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Revista de Análisis Económico Vol. 20, No 2,2005, pp. 3-22
An investigation of cross-country income differences
Pedro Cavalcanti Ferreira, Joao Victor Issler and Samuel de Abreu Pessoa
This paper investigates the nature of income inequality across nations. Several exercises, such as variance decompositions, simulations and counter-factual analyses are performed. We find that, although total factor productivity has a leading role in explaining the dispersion of output per worker, countries grew in the past –and, consequently, are poor in the present– for different reasons. Even after correcting for productivity differences, some nations remain poor mostly because of low schooling of the labor force and other because they impose too many distortions to capital accumulation. Policy recommendations have to take country differences into account, or else they have a high chance of being either wrong or ineffective.
Keywords: Cross-Country Income inequality, Development, Total Factor Productivity, Aggregate Production Function.
JEL Classification: O11, O47, O57.
Revista de Análisis Económico Vol. 20, No 2,2005, pp. 23-40
El costo de la falla residencial en Chile: una estimación usando la curva de demanda
José Miguel Benavente, Alexander Galetovic, Ricardo Sanhueza y Pablo Serra
This paper estimates the residential outage cost in Chile’s Central Interconnected System (SIC), using consumer’s willingness to pay for energy. We first estimate the cost of reducing energy consumption efficiently, that is only the less valuable kWh (as indicated by the market demand curve) are rationed. Then we estimate the per-kWh cost of rationing by cutting off service. We find that the outage cost varies considerably depending on the length of the rationing period; and on how energy is rationed. Longer restrictions allow users to adjust more, and hence are cheaper. Similarly, we estimate that rationing efficiently is between two and six times cheaper than rationing by cutting off service.
Keywords: Chile, Demand, Duality, Elasticity, Energy, Rationing.
JEL Classification: L94.
Revista de Análisis Económico Vol. 20, No 2,2005, pp. 41-61
Knowledge creation and technology difusion: a framework to understand economic growth
Orlando Gomes
The most influential explanations of economic growth along the past five decades rely on two main items: human capital accumulation and the dissemination of knowledge/technological diffusion. These items traditionally appear as separate growth sources. In this paper an integrated perspective is adopted. We begin by building a growth model where two goals regarding technological achievements are considered; economic agents simultaneously want to expand the theoretical knowledge frontier and to reduce the gap between ready-to-use techniques and potentially available knowledge. Considering an objective function that captures the two pointed goals, one develops an intertemporal optimization setup concerning a two sector scenario. The first sector adapts existent technology to productive uses, while the second is an education sector. In this way, we can study the close relationship between technical progress and human capital generation decisions under an intertemporal perspective.
Keywords: Technology, Human Capital, Economic Growth, Optimal Control, Transitional Dynamics.
JEL Classification: C61, O33, O41.
Revista de Análisis Económico Vol. 20, No 2,2005, pp. 63-90
¿Es el ingreso suficiente para explicar cambios en la elección de carrera?
Emanuel Vespa
By influencing her specific labor occupation choice major choices greatly condition the allocation of an individual’s time. Previous economic analysis on the subject has emphasized monetary considerations affecting such a decision, but has been relatively less incisive regarding non pecuniary variables, which are precisely those that psychologists consider as relatively relevant. This paper shows that giving a greater role to non pecuniary variables may vary and even contradict some previous considerations. In fact, when the non-pecuniary variable enters in the utility function it is shown that if abilities are absolute (being proficient in major i implies being proficient in all others), then average ability will not be affected; whereas, in the relative case, the rise in average ability may be indistinguishable
Keywords: Undergraduate Major Choice, Dynamic Programming, Simulations.
JEL Classification: J24, C15, C61.
Revista de Análisis Económico Vol. 20, No 1,2005, pp. 3-22
Infraestructuras, costos de transporte y flujos de comercio
Pedro Coca Castaño, Laura Márquez Ramos e Inmaculada Martínez Zarzoso
This paper aims to investigate the effects of logistic performance on international trade flows. In order to analyse empirically the impact of logistics on trade, two kinds of logistic indicators are considered: hard-ware and software indicators. A gravity model augmented with hard-ware and software variables is estimated. Moreover, geographical and social variables are also included as determinants of trade flows. Hard-ware indicators represent overland and maritime infrastructure endow-ments, and also how well countries are connected in the world economy, and software indicators reflect the logistics management performance in different countries. The results of this research indicate that investing in logistics leads to improve and maintain the level of competitiveness.
Keywords: International Trade, Hardware Infrastructure, Software Infrastructure, Gravity Equation.
JEL Classification: F10.
Revista de Análisis Económico Vol. 20, No1,2005, pp. 23-44
The choice of majors as a signaling device
Javier Núñez and Andrés Otero
This work analyzes the ability signaling hypothesis using a rich set of data of a homogeneous population –Business and Economics graduates of University X– who share similar occupations in the labor market. After studying three years of a common core curriculum, students must choose between either a Business or an Economics major. The work investigates if the choice of major is employed by the labor market as a signal of ability and of expected productivity, and if this is reflected in differences in the earnings profiles of graduates of each field. Given the detailed nature of the data, we employ an unusually rich measure of ability, namely the grades obtained in the core curriculum. This work presents multiple evidence in favor of this hypothesis. The evidence is based on seven empirical results, properly derived from a simple theoretical signaling model. The empirical facts support the sig-naling hypothesis under the assumption that an individual’s ability is gradually revealed to the labor market as experience increases.
Keywords: Signaling, Choice of Majors, Human Capital.
JEL Classification: I21, J24, C70, D82.
Revista de Análisis Económico Vol. 20, No 1,2005, pp. 45-62
The implementation of monetary policy in an emerging economy: the case of Chile
Christian A. Johnson and Rodrigo Vergara
Central bank authorities base implementation of monetary policy on an analysis of multiple variables known as monetary policy indicators. In a small open economy such as Chile, these indicators may include in-flation misalignments, unemployment, GDP growth, money growth, the current account balance, exchange rate volatility and international re-serves. A neural network approach is used to establish the correspond-ing weights considered by the Board of the Central Bank of Chile dur-ing the period 1995-2003. GDP growth and the difference between the actual and the target inflation were found to be among the variables of greatest weight in the monetary policy decision-making process of the Central Bank of Chile during this period.
Keywords: Monetary Policy, Neural Network.
JEL Classification: E52, C45.
Revista de Análisis Económico Vol. 20, No 1,2005, pp. 63-94
El nivel adecuado de reservas internacionales: notas para el caso venezolano
Leonardo Vera y Luis Zambrano Sequín
Based on a standard set of factors pointed out by the literature we analyze the recent and rapid accumulation of international reserves in Venezuela. Among other things, we characterize the Venezuelan case and conduct a statistical analysis using a quarterly time series model between 1996 and 2004. The specification follows closely Aizenman and Marion (2002). Both a static and dynamic econometric version of the model allows us to report some of the factors that influence the decision to hold foreign exchange reserves. When we calculate the adequate level of reserves, using the econometric specifications, we found that excess reserves are not currently high and that the results do not diverge much from the traditional Heller’s methodology. Finally, we undertake an evaluation of the alternatives pointed out for excess reserves manage-ment in Venezuela.
Keywords: International Reserve Holdings, Excess Reserves, Venezuela, Econometric Model.
JEL Classification: E58, F31, O24.
Revista de Análisis Económico Vol. 20, No1,2005, pp. 95-122
Modelos de alerta temprana para pronosticar crisis bancarias: desde la extracción de señales a las redes neuronales
Christian A. Johnson
This paper reviews alternative methodologies and models to design sys-tems to help in the early detection of banking distress (EWS). The pro-posed methodologies are aimed to the early identification of financial distress for countries without an important recent history of banking failure. This paper presents traditional models often used to predict currency crisis, and more advanced approaches, such as non linear neural networks models.
Keywords: Banking, Financial Distress, Early Warning System, Logit, Neural Network.
JEL Classification: E44, G21, C23, C25, C45.
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