|
Economic Research Working Papers
Working papers from the Federal
Reserve Bank of Dallas are preliminary drafts circulated
for professional comment.
2008
| 2007
| 2006
| 2005
| 2004
| 2003
| 2002
| 2001
| 2000
| 1999
| 1998
and earlier
2001 Working Papers
0110
Are
Labor Markets Segmented in Argentina? A Semiparametric
Approach 
Center for Latin American Economics Working Paper 0701
Sangeeta Pratap and Erwan Quintin
We use data from Argentina's
household survey to evaluate the hypothesis that informal
workers would expect higher wages in the formal sector.
Using various definitions of informal employment we
find that, on average, formal wages are higher than
informal wages. Parametric tests suggest that a formal
premium remains after controlling for individual and
establishment characteristics. However, this approach
suffers from several econometric problems, which we
address with semiparametric methods. The resulting formal
premium estimates prove either small and insignificant,
or negative. In other words, we find no evidence that
Argentina's labor markets are segmented along formal/informal
lines.
0109
Limited
Enforcement and the Organization of Production
Center for Latin American Economics Working Paper 0601
Erwan Quintin
This paper describes a dynamic,
general equilibrium model designed to assess whether
contractual imperfections in the form of limited enforcement
can account for international differences in the organization
of production. In the model, limited enforcement constrains
some agents to operate establishments below their optimal
scale. As a result, economies where contracts are enforced
more efficiently tent to be richer and emphasize large
scale production. Calibrated simulations of the model
reveal that these effects can be large and account for
a sizeable part of the observed differences in the size
distribution of manufacturing establishments between
Mexico and the United States.
0108
Banking
and Finance in Argentina in the Period 1900–35
Center for Latin American Economics Working Paper 0501
Leonard Nakamura and Carlos E. J. M. Zarazaga
From 1900 to 1935, Argentina
evolved from an economy highly dependent on external,
primarily British, finance to one more nearly self-sufficient.
We examine the failure of domestic finance to adequately
fill the void left by the decline of London and the
breakdown of the world financial system in the interwar
period, when neither the Buenos Aires Bolsa nor the
private domestic banks developed rapidly enough to fully
replace British investors as efficient channels for
financing private investment. One consequence is that
Argentine investable funds were increasingly concentrated
in a single institution, the Banco de la Nacion Argentina
(BNA), creating a lopsided financial structure that
was vulnerable to rent seeking and to authoritarian
capture. Nevertheless, several measures, including gold
reserves, interest rates, money supply, bank credit,
and the market capitalization of domestic corporations,
attest to the very high level of financial development
achieved by Argentina.
0107
Argentina's
Lost Decade
Center for Latin American Economics Working Paper 0401
Finn E. Kydland and Carlos E. J. M. Zarazaga
Argentina suffered a great depression
in the 1980s that was as severe as the Great Depression
experienced in the United States and Germany in the
interwar period. Our paper examines this great depression
from the perspective of growth theory, taking total
factor productivity as exogenous. Overall, the predictions
of the model are encouraging for the view that neoclassical
growth theory can account for the main growth features
of Argentina's lost decade and the subsequent recovery
in the 1990s.
0106
Did
NAFTA Really Cause Mexico’s High Maquiladora
Growth?
Center for Latin American Economics Working Paper 0301
William C. Gruben
Although Mexico's maquiladora
or in-bond plant system is an important and well-recognized
component of Mexico-U.S. trade, the connection between
the acceleration in maquiladora
growth and NAFTA is less clearly understood. A broad
cross-section of maquiladora
observers—including journalists, political activists,
industry analysts, and professors—argue that Mexico's
maquiladoras have been strongly
influenced by NAFTA and have grown rapidly as a result.
There are reasons to wonder if these conjectures are
correct. I test for the contribution of NAFTA to fluctuations
in maquiladora employment and
find evidence that no such connection exists. Instead,
maquiladoras' post-NAFTA growth
is connected to changes in Mexican wages relative to
those in Asia and in the United States, and to fluctuations
in U.S. industrial production. Indeed, for every 1 percent
change in U.S. industrial production I find a change
in maquiladora employment of
between 1.2 percent and 1.3 percent. This connection
is consistent with declining maquiladora
employment in 2001, as U.S. industrial production has
fallen, but is not consistent with the NAFTA-caused-maquiladora
growth story typically found in newspapers and magazines.
0105
Dollarization
and Monetary Unions: Implementation Guidelines
Dolarización
y uniones monetarias: pautas de implementación
Center for Latin American Economics Working Paper 0201
William C. Gruben, Mark A. Wynne, and Carlos E. J. M.
Zarazaga
0104
Capital
Account Liberalization and Disinflation in the 1990s
Center for Latin American Economics Working Paper 0101
William C. Gruben and Darryl McLeod
As a way of addressing arguments
in the literature (Rodrik, 1998) that the act of capital
account liberalization leads to inflation, we present
a simple theoretical model in which capital account
liberalization raises the absolute value of the elasticity
of money demand because agents have broader money holding
options than under a closed capital account. The central
bank maximizes seigniorage, balancing the benefits of
higher inflation against potential losses of foreign
currency reserves. The optimum seigniorage-maximizing
rate of inflation falls when capital controls are loosened,
as a result of the impact of liberalization on the elasticity
of money demand. In a series of OLS and instrumental
variables models that are heavily influenced by the
work of Romer (1993) on current account openness and
Grilli and Milesi-Ferretti (1995) on capital account
openness, we test the impact of the act capital account
liberalization (and many other factors) on inflation
and find results that are consistent with our simple
theoretical model and that are inconsistent with the
recent work of Rodrik (1998).
0103
Do
Amnesty Programs Encourage Illegal Immigration? Evidence
from IRCA
Pia M. Orrenius and Madeline Zavodny
This paper examines whether allowing
certain undocumented immigrants to legalize their status
leads to additional illegal immigration. We focus on
the effects of the 1986 Immigration Reform and Control
Act, which granted amnesty to over 3 million undocumented
immigrants. We find that apprehensions of persons attempting
to illegally cross the U.S.-Mexico border declined immediately
following passage of the law but returned to normal
levels during the period when illegal immigrants could
file for amnesty and the years thereafter. Our findings
suggest that the amnesty program did not change long-run
patterns of illegal immigration from Mexico.
0102
Energy
Prices and Aggregate Economic Activity: An Interpretative
Survey
forthcoming, Quarterly Review of Economics and Finance
Stephen P. A. Brown and Mine K. Yücel
In this paper, we survey the
theory and evidence linking fluctuations in energy prices
to aggregate economic activity. We then briefly examine
the implications of this research for both monetary
policy and energy policy in response to oil price shocks.
Research seems to provide relatively reliable guidance
for monetary policy. Because the precise channels through
which oil price shocks affect economic activity are
only partially known, however, research offers less
guidance about how energy policy should cope with oil
price shocks.
0101
What
Goes Down Must Come Up: Understanding Time-Variation
in the NAIRU
Evan F. Koenig
The behavior of inflation during
the 1990s is consistent with the predictions of a model
that assumes a constant long-run NAIRU and a constant
long-run markup of output prices over unit labor costs.
Within this framework, inflation fell during the late
1990s-despite low unemployment-chiefly because an unusually
high markup allowed firms to increase wages without
raising prices. As the markup returns to normal, the
recent unusually favorable unemployment-inflation trade-off
can be expected to deteriorate. More generally, movements
in the markup induce persistent but ultimately temporary
variation in the NAIRU.
2001 Working Papers
0701 (Economic Research Working
Paper 0110)
Are
Labor Markets Segmented in Argentina? A Semiparametric
Approach
Sangeeta Pratap and Erwan Quintin
We use data from Argentina's
household survey to evaluate the hypothesis that informal
workers would expect higher wages in the formal sector.
Using various definitions of informal employment we
find that, on average, formal wages are higher than
informal wages. Parametric tests suggest that a formal
premium remains after controlling for individual and
establishment characteristics. However, this approach
suffers from several econometric problems, which we
address with semiparametric methods. The resulting formal
premium estimates prove either small and insignificant,
or negative. In other words, we find no evidence that
Argentina's labor markets are segmented along formal/informal
lines.
0601 (Economic Research Working
Paper 0109)
Limited
Enforcement and the Organization of Production
Erwan Quintin
This paper describes a
dynamic, general equilibrium model designed to assess
whether contractual imperfections in the form of limited
enforcement can account for international differences
in the organization of production. In the model, limited
enforcement constrains some agents to operate establishments
below their optimal scale. As a result, economies where
contracts are enforced more efficiently tent to be richer
and emphasize large scale production. Calibrated simulations
of the model reveal that these effects can be large
and account for a sizeable part of the observed differences
in the size distribution of manufacturing establishments
between Mexico and the United States.
0501 (Economic Research Working
Paper 0108)
Banking
and Finance in Argentina in the Period 1900–35
Leonard Nakamura and Carlos E. J. M. Zarazaga
From 1900 to 1935, Argentina
evolved from an economy highly dependent on external,
primarily British, finance to one more nearly self-sufficient.
We examine the failure of domestic finance to adequately
fill the void left by the decline of London and the
breakdown of the world financial system in the interwar
period, when neither the Buenos Aires
Bolsa nor the private domestic banks developed
rapidly enough to fully replace British investors as
efficient channels for financing private investment.
One consequence is that Argentine investable funds were
increasingly concentrated in a single institution, the
Banco de la Nacion Argentina
(BNA), creating a lopsided financial structure that
was vulnerable to rent seeking and to authoritarian
capture. Nevertheless, several measures, including gold
reserves, interest rates, money supply, bank credit,
and the market capitalization of domestic corporations,
attest to the very high level of financial development
achieved by Argentina.
0401 (Economic Research Working
Paper 0107)
Argentina's
Lost Decade
Finn E. Kydland and Carlos E. J. M. Zarazaga
Argentina suffered a great
depression in the 1980s that was as severe as the Great
Depression experienced in the United States and Germany
in the interwar period. Our paper examines this great
depression from the perspective of growth theory, taking
total factor productivity as exogenous. Overall, the
predictions of the model are encouraging for the view
that neoclassical growth theory can account for the
main growth features of Argentina's lost decade and
the subsequent recovery in the 1990s.
0301 (Economic Research Working
Paper 0106)
Did
NAFTA Really Cause Mexico’s High Maquiladora
Growth?
William C. Gruben
Although Mexico's maquiladora
or in-bond plant system is an important and well-recognized
component of Mexico–U.S. trade, the connection
between the acceleration in maquiladora
growth and NAFTA is less clearly understood. A broad
cross-section of maquiladora
observers—including journalists, political activists,
industry analysts, and professors—argue that Mexico's
maquiladoras have been strongly
influenced by NAFTA and have grown rapidly as a result.
There are reasons to wonder if these conjectures are
correct. I test for the contribution of NAFTA to fluctuations
in maquiladora employment and
find evidence that no such connection exists. Instead,
maquiladoras' post-NAFTA growth
is connected to changes in Mexican wages relative to
those in Asia and in the United States, and to fluctuations
in U.S. industrial production. Indeed, for every 1 percent
change in U.S. industrial production I find a change
in maquiladora employment of
between 1.2 percent and 1.3 percent. This connection
is consistent with declining maquiladora
employment in 2001, as U.S. industrial production has
fallen, but is not consistent with the NAFTA-caused-maquiladora
growth story typically found in newspapers and magazines.
0201 (Economic Research Working
Paper 0105)
Dollarization
and Monetary Unions: Implementation Guidelines
Dolarización
y uniones monetarias: pautas de implementación
William C. Gruben, Mark A. Wynne, and Carlos E. J. M.
Zarazaga
0101 (Economic Research Working
Paper 0104)
Capital
Account Liberalization and Disinflation in the 1990s
William C. Gruben and Darryl McLeod
As a way of addressing
arguments in the literature (Rodrik, 1998) that the
act of capital account liberalization leads to inflation,
we present a simple theoretical model in which capital
account liberalization raises the absolute value of
the elasticity of money demand because agents have broader
money holding options than under a closed capital account.
The central bank maximizes seigniorage, balancing the
benefits of higher inflation against potential losses
of foreign currency reserves. The optimum seigniorage-maximizing
rate of inflation falls when capital controls are loosened,
as a result of the impact of liberalization on the elasticity
of money demand. In a series of OLS and instrumental
variables models that are heavily influenced by the
work of Romer (1993) on current account openness and
Grilli and Milesi-Ferretti (1995) on capital account
openness, we test the impact of the act capital account
liberalization (and many other factors) on inflation
and find results that are consistent with our simple
theoretical model and that are inconsistent with the
recent work of Rodrik (1998). |
