Implications of WMAP observations on Li abundance and stellar evolution models

The WMAP determination of the baryon-to-photon ratio implies, through Big Bang nucleosynthesis, a cosmological Li abundance larger, by a factor of 2 to 3, than the Li abundance plateau observed in the oldest Pop II stars. It is however inescapable that there be a reduction by a factor of at least 1.6 to 2.0 of the surface Li abundance during the evolution of Pop II field stars with [Fe/H] < -1.5. That the observed Li be lower than cosmologically produced Li is expected from stellar evolution models. Since at turnoff most of the Li abundance reduction is caused by gravitational settling, the presence of Lithium 6 in some turnoff stars is also understood. Given that the WMAP implications for Li cosmological abundance and the Li Spite plateau can be naturally explained by gravitational settling in the presence of weak turbulence, there appears little need for exotic physics as suggested by some authors. Instead, there is a need for a better understanding of turbulent transport in the radiative zones of stars. This requires simulations from first principles. Rather strict upper limits to turbulent transport are determined for the Sun and Pop II stars.Comment: The Astrophysical Journal, in pres

Learning by Doing, Trade in Capital Goods and Growth

The paper aims at reconciling theoretical models of endogenous growth with the empirical evidence on trade and growth. In particular, we show that the conventional wisdom according to which trade is growth-impairing for a country with comparative advantage in goods with limited opportunities for learning fails to hold when the imported good is a capital good. The intuition is that the country gains access to cheaper capital goods, which raises investment, output per worker and learning by doing.trade; capital goods; growth

The dog that did not bark: Insider trading and crashes

This paper documents that at the individual stock level insiders sales peak many months before a large drop in the stock price, while insiders purchases peak only the month before a large jump. We provide a theoretical explanation for this phenomenon based on trading constraints and asymmetric information. We test our hypothesis against competing stories such as patterns of insider trading driven by earnings announcement dates, or insiders timing their trades to evade prosecution. Finally we provide new evidence regarding crashes and the degree of information asymmetry.Insider Trading, Rational Expectations Equilibrium, Trading Constraints, Volatility, Crashes

Administrative barriers to foreign investment in developing countries

Recent international experience has shown that excessively complex administrative procedures, required to establish, and operate a business, discourage inflows of foreign direct investment. The authors present a new database on the administrative costs faced by private investors in 32 developing countries. The database is much more comprehensive than the existing sources, as it contains not only information on general entry procedures, such as business and tax registration, but also captures regulation on land access, site development, import procedures, and inspections, Thedata include measures on the number of procedures, direct monetary costs, and time. The cost of administrative procedures vary significantly across countries. The most important barriers appear to be the delays associated with securing land access, and obtaining building permits, which in several countries, take more than two years. Countries that impose excessive administrative costs on entry, tend to be equally intrusive in firm operations, thereby weakening the argument that barriers to entry, are a substitute for the government's unwillingness, or inability to regulate enterprise operations. The level of administrative costs is positively correlated with corruption incidence, and exhibits a negative correlation with the quality of governance, degree of openness, and public wages. These correlations suggest that administrative reforms, need to be incorporated into the broader agenda for reforms, such as trade and financial liberalization, the fight against corruption, and public sector administration.Economic Theory&Research,Decentralization,Environmental Economics&Policies,Enterprise Development&Reform,International Terrorism&Counterterrorism,Economic Theory&Research,National Governance,Environmental Economics&Policies,International Terrorism&Counterterrorism,Health Monitoring&Evaluation

Financing decisions of firms and central bank policy

This paper aims to explain the sharp rise in unhedged foreign borrowing by South East Asian corporations in the few years prior to the crisis despite remarkably little change in fundamentals. The crucial element of our story is the strategic interaction between firms and the central bank, which gives rise to multiple equilibria: when firms use foreign borrowing, they raise the cost of devaluation to the central bank, which in turn makes foreign borrowing more attractive. Consequently, a small shock to fundamentals may have a large and permanent effect on the equilibrium composition of firms' borrowing.foreign borrowing; Asian crisis

International Vertical Specialization, Imperfect Competition and Welfare

This paper looks at the impact of international vertical specialization when the final good industry is imperfectly competitive. Final goods are assembled out of different fragments. In the absence of international vertical specialization all fragments required to produce a given final good must be produced in the same country. International vertical specialization unambiguously reduces the costs of production of all final good producers, albeit not necessarily in the same proportion. If the cost of production of a less efficient producer is reduced to a lesser extent than that of a more efficient producer, vertical specialization may lead to exit in the final good industry. This anti-competitive effect may be strong enough that international vertical specialization leads to a Pareto inferior outcome. On the other hand, we can characterize two sets of policies, which, combined with vertical specialization, are Pareto improving compared to autarky regardless of consumer preferences and of the form of competition in the final good industry.fragmentation; vertical specialization; imperfect competition; welfare; anti-competitive effect of trade

Free trade and protection of intellectual property rights : can we have one without the other?

This paper is concerned with the interaction between trade policies and the protection of Intellectual Property Rights (IPRs). In particular, it investigates the welfare implications of an international agreement on one or both policy instruments. The main insights are first, that both sets of policies are substitutes and second, that they are affected by the same Prisoner's Dilemma problem. As a consequence, an agreement in both policy instruments is needed to achieve any positive welfare gains, which supports the long standing claim of policy makers from developed countries that protection of IPRs should be included in multilateral trade agreements.trade policy; intellectual property rights