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Purpose: The authors examine network features such as connectivity, centrality, adjacency matrices, closeness and betweenness measures through a variety of indicators. The results of the study indicate that over time there is a tendency for markets to integrate and segment due to various factors such as pandemics, financial crises, global trade relations and international investments. Design/methodology/approach: This paper employs a visualized network technique to study the dynamics of integration and comovements in global equity markets of emerging economies. Daily closing prices of stock market indices of 24 countries from January 2013 to July 2020 are used to construct a minimum spanning tree network (MSTN) and graph network (GN). Findings: The authors identify India and China as global power hubs and clusters among the emerging economies. India and Bangladesh serve as bridging countries connecting to various other clusters. Bosnia serves as a center in the European region owing to Bosnia's trade relations with neighboring countries. Although Brazil has witnessed the worst recession in the early years of the decade, Brazil has risen to be a central cluster among the Latin American countries. Finally, the authors find that African countries tend to form links with the rest of the world rather than with economies within the Africa continent. Originality/value: This is the pioneering study that uses network models such as MSTN and GN supplemented with measures of centrality and connectivity to study financial market integration in emerging countries. Against this backdrop, this paper aims to work on a network visualization strategy to examine global stock market integration. The authors also try to use graphs and the spanning trees instead of the correlation models to understand the association between the markets, avoiding the downsides of the existing models. The authors' approach tries to visualize the network integration to examine the interconnectedness in the global stock market. [ABSTRACT FROM AUTHOR]

Purpose: The aim of this study was to determine if there are asymmetries in the pass-through of West Texas Intermediate (WTI) crude oil prices to its derivatives (diesel and gasoline) in the Brazilian market. Design/methodology/approach: Initially, the future WTI oil price series was analyzed using the self-exciting threshold autoregressive (SETAR) and logistic smooth transition autoregressive (LSTAR) non-linear models. Subsequently, the threshold autoregressive error-correction model (TAR-ECM) and Markov-switching model were used. Findings: The findings indicated high prices throughout 2008 due to the subprime crisis. The findings indicated high prices throughout 2008 due to the subprime crisis. The results indicated that there is long-term pass-through of oil prices in both methods, suggesting an equilibrium adjustment in the prices of diesel and gasoline in the analyzed period. Regarding the short term, the variations in contemporary crude oil prices have positive effects on the variations in fuel prices. Lastly, this behavior can partly be explained by the internal price management structure adopted during almost all of the analyzed period. Originality/value: This paper contributes to the literature at some points. The first contribution is the modeling of the oil price series through non-linear models, further enriching the literature on the recent behavior of this time series. The second is the simultaneous use of the TAR-ECM and Markov-switching model to capture possible short- and long-term asymmetries in the pass-through of prices, as few studies have applied these methods to the future price of oil. The third and main contribution is the investigation of whether there are asymmetries in the transfer of oil prices to the price of derivatives in Brazil. So far, no work has investigated this issue, which is very relevant to the country. [ABSTRACT FROM AUTHOR]

Purpose: This paper aims to investigate the existing relations between the management of public bonds on the dynamics of debt, term structure of interest rates and economic cycle, through a dynamic stochastic general equilibrium model (DSGE), which was estimated through Bayesian inference techniques using data from Brazil. Design/methodology/approach: The model developed was used to investigate the effects of the public debt average maturity management when the economy faces a monetary policy shock. For this, three management scenarios are evaluated, including Brazilian securities average term. Findings: Contrary to what might be inferred from DSGE models that limited the analysis of the debt term by imposing only one-period bonds, a contractionary monetary policy shock does not necessarily cause public debt to increase significantly. Debt term structure plays a crucial role in this result since the government does not need to roll the debt over at higher costs when the debt term profile is longer, reducing the debt service costs and then the impact on the overall debt. Originality/value: Despite the relevance of this theme and its implications for the dynamics of the economy, there is still a gap to be filled in the literature when using DSGE models, since most part of the work that used this methodology limited the analysis of the debt term by imposing that government issues only one-period bonds. This paper differs from the others insofar as it promotes an investigation focused on the role played by debt maturity management on the performance of the contractionary monetary policy. This approach can generate a better understanding of debt management policy and its interaction with fiscal and monetary policies. [ABSTRACT FROM AUTHOR]

Purpose: This paper analyzes the potential presence of time-varying asymmetries in the preference parameters of the Central Bank of Brazil during the inflation targeting regime. Design/methodology/approach: Given the econometric issues inherent to classical time-varying parameter (TVP) regressions, a Bayesian estimation procedure is implemented in order to provide more robust parameter estimates. A stochastic volatility specification is also included to take into account the potential presence of conditional heteroskedasticity. Findings: The obtained results show that the reduced form and structural parameters were not constant during the period considered. Moreover, the subsequent analysis of the preference parameters provided evidences of short periods in which asymmetry was an important feature to the conduction of monetary policy in Brazil. Yet, during most of the sample period, the loss function was considered to be symmetrical. Originality/value: This paper aims to contribute to the rather scarce monetary debate on time-varying central bank preferences. The study of Lopes and Aragón (2014) is, to the best of the authors' knowledge, the only study for Brazil considering specifically TVPs. The authors applied Kalman filter estimation to data from 2000:M1 to 2011:M12. Despite the similar structure of TVPs, the present paper extends the latter study by controlling for stochastic volatility. Ignoring conditional heteroskedasticity might lead to spurious movements in time-varying variables and inaccurate inference (Hamilton, 2010). Thus, the stochastic volatility specification is included to take this issue into account. The authors follow the theoretical scheme put forward by Surico (2007) and Aragón and Portugal (2010), in which the economy is modeled from a New Keynesian perspective and the central bank loss function is assumed to be asymmetric regarding the responses to inflation and output deviations from their targets. On the empirical side, the authors propose a TVP univariate regression with stochastic volatility for the Brazilian reduced-form reaction function, following closely the Bayesian econometric procedure developed by Nakajima (2011). Given the nonlinear non-Gaussian nature of the TVP regression with stochastic volatility, the choice of a nonlinear Bayesian approach using the Markov chain Monte Carlo (MCMC) method is justified due to the intractability of the associated likelihood function (Primiceri, 2005). Finally, based on the theoretical model specification, the authors intend to recover the central bank preference parameters as to further evaluate the degree of asymmetry and its potential time-variation under the inflation targeting regime. [ABSTRACT FROM AUTHOR]

Purpose: This paper aims to analyze the macroeconomic effects of a monetary policy shock considering that fiscal policy is under fiscal constraints. For that, a dynamic stochastic general equilibrium (DSGE) model was developed for Brazil, which was estimated through Bayesian econometrics. Design/methodology/approach: In the basic model, the government does not have any type of fiscal restriction. The other two estimated models, however, consider that the fiscal authority implements some kind of fiscal rule. One of these rules is the Constitutional Amendment 95/2016 (EA 95/2016), which includes a limitation for government spending. The other Alternative Rule seeks to represent the characteristics of a more austere fiscal rule, as proposed by Wesselbaum (2017). Findings: It was possible to verify in this paper that the implementation of EA 95/2016 by the Brazilian government does not produce statistically different results and that it reduces the welfare of the households in relation to the scenario without fiscal rule. Thus, the proportionate benefit of EA 95/2016 is less than the cost associated with this fiscal rule (less welfare). If the government adopts a fiscal constraint similar to the Alternative Rule, it is possible to considerably reduce the interaction between fiscal and monetary policy, thereby reducing the fiscal dominance policy over monetary policy. However, the cost in terms of welfare is much higher than the baseline scenario. Thus, the fiscal authority is subject to a trade-off among public debt stabilization and household welfare. Originality/value: The study intends to contribute to the literature on three specific points. First, the monetary–fiscal policy interaction within a representative model of the Brazilian economy is discussed. In addition, the study considers that the government can adopt EA 95/2016 and the Alternative Rule, used in the US economy. Second, the impacts of EA 95/2016 and the Alternative Rule on household welfare will be quantified. Finally, two types of individuals (Ricardian and non-Ricardian agents) and two sectors of production (wholesalers and retailers) are considered. In this paper, the DSGE model is estimated, since the previously mentioned authors performed simulations [ABSTRACT FROM AUTHOR]

Purpose: The outbreak of the coronavirus disease 2019 (COVID-19) pandemic is an unprecedented shock to the BRICS (Brazil, Russia, India, China, South Africa) economy and their financial markets have plummeted significantly due to it. This paper adds to the recent literature on contagion due to spillover by uniquely examining the presence of pairwise contagion or volatility transmissions in stock markets returns of India, Brazil, Russia, China and USA prior to and during COVID-19 pandemic period. Design/methodology/approach: In this study, the generalised autoregressive conditional heteroskedasticity (GARCH) by Bollerslev (1986) under diagonal parameterization is used to estimate multivariate GARCH framework also known as BEKK (Baba EngleKraft and Kroner) model on stock market returns of BRIC nations and the US. Findings: The empirical results show that the model captures the volatility spillovers and display statistical significance for own past mean and volatility with both short- and long-run persistence effects. Own volatility spillovers (Heatwave phenomenon) have been found to be highest for the US, China and Brazil compared to Russia and India. The coefficients indicate persistence of volatility for each country in terms of its own past errors. The highest and long-term spillover effect is found between US and Russia. The results recommend that Russia is least vulnerable to outside shocks. Finally after examining the pairwise results, it is suggested that the BRIC countries stock indices have exhibited volatility spillover due to the COVID-19 pandemic. Research limitations/implications: The study may be extended to include other emerging market economies under a dynamic framework. Practical implications: Researchers and policymakers may draw useful insights on cross-market interdependencies regarding the spillovers in BRIC countries' stock markets. It also helps design international portfolio diversification strategies and in constructing optimal portfolios during COVID and in a post-COVID world. Originality/value: COVID-19 has been an improbable event in the history of the world which can have a large impact on the financial economies across the emerging countries. This event can be deemed to be informative enough to measure the co-movements of the equity markets amongst cross-country return series, which has not been investigated so far for BRIC nations. [ABSTRACT FROM AUTHOR]

Purpose: The purpose of this paper is to investigate the effects of Chinese and non-Chinese import penetration on the inter-industry wage premium, and how such effects vary according to the unskilled-labor intensity of the industry and to the implementation of the Nova Matriz Economica policy in 2008. Design/methodology/approach: The paper empirically examines the effects of the Chinese and non-Chinese import penetration on the wage premium using a linear instrumental variables model and data from Brazilian household surveys and censuses. Findings: The estimates show the Chinese import penetration positively affecting the wage premium in unskilled-labor intensive. And the implementation of the new macroeconomic policy strengthened this effect. Originality/value: To the best of the author's knowledge, this is the first paper to study the effects of Chinese and non-Chinese import penetration on the inter-industry wage premium. [ABSTRACT FROM AUTHOR]

Purpose: In an attempt to reduce tax distortions and increase economic efficiency, in 2002 and 2003 Brazil promoted changes in the PIS/COFINS tax, the main federal tax on consumption. Thus, in addition to the old cumulative regime calculated on company revenues, the noncumulative regime was created with higher rates and the added value as a tax basis. Design/methodology/approach: This paper analyzes the effects of the PIS/COFINS reform in a context of deindustrialization in the Brazilian economy, using a neoclassical model with two sectors. Findings: The results suggest that after a small improvement in the aggregate economy in the short term, in the long term there was a worsening of the macroeconomic indicators. From the sector perspective, the PIS/COFINS reform may have contributed to the loss of industry participation in the Brazilian economy. Originality/value: The study of the impact of the PIS/COFINS reform on industry through a neoclassical model is unprecedented in the national literature and contributes to the investigation of changes in the tax regime that occurred in the country. [ABSTRACT FROM AUTHOR]

Purpose The purpose of this paper is to use the instrumental game theory to understand the behavior of the front agents tax evasion and tax authority in Brazil.Design/methodology/approach In order to analyze the taxpayer’s behavior before the Brazilian tax system and tax actions aimed at reducing tax evasion, the authors developed a theoretical model based on the payoffs of Graetz et al. (1986) and increased with situations proposed by Siqueira (2004), Lipatov (2006) and Oliveira (2011).Findings Considering the cases with and without specialists, the main results show that in high dropout situation, penalize taxpayers with high fines or deprivations of liberty may not be as effective. Another result of the analysis is that the audit and inspection costs played an important role in driving the equilibrium system.Research limitations/implications One limitation of this study is to consider how the exogenous tax authorities earnings (Federal Revenue of Brazil and Federal Police) and not as a function of the goals and certain enforcement policies for each public body.Practical implications The authors suggest the following policy: investing in tax inspectors and unbureaucratic the authorities of the cost structure become a more effective tool to combat non-compliance with tax obligations that the intensity of the penalties imposed by the act of evading.Originality/value This paper contributes to the literature insofar as it models for the first time, using game theory, the behavior of the evading agent and the tax authority in Brazil. [ABSTRACT FROM AUTHOR]

Purpose The purpose of this paper is to estimate the impact of racial and low-income quotas on academic performance of students from public and private universities in Brazil.Design/methodology/approach Using propensity score matching applied to student-level data from the National Examination of Student Performance conducted in 2012; this paper identifies the impact of the quota policy on academic performance considering all Brazilian universities.Findings The results indicate that there is no statistically significant difference in academic performance between students admitted under the racial quota and those who had the regular admission (non-quota students). The impact is positive, however, for students from the North region of Brazil and among those with very low family income, whereas a negative impact is observed for those from the Central-West region. In regard to the low-income quota, quota students perform worse than eligible non-quota students as their scores are, on average, 14 percent lower. Similar findings are observed when different subsamples are considered.Originality/value This paper’s main contribution is to provide a broader and more rigorous empirical approach than that presented by the existing literature in order to evaluate the impact of quota policies on academic achievement. Moreover, this study considers all Brazilian institutions whereas previous studies are limited to only one or a few universities. [ABSTRACT FROM AUTHOR]

Purpose: This paper investigates the relationship between (1) business cycle and use of personal contacts to obtain job and (2) use of personal contacts to obtain job and wages. Design/methodology/approach: For this, we use data from the Monthly Employment Survey (2002–2015) from Brazil which has detailed information on individual and job characteristics. In addition, we investigate the impact of referrals on wage using quantile regressions. Findings: Time-varying parameter estimates indicate that the relationship between business cycle and use of personal contacts became less countercyclical over time. In general, they show that there is more evidence of a slow changing relationship between personal contacts and the business cycle over time rather than a sudden and discrete one. Using quantile regressions, we observed that, controlling for similar observable characteristics, and including unobserved heterogeneity, wage differences between workers using personal contacts versus workers using others channels disappear. The evidences indicate that workers resort to personal contacts because of valuation of non-pecuniary job characteristics. Practical implications: The results suggest that, in designing subsidy or affirmative action programs, attention to network effects is important. Social networks can help labor markets run more smoothly by alleviating information frictions. Originality/value: This study extends the existing literature by providing empirical evidence of the use of personal contacts for the Brazil. Although there are many studies and methods for measuring use of personal contacts, to our knowledge, there are no studies using a time-varying parameters model. [ABSTRACT FROM AUTHOR]

Purpose The purpose of this paper is to evaluate skilled labor demand determinants in Brazil, considering alternatives explanations: changes in relative wages, non-homothetic technology output growth and skill-biased technical change.Design/methodology/approach This study relies on a rich and unique matched employer-employee data set for manufacturing sector, from 1996 to 2003. The analysis considers a translog functional form labor demand system estimated using seemingly unrelated regression and instrumental variables to control for possible measurement errors and wages and output endogeneity.Findings The demand function estimates suggest that: labor demand underlying technology is non-homothetic, research and development investment is biased toward skilled workers, the non-homothetic technology is not skill biased so output changes contributed positively for skilled labor increase, relative wages played a significant role and international trade has little explanatory power explaining labor demand shifts.Originality/value This is the first paper that considers alternative explanations for the increase in the demand of skilled workers for manufacturing in Brazil simultaneously: changes in relative wages, output changes with non-homothetic technology, skill-biased technical change and, to a lesser extent, international trade. The study challenges current empirical evidence that considers trade and trade liberalization as the main factor explaining labor demand shifts. [ABSTRACT FROM AUTHOR]

Purpose This paper investigates discrimination against women within the Brazilian labour market using firm-level data from the World Bank Investment Climate Survey. The purpose of this paper is to determine whether the female employees in the Brazilian labour market are paid less than their productivity warrants due to the existence of discrimination.Design/methodology/approach Based on employer discrimination model proposed by Becker (1971) that considered the proportion of female employees as a proxy for the extent of discrimination, the authors estimate the profit function using OLS analysis, and regress it on the proportion of female employees and other firm characteristics. To address the endogeneity problem caused by unobservable productivity shocks, the authors employed the methods proposed by Olley and Pakes (1996) and Levinsohn and Petrin (2003), respectively.Findings The results indicate that the proportion of female employees has positive effect on firms’ profit in 2002, but has no effect in 2007. This finding gives evidence of the existence of discrimination against female employees within the Brazilian labour market in the early 2000s, while the gender discrimination was reduced overtime.Originality/value This paper’s main contribution is to provide an approach that differs from that of previous research to determine whether discrimination exists within the Brazilian labour market. This paper also provides policy insights for Brazilian labour market. [ABSTRACT FROM AUTHOR]

Purpose The purpose of this paper is to investigate whether Brazilian municipalities are losing efficiency when collecting local taxes in response to oil windfalls. In particular, the paper aims to analyze the hypothesis that these grants encourage the benefiting municipalities to collect taxes with excessive administrative costs.Design/methodology/approach The author estimate a stochastic cost frontier with fixed effects and investigate whether oil revenues impact on the efficiency scores.Findings The results reveal that the municipalities benefitting from oil revenues (royalties) reduce their efficiency in collecting taxes in response to such grants, which signals that they generate some type of X-inefficiency in municipal public management.Research limitations/implications The stochastic cost frontier requires the calculation of input prices for public sector.Originality/value Using a cost frontier, it is possible to avoid the problem of mixing technical efficiency with unobservable preferences on public goods, as well as to focus on economic efficiency instead of technical one. [ABSTRACT FROM AUTHOR]

Purpose – The purpose of this paper is to study the impact of the real exchange rate on investment in the Brazilian manufacturing industry. Design/methodology/approach – The authors develop an investment model that considers the effect of changes in the real exchange rate, taking into account that the effect of the real exchange rate on the Brazilian manufacturing investment operates through demand and cost channels. The composition of these effects varies across manufacturing sectors, with different repercussions on investment decisions, depending on sectoral characteristics. A panel data analysis is applied to estimate the model for the Brazilian manufacturing sectors from 1996 to 2010. Findings – One main result is that the responsiveness of the Brazilian manufacturing investment to real exchange rate varies considerably across manufacturing sectors. Overall, the results contribute to a better understanding of the relationship between exchange rate dynamics, manufacturing investment and industrial development, thus unveiling important empirical elements for the debate on industrial policies to stimulate manufacturing investment and production. Originality/value – As the (scant) empirical literature on real exchange rate and investment in Brazil has invariably been using aggregate data, this paper contributes to the literature by obtaining sectoral estimates of the responsiveness of manufacturing investment to exchange rate fluctuations that further the understanding of the complex relationship between these economic variables. [ABSTRACT FROM AUTHOR]

Purpose – Due to the fact that studies on central bank communication in emerging countries are still scarce and there are few studies related to the influence that central bank’s perspectives about the state of the economy have on inflation expectations in emerging economies, the purpose of this paper is to contribute to the literature in the following aspects: it proposes an indicator of the central bank’s perception of inflation based on the minutes of the COPOM meetings, and, it analyzes the influence of central bank communication on expert inflation expectations through such indicator. Design/methodology/approach – Due to the fact that the perception of the Central Bank of Brazil is not directly observable, it is measured through the fuzzy set theory by an indicator that captures the informational content of the minutes of the COPOM meetings. The empirical analysis uses ordinary least squares, the generalized method of moments and vector-autoregressive through impulse-response analysis. Findings – The findings suggest that the expectations of financial market experts react according to the content of the information provided by the central bank, i.e., announcements cause deterioration of expectations in times of instability, and reduce inflation expectations when inflation is controlled. The results also support the idea that the credibility of inflation targeting plays a key role in determining inflation expectations. Practical implications – This paper suggests a new approach on studies about central bank communication. The focus here is not on the effect of the announcements in terms of future monetary policy, but on the perception of the central bank in terms of inflation. This central bank’s perception reflects the optimistic or pessimistic view about the economic outlook and risk of inflation and this perception is considered by experts of financial markets. Originality/value – For Brazil, there are no studies about the influence of communication through the minutes of the Brazilian Monetary Policy Committee meetings on inflation expectations. The authors develop an indicator in order to measure central bank’s perception of inflation based on the minutes of COPOM meetings. [ABSTRACT FROM AUTHOR]

Purpose – The purpose of this paper is to consider a monetary-jump model to measure the contribution of jumps to the total volatility of interest rates in the Brazilian interbank market and to assess the extent to which the central bank’s unanticipated monetary policy decisions are driving these jumps. Design/methodology/approach – The authors use a sample of swap rates contracts with different maturities to estimate a mixture GARCH-jump model that disentangles two components of interest rate volatility: a GARCH-type specification that models conditional heteroskedasticity to account for the volatility during “normal” times and a Poisson process that models the occurrence of abrupt changes in interest rates. Findings – The contribution of jumps to the total volatility is substantial, and monetary policy decisions partly explain the occurrence of those jumps. In particular, the authors find that the likelihood of a jump occurring during a meeting day of the Brazilian central bank’s monetary policy committee (COPOM) is higher in comparison to that of a non-meeting day. Research limitations/implications – The occurrence of jumps in the term structure of interest rates raises the question of the transmission mechanism of the monetary policy through the asset price channel as well as the relation between jumps and economic fundamentals. Practical implications – Communication between the central bank and the market will affect expectations and asset values. If the central bank’s decisions generate fewer jumps, then the variance of the interest rate-linked asset values will also be reduced. Originality/value – The paper employs a new approach to assess monetary policy surprises to a set of Brazilian interest rate data and relates the occurrence of jumps to the macroeconomic environment. [ABSTRACT FROM AUTHOR]

Purpose -- The purpose of this paper is to analyze the influence of prudential regulation and monetary policies on the supply of credit as well as the influence of such policies on the aggregate investment through the credit channel in Brazil. Design/methodology/approach -- The empirical analysis is based on estimates through ordinary least squares (OLS), generalized method of moments (GMM), system of equations through GMM (system-GMM), and impulse response functions through vector autoregressive (VAR). Findings -- The results suggest that monetary policies and prudential regulation affect aggregate investment through the bank lending channel. With regards to elasticities, the findings indicate that the credit is very sensitive to variations in economic activity and, in turn, prudential regulation presents a stronger influence on credit than the basic interest rate and the reserve requirement rate. Moreover, the estimates suggest that aggregate investment is more sensitive to entrepreneurs' expectations and credit supply. Practical implications -- Aiming to reduce systemic risk in the economy, capital requirements may be increased in order to induce banks to a lower risk exposure by reducing the supply of loans. However, while this instrument strengthens the banking system, it can also lead the banking system to become less sensitive to monetary policy shocks, and also discourage aggregate demand through the influence that the credit exerts on investments. As a consequence, prudential regulation is an important tool because it acts on the balance between economic growth and low risk exposure of banks. Originality/value -- The paper provides useful insights to academicians, economists and policymakers who are interested in understanding the effects of monetary policies and prudential regulation on aggregate investment through the credit channel in an emerging economy under inflation targeting. Moreover, the paper develops a theoretical model in order to show the influence of different monetary policies, as well as the influence of prudential regulation on the supply of credit. [ABSTRACT FROM AUTHOR]

Purpose – Most intergenerational mobility studies use data on two generations to estimate the elasticity between son's and father's earnings. The purpose of this paper is to use a data set spanning three generations to estimate additional relationships between a person's earnings and family background yielded by intergenerational mobility models such as Becker-Tomes (1979) model and modified versions of it. Design/methodology/approach – The paper uses data from the 1996 PNAD – a nationally representative household survey in Brazil. The author builds a data set consisting of 5,125 grandfather-father-son triplets by taking advantage of two characteristics of Brazil. First, commonly in Brazil, individuals live with their parents until they marry. Second, individuals tended to quit school and begin working at an early age. As a result, there are many households with adult sons who are not at the very beginning of their working careers. Since the sample is limited to households with adult sons, the author applies Heckman (1979) estimation procedure to address selection bias. Findings – Estimation results contradict some predictions of simple versions of the Becker and Tomes model. The paper proposes a modified version of the Becker and Tomes model that allows for a skipping generation effect, and finds that family background explains 34.9 percent of the variation in earnings among males aged 16-27 in Brazil. If there were no differences in endowments (talent, IQ, health, physical appearance, attitudes toward work, family connections, etc.), the variation in earnings would fall by no less than 26 percent. If it were possible to eliminate differences in investment in human capital, the variation in earnings would fall by at most 21.1 percent. Research limitations/implications – The paper has two main data limitations. First, the 1996 earnings of the fathers and sons are used as proxies for lifetime earnings although the transitory component of one-year earnings may be quite large, particularly at young ages. Second, in spite of the efforts to deal with the sample selection bias, the paper shows that the intergenerational elasticity in earnings for the sons aged 22-27 is about 14.6 percent lower for the subsample of households with adult sons than for the full sample. Practical implications – The paper finds evidence supporting the existence of a direct effect of the grandparents on the grandchildren beyond their influence on the parents, and reinforces consideration of this factor in intergenerational mobility studies. Social implications – The findings in this paper may suggest a room for improvements in economic outcomes of children in less privileged families through investment in formal education as well as policies that considers other aspects of a person's life. For instance, Bolsa Família – a Brazilian government program that provide cash allowances to poor families conditional on children school attendance – may improve the economic outcomes of poor children by enforcing formal education and by lessening the children hardships at home. Originality/value – The paper proposes a modified version of the Becker and Tomes model which allows for a skipping generation effect. Under the assumptions of the modified model and in hand with a three-generations data set from Brazil, the paper estimates a lowerbound for the variation in earnings explained by differences in endowments across families, and an upperbound for the variation in earnings explained by differences in human capital. [ABSTRACT FROM AUTHOR]

Purpose – The purpose of this paper is to demonstrate that both the reputation of the monetary authority and the credibility of the regime of inflation targeting are important to reduce the inflation bias and the effort of the monetary authority in an emerging economy. Design/methodology/approach – The paper develops a model which shows that the gain of credibility reduces the effort of the monetary authority in the conduct of monetary policy. The paper presents an econometric analysis for Brazil through ordinary least squares, generalized method of moments (GMM), system of equations by GMM and vector autoregressive. Findings – The findings suggest that the reputation of the monetary authority is important to the improvement of credibility, and the gains of credibility reduce the effort of the monetary authority in the conduct of monetary policy, reducing the variations of the monetary base. Originality/value – In the theoretical field, the study develops a model which shows that credibility is important to reduce both the inflation bias and the efforts of the monetary authority in the conduct of monetary policy. In the empirical field: first, it proposes a new index of reputation for the monetary authority; second, it demonstrates that the gain of reputation improves credibility, but also that attempts to exploit the output-inflation trade-off reduces credibility; third, the analysis found that the gains of credibility reduce the efforts of the monetary authority in the conduct of monetary policy. [ABSTRACT FROM AUTHOR]

Purpose – The purpose of this paper is to present a theoretical model and empirically verifies the transmission of monetary policy through the credit channel in Brazil. The study verifies if the monetary policy, the economic activity and the maturity of the inflation targeting regime affect the supply of credit. Design/methodology/approach – The paper offers a review of the literature concerning inflation targeting credibility and the transmission mechanism of monetary policy through the credit channel, it develops a theoretical model based on Bernanke and Blinder and Ferreira and it seeks empirical evidence for the Brazilian economy using ordinary least squares, generalized method of moments and vector autoregressive. Findings – The estimates indicate that the supply of credit is stimulated when the economy heats up, when the monetary authority reduces the interest rate and when the credibility increases. The evidence also indicate that the supply of credit is affected by the variables of the model, economic activity and employment are affected by monetary policy and the supply of credit exerts influence on both employment and output gap. Research limitations/implications – An important implication of this study is that, in inflation targeting emerging economies, such as that of Brazil, following a committed monetary policy to price stability which increases the credibility of the regime of inflation targeting and promoting macroeconomic stability represents a good strategy for improving the volume of lending to the private sector, thus stimulating economic activity and employment. What the findings do indicate is that developing credibility is crucial for emerging economies that are trying to grow, but with inflation being kept under control. Originality/value – The paper presents the following theoretical and empirical contributions: the model incorporates the effect that the credibility of the inflation targeting regime has on the supply of credit and, the econometric approach provides evidence that the monetary policy, the economic activity and the process of anchoring of inflation expectations affect the supply of credit in Brazil. Moreover, the paper finds evidence that the credit channel acts as a transmission mechanism of monetary policy to the economy. [ABSTRACT FROM AUTHOR]

Purpose – The purpose of this paper is to investigate the hysteresis hypothesis for the price and quantity of Brazilian imports in recent years. Design/methodology/approach – The empirical measure of strong macro hysteresis, as developed by Piscitelli et al., was incorporated into import demand and pass-through panel cointegration equations. Findings – The results show that the number of sectors that do not reject hysteresis is larger for the import price than for the demand for imported goods. The evidence supports Dixit's idea that the presence of hysteresis should diminish the degree of pass-through. Correcting for hysteresis makes quantity and price of imports more sensitive to exchange rate variations. Originality/value – This paper contributes to the literature by introducing Piscitelli et al.'s measure to test the hysteresis hypothesis in import prices and quantity. [ABSTRACT FROM AUTHOR]

Purpose – The purpose of this paper is to analyze the influence of macroeconomic variables and economic policies on expectations and confidence of entrepreneurs. It provides an econometric analysis of the expectation transmission channel under inflation targeting in Brazil, emphasizing the effect of inflation targeting credibility on the business confidence of industrial entrepreneurs. Design/methodology/approach – Based on ordinary least square (OLS), generalized method of moments (GMM) and vector autoregression (VAR), the paper provides empirical evidence about the influence of inflation targeting credibility and macroeconomic policies on expectations and confidence of entrepreneurs and, as a consequence, on industrial production. Findings – The evidence for the Brazilian economy suggest that monetary and fiscal policies as well as the credibility of the monetary regime affect economic activity by their impact on expectations of entrepreneurs. Research limitations/implication – Development of macroeconomic stability is important to the expectations formed by entrepreneurs and, therefore, for industrial production. In particular, inflation targeting credibility stimulates industrial production, since it increases the confidence of entrepreneurs about the functioning of the economy and their businesses. Originality/value – The results suggest new insights about the influence of economic policies on the real side of the economy, pointing out that the conduct of economic policies in emerging countries with inflation targets are likely to affect the expectations of entrepreneurs and therefore their production decisions. [ABSTRACT FROM AUTHOR]

Purpose – The aim of this paper is to perform an evaluation of the Brazilian informal labor market, following the lines suggested by Araujo and Souza. The paper focuses on the Brazilian labor market by using data from the National Household Sampling Survey – PNAD/IBGE, from 1995 to 2008. Design/methodology/approach – The paper uses four different methodologies: the OLS, pseudo-panel with fixed effects, instrumental variables and the Heckman selection model. The data for this study were obtained at the National Household Sampling Survey – PNAD/IBGE, from 1995 to 2008, with an exception to the years of 1994 and 2000, when this survey did not occur. The cross-section data were pooled and divided in two periods: 1995-2002 and 2003-2008. The sample ranges individuals from 22 to 57 years of age. Findings – The empirical findings show that although wages play an import role in the decision of workers and firms, all wage gaps between formal and informal markets reduced considerably, as has been pointed out by Mattos and Ogura. However, an increase in one year of study would raise the probability of participating in the formal sector while diminishing the probability of joining the informal sector. Besides, the skill premium in the formal sector is higher than in the informal sector. Originality/value – Results indicate that the main difference between the 1995-2002 and 2003-2008 period is the impact of education over wages. Returns to education for the second period are greater than for the first period analyzed. The monetary gains for the first period vary from 16.5 to 18.2 percent for formality and from 12.2 to 14.3 percent for informal labor. Whereas, for the second period these gains range from 19.7 to 22.6 percent and from 16.9 to 18.2 percent, for formality and informality, respectively. According to these findings, investments made on education were more profitable for the 2003-2008 period. However, all wage gaps between formal and informal markets reduced considerably, which reinforces the fact that workers are increasingly deciding in which market to operate. [ABSTRACT FROM AUTHOR]

Purpose The purpose of this paper is to present evidences on the spillover effects of a cash transfer addressed to poor elders in Brazil.Design/methodology/approach Using the Brazilian National Households Survey (PNAD) the authors assess the effects of an income transfer to the elders on household composition and the labor supply of elders and co-residing relatives, under a regression discontinuity design.Findings The authors do not find strong evidences of changes in the household composition due to the program. However the authors found reductions in the elders’ labor force participation, indicating that the program allow elders to retire. Moreover, the transfer yields a decrease in the labor force participation of co-residents, depending on their age. The authors also observe decreases in child labor.Originality/value Along with the cash comes context-dependent effects, showing there are many latent aspects of these transfers yet to be uncovered. [ABSTRACT FROM AUTHOR]

Purpose The purpose of this paper is to analyze the conduct of monetary policy in Brazil and estimate the country’s neutral real interest rate.Design/methodology/approach The authors make use of a state-space macroeconomic model representation.Findings The period of analysis goes from 2003 up to the end of 2013 and the results show that the country’s natural rate of interest was around 4.2 percent in December 2013.Originality/value One of the main differences of this work is the inclusion of variables such as the real exchange rate and world interest rate. This is important because these variables play an important role in the definition of the interest rate and, consequently, in the definition of the neutral interest rate. [ABSTRACT FROM AUTHOR]

Purpose – The purpose of this paper is to see if a difference exists between the impact of the subprime crisis on countries with more transparency and more regulated finance than on others. A further objective is to explain the success of the Brazilian case in avoiding the financial crisis and to show empirical evidence for the presence of market discipline. Design/methodology/approach – The paper offers a regulation and transparency index (RTI) based on 37 countries. Considering RTI and stock market index of developed economies, BRICs economies, and developing economies, cross-country estimations are made. Furthermore, the analysis for market discipline in the Brazilian case is based on GMM panels, taking into account market discipline through subordinated debt holders (debentures). Findings – The results indicate that a higher degree of regulation and transparency is related to a higher return and a lower volatility in the stock market during the subprime crisis. Moreover, one of the main reasons for the apparent success of the Brazilian case in facing the crisis is the combination of a strong regulation of the financial system and the presence of market discipline. Practical implications – Transparency of information by the banking sector is relevant for the regulation of the financial system. Originality/value – The paper presents new insights for the literature on financial regulation and transparency of information in the search for a framework capable of avoiding financial crisis. [ABSTRACT FROM AUTHOR]

Purpose – The purpose of this paper is to analyse the relationship between infrastructure and total factor productivity (TFP) in the four major Latin American economies: Argentina, Brazil, Chile, and Mexico. Design/methodology/approach – The authors hypothesise that an increase in infrastructure has an indirect effect on output by raising productivity. To assess this theory, the traditional Johansen methodology was used for testing the cointegration between TFP and physical measures of infrastructure stock, such as energy, roads, and telephones. The Lütkepohl, Saikkonen and Trenkler Test, which considers a possible level shift in the series and has better small sample properties, was applied to the same data set and the two tests were compared. Findings – The results do not support a robust long-term relationship between the series; the authors do not find strong evidence that cuts in infrastructure investment in some Latin American countries were the main reason for the fall in TFP during the 1970s and 1980s. Originality/value – The present paper addresses the empirical relationship between infrastructure and economic growth for Argentina, Brazil, Chile, and Mexico between 1950 and 2000, using new time series econometric methods finding new evidences on this relationship. [ABSTRACT FROM AUTHOR]

Purpose – The purpose of this paper is to characterize that the marginal social cost of public funds and to estimate the response of labor supply to these publicly provided goods, and simulate the marginal social cost of cash-cum-in-kind transfers (MSCKT) for Brazil. Design/methodology/approach – The paper provides a theoretical model based on Wildasin to characterize the marginal social cost of public funds. Next it estimates using instrumental variables approach the variables necessary to calibrate our theoretical model. Findings – The marginal social cost of public funds depends on the relation between labor supply and the cash-cum-in-kind transfers. Last, the simulations suggest that MSCKT can increase up to 12.4 percent if compared with cases in which is assumed ordinary independence between labor and the bundle of goods provided by the public sector. Research limitations/implications – Further panel data experiments based on municipal public finance data should be conducted in order to circumvent the agents' heterogeneity problem inherent in cross section analysis – and individuals' labor supply response could be more sensitive at this data level. Finally, such cost-benefit analysis makes more sense when a specific project is considered and therefore its effects on the taxed good can be clearly estimated leading to a more reliable estimative of the marginal social cost of funding that project. Social implications – Governments should take the actual social cost of public policies into consideration before undertaking any new project. Originality/value – The paper is useful to characterize the marginal social cost of public funds, estimate the necessary parameters and, last, to calibrate its correspondent using Brazilian data. [ABSTRACT FROM AUTHOR]

Purpose – This analysis seeks to deal with the emerging economies and to reveal that, if the fiscal authority is accountable with a policy that stabilizes the public debt/GDP ratio, the consequence is a low Treasury bond risk premium. Design/methodology/approach – Based on the purpose of this paper, a theoretical model is developed and empirical evidence through an autoregressive distributed lag (ADL) model, taking into account the Brazilian experience, is made. Findings – The findings denote that domestic variables are responsible for determining the risk premium. Moreover, a correct management of the public debt and the use of primary surplus targets make for a good strategy for promoting a fall in the Treasury bond risk premium. Practical implications – Primary surplus and public debt/GDP ratio can be used as important tools for mitigating the Treasury bond risk premium. Originality/value – The results of the paper give some new insights about the management of fiscal policy for developing countries. [ABSTRACT FROM AUTHOR]

Purpose - The purpose of this paper is to examine the existence of skill differentiation between formal and informal labor markets. Design/methodology/approach - First, a theoretical model is developed under the assumption that concealment of production is increasingly costly for informal firms. Second, using data on the Brazilian self-employed economy, two methods are utilized to compare earnings in the formal versus the informal economy: propensity score and instrumental variable (IV) methods. For the IV estimations, state-level variables are used as instruments for individual's decisions. In addition, the effect of schooling on formality choice is analyzed. Findings - The theoretical model implies that more productive firms tend to operate formally and the proportion of workers employed by formal firms is larger for higher skilled workers. In the empirical analysis, it is found that formal firms are more productive than informal firms, controlling for workers' characteristics, and that higher workers' skill increase the probability of formal operation, as predicted by the theoretical model. Originality/value - The paper provides an original theoretical model of skill differentiation in labor markets and empirically evaluates the implications of the model. [ABSTRACT FROM AUTHOR]

Purpose — This paper seeks to investigate the role of income-inequality on the size of local government. Design/methodology/approach — First, the paper extends the model proposed by Meltzer and Richard, allowing for spatial interaction in the redistributive in-kind transfers from the local governments. Second, it estimates the determinants of the size in local government taking into consideration spatial dependence in the variables. Findings — This model points that the poorer the median voter is, the higher should be the level of local public expenditures, but the spillover effect (spatial effect) in spending is undetermined. Second, using data on Brazilian states public finance, the results suggest a negative relation between expenditures (and tax revenues) and the median voter income, in favor to the model. While both public spending and tax rates exhibit negative spatial correlation (substitute goods), behavioral significance can be attached to the spatial process in public spending but not to the spatial process in the local tax rate. Originality/value — The paper provides a small extension of the Meltzer and Richard model allowing for spatial interaction and contributes to the empirical debate about inequality and the size of the government presenting the results for Brazil. [ABSTRACT FROM AUTHOR]

Purpose – Poverty and inequality undoubtedly remain substantial challenges to economic and human developments amid growing emphasis on intellectual property rights (IPRs) (with recent advances in information and communication technology (ICTs)) and good governance. In the first empirical study on the incidence of piracy on inequality in Africa, the purpose of this paper is to examine how a plethora of factors (IPRs laws, education and ICTs and government quality) are instrumental in the piracy-inequality nexus. Design/methodology/approach – Two-stage least squares estimation approaches are applied in which piracy is instrumented with IPRs regimes (treaties), education and ICTs and government quality dynamics. Findings – The main finding suggests that, software piracy is good for the poor as it has a positive income-redistributive effect; consistent with economic and cultural considerations from recent literature. ICTs and education (dissemination of knowledge) are instrumental in this positive redistributive effect, while good governance mitigates inequality beyond the piracy channel. Practical implications – As a policy implication, in the adoption IPRs, sampled countries should take account of the role less stringent IPRs regimes play on income-redistribution through software piracy. Collateral benefits include among others, the cheap dissemination of knowledge through ICTs which African countries badly need in their quest to become “knowledge economies.” A caveat, however, is that, too much piracy may decrease incentives to innovate. Hence, the need to adopt tighter IPRs regimes in tandem with increasing income-equality. Originality/value – It is the first empirical assessment of the incidence of piracy on inequality in Africa: a continent with stubbornly high poverty and inequality rates. [ABSTRACT FROM AUTHOR]

Purpose – The Brazilian municipalities show a huge disparity in income level. The GDP per capita difference between the richest and the poorest municipalities is about 190 times, according to IBGE (2000) database. This paper aims to analyze the impacts of Brazilian municipalities institutional quality on their levels of per capita income. Design/methodology/approach – Institutionalist theory provides a plausible explanation for the gap among municipalities income level. Many empirical studies based on cross-country data have found a high correlation between institutional quality and the level of economic development, but there is little research concerning the extreme inequality within the national territory and its relationship with institutional quality. The theory suggests that the institutions matter for the level of economic development because of their effects on political power distribution, generation of economic opportunities, innovation, human capital accumulation, and so on. Findings – Overall, an increase by one point in the average quality of the institutions is able to increase the average GDP per capita around 20 percent. This means that each point of increase in the quality of the municipality institutions is able to increase the municipality GDP per capita by R$1,000 (around US$600). Originality/value – This is an important research that sheds light to the importance of institutional quality at local level and its influence over growth in a developing country. [ABSTRACT FROM AUTHOR]

Purpose – The purpose of this paper is to make an analysis of the Brazilian experience after the adoption of inflation targeting concerning the effects caused by the new practices of transparency and communication in the monetary policy. Design/methodology/approach – Changes in the financial market's expectations due to monetary policy actions are analyzed based on methodologies proposed by Cook and Hahn and Kuttner. Daily data from transactions in the interbank deposit futures market of the Securities, Commodities and Futures Exchange (BMF&BOVESPA) are used for the period July 1999-January 2009. Two sub-periods are also considered: the "maturation period" – the first phase of the effects caused by an increase in central bank transparency; and the "wisdom period" – the second phase in the financial market's perception regarding an environment with more transparency. Findings – The findings are in consonance with the idea that an increase in central bank transparency and communication improves the efficiency of expectations hypothesis of the term structure of interest rate and the anticipation of changes in the interest rate target. Originality/value – This study offers some new insights into how central bank communication improves the efficiency of the monetary policy for developing countries, which have adopted inflation targeting. [ABSTRACT FROM AUTHOR]

Purpose-This article aims to analyze if the adoption of inflation targeting in Brazil contributed to an improvement in the conduction of monetary policy capable of increasing credibility and reducing inflation without an increase in the sacrifice rate. Design/methodology/approach-Considering the Brazilian experience, this article estimates, through GMM and VAR methods, the offsetting effects of a monetary policy change on the output-inflation and unemployment-inflation trade-offs. Findings-The findings denote that the disinflationary process implemented in Brazil, afterthe adoption of inflation targeting, is not associated with the emergence of the above-mentioned trade-offs. Furthermore, the development of credibility in the conduction of monetary policy is an important element responsible for the achievement of this result. Practical implications-Development of credibility is an important strategy for improving the conduction of the monetary policy. Originality/value-The results of the paper give some new insights about the conduction of monetary policy for developing countries, which have adopted inflation targeting. [ABSTRACT FROM AUTHOR]

The paper questions the widely accepted view according to which distorted factor prices are the main determinant of rural unemployment and under-employment in Brazil. It is argued that more than distorted relative prices, the very limited technological alternatives available, together with the pattern of land ownership and the "urban bias" style of the country's agricultural policies are the main forces behind the introduction of capital-intensive processes in Brazil's more advanced agriculture, and the related problems of labour absorption. [ABSTRACT FROM AUTHOR]