Pedro Cavalcanti Ferreira

The Evolution of International Output Differences (1960-2000): From Factors to Productivity

This article presents a group of exercises of level and growth decomposition of output per worker using cross-country data from 1960 to 2000. It is shown that at least until 1975 factors of production (capital and education) were the main source of output dispersion across economies and that productivity variance was considerably smaller than in later years. Only after this date did the prominence of productivity start to show up in the data, as the majority of the literature has found. The growth decomposition exercises showed that the reversal of relative importance of productivity vis-a-vis factors is explained by the very good (bad) performance of productivity of fast- (slow-) growing economies. Although growth in the period, is on average, is mostly due to factor accumulation, its variance is explained by productivity.

On the Evolution of Total Factor Productivity in Latin America

Because of several policy distortions, including import‐substitution industrialization, widespread government intervention, and both domestic and international competitive barriers, there has been a general presumption that Latin America has been much less productive than the leading economies in the last decades. In this paper we show, however, that until the late 1970s Latin American countries had high productivity levels relative to the United States. It is only after the late 1970s that we observe a fast decrease of relative total factor productivity (TFP) in Latin America. We also show that the inclusion of human capital in the production function makes a crucial difference in the TFP calculations for Latin America.

The Effects of Longevity and Distortions on Education and Retirement

This article studies the impact of longevity and taxation on life-cycle decisions and long run income. Individuals allocate optimally their total lifetime between education, working and retirement. They also decide at each moment how much to save or consume out of their income, and, after entering the labor market, how to divide their time between labor and leisure. The model incorporates experience-earnings profiles and return to education function that follows evidence from the labor literature. In this setup increases in longevity raises the investment in education - time in school - and retirement. The model is calibrated to the U.S. and is able to reproduce observed schooling trends of the last century. It also reproduces the increase in retirement, as the evidence shows. Simulations show that a country equal to the U.S. but with 20% smaller longevity will be 25% poorer, mostly because of the impact of life expectancy on human capital formation and retirement. In this economy labor taxes has a strong impact on the per capita income, as it decreases labor effort, time at school and retirement age, in addition to the general equilibrium impact over physical capital. (Copyright: Elsevier)

The long run economic impact of AIDS

This paper studies the long-run impact of HIV/AIDS on per capita income and education. We introduce a channel from HIV/AIDS to long-run income that has been overlooked by the literature, the reduction of the incentives to study due to shorter expected longevity. We work with a continuous time overlapping generations mo deI in which life cycle features of savings and education decision play key roles. The simulations predict that the most affected countries in Sub-Saharan Africa will be in the future, on average, a quarter poorer than they would be without AIDS, due only to the direct (human capital reduction) and indirect (decline in savings and investment) effects of life-expectancy reductions. Schooling will decline on average by half. These findings are well above previous results in the literature and indicate that, as pessimistic as they may be, at least in economic terms the worst could be yet to come.

Inflationary financing of public investment and economic growth

a theoretical model is constructed in order to explain particular historical experiences in which inflation acceleration apparently helped to spur a period of economic growth. Government financed expenditures affect positively the productivity growth in this model so that the distortionary effect of inflation tax is compensated by the productive effect of public expenditures. We show that for some interval of money creation rates there is an equilibrium where money is valued and where steady state physical capital grows with inflation. It is also shown that zero inflation and growth maximization are never the optimal policies.

O impacto da escolaridade sobre a distribuição de renda

This paper investigates the impact of education on income distribution of Brazilian states and regions, using a semi parametric method, following Dinardo, Fortin and Lemieux (1996) and dataset from the PNAD 1999. Contrafactual densities were constructed weighting the distribution of the poorest region/state (Northeast / Ceara) by the profile of education in the richer one (Southeast / Sao Paulo). Results: between 12% and 36% of the difference in income is explained by the educational differences; the weighting by education increased by about 55% the average income in counterfactuals; the counterfactual income of the Northeast amounts to 93% of the average Brazilian income; the higher the percentile considered income, the greater the contribution of the difference in schooling for the difference in income; and the income dispersion of the poorest regions increases when they provide the level of schooling of the richest regions, while the wage profile of the region is kept constant.

Trade liberalization and industrial concentration: Evidence from Brazil

Abstract This paper studies the relationship between industrial structure and the extent of trade protection granted to Brazilian manufacturing industries during the 1988–1994 trade liberalization episode. Using a panel data-set covering this period, we find that even in an environment in which a major regime shift has been introduced, more concentrated sectors have been able to obtain policy advantages, that lead to a reduction in international competition. The importance of industry structure appears to be substantial: In our baseline specification, an increase in concentration by 20% leads to an increase in protection by 5–7%.

On the Tyranny of Numbers: East Asian Miracles in World Perspective

In a widely cited paper, Young (1995) showed that the East Asian miracles (Hong Kong, Korea, Singapore and Taiwan) grew mostly through input accumulation during the period 1966-1990. Using data for 83 countries taken from the Penn World Table, version 6.1, and Barro and Lee (2000), we use a common methodology in order to compare the growth performance of the East Asian miracles with the rest of the world. We find that, even though the TFP growth rates of the four East Asian miracles were not remarkable in absolute values, they were very high in relative terms. We argue that, since Young (1995) focused only on the four East Asian miracles, he did not notice that 1966-1990 was a period of particularly low TFP growth and particularly high factor accumulation in the world. Despite the fact that they had high rates of physical capital accumulation, the distinguishing feature of these miracles was their relative productivity growth performance.

Produtividade agregada brasileira (1970-2000): declínio robusto e fraca recuperação

This study explores the productivity performance of the Brazilian economy between 1970 and 1998. We assess how much of the TFP downfall can be explained by some departures from the standard procedure. We incorporate to the standard measure utilization of capacity, changes in the workweek of capital, services of capital from electricity consumption, relative prices distortions, human capital, and investment in specific technology. We conclude that the downfall in productivity is quite robust to those specifications. The only case that presents a marked difference from the standard TFP measure occurs when relative prices of capital are corrected. The implications of this finding are a topic for future research.

THE IMPACT OF AIDS ON INCOME AND HUMAN CAPITAL

This paper studies the impact of HIV/AIDS on per capita income and education. It explores two channels on how HIV/AIDS affects income that have not been sufficiently stressed by previous literature: the reduction of the incentives to stay in school due to shorter expected longevity and the reduction in productivity of experienced workers. In the model, individuals live for three periods, may get infected in the second period, and with some probability die of AIDS before reaching the third period of their lives. Parents care for the welfare of the future generations so that they will maximize lifetime utility of their dynasty. The simulations predict that the most affected countries in Sub-Saharan Africa in the future will be, on average, 30% poorer than they would be without AIDS. Schooling will decline in some cases by 40%. These figures are dramatically reduced with widespread medical treatment, as it increases the survival probability and productivity of infected individuals.