CEF.UP – ECO Webinar

Friday – January 8^th, 2021  3:00 p.m.

Comparative European Institutions and the Little Divergence, 1385-1800

Nuno Palma –   Manchester University (joint work with António Castro Henriques)

Abstract:

Why did the countries which first benefited from access to the New World –Castile and Portugal –decline relative to their followers, especially England and the Netherlands? The dominant narrative is that worse initial institutions at the time of the opening of Atlantic trade explain Iberian divergence. In this paper, we build new quantitative measures which allow for a comparison of institutional quality over time. We consider the frequency and nature of parliamentary meetings, the frequency and intensity of extraordinary taxation and coin debasement, and real interest spreads for public debt. We find no evidence that the political institutions of Iberia were worse at least until the English Civil War.

CEF.UP – ECO Webinar

Tuesday – May 11^th, 2021 3:00 p.m.

“Necessary and Sufficient conditions for Determinacy of Asymptotically Stationary Equilibria in OLG Models”

Anna Rubinchik –  Western Galilee College, Israel (joint work with Alexander Gorokhovsky)

Abstract:

We propose a criterion for verifying whether a local policy analysis can be made in an overlapping generations model,  i.e., whether a given equilibrium is determinate. The criterion is applicable for a generic set of parameters of the model, and in case of indeterminacy, it indicates the nature of the problem: multiplicity of equilibria or their absence for near-by parameters.

The criterion can be applied to models with infinite past and future as well as those with a truncated past.

The equilibrium is not necessarily a steady state; for example, demographic- and type-composition of the population and endowments can change over time.

However, asymptotically, the equilibrium should be stationary. The two limiting stationary paths at either end of the timeline do not have to be the same. If they are, conditions for local uniqueness are far more stringent for an economy with a truncated past as compared to its counterpart with an infinite past.

In addition, we illustrate our main result using a text-book model with a single physical good, a two-period life-cycle and a single type of consumer. In this model we show how to calculate a response to a policy change using the implicit function theorem.

CEF.UP – ECO Webinar

Friday – July 9^th, 2021 2:00 p.m.

“The trend-cycle connection”

Hernan Bernadaz –  Universidad Carlos III, Madrid (joint work with Florencia Airaudo)

Abstract

“Long-run growth in Latin America over the last 50 years has been low and volatile in the presence of frequent Sudden Stops. We develop a theory that links long-run growth, financial frictions, and Sudden Stops in Emerging countries. Our theory exploits the fact that reversals in trade balance during Sudden Stops occur through sharp declines in imports, particularly of imported investment, rather than increases in exports. Imported investment, in turn, has a permanent impact on economic growth. We find that trend growth deteriorates during Sudden Stops and, even though trend shocks play a crucial role, financial frictions and shocks have a significant impact on its dynamics. We apply our model to the Sudden Stops in Argentina since the 1950s and find that financial crises have a strong permanent effect on the trend, that is, to a large extent, the trend is the cycle.”