http://www.recercat.cat:80/handle/2072/191 Fri, 18 May 2012 09:51:12 GMT 2012-05-18T09:51:12Z http://www.recercat.cat:80/bitstream/id/34962/ http://www.recercat.cat:80/handle/2072/191 http://www.recercat.cat:80/handle/2072/152081 How the West "invented" fertility restriction Voigtländer, Nico; Voth, Hans-Joachim Europeans restricted their fertility long before other parts of the world did so. By raising the marriage age of women, and ensuring that a substantial proportion remained celibate, the "European Marriage Pattern" (EMP) reduced childbirths by up to 40%. We analyze the rise of this first socio-economic institution in history that limited fertility through delayed marriage. Our model emphasizes changes in agricultural production following the Black Death. The production of meat, wool, and dairy (pastoral products) increased, while grain production declined. Women had a comparative advantage producing pastoral goods. They often worked as servants in husbandry, where they remained unmarried long after they had left the parental household. In a Malthusian world, this translated into lower population pressure, raising average wages by up to a quarter. The Black Death thus set into motion a virtuous circle of higher wages and fertility decline that underpinned Europe's high per capita incomes. We demonstrate the importance of this effect in a calibration of our model. Mon, 01 Dec 2008 00:00:00 GMT http://www.recercat.cat:80/handle/2072/152081 2008-12-01T00:00:00Z http://www.recercat.cat:80/handle/2072/152080 Banking as an emerging technology: Hoare's Bank, 1702-1742 Temin, Peter; Voth, Hans-Joachim London's financial market underwent dramatic change after 1700. More limited than Paris or Amsterdam in the seventeenth century, London became the leading financial centre in Europe in the eighteenth century. There is an extensive and growing literature on the causes of this change, but comparatively little on the change itself. This article provides detailed information on the operation of the London financial market around 1700 by describing the operations of a nascent London bank. Sun, 01 Oct 2006 00:00:00 GMT http://www.recercat.cat:80/handle/2072/152080 2006-10-01T00:00:00Z http://www.recercat.cat:80/handle/2072/152079 Serial defaults, serial profits: returns to sovereign lending in Habsburg Spain, 1566-1600 Drelichman, Mauricio; Voth, Hans-Joachim Philip II of Spain accumulated debts equivalent to 60% of GDP. He also defaulted four times on his short-term loans, thus becoming the first serial defaulter in history. Contrary to a common view in the literature, we show that lending to the king was profitable even under worst-case scenario assumptions. Lenders maintained long-term relationships with the crown. Losses sustained during defaults were more than compensated by profits in normal times. Defaults were not catastrophic events. In effect, short-term lending acted as an insurance mechanism, allowing the king to reduce his payments in harsh times in exchange for paying a premium in tranquil periods. © 2010 Elsevier Inc. All rights reserved. Sat, 01 Jan 2011 00:00:00 GMT http://www.recercat.cat:80/handle/2072/152079 2011-01-01T00:00:00Z http://www.recercat.cat:80/handle/2072/152078 Design effect and interviewer effects: evidence from the Spanish ESS3-2006 Data Cuxart i Jardí, Anna In 2007 the first Quality Enhancement Meeting on sampling in the European Social Survey (ESS) took place. The discussion focused on design effects and inteviewer effects in face-to-face interviews. Following the recomendations of this meeting the Spanish ESS team studied the impact of interviewers as a new element in the design effect in the response's variance using the information of the correspondent Sample Design Data Files. Hierarchical multilevel and cross-classified multilevel analysis are conducted in order to estimate the amount of responses' variation due to PSU and to interviewers for different questions in the survey. Factor such as the age of the interviewer, gender, workload, training and experience and respondent characteristics such as age, gender, renuance to participate and their possible interactions are also included in the analysis of some specific questions like "trust in politicians" and "trust in legal system". Some recomendations related to future sampling designs and the contents of the briefing sessions are derived from this initial research. Sat, 01 Jan 2011 00:00:00 GMT http://www.recercat.cat:80/handle/2072/152078 2011-01-01T00:00:00Z http://www.recercat.cat:80/handle/2072/152077 The economic effects of the Protestant Reformation: testing the Weber hypothesis in the German Lands Cantoni, Davide Many theories, most famously Max Weber's essay on the "Protestant ethic," have hypothesized that Protestantism should have favored economic development. With their considerable religious heterogeneity and stability of denominational affiliations until the 19th century, the German Lands of the Holy Roman Empire present an ideal testing ground for this hypothesis. Using population figures in a dataset comprising 272 cities in the years 1300-1900, I find no effects of Protestantism on economic growth. The finding is robust to the inclusion of a variety of controls, and does not appear to depend on data selection or small sample size. In addition, Protestantism has no effect when interacted with other likely determinants of economic development. I also analyze the endogeneity of religious choice; instrumental variables estimates of the effects of Protestantism are similar to the OLS results. Wed, 01 Dec 2010 00:00:00 GMT http://www.recercat.cat:80/handle/2072/152077 2010-12-01T00:00:00Z http://www.recercat.cat:80/handle/2072/152076 An enhanced concave program relaxation for choice network revenue management Meissner, Joern; Strauss, Arne; Talluri, Kalyan T. The network choice revenue management problem models customers as choosing from an offer-set, and the firm decides the best subset to offer at any given moment to maximize expected revenue. The resulting dynamic program for the firm is intractable and approximated by a deterministic linear program called the CDLP which has an exponential number of columns. However, under the choice-set paradigm when the segment consideration sets overlap, the CDLP is difficult to solve. Column generation has been proposed but finding an entering column has been shown to be NP-hard. In this paper, starting with a concave program formulation based on segment-level consideration sets called SDCP, we add a class of constraints called product constraints, that project onto subsets of intersections. In addition we propose a natural direct tightening of the SDCP called ?SDCP, and compare the performance of both methods on the benchmark data sets in the literature. Both the product constraints and the ?SDCP method are very simple and easy to implement and are applicable to the case of overlapping segment consideration sets. In our computational testing on the benchmark data sets in the literature, SDCP with product constraints achieves the CDLP value at a fraction of the CPU time taken by column generation and we believe is a very promising approach for quickly approximating CDLP when segment consideration sets overlap and the consideration sets themselves are relatively small. Sat, 01 Jan 2011 00:00:00 GMT http://www.recercat.cat:80/handle/2072/152076 2011-01-01T00:00:00Z http://www.recercat.cat:80/handle/2072/152075 ClubMed? Cyclical fluctuations in the Mediterranean basin Canova, Fabio We investigate the similarities of macroeconomic fluctuations in the Mediterranean basin and their convergence. A model with three geo-political indicators, covering the West, the East and the MENA portions of the Mediterranean, characterizes well the historical experience since the early 1980. Convergence and divergence coexist in the region and are reversible. Except for the West, domestic cyclical fluctuations are still due to national and idiosyncratic causes. The outlook for the next few years looks rosier for the MENA and the East blocks than for the West. Sat, 01 Jan 2011 00:00:00 GMT http://www.recercat.cat:80/handle/2072/152075 2011-01-01T00:00:00Z http://www.recercat.cat:80/handle/2072/152074 Adverse selection, credit, and efficiency: the case of the missing market Martin, Alberto We analyze a standard environment of adverse selection in credit markets. In our environment, entrepreneurs who are privately informed about the quality of their projects need to borrow in order to invest. Conventional wisdom says that, in this class of economies, the competitive equilibrium is typically inefficient. We show that this conventional wisdom rests on one implicit assumption: entrepreneurs can only access monitored lending. If a new set of markets is added to provide entrepreneurs with additional funds, efficiency can be attained in equilibrium. An important characteristic of these additional markets is that lending in them must be unmonitored, in the sense that it does not condition total borrowing or investment by entrepreneurs. This makes it possible to attain efficiency by pooling all entrepreneurs in the new markets while separating them in the markets for monitored loans. Wed, 01 Dec 2010 00:00:00 GMT http://www.recercat.cat:80/handle/2072/152074 2010-12-01T00:00:00Z http://www.recercat.cat:80/handle/2072/152073 Concentration and self-censorship in commercial media Germano, Fabrizio; Meier, Martin Within a simple model of non-localized, Hotelling-type competition among arbitrary numbers of media outlets we characterize quality and content of media under different ownership structures. Assuming advertising-sponsored, profit-maximizing outlets, we show that (i) topics sensitive to advertisers can be underreported (self-censored) by all outlets in the market, (ii) self-censorship increases with the concentration of ownership, (iii) adding outlets, while keeping the number of owners fixed, may even increase self-censorship; the latter result relies on consumers' most preferred outlets being potentially owned by the same media companies. We argue that externalities resulting from self-censorship could be empirically large. Wed, 01 Dec 2010 00:00:00 GMT http://www.recercat.cat:80/handle/2072/152073 2010-12-01T00:00:00Z http://www.recercat.cat:80/handle/2072/152072 The varieties of regional change Glaeser, Edward L.; Ponzetto, Giacomo A. M.; Tobio, Kristina Many metropolitan areas have experienced extreme boom-bust cycles over the past century. Some places, like Detroit, grew enormously as industrial powerhouses and then declined, while other older cities, like Boston, seem quite resilient. Education does a reasonable job of explaining urban resilience. In this paper, we present a simple model where education increases the level of entrepreneurship. In this model, human capital spillovers occur at the city level because skilled workers produce more product varieties and thereby increase labor demand. We decompose empirically the causes of the connection between skills and urban success and find that skills are associated with growth in productivity or entrepreneurship, not with growth in quality of life, at least outside of the West. We also find that skills seem to have depressed housing supply growth in the West, but not in other regions, which supports the view that educated residents in that region have fought for tougher land-use controls. We also present evidence that skills have had a disproportionately large impact on unemployment during the current recession. Tue, 01 Jun 2010 00:00:00 GMT http://www.recercat.cat:80/handle/2072/152072 2010-06-01T00:00:00Z http://www.recercat.cat:80/handle/2072/152071 Intellectual property rights and efficient firm organization Ponzetto, Giacomo A. M. Evidence from policy reforms has shown that a strengthening of patent protection has no significant positive impact on innovation and R&D. Are intellectual property rights justified, if not to provide incentives to innovators? I present a new rationale grounded in the theory of the firm. In a world of incomplete contracts and relationship-specific investments, the efficient organization of production is achieved by allocating property rights. If ownership of intangible assets is not sufficiently protected by the legal system, the structure of the firm is distorted: an entrepreneur must either integrate his suppliers, or risk being displaced by them. In either case efficiency falls, even if innovation is entirely exogenous. My model predicts a greater prevalence of vertical integration where intellectual property rights are weaker. It also accounts for a product cycle in which an integrated firm spins off its suppliers and achieves lower costs after learning the appropriability of its technology. Mon, 01 Dec 2008 00:00:00 GMT http://www.recercat.cat:80/handle/2072/152071 2008-12-01T00:00:00Z http://www.recercat.cat:80/handle/2072/152070 Asymmetric information and trade policy Ponzetto, Giacomo A. M. Economists understand protectionism as a costly mechanism to redistribute from the average citizen to special-interest groups; yet political platforms that deviate from free trade have surprising popular appeal. I present an explanation based on heterogeneous information across citizens whose voting decision has an intensive margin. For each politician and each sector, the optimal trade-policy choice caters to the preferences of those voters who are more likely to be informed of that proposal. An overall protectionist bias emerges because in every industry producers are better informed than consumers. This asymmetry emerges in equilibrium because co-workers share industry-specific knwoledge, and because producers have greater incentives to engage in costly learning about their sector. My model implies that more widespread information about trade policy for an industry is associated with lower protection. Cross-sectoral evidence on U.S. non-tariff barriers and newspaper coverage is consistent with this prediction. Sat, 01 Nov 2008 00:00:00 GMT http://www.recercat.cat:80/handle/2072/152070 2008-11-01T00:00:00Z http://www.recercat.cat:80/handle/2072/152069 Salience theory of choice under risk Bordalo, Pedro; Gennaioli, Nicola; Shleifer, Andrei We present a theory of choice among lotteries in which the decision maker's attention is drawn to (precisely defined) salient payoffs. This leads the decision maker to a context-dependent representation of lotteries in which true probabilities are replaced by decision weights distorted in favor of salient payoffs. By endogenizing decision weights as a function of payoffs, our model provides a novel and unified account of many empirical phenomena, including frequent risk-seeking behavior, invariance failures such as the Allais paradox, and preference reversals. It also yields new predictions, including some that distinguish it from Prospect Theory, which we test. Thu, 01 Apr 2010 00:00:00 GMT http://www.recercat.cat:80/handle/2072/152069 2010-04-01T00:00:00Z http://www.recercat.cat:80/handle/2072/152068 Neglected risks, financial innovation, and financial fragility Gennaioli, Nicola; Shleifer, Andrei; Vishny, Robert W. (Robert Ward) We present a standard model of financial innovation, in which intermediaries engineer securities with cash flows that investors seek, but modify two assumptions. First, investors (and possibly intermediaries) neglect certain unlikely risks. Second, investors demand securities with safe cash flows. Financial intermediaries cater to these preferences and beliefs by engineering securities perceived to be safe but exposed to neglected risks. Because the risks are neglected, security issuance is excessive. As investors eventually recognize these risks, they fly back to safety of traditional securities and markets become fragile, even without leverage, precisely because the volume of new claims is excessive. Thu, 01 Apr 2010 00:00:00 GMT http://www.recercat.cat:80/handle/2072/152068 2010-04-01T00:00:00Z http://www.recercat.cat:80/handle/2072/152067 The political cost of reforms Bonfiglioli, Alessandra; Gancia, Gino This paper formalizes in a fully-rational model the popular idea that politicians perceive an electoral cost in adopting costly reforms with future benefits and reconciles it with the evidence that reformist governments are not punished by voters. To do so, it proposes a model of elections where political ability is ex-ante unknown and investment in reforms is unobservable. On the one hand, elections improve accountability and allow to keep well-performing incumbents. On the other, politicians make too little reforms in an attempt to signal high ability and increase their reappointment probability. Although in a rational expectation equilibrium voters cannot be fooled and hence reelection does not depend on reforms, the strategy of underinvesting in reforms is nonetheless sustained by out-of-equilibrium beliefs. Contrary to the conventional wisdom, uncertainty makes reforms more politically viable and may, under some conditions, increase social welfare. The model is then used to study how political rewards can be set so as to maximize social welfare and the desirability of imposing a one-term limit to governments. The predictions of this theory are consistent with a number of empirical regularities on the determinants of reforms and reelection. They are also consistent with a new stylized fact documented in this paper: economic uncertainty is associated to more reforms in a panel of 20 OECD countries. Fri, 01 Jan 2010 00:00:00 GMT http://www.recercat.cat:80/handle/2072/152067 2010-01-01T00:00:00Z http://www.recercat.cat:80/handle/2072/152066 Structural development accounting Gancia, Gino; Müller, Andreas; Zilibotti, Fabrizio In this paper, we construct and estimate a unified model combining three of the main sources of cross-country income disparities: differences in factor endowments, barriers to technology adoption and the inappropriateness of frontier technologies to local conditions. The key components of our framework are different types of workers (skilled and unskilled labor), distortions to capital accumulation, directed technical change, costly adoption and spillovers from the world technology frontier. Despite its parsimonious parametrization, our empirical model provides a good fit of GDP data for up to 90 countries in 1970 and 2000. We use the model to assess the relative importance of alternative factors affecting the world income distribution and to perform counterfactual experiments. Our results suggests that removing barriers to technology adoption would increase output of the average OECD economy relative to the US frontier from 68.3% to 92.5%. The average non-OECD country would instead increase from 17.4% to 53.8%. Slashing barriers would also lead to higher skill premia in all countries. We also study how globalization can shape income disparities. In the absence of global IPR protection, we find that trade in goods amplifies income disparities, induces skill-biased technology adoption and increases skill premia in the majority of countries. These results are reverted if trade liberalization is coupled with international protection of IPR. Thu, 01 Jul 2010 00:00:00 GMT http://www.recercat.cat:80/handle/2072/152066 2010-07-01T00:00:00Z http://www.recercat.cat:80/handle/2072/152065 Computing congruences of modular forms and Galois representations modulo prime powers Taixes Ventosa, Xavier; Wiese, Gabor This article starts a computational study of congruences of modular forms and modular Galois representations modulo prime powers. Algorithms are described that compute the maximum integer modulo which two monic coprime integral polynomials have a root in common in a sense that is defined. These techniques are applied to the study of congruences of modular forms and modular Galois representations modulo prime powers. Finally, some computational results with implications on the (non-)liftability of modular forms modulo prime powers and possible generalisations of level raising are presented. Fri, 01 Jan 2010 00:00:00 GMT http://www.recercat.cat:80/handle/2072/152065 2010-01-01T00:00:00Z http://www.recercat.cat:80/handle/2072/152064 Congruences between modular forms and lowering the level mod l^n Dieulefait, L. V. (Luis Victor); Taixes Ventosa, Xavier In this article we study the behavior of inertia groups for modular Galois mod l^n representations and in some cases we give a generalization of Ribet's lowering the level result (cf. [Rib90]). Tue, 01 Apr 2008 00:00:00 GMT http://www.recercat.cat:80/handle/2072/152064 2008-04-01T00:00:00Z http://www.recercat.cat:80/handle/2072/152063 The size and distribution of donations: effects of numbers of potential recipients Hogarth, Robin M.; Soyer, Emre Whereas much literature exists on "choice overload," little is known about effects of numbers of alternatives in donation decisions. How do these affect both the size and distribution of donations? We hypothesize that donations are affected by the reputation of recipients and increase with their number, albeit at a decreasing rate. Allocations to recipients reflect different concepts of fairness - "equity" and "equality." Both may be employed but, since they differ in cognitive and emotional costs, numbers of recipients are important. Using a cognitive (emotional) argument, distributions become more uniform (skewed) as numbers increase. In a survey, respondents indicated how they would donate lottery winnings of 50 Euros. Results indicated that more was donated to NGO's that respondents knew better. Second, total donations increased with the number of recipients albeit at a decreasing rate. Third, distributions of donations became more skewed as numbers increased. We comment on theoretical and practical implications. Mon, 01 Nov 2010 00:00:00 GMT http://www.recercat.cat:80/handle/2072/152063 2010-11-01T00:00:00Z http://www.recercat.cat:80/handle/2072/152062 International capital flows and credit market imperfections: a tale of two frictions Martin, Alberto; Taddei,Filippo The financial crisis of 2007-08 has underscored the importance of adverse selection in financial markets. This friction has been mostly neglected by macroeconomic models of financial frictions, however, which have focused almost exclusively on the effects of limited pledgeability. In this paper, we fill this gap by developing a standard growth model with adverse selection. Our main results are that, by fostering unproductive investment, adverse selection: (i) leads to an increase in the economy's equilibrium interest rate, and; (ii) it generates a negative wedge between the marginal return to investment and the equilibrium interest rate. Under financial integration, we show how this translates into excessive capital inflows and endogenous cycles. We also explore how these results change when limited pledgeability is added to the model. We conclude that both frictions complement one another and argue that limited pledgeability exacerbates the effects of adverse selection. Mon, 01 Nov 2010 00:00:00 GMT http://www.recercat.cat:80/handle/2072/152062 2010-11-01T00:00:00Z http://www.recercat.cat:80/handle/2072/152061 Gazelle companies: growth drivers and an evolution analysis Amat Salas, Oriol; Perramon, Jordi (Perramon Costa) Gazelle companies are relevant because they generate much more employment than other companies and deliver high returns to their shareholders. This paper analyzes their behavior in the years of high growth and their evolution in the following years. The main factors that explain their success are competitive advantages based on human resources, innovation, internationalization, the excellence in processes and a conservative financial policy. Nevertheless, as time goes by they can be divided in two groups: a group which continues having growth, but most of them with lower growth rates; and the rest which face great problems or even disappear. The present study identifies several key factors that explain this different evolution. Mon, 01 Nov 2010 00:00:00 GMT http://www.recercat.cat:80/handle/2072/152061 2010-11-01T00:00:00Z http://www.recercat.cat:80/handle/2072/152060 Network Revenue Management with Product-Specific No-Shows Kunnumkal, Sumit; Talluri, Kalyan T.; Topaloglu, Huseyin Revenue management practices often include overbooking capacity to account for customers who make reservations but do not show up. In this paper, we consider the network revenue management problem with no-shows and overbooking, where the show-up probabilities are specific to each product. No-show rates differ significantly by product (for instance each itinerary/fare combination for an airline) as sale restrictions and the demand characteristics vary by product. However, models that consider no-show rates by each individual product are difficult to handle as the state-space (or the variable space in approximations) increases significantly. In this paper we propose a randomized linear program to jointly make the capacity control and overbooking decisions with product-specific no-shows. We establish that our formulation gives an upper bound on the optimal expected total profit and that this upper bound is tighter than a deterministic linear programming bound that appears in the existing literature. We describe how the randomized linear program can be used to obtain a bid price control policy. Numerical experiments indicate that our approach is fast, able to scale to industrial-size problems, and can provide significant improvements over standard benchmark methods. Fri, 01 Oct 2010 00:00:00 GMT http://www.recercat.cat:80/handle/2072/152060 2010-10-01T00:00:00Z http://www.recercat.cat:80/handle/2072/152059 Does money matter in shaping domestic business cycles? An international investigation (with appendices) Canova, Fabio; Menz, Tobias We study the contribution of money to business cycle fluctuations in the US, the UK, Japan, and the Euro area using a small scale structural monetary business cycle model. Constrained likelihood-based estimates of the parameters are provided and time instabilities analyzed. Real balances are statistically important for output and inflation fluctuations. Their contribution changes over time. Models giving money no role provide a distorted representation of the sources of cyclical fluctuations, of the transmission of shocks and of the events of the last 40 years. Wed, 01 Jul 2009 00:00:00 GMT http://www.recercat.cat:80/handle/2072/152059 2009-07-01T00:00:00Z http://www.recercat.cat:80/handle/2072/152058 The dynamics of US inflation: can monetary policy explain the changes? Canova, Fabio; Ferroni, Filippo We investigate the relationship between monetary policy and inflation dynamics in the US using a medium scale structural model. The specification is estimated with Bayesian techniques and fits the data reasonably well. Policy shocks account for a part of the decline in inflation volatility; they have been less effective in triggering inflation responses over time and qualitatively account for the rise and fall in the level of inflation. A number of structural parameter variations contribute to these patterns. Tue, 01 Jun 2010 00:00:00 GMT http://www.recercat.cat:80/handle/2072/152058 2010-06-01T00:00:00Z http://www.recercat.cat:80/handle/2072/152057 Japan's Lost Decade: Does Money have a Role? Canova, Fabio; Menz, Tobias We study the contribution of the stock of money to the macroeconomic outcomes of the 1990s in Japan using a small scale structural model. Likelihood-based estimates of the parameters are provided and time stabilities of the structural relationships analyzed. Real balances are statistically important for output and inflation fluctuations and their role has changed over time. Models which give money no role give a distorted representation of the sources of cyclical fluctuations. The severe stagnation and the long deflation are driven by different causes. Sun, 01 Nov 2009 00:00:00 GMT http://www.recercat.cat:80/handle/2072/152057 2009-11-01T00:00:00Z http://www.recercat.cat:80/handle/2072/152056 Retirement incentives, individual heterogeneity and labour transitions of employed and unemployed workers García-Pérez, J. Ignacio; Jimenez-Martin, Sergi; Sánchez-Martín, Alfonso R. In this paper we analyze the sensitivity of the labour market decisions of workers close to retirement with respect to the incentives created by public regulations. We improve upon the extensive prior literature on the effect of pension incentives on retirement in two ways. First, by modeling the transitions between employment, unemployment and retirement in a simultaneous manner, paying special attention to the transition from unemployment to retirement (which is particularly important in Spain). Second, by considering the influence of unobserved heterogeneity in the estimation of the effect of our (carefully constructed) incentive variables. Using administrative data, we find that, when properly defined, economic incentives have a strong impact on labour market decisions in Spain. Unemployment regulations are shown to be particularly influential for retirement behaviour, along with the more traditional determinants linked to the pension system. Pension variables also have a major bearing on both workers' reemployment decisions and on the strategic actions of employers. The quantitative impact of the incentives, however, is greatly affected by the existence of unobserved heterogeneity among workers. Its omission leads to sizable biases in the assessment of the sensitivity to economic incentives, a finding that has clear consequences for the credibility of any model-based policy analysis. We confirm the importance of this potential problem in one especially interesting instance: the reform of early retirement provisions undertaken in Spain in 2002. We use a difference-in-difference approach to measure the behavioural reaction to this change, finding a large overestimation when unobserved heterogeneity is not taken into account. Fri, 01 Oct 2010 00:00:00 GMT http://www.recercat.cat:80/handle/2072/152056 2010-10-01T00:00:00Z http://www.recercat.cat:80/handle/2072/152055 What Do Outside Experts Bring To A Committee? Evidence From The Bank of England Hansen, Stephen Eliot; McMahon, Michael We test whether outside experts have information not available to insiders by using the voting record of the Bank of England's Monetary Policy Committee. Members with more private information should vote more often against conventional wisdom, which we measure as the average belief of market economists about future interest rates. We find evidence that external members indeed have information not available to internals, but also use a quasi-natural experiment to show they may exaggerate their expertise to obtain reappointment. This implies that an optimal committee, even outside monetary policy, should potentially include outsiders, but needs to manage career concerns. Fri, 01 Oct 2010 00:00:00 GMT http://www.recercat.cat:80/handle/2072/152055 2010-10-01T00:00:00Z http://www.recercat.cat:80/handle/2072/152054 Credit Constraints, Firms' Precautionary Investment, and the Business Cycle Pérez Orive, Ander This paper studies the macroeconomic implications of firms' precautionary investment behavior in response to the anticipation of future financing constraints. Firms increase their demand for liquid and safe investments in order to alleviate future borrowing constraints and decrease the probability of having to forego future profitable investment opportunities. This results in an increase in the share of short-term projects that produces a temporary increase in output, at the expense of lower long-run investment and future output. I show in a calibrated model that this behavior is at the source of a novel and powerful channel of shock transmission of productivity shocks that produces short-run dampening and long-run propagation. Furthermore, it can account for the observed business cycle patterns of the aggregate and firm-level composition of investment. Wed, 01 Sep 2010 00:00:00 GMT http://www.recercat.cat:80/handle/2072/152054 2010-09-01T00:00:00Z http://www.recercat.cat:80/handle/2072/152053 The Electric Revolution in Latin America Tafunell, Xavier Latin America participated in the electric revolution which profoundly transformed the most developed Western economies between 1880 and 1930. The electrification of Latin America began relatively soon after these economies, but it was incapable of keeping up with them. Public electric lighting was introduced early in the big Latin American cities, where electric trams started running at almost the same time as in Europe, and electricity spread rapidly in the mining sector. In the most advanced countries or areas in the region, the manufacturing industry substituted the steam engine with the electric motor, following the example of industry in the United States and Europe. Nevertheless, towards 1930 electricity consumption per inhabitant for Latin America was far below that of the more advanced economies, and only the Latin American countries which lead the process of electrification had reached levels of electric consumption that were similar to those of the late industrialised European countries. One of the most striking features of the electric revolution in Latin America is rooted precisely in the enormous national differences. These differences are indicative of the great economic inequalities existing in the heart of the region and these nations' highly diverse capacity for economic modernisation. Wed, 01 Sep 2010 00:00:00 GMT http://www.recercat.cat:80/handle/2072/152053 2010-09-01T00:00:00Z http://www.recercat.cat:80/handle/2072/152052 Estimating Cross-Industry Cross-Country Models Using Benchmark Industry Characteristics Ciccone, Antonio; Papaioannou, Elias International industry data permits testing whether the industry-specific impact of cross-country differences in institutions or policies is consistent with economic theory. Empirical implementation requires specifying the industry characteristics that determine impact strength. Most of the literature has been using US proxies of the relevant industry characteristics. We show that using industry characteristics in a benchmark country as a proxy of the relevant industry characteristics can result in an attenuation bias or an amplification bias. We also describe circumstances allowing for an alternative approach that yields consistent estimates. As an application, we reexamine the influential conjecture that financial development facilitates the reallocation of capital from declining to expanding industries. Wed, 01 Sep 2010 00:00:00 GMT http://www.recercat.cat:80/handle/2072/152052 2010-09-01T00:00:00Z