Costa, Luís F.
Freitas, Miguel Lebre de; Nunes, Luis Catela; Neves, Rui Costa; Salvado, Susana
Following Hidalgo et al. (Sci Mag 317: 482–487, 2007), we use the structure of international trade to estimate a measure of “revealed relatedness” for each pair of internationally traded products, which intends to capture similarities in terms of the endowments or capabilities they use in production. Our method departs from the original one, in that we run statistical tests of equality in probabilities, instead of computing conditional probabilities. We estimate a matrix of “Revealed Relatedness Indexes” using
2005 data and we then investigate which “upscale” products in which Portugal didn’t develop comparative advantage are more related to products in which the...
Canale, Rosaria Rita
The paper aims at estimating the existence of a trilemma in the Eurozone, i.e., to assess to what extent the net capital flows, the volatility of bond yields and the fiscal stance are strictly linked to each other constraining countries’ ability to manage the internal policy goals. The existence of constraints on policy alternatives is estimated for 11 Eurozone countries from 2002 till 2012. The sample is then divided into pre- (2002–2008) and post-crisis (2009–2012) periods. A further division between the PIIGS and the non-PIIGS is then applied. The results show the validity of the trilemma for the whole Euro...
In our model, the government operates a mandatory proportional (DC) pension system to substitute for the low life-cycle savings of the lower-paid myopic workers, while maintaining the incentives of the higher-paid far-sighted ones in contributing to the system. The introduction of an appropriate cap on pension contribution (or its base)—excluding the earnings above the cap from the contribution base—raises the optimal contribution rate, helping more the lower-paid myopic workers and reserving enough room for the saving of higher-paid far-sighted ones. The social welfare is almost independent of the cap in a relatively wide interval but the maximal welfare is higher...
Broll, Udo; Kit Pong, Wong
This paper examines the behavior of a competitive firm that faces joint price and inflation risk. Given that the price risk is negatively correlated with the inflation risk in the sense of expectation dependence, we show that the firm optimally opts for an over-hedge (under-hedge) if the firm’s coefficient of relative risk aversion is everywhere no greater (no smaller) than unity. We show further that banning the firm from forward trading may induce the firm to produce more or less, depending on whether the price risk premium is positive or negative, respectively. While the price risk premium is unambiguously negative...
The aim of this paper is to investigate the threshold effect of foreign direct investment (FDI) on environmental degradation. In empirical analysis, FDI and environmental degradation are jointly determined under the given threshold variable and other exogenous variables. Using carbon dioxide (CO2) emissions per capita as a proxy for environmental degradation, the results show that increasing FDI worsens CO2 emissions after a threshold level of corruption has been reached. Our results demonstrate that increasing FDI will increase CO2 emissions when the degree of corruptibility is relatively high. The study suggests that further FDI and improved environmental quality are competing rather...