Marla Ripoll

Tariffs and Growth: An Empirical Exploration of Contingent Relationships

A large body of empirical research indicates that countries with low policy-induced trade barriers tend to enjoy rapid growth, ceteris paribus. In contrast, alternative theoretical models suggest that the relationship between trade barriers and growth may be contingent on the level of development. Employing a direct trade-barrier measuread valorem tariff rateswe find evidence of such a contingency: the marginal effect of tariffs on growth is declining in the level of per capita income. Moreover, evidence of a negative relationship between tariffs and growth is apparent only among the worlds rich countries.

COLLATERAL CONSTRAINTS IN A MONETARY ECONOMY

The purpose of this paper is to analyze the role of collateral constraints as a transmission mechanism of monetary shocks. We do this by introducing money in the heterogeneous-agent real economy of Kiyotaki and Moore (1997). Money enters in a cash-in-advance constraint and is injected via open-market operations. In the model, a one-time exogenous monetary shock generates persistent movements in aggregate output, whose amplitude depends on the degree of debt indexation. Monetary expansions can trigger a large upward movement in output, while monetary contractions give rise to a smaller downward movement. This asymmetry occurs because full indexation of debt contracts can only be effective following a monetary contraction. In contrast, following a monetary expansion indexation can only be partial because debtors end up paying back just the market value of the collateral. Due to the existence of both cash-in-advance and collateral constraints, monetary shocks generate a highly persistent dampening cycle rather than a smoothly declining deviation.

Intergenerational Transfers and the Fertility–Income Relationship

Evidence from cross‐sectional data reveals a negative relationship between family income and fertility. This article argues that constraints to intergenerational transfers are crucial for understanding this relationship. If parents could legally impose debt obligations on their children to recover the costs incurred in raising them, then fertility would be independent of parental income. A relationship between fertility and income arises when parents are unable to leave debts because of legal, enforcement or moral constraints. This relationship is negative when the intergenerational elasticity of substitution is larger than one, a case in which parental consumption is a good substitute for childrens consumption.

Real Exchange Rate Targeting, Macroeconomic Performance and Sectoral Income Distribution in Developing Countries

This paper uses a two-sector general equilibrium model to analyse both steady-state and stochastic dynamic effects of two real exchange rate targeting policies: a constant-target, and a band-target rule. In the model, targeting is implemented by imposing a stochastic fully-rebatable tax on the consumption of non-traded goods. The first result is that when comparing only steady states, a real exchange rate appreciation favours labour and capital in the non-traded sector, while factors in the traded sector are favoured by depreciations. A second result is that both rules reduce the volatility of investment and the trade balance. The third key result is that in the stochastic economy sectoral income distribution outcomes depend on the design of the constant and band-target rules. In particular, a variety of outcomes may be generated depending on the magnitude of the constant target, or the amplitude of the band, relative to the volatility of productivity shocks.