A note about credit rationing on research and development

This note develops an overlapping generations model with credit rationing on research and development, in which both are determined simultaneously and endogenously. The model provides a useful tool to examine different policies that may help alleviate the negative effect of �financial constraints faced by fi�rms.R&D, credit constraints, overlapping generations

Managerial discretion and optimal financing policies with cash flow uncertainty

Building on the work of Stulz (1990), this paper analyzes the impact of managerial discretion on optimal leverage within an agency cost model of corporate financing. Under the assumption that stockholders do not know with certainty the mean of the cash flow distribution, we argue that leverage fails to control for the amount of cash the manager can misappropriate in personal projects. We develop a model of a firm’s value maximization problem that predicts that as expected earnings uncertainty increases the firm will decrease its optimal level of borrowing. In a second part, we test this proposition on a panel of non–financial UK firms, by investigating the determinants of firms’ performance and allowing for endogeneity of capital structure decisions. The estimates confirm that earnings uncertainty, as measured by the volatility in monthly consensus forecasts of individual companies’ earnings per share, negatively affects corporate leverage. Furthermore, new empirical support is found to the agency cost view that corporate performance is positively correlated with leverage when poorly managed firms are selected.

Singlet-doublet fermion and triplet scalar dark matter with radiative neutrino masses

We present a detailed study of a combined singlet-doublet fermion and triplet scalar model for dark matter. These models have only been studied separately in the past. Together, they form a simple extension of the Standard Model that can account for dark matter and explain the existence of neutrino masses, which are generated radiatively. This holds even if singlet-doublet fermions and triplet scalars never contribute simultaneously to the dark matter abundance. However, this also implies the existence of lepton flavour violating processes. In addition, this particular model allows for gauge coupling unification. The new fields are odd under a new $\mathbb{Z}_2$ symmetry to stabilise the dark matter candidate. We analyse the dark matter, neutrino mass and lepton flavour violation aspects both separately and in conjunction, exploring the viable parameter space of the model. This is done using a numerical random scan imposing successively the neutrino mass and mixing, relic density, Higgs mass, direct detection, collider and lepton flavour violation constraints. We find that dark matter in this model is fermionic for masses below about 1 TeV and scalar above. The narrow mass regions found previously for the two separate models are enlarged by their coupling. While coannihilations of the weak isospin partners are sizeable, this is not the case for fermions and scalars despite their often similar masses due to the relatively small coupling of the two sectors, imposed by the small neutrino masses. We observe a high degree of complementarity between direct detection and lepton flavour violation experiments, which should soon allow to fully probe the fermionic dark matter sector and at least partially the scalar dark matter sector.Comment: 24 pages, 12 figures; version accepted by and published in JHE

Singlet-doublet/triplet dark matter and neutrino masses

In these proceedings, we present a study of a combined singlet--doublet fermion and triplet scalar model for dark matter (DM). Together, these models form a simple extension of the Standard Model (SM) that can account for DM and explain the existence of neutrino masses, which are generated radiatively. However, this also implies the existence of lepton flavour violating (LFV) processes. In addition, this particular model allows for gauge coupling unification. The new fields are odd under a new $\mathbb{Z}_2$ symmetry to stabilise the DM candidate. We analyse the DM, neutrino mass and LFV aspects, exploring the viable parameter space of the model. This is done using a numerical random scan imposing successively the neutrino mass and mixing, relic density, Higgs mass, direct detection, collider and LFV constraints. We find that DM in this model is fermionic for masses below about 1 TeV and scalar above. We observe a high degree of complementarity between direct detection and LFV experiments, which should soon allow to fully probe the fermionic DM sector and at least partially the scalar DM sector.Comment: 4 pages, 1 figure; contribution to the 2019 EW session of the 54th Rencontres de Moriond (summary of arXiv:1812.11133

Nonlinear dynamics in welfare and the evolution of world inequality

The paper proposes a measure of countries' welfare based on individuals' lifetime utility and applies it to a large sample of countries in the period 1960-2000. Even though welfare inequality across countries appeared stable, the distribution dynamics points out the emergence of three clusters. Such tendencies to polarization shall strengthen in the future. In terms of the world population distribution, welfare inequality decreased as the result of the decline in inequality of both per capita GDP and life expectancy, but this downward trend should be reverted hereafter. Finally, a polarization pattern emerged, which is expected to further intensify in the future.distribution of welfare, nonparametric estimation, polarization, distribution dynamics, inequality

Nonlinear Growth and the Productivity Slowdown

In this paper we study the productivity slowdown taking as a starting point the nonlinear shape of the growth path. We relate the slowdown to the evolution of the world income distribution in the periods before and after the oil shock of 1973 and show that: i) in both periods growth is nonlinear; ii) the productivity slowdown consists in a downward shift of the nonlinear growth path; iii) in both periods we observe a medium-run tendency to polarization, but the long-run distribution features convergence in the first period and polarization in the second. We provide theoretical and empirical arguments suggesting that the interaction between nonlinear growth and international technology spillovers can explain how a temporary shock may have permanent effects on world growth.

The Interrupted Power Law and The Size of Shadow Banking

Using public data (Forbes Global 2000) we show that the asset sizes for the largest global firms follow a Pareto distribution in an intermediate range, that is ``interrupted'' by a sharp cut-off in its upper tail, where it is totally dominated by financial firms. This flattening of the distribution contrasts with a large body of empirical literature which finds a Pareto distribution for firm sizes both across countries and over time. Pareto distributions are generally traced back to a mechanism of proportional random growth, based on a regime of constant returns to scale. This makes our findings of an ``interrupted'' Pareto distribution all the more puzzling, because we provide evidence that financial firms in our sample should operate in such a regime. We claim that the missing mass from the upper tail of the asset size distribution is a consequence of shadow banking activity and that it provides an (upper) estimate of the size of the shadow banking system. This estimate -- which we propose as a shadow banking index -- compares well with estimates of the Financial Stability Board until 2009, but it shows a sharper rise in shadow banking activity after 2010. Finally, we propose a proportional random growth model that reproduces the observed distribution, thereby providing a quantitative estimate of the intensity of shadow banking activity.Comment: 12 pages, 5 figures, 2 tables. To appear in Plos ONE 201