Vladimir Kuhl Teles

Public investment in basic education and economic growth

Purpose - The main purpose of this paper is to visualize the relation between government spending on basic education and the human capital accumulation process, observing the impacts of this spending on individual investments in higher education, and on economic growth. Design/methodology/approach - The paper uses an overlapping-generations model where the government tax the adult generation and spent it in basic education of the next generations. Findings - It was demonstrated that the magnitude of the marginal effect of government spending in basic education on growth crucially depends on public budget constrains. Originality/value - The paper explains why some countries with a lot of public investment in basic education growth at low rates. In that sense if a country has only a lot of public investment in basic education without investment in higher education it may growth at low rates because the taxation can cause distortions in the agents incentives to invest in higher education.

Fundamentals or market sentiment: what causes country risk?

The country risk indicator, as measured by the JP Morgans EMBI or grades of rating agencies such as Standard & Poors (S&Ps) or Moodys, does not seem to truly reflect the fundamentals of an economy. Countries that pursue sound economic policies are frequently placed on the same level as countries with a populist orientation or with a recent history of default or debt restructuring. Such circumstance generates a feeling of unease with regard to these ratings. The objective of this article is to investigate whether these indicators truly reflect market fundamentals or whether some sort of prejudice, or intolerance towards certain countries, can be identified. We use the Oaxaca–Blinder decomposition to analyse the differences in country risk, measured as by EMBI+, for a group of emerging markets. This decomposition allows us to separate the ‘justified’ (differences in fundamentals) from the ‘unjustified’ differences (same fundamental differently evaluated).

Monetary policy and country risk

This article develops an econometric model in order to study country risk behaviour for six emerging economies (Argentina, Mexico, Russia, Thailand, Korea and Indonesia), by expanding the country beta risk model of Harvey and Zhou (1993), Erb et al . (1996a, b) and Gangemi et al . (2000). Towards this end, we have analysed the impact of macroeconomic variables, especially monetary policy, upon country risk, by way of a time-varying parameter approach. The results indicate an unstable effect of monetary policy upon country risk in periods of crisis. However, this effect is stable in other periods, and the Favero–Giavazzi effect is not verified for all economies, with an opposite effect being observed in many cases.

O Regime de Metas de Inflação do Brasil é Crível

Um Banco Central que estabelece e mantem uma meta de inflacao baixa e estavel, e abdica-se do uso do trade-off entre produto real e inflacao como instrumento de politica e definido como crivel. Um modelo de serie de tempo foi estimado com o objetivo de verificar a credibilidade do regime de metas de inflacao brasileiro. Ao mesmo tempo, um indice de credibilidade da politica monetaria foi construido a partir de um modelo estado-espaco. Em tal modelo a utilizacao do filtro de Kalman sob o trade-off entre inflacao e produto indica a evolucao da credibilidade do Banco Central brasileiro ao combater a inflacao.

A Política Monetária Brasileira sob o Regime de Metas de Inflação

The paper analyzes the evolution of monetary policy since the implementation of inflation targets in the period 1999 to 2009 in order to assess whether there are differences in the conduct of monetary policy between managements of Arminio Fraga and Henrique Meirelles. A New Keynesian general equilibrium model is used to model the Brazilian economy and derives a Taylor rule to find the sufficient condition for inflation convergence. The process of empirical analysis is to estimate a VAR model whose parameters vary over time as well as innovations in the variance-covariance matrix. The empirical results show that (i) there aren’t significant differences in the conduct of monetary policy during the administrations Arminio Fraga and Henrique Meirelles; (ii) Since 2003, the interest rate remained above that needed for the convergence of inflation according with the stability condition; and (iii) Arminio Fraga management acted according to a Taylor rule in the crisis of 2002, and inflation remained above target because of the magnitude of exogenous shocks.

Reformas tributária e previdenciária e a economia brasileira no longo prazo

The paper simulates the effects of tax and social security reforms on the main variables of the Brazilian Economy in the long run. For that matter a computable general equilibrium model of overlapping generations a la Lucas (1988) is employed. The main results are that the reforms in themselves are not capable of affecting the performance of the interest rate and the long run growth rate of the economy. However, as long as they make it possible to reduce the public debt and to increase the investment in education, they become important for the improvement of those variables.

Choques cambiais, política monetária e equilíbrio externo da economia brasileira em um ambiente de hysteresis

The concept of hysteresis suggests that a shock on exchange rate change the foreign equilibrium of the economy. In that context, the experience of the fluctuations of the Brazilian case from the Real Plan is examined, obtaining three central conclusions: 1) A high interest rate monetary policy diminishes the magnitude of the impact of an exchange depreciation about the exports, what imply a shift of the external equilibrium; 2) An elevation of the interest rate increase the lag of the J curve for the Brazilian economy; 3) The change of the exchange rate regime from fixed to flexible in 1999, altered the parameters of the stochastic process that governs the exchange fluctuations, affecting the entrance decision parameters in the external market of the domestic firms, being necessary a bigger exchange depreciation to the domestic firm decide to export.

Política monetária e ciclos regionais no Brasil: uma investigação das condições para uma área monetária ótima

The objective of this paper is to investigate the influence of the monetary policy and other shocks on the gross domestic product of each one of the Brazilian regions. The methodology is a combination of non-observed components and auto-regressive techniques (VAR). Common and specific shocks and common and specific effects of these shocks had been identified. The results indicate that Brazilian regions have symmetric responses to the common shocks but the most important shocks are the idiosyncratic ones.

Ciclos reais e política fiscal no Brasil

We develop a real business cycle model that includes the government sector and public capital, in order to analyze the effects of fiscal shocks over the business cycle and to account for the main stylized facts of postwar Brazilian fiscal policy (1950-2006). The model captures quite well the main characteristics of the fiscal variables along the business cycle, namely, the greater volatility of the government spending (consumption and investment) compared to the private sector spending and the procyclical behaviour of the fiscal policy. Although the tax burden is the fiscal variable that fluctuates less along the business cycle, it is the most important one to explain the output volatility, besides productivity.

Crime and Punishment with Habit Formation

Moral concepts affect crime supply. This idea is modelled assuming that illegal activities is habit forming. We introduce habits in a intertemporal general equilibrium framework to illegal activities and compare its outcomes with a model without habit formation. The findings are that habit and crime presents a non linear relationship that hinges upon the level of capital and habit formation. It is possible to show that while the effect of habit on crime is negative for low levels o habit formation it becomes positive as habits goes up. Secondly habit reduces the marginal effect of illegal activities return on crime. Finally, the effect of habit on crime depends positively on the amount of capital. This could explain the relationship between size of cities and illegal activity.