In this paper we use a sample of 15 OECD countries to examine whether provision of public and pri... more In this paper we use a sample of 15 OECD countries to examine whether provision of public and private capital satisfies conditions of intertemporal e ciency over the 1970-1995 period. We find robust evidence that private and public capital have followed criteria of e cient resource allocation in all countries. The estimated output elasticities of private and public capital display little variation across countries, and reach mean values of 0.19 and 0.055. Consequently, average rates of return to both factors are estimated at about 5-5.5%. All along we estimate a positive and significant intertemporal elasticity of substitution of consumption in all countries.
This paper analyses technical efficiency of Italian and Spanish football during three recent seas... more This paper analyses technical efficiency of Italian and Spanish football during three recent seasons, to shed light on the sport performance of professional football clubs. To achieve this we have used mathematical optimisation methods, particularly DEA models, which ...
This paper presents the model used for simulation purposes within the Spanish Ministry of Economi... more This paper presents the model used for simulation purposes within the Spanish Ministry of Economic Affairs and Finance. REMS (a Rational Expectations Model for the Spanish economy) is a small open economy dynamic general equilibrium model in the vein of the New-Neoclassical-Keynesian synthesis models, with a strongly micro-founded system of equations. In the long run REMS behaves in accordance with the neoclassical growth model. In the short run, it incorporates nominal, real and financial frictions. Real frictions include adjustment costs in consumption (via habits in consumption and rule-of-thumb households) and investment into physical capital. Due to financial frictions, there is no perfect arbitrage between different types of assets. The model also allows for slow adjustment in wages and price rigidities, which are specified through a Calvo-type Phillips curve. All these modelling choices are fairly in line with other existing models for the Spanish economy. One valuable contribution of REMS to the renewed vintage of D(S)GE models attempting to feature the Spanish economy is the specification of the labour market according to the search paradigm, which is best suited to assess the impact of welfare policies on both the intensive and extensive margins of employment. The model's most valuable asset is the rigour of the analysis of the transmission channels linking policy action with economic outcomes.
We use a small open economy general equilibrium model to analyse the effects of a fiscal devaluat... more We use a small open economy general equilibrium model to analyse the effects of a fiscal devaluation in an EMU country. The model has been calibrated for the Spanish economy, which is a good example of the advantages of a change in the tax mix given that its tax system shows a positive bias in the ratio of social security contributions over consumption taxes. The preliminary empirical evidence for European countries shows that this bias was negatively correlated with the current account balance in the expansionary years leading up to the 2009 crisis, a period when many EMU members accumulated large external imbalances. Our simulation results point to significant positive effects of a fiscal devaluation on GDP and employment similar to the ones that could be obtained with an exchange rate devaluation. However, although the effects in terms of GDP and employment are similar, the composition effects of fiscal and nominal devaluations are not alike. In both cases, there is an improvement in net exports, but the effects on domestic and external demand are quite different.
We study the size of fiscal multipliers in response to a government spending shock under differen... more We study the size of fiscal multipliers in response to a government spending shock under different household leverage conditions in a general equilibrium setting with search and matching frictions. We allow for different levels of household indebtedness by changing the intensive margin of borrowing (loan-to-value ratio), as well as the extensive margin, defined as the number of borrowers over total population. The interaction between the consumption decisions of agents with limited access to credit and the process of wage bargaining and vacancy posting delivers two main results: (a) higher initial leverage makes it more likely to find output multipliers higher than one; and (b) a positive government expenditure shock always produces a positive multiplier for vacancies and employment. The latter result is in sharp contrast with models in which some households do not have access to the financial market (RoT consumers), in which the implied labor market responses to fiscal shocks are inconsistent with the empirical evidence. We also find that the impact on GDP of consolidations is lower when consumers have a more limited capacity to borrow, and that increasing government spending in an episode of intense private deleveraging can still generate positive and significant effects on consumption and output, although the fiscal output (employment) multiplier decreases (increases) with the intensity of the credit crunch. In the model with indebted impatient households we also observe that output (employment) multipliers decrease (increase) markedly with the degree of shock persistence and increase with the degree of price stickiness.
In this paper we test the homogeneity of the technological parameters among OECD countries, which... more In this paper we test the homogeneity of the technological parameters among OECD countries, which is the maintained hypothesis in most of the empirical growth literature. We first identify differences in the constant term of the convergence equation estimated for the OECD 1960/1990 sample using a fixedeffects estimator. Then we provide a formal test of the homogeneity of technological parameters across groups of countries. We identify at least two different groups within the OECD, with significantly different technologies. Convergence within each group is fast, supporting the notion of club convergence. Nevertheless, the implausible parameter values obtained for the leading technology club casts some doubts on the validity of the Solow model to account for the long run behaviour of this group of countries.
The co-movements of labor productivity with output, total hours, vacancies and unemployment have ... more The co-movements of labor productivity with output, total hours, vacancies and unemployment have changed since the mid 1980s. This paper offers an explanation for the sharp break in the fluctuations of labor market variables based on endogenous labor supply decisions following the mortgage market deregulation. We set up a search model with efficient bargaining and financial frictions, in which impatient borrowers can take an amount of credit that cannot exceed a proportion of the expected value of their real estate holdings. When borrowers' equity requirements are low, the impact of a positive technology shock on the marginal utility of consumption is strengthened, which in turn results in lower hours per worker and higher wages in the bargaining process. This shift in labor supply discourages firms from opening vacancies, reducing the impact of the shock on employment. We simulate the effects of a continuous increase in both the loan-to-value ratio and the share of borrowers in total population. Our exercise shows that the response of labor market variables might have been substantially affected by the increase in household leverage in the US in the last twenty years.
ABSTRACT This article analyses the economic results of Spanish professional football teams using ... more ABSTRACT This article analyses the economic results of Spanish professional football teams using data collected over the past few years. These data differ substantially from the information presented in the annual reports of the “Liga de Futbol Profesional” (Spanish professional football league), which are obtained from the initial budgets elaborated each season. Special attention is paid to the two most important teams in the Spanish league: Real Madrid and FC Barcelona. The results of this research show that Spanish football has the same problems as those evidenced by the Italian and English football leagues and, therefore, requires similar solutions in order to be able to survive in forthcoming years.
This paper analyses the effects of introducing typical Keynesian features, namely rule-of-thumb c... more This paper analyses the effects of introducing typical Keynesian features, namely rule-of-thumb consumers and consumption habits, into a standard labour market search model. It is a well-known fact that labour market matching with Nash-wage bargaining improves the ability of the standard real business cycle model to replicate some of the cyclical properties featuring the labour market. However, when habits and rule-of-thumb consumers are taken into account, the labour market search model gains extra power to reproduce some of the stylised facts characterising the US labour market, as well as other business cycle facts concerning aggregate consumption and investment behaviour.
The empirical literature on growth has steadily improved the econometric methods used mainly to a... more The empirical literature on growth has steadily improved the econometric methods used mainly to address the effect of crosscountry heterogeneity in the estimated convergence rate. In this paper, we highlight an important implication of this process of econometric refinement that has so far received little attention. We show that the picture that emerges from models that allow for generalized heterogeneity changes our view of the process of convergence within the OECD. Estimation methods that allow for non or partial heterogeneity stress the importance of transitional dynamics in the process of convergence. Thus, the observed reduction in the dispersion of per capita income within the OECD (σ−convergence) is mostly explained by transitional dynamics. On the contrary, when generalized parameter heterogeneity is (tested and) allowed for, we find that the observed narrowing of incomes in the OECD has little bearing on transitional dynamics. σ−convergence in this case happens because the long run features of these countries are becoming increasingly similar (convergence in steady states). There are also striking differences across estimated models as regards the evolution of the relative position of the average country with respect to its steady state income per capita level.
... 35-63 МАШ PATTERNS OF ECONOMIC GROWTH m OECD COUNTRIES* Javier ANDRES José E. BOSCA Rafael DO... more ... 35-63 МАШ PATTERNS OF ECONOMIC GROWTH m OECD COUNTRIES* Javier ANDRES José E. BOSCA Rafael DOMENECH Universidad de Valencia This paper provides a comprehensive account of the most salient features of long run macroeco-nomic performance in ...
The benefits implied by changing the growth model are at the heart of the heated political and ec... more The benefits implied by changing the growth model are at the heart of the heated political and economic debate in Spain. Increases in productivity and the reallocation of employment towards more innovative sectors are defended as the panacea for most of the ills afflicting the Spanish economy. In this paper we use a DSGE model with price rigidities, and labour market search frictions a la Mortensen-Pissarides, to assess the effects of the change in the growth model on unemployment. In so doing, we assume that the vigorous demand shock which has been mostly responsible for recent economic growth in Spain will be successfully substituted by a productivity shock as the main driver of Spain's economic growth in the future. So we assume that we actually succeed in the so called "change in the growth model". We show that whatever the benefits that this change might bring to the Spanish economy, the time span needed to bring the unemployment rate down to the European average actually increases. We then analyze the impact of several reforms in the labour market and evaluate their interaction with the new growth model. We conclude that changes in the economic structure do not make labour reforms any less necessary, but rather the opposite if we want to shorten employment recovery significantly.
In this paper we use a sample of 15 OECD countries to examine whether provision of public and pri... more In this paper we use a sample of 15 OECD countries to examine whether provision of public and private capital satisfies conditions of intertemporal e ciency over the 1970-1995 period. We find robust evidence that private and public capital have followed criteria of e cient resource allocation in all countries. The estimated output elasticities of private and public capital display little variation across countries, and reach mean values of 0.19 and 0.055. Consequently, average rates of return to both factors are estimated at about 5-5.5%. All along we estimate a positive and significant intertemporal elasticity of substitution of consumption in all countries.
This paper analyses technical efficiency of Italian and Spanish football during three recent seas... more This paper analyses technical efficiency of Italian and Spanish football during three recent seasons, to shed light on the sport performance of professional football clubs. To achieve this we have used mathematical optimisation methods, particularly DEA models, which ...
This paper presents the model used for simulation purposes within the Spanish Ministry of Economi... more This paper presents the model used for simulation purposes within the Spanish Ministry of Economic Affairs and Finance. REMS (a Rational Expectations Model for the Spanish economy) is a small open economy dynamic general equilibrium model in the vein of the New-Neoclassical-Keynesian synthesis models, with a strongly micro-founded system of equations. In the long run REMS behaves in accordance with the neoclassical growth model. In the short run, it incorporates nominal, real and financial frictions. Real frictions include adjustment costs in consumption (via habits in consumption and rule-of-thumb households) and investment into physical capital. Due to financial frictions, there is no perfect arbitrage between different types of assets. The model also allows for slow adjustment in wages and price rigidities, which are specified through a Calvo-type Phillips curve. All these modelling choices are fairly in line with other existing models for the Spanish economy. One valuable contribution of REMS to the renewed vintage of D(S)GE models attempting to feature the Spanish economy is the specification of the labour market according to the search paradigm, which is best suited to assess the impact of welfare policies on both the intensive and extensive margins of employment. The model's most valuable asset is the rigour of the analysis of the transmission channels linking policy action with economic outcomes.
We use a small open economy general equilibrium model to analyse the effects of a fiscal devaluat... more We use a small open economy general equilibrium model to analyse the effects of a fiscal devaluation in an EMU country. The model has been calibrated for the Spanish economy, which is a good example of the advantages of a change in the tax mix given that its tax system shows a positive bias in the ratio of social security contributions over consumption taxes. The preliminary empirical evidence for European countries shows that this bias was negatively correlated with the current account balance in the expansionary years leading up to the 2009 crisis, a period when many EMU members accumulated large external imbalances. Our simulation results point to significant positive effects of a fiscal devaluation on GDP and employment similar to the ones that could be obtained with an exchange rate devaluation. However, although the effects in terms of GDP and employment are similar, the composition effects of fiscal and nominal devaluations are not alike. In both cases, there is an improvement in net exports, but the effects on domestic and external demand are quite different.
We study the size of fiscal multipliers in response to a government spending shock under differen... more We study the size of fiscal multipliers in response to a government spending shock under different household leverage conditions in a general equilibrium setting with search and matching frictions. We allow for different levels of household indebtedness by changing the intensive margin of borrowing (loan-to-value ratio), as well as the extensive margin, defined as the number of borrowers over total population. The interaction between the consumption decisions of agents with limited access to credit and the process of wage bargaining and vacancy posting delivers two main results: (a) higher initial leverage makes it more likely to find output multipliers higher than one; and (b) a positive government expenditure shock always produces a positive multiplier for vacancies and employment. The latter result is in sharp contrast with models in which some households do not have access to the financial market (RoT consumers), in which the implied labor market responses to fiscal shocks are inconsistent with the empirical evidence. We also find that the impact on GDP of consolidations is lower when consumers have a more limited capacity to borrow, and that increasing government spending in an episode of intense private deleveraging can still generate positive and significant effects on consumption and output, although the fiscal output (employment) multiplier decreases (increases) with the intensity of the credit crunch. In the model with indebted impatient households we also observe that output (employment) multipliers decrease (increase) markedly with the degree of shock persistence and increase with the degree of price stickiness.
In this paper we test the homogeneity of the technological parameters among OECD countries, which... more In this paper we test the homogeneity of the technological parameters among OECD countries, which is the maintained hypothesis in most of the empirical growth literature. We first identify differences in the constant term of the convergence equation estimated for the OECD 1960/1990 sample using a fixedeffects estimator. Then we provide a formal test of the homogeneity of technological parameters across groups of countries. We identify at least two different groups within the OECD, with significantly different technologies. Convergence within each group is fast, supporting the notion of club convergence. Nevertheless, the implausible parameter values obtained for the leading technology club casts some doubts on the validity of the Solow model to account for the long run behaviour of this group of countries.
The co-movements of labor productivity with output, total hours, vacancies and unemployment have ... more The co-movements of labor productivity with output, total hours, vacancies and unemployment have changed since the mid 1980s. This paper offers an explanation for the sharp break in the fluctuations of labor market variables based on endogenous labor supply decisions following the mortgage market deregulation. We set up a search model with efficient bargaining and financial frictions, in which impatient borrowers can take an amount of credit that cannot exceed a proportion of the expected value of their real estate holdings. When borrowers' equity requirements are low, the impact of a positive technology shock on the marginal utility of consumption is strengthened, which in turn results in lower hours per worker and higher wages in the bargaining process. This shift in labor supply discourages firms from opening vacancies, reducing the impact of the shock on employment. We simulate the effects of a continuous increase in both the loan-to-value ratio and the share of borrowers in total population. Our exercise shows that the response of labor market variables might have been substantially affected by the increase in household leverage in the US in the last twenty years.
ABSTRACT This article analyses the economic results of Spanish professional football teams using ... more ABSTRACT This article analyses the economic results of Spanish professional football teams using data collected over the past few years. These data differ substantially from the information presented in the annual reports of the “Liga de Futbol Profesional” (Spanish professional football league), which are obtained from the initial budgets elaborated each season. Special attention is paid to the two most important teams in the Spanish league: Real Madrid and FC Barcelona. The results of this research show that Spanish football has the same problems as those evidenced by the Italian and English football leagues and, therefore, requires similar solutions in order to be able to survive in forthcoming years.
This paper analyses the effects of introducing typical Keynesian features, namely rule-of-thumb c... more This paper analyses the effects of introducing typical Keynesian features, namely rule-of-thumb consumers and consumption habits, into a standard labour market search model. It is a well-known fact that labour market matching with Nash-wage bargaining improves the ability of the standard real business cycle model to replicate some of the cyclical properties featuring the labour market. However, when habits and rule-of-thumb consumers are taken into account, the labour market search model gains extra power to reproduce some of the stylised facts characterising the US labour market, as well as other business cycle facts concerning aggregate consumption and investment behaviour.
The empirical literature on growth has steadily improved the econometric methods used mainly to a... more The empirical literature on growth has steadily improved the econometric methods used mainly to address the effect of crosscountry heterogeneity in the estimated convergence rate. In this paper, we highlight an important implication of this process of econometric refinement that has so far received little attention. We show that the picture that emerges from models that allow for generalized heterogeneity changes our view of the process of convergence within the OECD. Estimation methods that allow for non or partial heterogeneity stress the importance of transitional dynamics in the process of convergence. Thus, the observed reduction in the dispersion of per capita income within the OECD (σ−convergence) is mostly explained by transitional dynamics. On the contrary, when generalized parameter heterogeneity is (tested and) allowed for, we find that the observed narrowing of incomes in the OECD has little bearing on transitional dynamics. σ−convergence in this case happens because the long run features of these countries are becoming increasingly similar (convergence in steady states). There are also striking differences across estimated models as regards the evolution of the relative position of the average country with respect to its steady state income per capita level.
... 35-63 МАШ PATTERNS OF ECONOMIC GROWTH m OECD COUNTRIES* Javier ANDRES José E. BOSCA Rafael DO... more ... 35-63 МАШ PATTERNS OF ECONOMIC GROWTH m OECD COUNTRIES* Javier ANDRES José E. BOSCA Rafael DOMENECH Universidad de Valencia This paper provides a comprehensive account of the most salient features of long run macroeco-nomic performance in ...
The benefits implied by changing the growth model are at the heart of the heated political and ec... more The benefits implied by changing the growth model are at the heart of the heated political and economic debate in Spain. Increases in productivity and the reallocation of employment towards more innovative sectors are defended as the panacea for most of the ills afflicting the Spanish economy. In this paper we use a DSGE model with price rigidities, and labour market search frictions a la Mortensen-Pissarides, to assess the effects of the change in the growth model on unemployment. In so doing, we assume that the vigorous demand shock which has been mostly responsible for recent economic growth in Spain will be successfully substituted by a productivity shock as the main driver of Spain's economic growth in the future. So we assume that we actually succeed in the so called "change in the growth model". We show that whatever the benefits that this change might bring to the Spanish economy, the time span needed to bring the unemployment rate down to the European average actually increases. We then analyze the impact of several reforms in the labour market and evaluate their interaction with the new growth model. We conclude that changes in the economic structure do not make labour reforms any less necessary, but rather the opposite if we want to shorten employment recovery significantly.
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