is in strategic complements and higher when competition is in strategic substitutes. Furthermore, the evidence suggests predation since the effect of competition depends upon the firm's financial structure and upon the extent of information and incentive problems in financial markets.Markets; Problems;

Continuity properties of a factor of Markov chains

Starting from a Markov chain with a finite alphabet, we consider the chain obtained when all but one symbol are undistinguishable for the practitioner. We study necessary and sufficient conditions for this chain to have continuous transition probabilities with respect to the past

The Washington consensus : assessing a damaged brand

The authors analyze the Washington Consensus, which at its original formulation reflected views not only from Washington, but also from Latin America. Tracing the life of the Consensus from a Latin American perspective in terms of evolving economic development paradigms, they document the extensive implementation of Consensus-style reforms in the region as well as the mismatch between reformers’ expectations and actual outcomes, in terms of growth, poverty reduction, and inequality. They present an assessment of what went wrong with the Washington Consensus-style reform agenda, using a taxonomy of views that put the blame, alternatively, on (i) shortfalls in the implementation of reforms combined with impatience regarding their expected effects; (ii) fundamental flaws—in either the design, sequencing, or basic premises of the reform agenda; and (iii) incompleteness of the agenda that left out crucial reform needs, such as volatility, technological innovation, institutional change and inequality.Debt Markets,Emerging Markets,Economic Theory&Research,Achieving Shared Growth,Access to Finance

The trade-off between bank debt and trade credit for business start-ups: Financing costs versus liquidation policy.

This paper investigates the trade-off between bank debt and trade credit for entrepreneurial start-ups. Specifically, we examine how the lower cost of bank debt is weighed against the more lenient liquidation policy adopted by suppliers. Both the riskiness of the venture and the entrepreneur's control rents influence this choice. Using unique data on 325 first-time business start-ups, we find that firms in industries with high historical failure rates and entrepreneurs who value private control benefits use less bank debt. These effects are even strengthened in case assets have a high liquidation value and thus banks are more likely to liquidate the firm following default.Research; Trade; Trade credit; Credit; Startups; Cost; Policy; Suppliers; Choice; Data; Firms; Industry; Entrepreneurs; Value; Effects; Assets; Default; Costs;