The Italian Stabilization of 1947: Domestic and International Factors

The paper examines the 1947 monetary stabilization in Italy, tracing the domestic and international political dynamics that allowed ideas and theoretical concepts developed within the Bank of Italy to be applied in a successful action to subdue spiraling inflation. The combination of events and circumstances necessary for the good outcome in a critical juncture of Italian economic history was the fruit of the efforts made by Prime Minister Alcide De Gasperi in both the domestic and international political arenas and of the collaboration he received from Luigi Einaudi and Donato Menichella. The Government’s economic action in this crucial episode constitutes perhaps the first outstanding example of cooperation between politicians and experts in the annals of the Italian Republic.Economic history; Stabilization; Italy; United States; De Gasperi; Menichella; 1947

Superatomic Boolean algebras constructed from strongly unbounded functions

Using Koszmider's strongly unbounded functions, we show the following consistency result: Suppose that $\kappa,\lambda$ are infinite cardinals such that $\kappa^{+++} \leq \lambda$, $\kappa^{<\kappa}=\kappa$ and $2^{\kappa}= \kappa^+$, and $\eta$ is an ordinal with $\kappa^+\leq \eta <\kappa^{++}$ and $cf(\eta) = \kappa^+$. Then, in some cardinal-preserving generic extension there is a superatomic Boolean algebra $B$ such that - $ht(B) = \eta + 1$, - the cardinality of the $\alpha$th level of $B$ is $\kappa$ for every $\alpha <\eta$, - and the cardinality of the $\eta$th level of $B$ is $\lambda$ Especially, \_{{\omega}_1}\concatenation \$ and \_{{\omega}_2}\concatenation \$ can be cardinal sequences of superatomic Boolean algebras.Comment: 13 page

Legal protection to foreign investors

Foreign investment is typically considered an important source of growth for developing countries. This article describes the legal protection granted to foreign investors and its enforcement mechanisms. Governments have signed international investment agreements intended to protect foreign investors from the risk of expropriation and have increasingly chosen to issue sovereign debt in international financial centers, which expose defaulting governments to litigations in foreign national courts. In most cases, governments have complied with unfavorable rulings of international arbitration courts, and many recent sovereign default episodes were followed by relatively friendly debt restructuring agreements. But there have been cases in which expropriated investors or holders of sovereign debt in default have not been compensated, which suggests that the actual legal protection granted to foreign investors is limited.Economic growth ; Business cycles

Mortgage defaults

We incorporate house price risk and mortgages into a standard incomplete market (SIM) model. We calibrate the model to match U.S. data and we show that the model also ac- counts for non-targeted features of the data such as the distribution of down payments, the life-cycle profile of home ownership, and the mortgage default rate. In addition, we show that the average coefficients that measure the agents' ability to self-insure against income shocks are similar to those of a SIM model without housing (as presented by Kaplan and Violante, 2010). However, incorporating housing increases the values of these coefficient for younger agents, which narrows the gap between the SIM model's implications and the data. The response of consumption to house price shocks is minimal. We also study the effects of default prevention policies. Introducing a minimum down payment requirement of 15% reduces defaults on mortgages by 30%, reduces the home ownership rate up to only 0.2 percentage points (if the aggregate house price level does not adjust), and may cause house prices to decline up to 0.7% (if home ownership does not adjust). Garnishing defaulters' income in excess of 43% of median consumption for one year produces a similar decline in defaults; but, since it reduces the median equilibrium down payment from 19% to 9%, it boosts home ownership up to 4.3 percentage points (if the aggregate house price level does not adjust) and may increase house prices up to 16.1% (if home ownership does not adjust). The introduction of minimum down payments or income garnishment benefit a majority of the population.Mortgage loans ; Default (Finance)

ALTERNATIVE CYCLING STRATEGIES FOR SHRIMP FARMING IN ARID ZONES OF MEXICO: DEALING WITH RISK AND UNCERTAINTY

Northwest Mexican coastal waters have large seasonal temperature variations, high salinity, and are subject to intense solar radiation. Shrimp farms in this region have been using two annual production strategies; six- to eight-month cycle with one complete harvest and several partial harvests, or two, three- to four-month cycles with complete harvests. The preferred strategy depends on two uncertain variables; shrimp growth, which varies across the region, and market price, which varies across the season. A bioeconomic model was used to compare the economic yield of the two cycling strategies for three zones across the region, under three alternative average annual temperatures states. Simple decision theory criteria are used to show that the two-cycle strategy dominates the one-cycle strategy in the Bahia de La Paz zone. Results for central and northern Sonora are conditional on temperature.Resource /Energy Economics and Policy,

Online Appendix to "Quantitative properties of sovereign default models: solution methods"

This document describes how we evaluate the accuracy of the solution of the baseline sovereign default model using the test proposed by den Haan and Marcet (1994). We show that the solutions obtained using Chebyshev collocation and cubic spline interpolation approximate the equilibrium with reasonable accuracy and illustrate the challenges that arise when the test is applied to the solution obtained using the discrete state space technique.

Global Imbalances in a World of Inflexible Real Exchange Rates and Capital Controls

This paper addresses the issue of international payments in a stock-flow framework, by capturing the interaction between the current account balance and international assets portfolios of domestic and foreign investors. It is argued that the stability of such interaction may be affected by shifts in the preferences of investors, by the relative rate of return of different assets, and—more in general—by institutional settings. The model is then used for policy analysis purposes to derive the conditions for the existence of dynamic equilibria, and if they can be attained, under the assumption of market-distorting policy choices.global economic imbalances; international payments; exchange rates; capital controls; current account balance; international assets portfolios

Sovereign default risk with heterogenous borrowers

We study a standard quantitative model of sovereign default in which the government in a small open economy (SMO) decides how much to save and whether to default on its debt. In contrast with previous quantitative studies, we do not assume that a defaulting country is exogenously excluded from capital markets, and we assume that political parties with different discount factors alternate in power. Preliminary quantitative results indicate that even without assuming exogenous exclusion, after a default episode, the model generates difficulties in market access---in average, for the same level of debt, spreads are higher after default; due to this increase in borrowing costs, capital inflows are initially decreased, and recover slowly after that. We also describe the strategic interaction of governments with different patienceSovereign Default, Strategic Behavior; Endogenous Borrowing Constraints; Markov Perfect Equilibrium.

Quantitative models of sovereign default and the threat of financial exclusion

Business cycles ; Debt ; Default (Finance)