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Abstract:
The article examines the response of equity markets in Brazil, Chile and Mexico to stock prices in the US, Spain and four major European countries during three sub-periods: 1988 to 1994, 1995 to 1998, and 1999 to 2004. The analysis employs VAR models. Our results appear to depend on the openness of the country in terms of international trade. We find that there is an increasing impact of Spain on the equity markets. The increasing linkages between Spain and these three countries (such as more trade and foreign direct investment), in particular in the case of Brazil, may explain the results.

Emerging Markets, Latin America, Spain, Stock Markets Interdependence, VAR

Abstract:
Mexican cities along the US-Mexico border, especially Cd. Juarez, became notorious for supposedly presenting abnormally high levels of femicide. Nonetheless, evaluation of data ranging from 1998 to 2003 shows that after factoring in the effects of male homicide, femicide rates in the region, including Cd. Juarez, are consistent with rates in non-border Mexican cities in the same states. Femicide rates in Cd. Juarez are lower than in Houston and Ensenada and as a share of overall homicide rates they are typically lower than in other cities considered in the study. These results challenge the literature on US-Mexico border femicide.

Crime, Gender Violence, Violence against Women, Homicide, Femicide, Border, Mexico, Juarez

Abstract:
This paper presents an asymptotically optimal time interval selection criterion for the long-run correlation block estimator (Bartlett kernel estimator) based on the Newey-West and Andrews-Monahan approaches. An alignment criterion that enhances finite-sample performance is also proposed. The procedure offers an optimal yet unobtrusive alternative to the common practice in finance and economics of arbitrarily choosing time intervals or lags in correlation studies. A Monte Carlo experiment using parameters derived from Dow Jones returns data confirms that the procedures are MSE-superior to typical alternatives such as aggregation over arbitrary time intervals, parametric VAR estimation, and Newey-West covariance matrix estimation with automatic lag selection.

Long-Run Correlation, Bartlett, Lag Selection, Time Interval, Alignment, Newey-West, Andrews-Monahan

Abstract:
In this paper we address the following important question: would a fully integrated world economy eliminate the widely reported decline in the terms of trade of primary commodities? We address the question by looking at the terms of trade (ToT) within the US (a highly integrated economy). Our findings show two results. First, US internal real commodities' ToT over the 1947-1998 period experienced slowly declining but significant trends. Second, once we control for the effect of US prices on international internal ToT, we find a long-run relationship between the US and international relative prices. These findings support the view that the decline of commodities' terms of trade bears no relationship with the process of globalisation. This seems to indicate that, if world ToT behaved as the US internal ToT, neither increased integration nor protectionist measures would eliminate this trend.

Economic Integration, Globalisation, Prebisch-Singer

Abstract:
It is well known from nonlinear aggregation theory that distributions play a central role in the determination of aggregate relations. This paper establishes a bridge between the aggregation and the inequality and growth literature by applying a log-linear aggregation method to a simple heterogeneous AK growth model. The aggregation effect is explicitly captured in the growth equation by the changes of the mean logarithmic deviation (MLD or Theil's second measure) of the income, implying that increases in income inequality may be unambiguously associated with temporary increases in a country's growth rate, in agreement with the empirical findings of Forbes (AER, 2000). Consequently, empirical studies of the long-run effects of income inequality may suffer from aggregation bias if the temporary effects of the MLD changes are not considered. The accelerated growth episodes observed in Brazil and China demonstrate that the increase in income inequality may have resulted in substantial temporary increases in the aggregate growth rates experienced by those countries.

Inequality, Growth, Income Distribution, Aggregation, Heterogeneity, AK Model, Brazil, China

Abstract:
During the last two decades of the twentieth century, Brazil went through a sequence of failed stabilization plans that tried to cope with an enduring hyperinflation. This paper uses a money demand model to evaluate monetary policies during those episodes. Consistency between money supply and expected conditional money demand growth rates is considered for each plan. It is shown that unsuccessful programs were marked by excessive liquidity. The results not only suggest that monetary mismanagement led to the failure of the plans, but also that the excessive liquidity could have been predicted.

Money Demand, Money Supply, Monetary Policy, Inflation, Stabilization, Brazil

Abstract:
In this paper we address the following question: would a fully integrated world economy eliminate the widely reported decline in the terms of trade of primary commodities? We address the question by looking at the terms of trade within the US (a highly integrated economy). Our findings show two results. First, US internal real commodities' terms of trade over the 1947-1998 period experienced slowly declining but significant trends. Second, once we control for the effect of US prices on international terms of trade, we find a long-run relationship between the US and international relative prices. These findings support the view that the decline of commodities' terms of trade bears no relationship with the process of globalisation. This seems to indicate that, if world terms of trade behaved as the US terms of trade, neither increased integration nor protectionist measures would eliminate this trend.

Economic integration, Globalisation, Prebisch-Singer

Abstract:
In this study, we examine the response of Latin American stock markets to movements in European stock markets. Our results vary depending on the openness of the country in terms of international trade. We find evidence that Latin American stock markets are affected by Spanish stock market. Additionally, during the second and third-periods (1995 to 1998 and 1999 to 2004) Spain appears to have much stronger ties (such as more trade) with Brazil and Chile, and this might explain why Brazil and Chile are affected from Spain and not from the other European markets. This study uncovers two important findings. First, Spain has an effect on Latin American markets but these responses are not homogeneous across markets. Second, the magnitude of Spain's influence is different in each of the three sub-periods under study.

Emerging Markets, Latin America, Stock Markets Interdependence

Abstract:
The article evaluates crime trends in south border American and Mexican sister cities using panel data analysis. The region offers a unique assessment opportunity since cities are characterized by shared cultural and historical legacies, institutional heterogeneity, and disparate crime outcomes. Higher homicide rates on the Mexican side seem to result from deficient law enforcement. Higher population densities in Mexican cities appear to also be a factor. Cultural differences, on the other hand, have been decreasing, and apparently do not play a substantial role. The homicide rate dynamics show opportunistic clustering of criminal activity in Mexican cities, while no clustering is found on the American side. Crime also appears to spill from Mexican cities into American cities. Homicide rates on both sides of the border have been falling faster than countrywide rates, leading, in the case of American cities, and against stereotypes, to rates below the countrywide rate in 2001.

Crime, South Border, Sister Cities, Law Enforcement, Justice, Immigration, Mexico, Panel Data

Abstract:
This paper uses a dynamic general equilibrium model to study the economic effects of bank account debits (BAD) taxation. Australia and various Latin American countries have levied or levy BAD taxes. Aspects such as financial disintermediation, market illiquidity, and impacts on dividend and interest rates are considered. Part of the BAD tax revenue may be fictitious, due to increased interest payments on government debt. The Brazilian BAD tax (CPMF) experience is evaluated. The empirical analysis confirms some theoretical predictions. Incidence base over GDP appears to be sensitive to the tax rate, possibly engendering a Laffer curve. The tax may also cause real interest rates to increase. Furthermore, the deadweight losses are relatively large, even if revenues are small. The theoretical and empirical results suggest that the BAD tax is not adequate for revenue collection.

Bank Account Debits Tax, BAD Tax, Financial Transactions Tax, FTT, Currency Transaction Tax, CTT, Automated Payment Transaction Tax, APT Tax, CPMF, Disintermediation, Illiquidity

Abstract:
A practical aggregation method for heterogeneous log-linear functions is presented. Inequality measures are employed in the construction of an exact representation of the aggregate behavior of an economy formed by heterogeneous log-linear agents. The exact aggregate representation derived here is relatively simple and intuitive. It can be used thereafter in applied issues and in teaching, easing the solving and understanding of aggregation problems. Three macroeconomic applications are discussed: the aggregation of the Lucas supply function, the time-inconsistent behavior of an egalitarian social planner facing heterogeneous discount rates, and the case of a simple heterogeneous growth model. The latter application, which leads to a decomposition of growth rates of the mean into means of growth rates plus inequality changes, is explored empirically. Aggregate CPS data is used to show that, when inequality changes are taken in consideration, the slowdown that followed the first oil shock appears to be worse than usually thought. Additionally, the new economy growth resurgence seems less impressive when compared to the growth performance of the period that preceded the first oil shock.

log-linear, aggregation, heterogeneity, inequality, household income, income distribution, heterogeneous growth

Abstract:
This paper aims to study the economic impacts of the CPMF in the Brazilian economy and is divided in three parts. In the first part, the CPMF is analyzed under the scope of economic theory. In the second part, the international experience with taxes similar to the CPMF (BAD taxes) is discussed. In the third part, the Brazilian experience is analyzed, considered the contributions of the two previous parts. According to the economic theory, the CPMF should increase real interest rates unproportionally to other taxes, because of the inclusion of asset turnovers in its incidence base. This conceptual deficiency would negatively affect, unproportionally to its tax collection, the level of capital, production and wages. It would also cause the increase of government spending through interest payments, implying that a part of the revenue is fictitious. The CPMF would cause disintermediation and illiquidity in the financial markets, hindering the resurgence of credit in Brazil. The tax collection would follow a Laffer curve, with high deadweight losses, particularly when compared to its small revenue. Empirical results confirm that those conclusions may be valid in the Brazilian case. The economic theory, the international experience and the Brazilian evidence reveal, therefore, that the CPMF presents significant deficiencies as a tax collection instrument.

CPMF, ITF, IDB