Documento de Trabajo

Financial Openness, Domestic Financial Development and Credit Ratings

This paper shows that financial openness significantly affects corporate and sovereign credit ratings, and that the magnitude of this effect depends on the level of development of the domestic financial market. Issuers located in less financially developed economies stand to benefit the most from opening up their capital accounts, whereas the impact of this effect

Inequality and Private Credit

This article examines whether the direction of the effect of inequality on private credit depends on the capital constraints of individual countries, as predicted by Balmaceda and Fischer (2010). Consistent with the model’s predictions, we find that greater income inequality leads to a higher ratio of private credit to GDP in economies with low incomes

Cooperation Dynamic in Repeated Games of Adverse Selection

We study a class of repeated games with Markovian private information and characterize optimal equilibria as players become arbitrarily patient.  We show that seemingly non-cooperative action may occur in equilibrium and serve as signals of changes in private information. Players forgive such actions, and use the information they convey to adjust their continuation play. However,

Destructive Creation: School Turnover and Educational Attainment

This paper studies the effect of school entry and exit in the Chilean market-oriented educational system. During the period 1994-2012, 2,151 schools closed, roughly one-fifth of the current stock of schools.  Nearly 245,000 studies were displaced from schools that closed. At the same time 3,770 new schools entered the school systems, mostly private-voucher schools. Given

Economic Performance, Wealth Distribution and Credit Restrictions under variable investment: The open economy

Potential entrepreneurs require capital for investment in projects. They are differentiated by wealth and face credit constraints. Agents with little wealth are unable to fund their projects, those with intermediate levels of wealth can fund inefficiently sized projects and only wealthy entrepreneurs can attain the efficient firm size. We examine the determinants of economic efficiency

The Whole is Greater than the Sum of Its Parts: Complementary Reforms to Address Microeconomic Distortions

This paper links microeconomic rigidities and technological adoption to propose a partial explanation for the observed differences in income per capita across countries. The paper first presents a neoclassical general equilibrium model with heterogeneous production units. It assumes that developing countries do not generate frontier technologies but can adopt them by investing in new capital,

Revealing Bargaining Power through Actual Wholesale Prices

In vertical relationships in which manufacturers and retailers bargain over a volatile surplus, negotiated wholesale prices determine both payoffs and risk-exposure. We use actual wholesale prices to study the profit-sharing and risk-sharing behavior of manufacturers and retailers in the co.ee industry in Chile. We find that small manufacturers are able to earn a sizable fraction

The African Financial Development and Financial Inclusion Gaps

This paper investigates the African financial development and financial inclusion gaps relative to other peer developing countries.  Using a set of variables related to financial development and inclusion, we first estimate the gaps between African countries and other developing countries with similar degrees of economic development. Then, we explore the determinants of financial development and

Assessing the extent of democratic failures. A 99%-Condorcet’s Jury Theorem

This This paper determines the probability a large electorate will take take the correct decision under qualified majority rules. The model allows the competence of each elector to vary with the size of the electorate, thus the results represent a connection between «naive» and «strategic» Condorcet`s Jury Theorems.
JEL Classification: D72 · H11 · P16.

Can a non-binding minimum wage reduce wages and employment?

The impact of the minimum wage on capital accumulation and employment in a large-firm framework

We study the effect of a binding minimum wage on labor market outcomes, the accumulation of capital and welfare. We consider a large firm that invests in physical capital and hires several types of workers. Labor markets are characterized by search and matching frictions, while incomplete wage contracts allow workers to appropriate part of the