2009 Working Papers ( AU-CAS-ECON)

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ABM template models
ABM template models
We refine a prominent set of template models for agent-based modeling, and we offer new reference implementations. We also address some issues of design, flexibility, and ease of use that are relevant to the choice of an agent-based modeling platform.
Comercio, empleo y distribución
Comercio, empleo y distribución
Capítulo por publicar en México 2010, volumen 10, Economía, Nora Lustig, Antonio Yúnez Naude y Alejandro Castañeda Sabido, comps., México, D.F.: El Colegio de México, 2010 (en prensa), Este capítulo sostendrá que algunas de las tendencias observadas en la economía mexicana durante las dos décadas más recientes se pueden explicar mejor tomando en cuenta la integración global del país, además de su integración regional dentro de América del Norte. En especial, el crecimiento decepcionante del empleo en las industrias manufactureras y el aumento en la desigualdad salarial en ciertos aspectos pueden entenderse, hasta cierto punto, como efectos de la inserción de México en la economía global. Desde una perspectiva global, México no es un país altamente abundante en trabajo—especialmente el no calificado—y en este marco podemos entender porque la liberalización comercial no ocasionó más ganancias, ni en el empleo manufacturero, ni en la igualdad salarial.
Creative destruction, economic insecurity, stress and epidemic obesity
Creative destruction, economic insecurity, stress and epidemic obesity
The percentage of Americans who are obese has doubled since 1980. Most attempts to explain this “obesity epidemic” have been found inadequate, including the “Big Two” (the increased availability of inexpensive food and the decline of physical exertion). This article explores the possibility that the obesity epidemic is substantially due to growing insecurity, stress, and a sense of powerlessness in modern society where high-sugar and high-fat foods are increasingly omnipresent. Those suffering these conditions may suffer less control over other domains of their lives. Insecurity and stress have been found to increase the desire for high-fat and high sugar foods. After exploring the evidence of a link between stress and obesity, the increasing pace of capitalism’s creative destruction and its generation of greater insecurity and stress are addressed. The article ends with reflections on how epidemic obesity is symptomatic of a social mistake – the seeking of maximum efficiency and economic growth even in societies where the fundamental problem of material security has been solved.
Determinants of state-level antitrust enforcement
Determinants of state-level antitrust enforcement
While there has been a considerable literature exploring determinants of antitrust enforcement in the United States, studies have been based either on aggregate federal enforcement data over time (exploring cyclical influences) or cross-industry studies, usually for a single year or aggregated over several years. What has never been investigated is the pattern of state-level antitrust. This is somewhat surprising, as this has been a major activity of many state Attorneys General. In this paper, we explain state antitrust enforcement across states and time (for a 15-year period), examining a number of economic and political determinants which have been proposed in the literature., Working Paper Series September 2009 No. 2009-17
Effect of R&D and market concentration on merger outcomes
Effect of R&D and market concentration on merger outcomes
This study examines the pattern of abnormal returns for merging companies and rivals to determine investor expectations regarding the impact of horizontal mergers challenged by the government. Prior studies have indicated that the government may have challenged efficiency enhancing mergers as evidenced by the pattern of abnormal returns to rivals during merger events. This study examines those patterns using challenged mergers from 1997 to 2007, and it adds to the literature by assessing the effect that R&D intensity and change in HHI have on the returns to rivals and merging firms. The paper finds that the pattern of abnormal returns is a result of the different effects that antitrust complaints and merger outcomes have on rivals based on R&D intensity and change in industry concentration. This finding suggests that the government may have been properly vigilant in challenging mergers over the past 10 years in basic industries that have high levels of market concentration. However, it also may have allowed collusive mergers to proceed in R&D intensive industries.
How to use decision theory to choose among mechanisms
How to use decision theory to choose among mechanisms
We extend a recently introduced approach to the positive problem of game theory, Predictive Game Theory (PGT Wolpert (2008)). In PGT, modeling a game results in a probability distribution over possible behavior profiles. This contrasts with the conventional approach where modeling a game results in an equilibrium set of possible behavior profiles. We analyze three PGT models. Two of these are based on the well-known quantal response and epsilon equilibrium concepts, while the third is entirely new to the economics literature. We use a Cournot game to demonstrate how to use our extension of PGT, concentrating on model combination, modeler uncertainty, and mechanism design. In particular, we emphasize how PGT allows a modeler to perform prediction and mechanism design in a manner that is fully consistent with decision theory. We do this even in situations where conventional approaches yield multiple equilibria, an ability that is necessary for a fully decision theoretic mechanism design. Where possible, PGT results are compared against equilibrium set analogs.
Impact of the economic crisis on women's economic empowerment
Impact of the economic crisis on women's economic empowerment
This paper argues that a systematic gender analysis of the current crisis is critical to develop viable solutions and for furthering the trend toward gender equality. It analyses the short- and long-term impact of the current economic crisis with a focus on developing countries. It identifies the multiple channels and transmission mechanisms through which the global economic crisis has affected women‘s lives and explores different areas where the burden of the crisis falls on poor women, using current indications, micro-level evidence and lessons learned from previous crises. The paper shows that the magnitude and types of effects are context-specific: they are likely to vary across countries, sectors, households and among women, depending on the economic, demographic and social circumstances. In the short run, many women are expected to lose their jobs, particularly those working on the export sectors and/or holding flexible jobs. At the same time, a fall in the supply of micro-credit is expected to result in a decrease in earnings among self-employed women workers in trade, agriculture and other sectors. Additionally, there will likely be an increase in the amount of unpaid work that women do to support their families. In the long-run, it is expected that an increase in girls’ dropout rate from school to compensate for their families’ loss of income will deteriorate women’s future socioeconomic opportunities. In addition, an increase in the level of violence against women, combined with limited access to health and other support services as a result of public expenditure cuts and lower aid receipts, complete the dim picture of the gendered impact of the crisis in developing countries. The paper concludes that it is essential to implement mechanisms to mitigate the negative effects of the crisis on women, in order to ensure that the gains in women‘s empowerment and gender equality in the last few decades are not put in danger. Furthermore, it is argued that the crisis can be used as a unique opportunity to change power structures and make economic and social policies more gender-aware and move toward creating a more gender-equal society and economic system. To that end, civil society involvement to monitor the gender effects of the crisis in the short and medium term, as well as government-led (and donor supported) gender-aware response packages will be essential.
Innovation through protection
Innovation through protection
We perform the first empirical study to focus on the relationship between trade protection and investment in R&D. Our results support predictions from the theoretical literature that temporary tariffs stimulate R&D, although we find no evidence that this effect diminishes as the termination of protection approaches as predicted by some theoretical models. We also find little evidence that quotas reduce R&D as predicted by multiple theoretical works. Finally, our results indicate that temporary tariffs result in decreased capital investment, perhaps because firms use periods of temporary protection to shutdown unprofitable facilities. This reveals an important distinction in firm behavior with regard to investment in tangible versus intangible capital during periods of trade protection., Working Paper Series October 2009 No. 2009-18
Legitimating inequality
Legitimating inequality
Over the three decades leading up to the crisis of 2008, inequality dramatically increased in the United States and Great Britain. What stands out, but is seldom noted, is that this occurred within democracies where the relative losers – the overwhelming majority – could in principle have used the political system to block or reverse rising inequality. Why did they not do so? A glance at history reveals that peoples have only very infrequently contested inequality because they were led to believe that their inferior status in terms of income, wealth, and privilege was just, that it was not really so bad, or that it was necessary for their future wellbeing. Ideological systems legitimated a status quo of inequality, or in more modern times even increasing inequality. This article surveys the manner in which inequality has been historically legitimated, first predominantly by religion, then predominately by economic thought. Attention is then focused on the manner in which contemporary economic science and its popular interpretations in the media have served to legitimate inequality in the U.S. since the mid-1970s. The paper concludes with a reflection on the unique conditions that enable the legitimation of inequality to be delegitimated.
Long-run growth in open economies
Long-run growth in open economies
The post-Keynesian tradition contains two different models of long-run growth in open economies: the model of export-led cumulative causation (ELCC) originally conceived by Nicholas Kaldor and the model of balance-of-payments-constrained growth (BPCG) developed by A.P. Thirlwall. These models diverge significantly in their core underlying assumptions. For example, they disagree about whether long-term gains in relative price competitiveness are possible and whether import demand constrains long-run growth. The two modeling approaches also yield conflicting policy implications. For example, some ELCC models imply that a domestic demand stimulus can boost long-run growth by sparking a virtuous circle of cumulative causation (including an endogenous increase in productivity growth), while most BPCG models imply that only policies that raise the income elasticity of export demand or lower the income elasticity of import demand can permit faster growth in the long run. The fact that both models have found econometric support suggests that each contains empirically supported elements, but the tests that have been conducted to date have not had sufficient power to distinguish between them. This paper will present both models in a common analytical framework to compare their theoretical differences and policy implications. The paper will argue that a generalized BPCG model that allows for financial flows and relative price effects can incorporate the cumulative causation feedbacks from the ELCC approach while also imposing the balance of payments equilibrium condition that is missing from the latter. The paper will also explore under what conditions different versions of the models apply.
NAFTA, trade, and development
NAFTA, trade, and development
In this paper, we analyze the expectations and the realities about the economic impact of NAFTA on Mexico in terms of economic convergence, trade, investment, employment, wages, and income distribution. We show that NAFTA has basically failed to fulfill the promise of closing the Mexico-US development gap, and we argue that this was due in part to the lack of deeper forms of regional integration or cooperation between Mexico and the United States. We also explore other factors that could explain this negative outcome, and we briefly discuss the opportunities for both Mexico and the United States to mutually benefit from a further economic integration process.

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