Mário Jorge Cardoso de Mendonça

The Determinants of Direct Foreign Investment in Developing Countries

Basically, foreign direct investments (FDI) determinants may be referred to firms and country characteristics - push factors - or to locational factors - pull factors. Most of theoretical literature relative to multinational enterprises in the last forty years, has emphasized firms advantages, giving no weight to macroeconomic factors. The purpose of this paper is to estimate, based on panel data of 33 countries for the period 1975-2000, the main determinants of FDI inflows in developing economies. Factors as size and pace of growth of economic activity, the level of labor qualification, friendly policies towards foreign capital, country risk and stock market performance are the main determinants of FDI. In addition, a causality test, in the special context of panel data, has shown that FDI does not cause economic growth. On the contrary, economic growth causes FDI.

A study on the valuing of biodiversity: the case of three endangered species in Brazil

Abstract Using the analysis developed by Montgomery et al. (J. Environ. Econ. Manage., 1999) as a starting point, this study establishes the bounds limits to the management price for the conservation of biodiversity. This means, how much the household would be willing to pay to finance a conservation program for three endangered species in Brazil. This program must be restricted to the change in habitat with regard to public benefits associated with biodiversity. Here, this increment in habitat means the marginal benefit derived from the increase in the size of the population. An important point of this paper is that we work with the robust instrument called the Population Viability Analysis (PVA) that estimates the survival probability of the species in the future given a current exogenous disturbance. We show that the results are very sensitive to the parameters of the model, mainly the populations current size and the degree of diversity. We also show that the total amount spent on conservation in Brazil is below the socially optimal level, considering only the three species analyzed in this study.

Monetary policy regimes in Brazil

This article estimates the monetary policy rule followed by the Brazilian Central Bank for setting its main policy instrument, the SELIC rate, for the period after the Real Plan. In order to overcome the uncertainty over the dates at which changes in parameters occurred, this paper uses regime-dependent-switching probabilities according to a hidden Markov chain to model possible deviations from a simple linear reaction function. From July 1996 to January 2006 the Brazilian monetary policy can be fully characterized by four policy regimes. The changes in monetary policy in this period are best described by recurring regime changes, instead of once-and-for-all shifts. We have identified substantial differences in the way monetary policy was conducted in the subperiods before and after 1999, when the Brazilian exchange rate policy regime changed from crawling peg to free-floating. At each of these subperiods there are two recurring regimes and the two regimes of one subperiod differ from the two regimes of the other.

MEASURING MONETARY POLICY STANCE IN BRAZIL

In this article we use the theory of conditional forecasts to develop a new Monetary Conditions Index (MCI) for Brazil and compare it to the ones constructed using the methodologies suggested by Bernanke and Mihov (1998) and Batini and Turnbull (2002). We use Sims and Zha (1999) and Waggoner and Zha (1999) approaches to develop and compute Bayesian error bands for the MCIs. The new indicator we develop is called the Conditional Monetary Conditions Index (CMCI) and is constructed using, alternatively, Structural Vector Autoregressions (SVARs) and Forward-Looking (FL) models. The CMCI is the forecasted output gap, conditioned on observed values of the nominal interest rate (the Selic rate) and of the real exchange rate. We show that the CMCI, when compared to the MCI developed by Batini and Turnbull (2002), is a better measure of monetary policy stance because it takes into account the endogeneity of variables involved in the analysis. The CMCI and the Bernanke and Mihov MCI (BMCI), despite conceptual differences, show similarities in their chronology of the stance of monetary policy in Brazil. The CMCI is a smoother version of the BMCI, possibly because the impact of changes in the observed values of the Selic rate is partially compensated by changes in the value of the real exchange rate. The Brazilian monetary policy, in the 2000:9- 2005:4 period and according to the last two indicators, has been expansionary near election months. Neste artigo utiliza-se a teoria das previsoes condicionais para o desenvolvimento de um novo Indice de Condicoes Monetarias [Monetary Conditions Index (MCI)] para o Brasil, comparando-o com os indices obtidos seguindo as metodologias sugeridas por Bernanke e Mihov (1998) e Batini e Turnbull (2002). Adicionalmente, desenvolvem-se e calculam-se intervalos de confianca bayesianos para os MCIs, empregando-se a abordagem proposta por Sims e Zha (1999) e Waggoner e Zha (1999). O novo indicador desenvolvido e chamado de Indice de Condicoes Monetarias Condicional [Conditional Monetary Conditionals Index (CMCI)], e e construido utilizando-se alternativamente os modelos de Auto-regressao Vetorial Estrutural [Structural Vector Autoregressions (SVARs) e Antecipativo [Forward-Looking (FL). O CMCI e a previsao do hiato do produto, condicionada aos valores observados da taxa de juros nominal (taxa Selic) e da taxa de câmbio real. Mostra-se que o CMCI, comparado ao MCI desenvolvido por Batini e Turnbull (2002), e um melhor indicador do estado da politica monetaria porque leva em consideracao a endogeneidade das variaveis envolvidas na analise. O CMCI e o MCI Bernanke-Mihov (BMCI), apesar das diferencas conceituais, estabelecem uma cronologia semelhante para o estado da politica monetaria no Brasil. O CMCI e uma versao suavizada do BMCI, provavelmente porque o impacto de mudancas nos valores observados da taxa Selic e parcialmente compensado por mudancas no valor da taxa de câmbio real. De acordo com o CMCI e o BMCI, no periodo entre setembro de 2000 e abril de 2005, a politica monetaria brasileira tem sido expansionista nos meses proximos as eleicoes.

The Effects of Monetary Policy in Brazil: Results from Agnostic Identification

This article investigates the effects of monetary policy shocks in the Brazilian economy through the period of July/1999 to January/2008. We follow the procedures suggested by Uhlig (2005) to verify the impact of the monetary policy shock over both inflation and output. The main consequences of a contractionary monetary policy shock are: instantaneous real GDP declines that are large in magnitude; and a drop of 0.4 percent in the price index (IPCA) during the first five months after the shock.

Evaluating the Fiscal Policy Effects in Brazil Using Agnostic Identification

This article investigates the effects of fiscal policy shock in the Brazilian economy using quarterly data during the period between January/1995 and December/2007. We follow the agnostic procedure suggested by Monford and Uhlig (2005) to verify separately the impact of the unexpected positive impulse of current government spending and the net public revenues on some variables of the economy. The main advantages of this method regard it allows to isolate the fiscal impulse from the movements that comes from business cycle and the management of monetary policy. We find that in response of an expansionary shock of public expenditures the private consumption increases surely. It can indicate that there is some kind of crowding out effect with a reduction of private investment because the GDP contemporaneous decreases with 77.1 percent probability. The GDP reacts negatively with 56.6 percent probability immediately after a positive shock of the public net revenues. But in long run the probability of this response to be positive rises strongly. With 76.1 percent probability the private consumption decreases after this shock. Finally, another distinctive feature of the agnostic identification used in this paper pertains to the assessment the business cycle and monetary shock. With a 70.0 percent probability the real GDP decreases immediately after a contractionary monetary shock on the SELIC rate and this effect is negative and very persistent. Further, the most likely path of the price index (IPCA) indicates a drop of 0.4 percent in this variable during the first five months after a monetary shock. Considering the business cycle, government spending is not countercyclical in a view that during an economic boom the endogenous response of expenditure of government is positive.

Ex-Convicts Face Multiple Labor Market Punishments: Estimates of Peer-Group and Stigma Effects Using Equations of Returns to Schooling

We produced a data set from a survey of a population of convicts in probation. We combined this new data set with an official data set from the Brazilian government to study labor market discrimination faced by ex-convicts. We were interested in estimating two potential effects of discrimination, statistical (stigma) and behavioral (peer-group) effects. Our econometric results suggest that stigmatization leads to a 39% reduction in the wage earned by ex-convicts relative to the wage earned by non-convicts. They also suggest that the peer-group effect accounts for a reduction in the relative earnings of ex-convicts of 1.1% per year of study. In addition, we also show that ex-convicts earn 3.1% less per year of experience than non-convicts.

Criminality and Social Interaction

As regards to the abrupt growth of crime, it has been analyzed that, only with Beckers (1968) original findings, is not sufficient to prove this phenomena. Thus, many researches have incorporated new paradigms with the intention to explain the mechanisms which react to crime. New research lines are being demonstrated the topic which studies the existing relation between illegal behavior and social interaction. Others works tries to verify the factors related to family situation or family heritage has impact on crime. The approach which gives us the support on this research parts from the foundation that crimes have diverse nature, not only for its type but, primarily on its determinants. Therefore, there should be a demarcation line which limits these different categories of crimes, when it is regarding to the nature of the motivation for committing a crime. Such motivation may be associated to economic factors or social interaction. The objective of this paper is to demonstrate if the optimum rule of decision making for entering the criminal world, for each different types of crimes, is motivated by the same factors. Thus, this article based on the procedures of Heckman (1979) to verify if the optimum rule of decision making, which motivates a crime, is the same for different types of crime. According to the results obtained from this study, one may find that there is a difference between the optimum rule of decision of the condemned prisoner for violent crimes of optimum rule of the rest of the prisoners.

An Evaluation of the Non-Neutrality of Money

This paper evaluates the effect of a change in the quantity of money on relative prices in the U.S. economy based on quarterly time-series for the period of 1959 to 2013. We also estimate the implication of a change in relative prices on the rate of inflation and macroeconomic variables. The empirical results indicate that the change of money supply not only affects relative prices but also affects the inflation rate and real variables, such as investment, natural rate of unemployment and potential GDP, through the change in relative prices. The relevant finding of our study is that money is not neutral in a non-traditional sense because a change in the money supply disturbs relative prices and, consequently, the allocation of resources in the economy. This finding has serious implications that must be considered in the transmission mechanisms of monetary policy.

Impact of Sexual Activity on Wage: An Empirical Investigation

We test the assumption that the relation between sexual activity and wage is nonlinear, considering that the impact of sex on productivity and therefore on wage occurs during a certain interval of times which one cannot perceive if discrimination is not done. In other words, we must use different dummies to enumerate distinct frequencies. A similar procedure appears in Blanchflower and Oswald (2004) to test the effect of sexual activity on happiness. This is done in column (2) and the results show that this assumption is valid.