This
article investigates the causes in the reduction of labor force participation
of the old. We argue that the changes in social security policy, in technology
and in demography may account for most of the changes in retirement over the
second part of the last century in the
This paper
studies the impact of HIV/AIDS on per capita income and education. It explores
two channels from HIV/AIDS to income that have not
been sufficiently stressed by the literature: the reduction of the incentives
to study due to shorter expected longevity and the reduction of productivity of
experienced workers. In the model individuals live for three periods, may get
infected in the second period and with some probability die of Aids before
reaching the third period of their life. Parents care for the welfare of the
future generations so that they will maximize lifetime utility of their
dynasty. The simulations predict that the most affected countries in
Sub-Saharan Africa will be in the future, on average, thirty percent poorer than
they would be without AIDS. Schooling will decline in some cases by forty
percent. These figures are dramatically reduced with widespread medical
treatment, as it increases the survival probability and productivity of
infected individuals.
We develop
and calibrate a model where differences in factor endowments lead countries to
trade intermediate goods, and gains from trade reflect in total factor
productivity. We perform several output and growth decompositions, to assess
the impact that barriers to trade, as well as changes in terms of trade, have
on measured TFP. We find that for very poor economies gains from trade are
large, in some cases representing a doubling of GDP. Also, that an improvement
in the terms of trade - by allowing the use of a better mix of intermediate
inputs in the production process - translates into productivity growth.
This paper
examines structural changes that occur in the total factor productivity (TFP)
within countries. It is possible that some episodes of high economic growth or
economic decline are associated with permanent productivity shocks; therefore,
this research has two objectives. The first one is to estimate the structural
changes present in TFP for a sample of 77 countries between 1950(60) and 2000. The
second one is to identify possible explanations for breaks. Two sources were
analyzed: (i) episodes in political and economic
history; (ii) changes in international trade - a measure of absorption of
technology. The results suggest that about one-third of the TFP time-series
present at least one structural break. Downwards breaks are more common, indicating that after a break the TFP has much
difficulty to recover. When we investigated factors related with structural
change, developed countries presented a break near the first oil shock while
the developing countries' breaks are more spread along the decades. Thus,
external strikes seem to be more relevant for developed countries. However, for
each country and break date, it was possible to find an event close to the
break date endogenously detected. Last, the relevance of international trade,
measured by trade share percentage of GDP, seems to be limited to explain
abrupt changes in TFP.
Due to
widespread government intervention and import-substitution industrialization,
there has been a general perception that
This
article presents a group of exercises of level and growth decomposition of output
per worker using cross-country data from 1960 to 2000. Its shown that at least
until 1975 factors of production ( capital and education) were the main cause
of output dispersion and that productivity variance was considerably smaller
than in late years. Only after this date the prominence of TFP started to show
up in the data, as the majority of the literature have found. The growth
decomposition exercises showed that the reversal of relative importance of TFP
vis-à-vis factors is explained by the very good (bad) performance of detrended TFP of fast (slow) growing economies. Although
growth in the period, on average, is mostly due to factors accumulation, its
variance is explained by productivity.
Published, The
B.E. Journal of Macroeconomics (Topics), Vol. 8 (1), 2008.
This
article studies the interplay between fiscal rules, public investment and
growth in
This
article studies the productive impact of infrastructure investment in
Published,
“Fiscal Policy, Stabilization and Growth,” edited by Perry, Serven
and Suescún, World Bank, 2007
We study
the macroeconomic effects of international trade policy by integrating a Hecksher-Ohlin trade model into an optimal-growth
framework. The model predicts that a more open economy will have higher factor
productivity. Furthermore, there is a "selective development trap,"
an additional steady state with low income, to which countries may or may not
converge, depending on policy. Income at the development trap falls as trade
barriers increase. Hence, cross-country differences in barriers to trade may
help explain the dispersion of per-capita income observed across countries. The
effects are quantified and we show that protectionism can explain a relevant
fraction of TFP and long-run income differentials across countries.
Published, International Economic
Review, Vol. 47, No. 4, November 2006
A working
paper version is available here
This paper
investigates the nature of income inequality across nations. Several exercises,
such as variance decompositions, simulations and counter-factual analyses are
performed. The picture that emerges is one where countries grew in the past for
different reasons, which should be an important ingredient in policy design.
Although there is not a single-factor explanation for the difference in output
per-worker across nations, productivity differences can explain a considerable
portion of income inequality, followed by distortions to\ capital accumulation
and then by human capital accumulation
Published
in the Revista
de Analisis Economico,
Vol. 20, nº2, Dec. 2005
This
article studies the impact of longevity and taxation on life-cycle decisions
and long-run income. Individuals allocate optimally their total lifetime
between education, working and retirement. They also decide at each moment how
much to save or consume out of their income, and after entering the labor market
how to divide their time between labor and leisure. The model incorporates
experience-earnings profiles and the return-to-education function that follows
evidence from the labor literature. In this setup, increases in longevity
raises the investment in education - time in school - and retirement. The model
is calibrated to the
Review of Economic Dynamics,
vol. 11(3), 2007
Download working paper version
This paper
studies the relationship between industrial structure and the extent of trade
protection granted to Brazilian manufacturing industries during the 1988-1994
trade liberalization episode. Using a panel data set covering this period, we
find that even in an environment in which a major regime shift has been
introduced, more concentrated sectors have been able to obtain policy
advantages, that lead to a reduction in international competition. The
importance of industry structure appears to be substantial: In our baseline
specification, an increase in concentration by 20% leads to an increase in
protection by 5%-7%.
Published
in the The Quarterly Review of Economics and Finance, Vol. 45,
Issues 2-3 , May 2005.
This paper
studies the long-run impact of HIV/AIDS on per capita income and education. We
introduce a channel from HIV/AIDS to long-run income that has been overlooked
by the literature, the reduction of the incentives to study due to shorter
expected longevity. We work with a continuous time overlapping generations
model in which life cycle features of savings and education decision play key
roles. The model is calibrated for a cross-section of countries. The
simulations predict that the most affected countries in Sub-Saharan Africa will
be in the future, on average, a quarter poorer than they would be without AIDS,
due only to the direct (human capital reduction) and indirect (decline in
savings and investment) effects of life-expectancy reductions. Schooling will
decline on average by half. These findings are well above previous results in
the literature.
This paper
explores the distortions on the cost of education, associated with government
policies and institutional factors, as an additional determinant of
cross-country income differences. Agents are finitely lived and the model takes
into account life-cycle features of human capital accumulation. There are two
sectors, one producing goods and the other providing educational services. The
model is calibrated and simulated for 89 economies. We find that human capital
taxation has a relevant impact on incomes, which is amplified by its indirect
effect on returns to physical capital. Life expectancy plays an important role
in determining long-run output: the expansion of the population working life
increases the present value of the flow of wages, which induces further human
capital investment and raises incomes. Although in our simulations the largest
gains are observed when productivity is equated across countries, changes in
longevity and in the incentives to educational investment are too relevant to
ignore.
This paper
presents evidence on the positive effect of international trade on productivity
growth using industrial level data preceding and following
Published
in the International
Economic Review, vol. 44, nº 4, November 2003
A working
paper version is available here
We estimate
and test two alternative functional forms, which have been used in the growth
literature, representing the aggregate production function for a panel of
countries: the extended neoclassical growth model, and a mincerian
formulation of schooling-returns to skills. Estimation is performed using
instrumental-variable techniques, and both functional forms are confronted
using a Box-Cox test, since human capital inputs enter in levels in the mincerian specification and in logs in the extended
neoclassical growth model.
Published
in the Economics
Letters, vol. 83, 2004
A working
paper version is available here
This
article studies the welfare and long run allocation impacts of privatization.
There are two types of capital in this model economy, one private and the other
initially public (``infrastructure''). A positive externality due to
infrastructure capital is assumed, so that the government could improve upon
decentralized allocations internalizing the externality, but public investment
is financed through distortionary taxation. It is
shown that privatization is welfare improving for a large set of economies and
that after privatization under-investment is optimal. When operation
inefficiency in the public sector, subsidy to infrastructure accumulation
and/or public consumption expenditures are introduced, gains from privatization
are higher and positive for most reasonable combinations of parameters.
A theoretical model is constructed in order to explain
particular historical experiences in which inflation acceleration apparently
helped to spur a period of economic growth. Government financed expenditures
affect positively the productivity growth in this model so that the distortionary effect of inflation tax is compensated by the
productive effect of public expenditures. We show that for some interval of
money creation rates there is an equilibrium where money is valued and where
steady state physical capital grows with inflation. It is also shown that zero
inflation and growth maximization are never the optimal policies
Published in the Journal
of Economic Dynamics and Control, v23, 1999, pp. 539-563.