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This study takes stock of the institutional reform of monetary policy in Latin America since the early 1990s. It argues that strengthening the legal independence of central banks, together with macroeeonomic policies, was instrumental in reducing inflation from three-digit annual rates in the 1990s to single-digit territory in 2004. The paper also discusses the main challenges of monetary policy today, namely, achieving price stability, restoring market confidence in domestic currencies, and sticking to policy consistency despite adverse effects of the volatility of capital flows. Finally, recurrent banking crises and lack of fiscal discipline are identified as the main risks for the success of monetary policy in Latin America. [ABSTRACT FROM AUTHOR]

In this paper we study the effect of short and long-term components of managerial compensation in the relationship between executive compensation and firm performance. We propose a dynamic agency model with capital accumulation to represent the decision making process of the principal regarding the optimal allocation of resources within the firm. From a numerical solution of this model, we produce model-generated data to compute pay-performance sensitivities that can be compared to those obtained in the empirical literature on CEO compensation. Our results are consistent with some of the observations reported in this literature. Our contribution in this article is the finding that past performances affect more the future compensation part of executive pay, while contemporaneous performances influence more the salary component of executive pay. [ABSTRACT FROM AUTHOR]

This paper shows the effects of uncertainty of economic growth and inflation on average rates of output growth and inflation, using quarterly data of Argentina, during the last three decades. The paper employs a GARCH-M model (VAKMA model) that permits to test diagonally and symmetry relationships between the variables. The results suggest that increased growth uncertainty is associated with significantly higher average output growth (theory of precautionary savings), while higher inflation uncertainty is correlated with lower average output growth (Okun, 1971, and Friedman, 1977, arguments). Both inflation and economic growth show evidence of significant asymmetric response to positive and negative shocks of equal magnitude. [ABSTRACT FROM AUTHOR]

This paper presents the first historical series of poverty and inequality in Mexico for the period 1950-2004. We observe that poverty reduces continuously between 1950 and 1984, and remains constant, with the exception of 1996, where it increases sharply. With regards to inequality, this variable follows an inverted U trend between 1950 and 1984, similar to the Kuznets curve; however, it increases almost continuously from 1984 on. We also show that during 1950-2004 the correlation between poverty and economic growth has been strong and negative, the correlation between poverty and inflation has been strong and positive, and the correlation between poverty and inequality has also been positive. [ABSTRACT FROM AUTHOR]

This paper analyzes economic development through a co-evolutionary process where formal institutions linked to the rule of law are transformed jointly with cultural values. This type of dynamic makes possible to attain multiple equilibriums and, hence, economic backwardness is explained by the presence of an "opportunistic" culture that coexists in an environment where illegality prevails. By means of an evolutionary game theory model, it is shown that a low income per-capita scenario is very difficult to eradicate. This is the case because of the existence of a cultural inertia generated by the co-evolution itself, and because of the relevance that remote factors (sociocultural and geographical) have on determining the probability that the economy can move following certain growth path. [ABSTRACT FROM AUTHOR]

This paper builds a banking environment where both fundamental runs (that stress macroeconomic variables, such as negative technology shocks, as the cause of bank runs) and sunspot runs (where self-fulfilling expectations generate equilibria where agents panic and run on banks) coexist. A policy of narrow banking will prevent runs, but holding excessively high levels of liquidity will prevent socially productive investment opportunities, and thus will not be optimal. In addition, banks lose their role as intermediaries under this policy. A policy of suspension of convertibility may reduce welfare relative to the case where bank runs are allowed to take place, if the probability of sunspot runs is sufficiently low. [ABSTRACT FROM AUTHOR]

This paper follows the macroeconomic variables tradition of the APT of Ross (1976a), which has the advantage (in comparison with the Factor Analysis approach) of allowing an economic interpretation of both the common factors and the risk premia. Similar to Burmeister and McElroy (1988), we consider four measured macroeconomic factors, and one unobserved factor. The existence of unobserved factors is a generalization of the previous work by Chen, Roll and Ross (1986). We test the restrictions that the APT imposes on a general factor model in the period 1990-2003. In addition, the CAPM is nested in the APT, which allows us to test the CAPM. Our empirical results are: (a) the APT restriction is not rejected by the data, (b) the innovations in the rate of growth of the Imacec (a monthly indicator of general economic growth), of the price of copper, and of the price of oil, are priced factors in the sample, while the innovation in inflation rates does not have a statistically significant premium in the sample, and (c) the CAPM is strongly rejected by the data, in favor of the APT. [ABSTRACT FROM AUTHOR]

This paper analyzes the effect of minimum wages on the income of workers in Mexico. Using panel data from the National Urban Employment Survey (ENEU) and from the administrative records of the Mexican Social Security Institute (IMSS), this paper shows that changes in the real minimum wage induce changes in the same direction on wages in the Mexican labor market. This effect is weaker (although positive) the higher the income of the worker. It is also shown that the effect was stronger in the period comprising 1985-1993 than in the period comprising 1994-2001, suggesting that this effect is losing strength. [ABSTRACT FROM AUTHOR]

Over time, the concept of food security has evolved and at the same time become more precise. From an initial concern over national or world supply, attention is now focused on access to food. The concept is analyzed as a problematic combination between supply and demand, be it from the point of view of the quality of the production, as in determining the effective demand of food. Hunger and food insecurity are both a result and a cause of poverty and, therefore, eliminating hunger is not only a moral and social imperative but is also a good investment for economic growth, especially for the poorer countries. In this respect, trade and biotechnology applied to agriculture seems to be indispensable to eradicate poverty and hunger. Nevertheless, many questions remain requesting answers. Hence the impact of the trade liberation and the contribution of the agricultural biotechnology on the food safety of the countries, especially of developing countries is discussed. We finalize this paper with a proposes programme for family agriculture aimed at improving the competitiveness and the effectiveness of policy interventions. It is thought it may cope better with the challenges that lie ahead. [ABSTRACT FROM AUTHOR]

This paper examines the determinants of sporting success of different countries in the Pan-American Games during the 1959-1999 period. The data consists of a panel of participant countries, where the variable of interest corresponds to the number of medals obtained by each country in each of the Games. The empirical model assumes that international sporting success depends on the effort and resources devoted to this activity as well as resource endowment, including population size, GDP, infant mortality, the percentage of Afro-Americans in the population. A set of dummy variables identifying whether the country is a host of the competition or a neighbor country were also included. Since the number of medals a country wins will depend on the effort and resources of the other countries in competition, the econometric estimate must take into account the variance-covariance matrix of the correlation of errors among countries. The results show that population size and GDP are not significantly correlated with the number of medals obtained in Pan-American Games when unobservable effects are accounted for. These results would be consistent with the hypothesis that more than size or wealth of a country what really determine success in international sports competition is the investment made by countries in developing such activities. [ABSTRACT FROM AUTHOR]

Theoretical models of the political budget cycle suggest that electoral manipulation of government expenditures can take the form of changes in the composition of spending, without impacting the overall budget or the deficit, and that the form and extent of this manipulation depend on the fiscal preferences of voters. These insights, however, are often overlooked in empirical studies. In this paper, I use data on government expenditures and election outcomes in Colombia to provide an integrated analysis of voting behavior and the pre-electoral dynamics of government spending. I emphasize potential changes in the composition, rather than the size, of the budget. I find that components of the budget that can be identified with targeted spending grow, and that non-targeted spending contracts, in the year preceding an election. Consistently, I find that voters reward the preelection increases in targeted spending, but punish incumbents who run high deficits before the election. [ABSTRACT FROM AUTHOR]

In this paper the methodology of real options is presented as an imperative tool for the board of directors of a firm for the decision making process on the financial assessment of projects or business strategies when there is flexibility (optionality) of making, in the future, new decisions such as: expanding, contracting, deferring, correcting or abandoning a project or strategy. In this regard, this research carries out a literature review of closed-form formulas to value the optionality of several strategies are obtained under the assumption that the present value of the expected cash flow follows a log-normal distribution or by using binomial methods. In particular, this paper deals with the case of the decision making of selling or shutting down a firm when the market value of its securities (titles of capital and debt) exceeds the present value of the expected cash flows, or the present value of such expected cash flows is less than certain salvage value. In this context, a Mexican firm that provides satellite communications services is analyzed. Moreover, the methodology of real options is applied to highway construction projects, in particular, the case of the Toluca-Atlacomulco highway project is examined under the assumptions of constant and stochastic volatility. It is also important to emphasize that this paper focuses on: i) the valuation of American abandonment real options; ii) valuation of composed real options; iii) valuation of real options with stochastic volatility extending Hull and White's (1987) model. [ABSTRACT FROM AUTHOR]

If finance is crucial to growth, as a large literature has demonstrated, then why is there wide variance in financial development across countries? Why have governments not put the appropriate policies into place to encourage the development of banks and securities markets? This paper addresses this question by exploring the development of the Mexican banking system from the 1880s to the present. It argues that the institutions that encourage financial development cannot be created at the stroke of a pen. Rather, the creation of institutions that encourage financial development are dependent upon other institutions that limit the authority and discretion of the government. In short, political institutions that constrain government are a necessary condition for economic growth. [ABSTRACT FROM AUTHOR]

This paper analyzes the episodes of economic growth in Guatemala over the last fifty years, with special emphasis in the post-1999 deceleration. The results show two important facts. First, there are good reasons to believe that this phenomenon may be temporary. Second, the post-1999 deceleration has an internal component linked to deteriorated competitiveness and lower levels of efficiency. Based on these results, we conclude that important reforms must be made in areas related to the absorption of new technologies, economic regulation, the public sector, financial markets, trade openness, and labor markets. These reforms are likely to result in greater levels of productivity and growth. [ABSTRACT FROM AUTHOR]

The most common approach used in international comparisons of agricultural productivity and technological change is generally based on Cobb-Douglas production functions. Similarly, the technological level is usually modelled as a linear deterministic trend. In this paper, we propose more general and less restrictive specifications. In particular, we consider a translog production function as well as a dynamic stochastic representation of the technological level, which produces a non-linear dynamic panel data model. The model is estimated for a sample of 104 countries and various sub samples, over the period 1961-1991. We find that the proposed model outperforms the alternative specifications considered and we use its results to characterize the agricultural technological processes and to make comparisons among groups of countries. A striking result is that the technological gap between developed and less developed countries has considerably increased over this period of time. [ABSTRACT FROM AUTHOR]

The Chilean private pension system is of Defined Contribution, and hence the future pension of its affiliates is uncertain. In this paper we study two factors that influence the level of pensions that an affiliate can expect to receive at retirement: temporal unemployment (and the consequent lack of contributions) and the investment risk of the pension assets themselves. We model the wage curve over time of a representative Chilean affiliate, but we do not add risk to it. Instead, we focus on the risk of unemployment, which we model as a Markov process with two states: employed and unemployed. On the other hand, the investment risk is modeled assuming that the pension assets follow a Geometric Brownian motion. We use the model to estimate the probability distribution of pensions at retirement age; which allows us to estimate the likely impact of changes in the aggregate unemployment rate, and of risk and return on the future pensions. Our results are that the future pensions of Chilean affiliates are more sensitive to investment risks than to unemployment risks. Also, female affiliates are more vulnerable than male affiliates, and married male affiliates are more vulnerable than single ones. [ABSTRACT FROM AUTHOR]

In this paper we evaluate the future evolution of the contributed pensions for the Spanish economy through the period 2002-2050. We specify a model that contains the evolution of the fundamental variables of this expenditure. The disaggregation of the total expenditure of the contributed pensions allows us to analyze in detail the features of this variable, as well as, to simulate more precisely the impact of legislative changes. [ABSTRACT FROM AUTHOR]

This paper presents an empirical evaluation of the evolution of trade relationships between Latin America and the European Union from 1992 to 2003, using the most recent data available. We focus on the volume, concentration by countries and areas, and the evolution phases, in the framework of the main intraregional agreements and the growing liberalization of these economies. We seek to determine whether the efforts made on both sides—specifically the changes in economic policies in many Latin American countries, the agreements to increase exchanges and the intensification of the political dialogue on both shores of the Atlantic—have achieved positive results. The general characteristics, their intensity, and their concentration in specific zones have been developed using a series of indicators that enable us to draw some conclusions about these transformations. [ABSTRACT FROM AUTHOR]

This paper estimates an Euler equation for per capita consumption to investigate whether social security increases consumption ceteris paribus in seventeen countries. Following the seminal work of Martin Feldstein, the literature has estimated consumption functions to address this question. Unfortunately, consumption functions confound structural and expectational parameters, making their interpretation problematical. Furthermore, if their variables are difference-stationary, least squares may produce inconsistent parameter estimates and must virtually always produce inconsistent standard errors for the estimated parameters. By contrast, under reasonable assumptions, generalized method of moments consistently estimates the parameters and standard errors of Euler equations. Moreover, the parameters are more readily interpretable. The paper finds strong evidence that social security increases consumption ceteris paribus. Furthermore, the coefficient estimates imply large negative effects either on the growth rates of the capital stock, out put and consumption along their balanced growth rates or alternatively on their levels. [ABSTRACT FROM AUTHOR]

Between 1979 and 1999, mortality rates in Chile fell from 6.8 to 5.4 per thousand while infant mortality rates decreased from 75 to 38 per 1 000 newborns. This paper presents a methodology to value these reductions on the mortality rates based on a model in which agents choose consumption and leisure, facing survival rates. We calibrate the model to the Chilean economy during the nineties. Our results indicate that changes in the mortality rates between 1980 and 1997 can be valued at 270% of the Chilean GDP in 1998. [ABSTRACT FROM AUTHOR]

In this paper, we analyze the changes in the Chilean economy specialization patterns mainly in the period of fastest economic growth and taking into account its relative abundance of productive factors. There are three important findings in this paper that are relevant for natural resources abundant, fast-growing economies. First, we find that even there is a great degree of heterogeneity in output and productivity growth across economic activities, the most dynamic sectors are those more intensive in natural resources. In contrast, labor-intensive sectors are more likely to experience economic contractions. Second, consistent with international evidence, our results suggest that significant changes in Chilean specialization patterns are possible only if the economy increases substantially the investment in both physical and human capital. Third, we do not find evidence that necessarily the tradable sector is an engine of growth. In fact, for a large part of the period under analysis, the non-tradable sector had experienced more rapid output and productivity growth than the tradable sector. This would be consistent with a number of structural reforms (privatization and liberalization of foreign direct investment) that favored expansion in non tradable sectors. [ABSTRACT FROM AUTHOR]

In this paper, changes in the Spanish personal in come distribution along the period 1973-2000 are studied using the parameter estimations of the Dagum model for the state and its autonomous communities. With this aim, in the first place, a theoretical approach to the parameters of Dagum model is developed to obtain a new characterization of each one of them, in relation to its economic interpretation. Available data from Spanish Household Budgets Basic Surveys and European Union Household Panel are used in order to adjust personal income distributions. [ABSTRACT FROM AUTHOR]

Over the last two decades Mexico has modified her intergovernmental fiscal structure from a very centralized system to a distorted scenario where state governments have gained substantial expenditure functions and most of the taxation responsibilities remained in the federal government. It is argued that, to move towards a more fiscal responsible scenario some decentralization on the taxation side is needed. In this con text, by constructing a representative tax system (RTS), this paper evaluates tax effort and tax potential in Mexico. The results are a useful in put for policy decision, not only in the event of future tax decentralization attempts but also in designing a new transfer scheme. The results are also the first RTS constructed for the Mexican case, which shows that regional data in Mexico is gradually improving. Also, while the results shed some light as to which taxes could potentially be decentralized, the article warns about the fact that regional disparities in the country may well be a limitation on the extent to which taxes can be decentralized. [ABSTRACT FROM AUTHOR]

The Input-Output model assumes that as economic systems develops, the technical coefficient matrix changes following either of two tendencies; one, the entries of the matrix shrink due to increased efficiency on the production lines; two, they expand, while productivity gains concentrate in the use of factors (nonproduced inputs). Further, the economic structure grows more complex as industries become more tightly (vertically) integrated and the development process evolves. Both phenomena have seldom been analysed together despite the apparent connections those may have with the evolution of economic structures and the development opportunities countries may face. This paper intend to examine the implications of these tendencies on the evolution of the economic systems in regards to the dynamics the growth process may adopt. [ABSTRACT FROM AUTHOR]

This article examines the role that regulated Micro Finance Organizations (MFO) have played in the Bolivian financial sector development. Using occasional references, the paper also acknowledges the contribution of non-regulated MFO in improving welfare of poor population sectors. Among policy lessons, the results suggest that microfinance is important in developing financial deepening in similar countries, such as those in the region. [ABSTRACT FROM AUTHOR]

This paper examines the impact of the school reinforcement program that "Un Techo Para Chile" offers to the poorest communities in the Metropolitan Region, in Chile. The data were taken from a survey specially designed by the authors. The effects of the program on low-income students attending elementary education show an increase in mathematics and language grades during the academic period 2004-2003. The impact of the program is estimated using parametric methods. The robustness of the results is analyzed with non-parametric estimations and using different control groups. The main results indicate that the program has a positive impact on student's grades. In addition, the grades obtained in 2003 did not determine student's participation in the program during 2004. [ABSTRACT FROM AUTHOR]

This paper studies the determinants of the capital structure for a sample of 113 firms that are listed in the Santiago Stock Exchange (Chile) in the period 1990-1998. The major difference between this and previous studies is the statistical method to analyze the data. Using LISREL (Linear Structural Relations), we find that tangibility of assets is significantly and positively related to the financial leverage and companies with higher level of profitability have more debt. On the other hand, if we use OLS we find that the leverage significantly related to tangibility, profitability, regulation and quality of the firm. We find less significant results related to growth opportunities, size and industrial classification. This paper shows that measurement errors are important when we have to choose proxies to capture the variables that determine the financial leverage. [ABSTRACT FROM AUTHOR]

This paper examines the impact of the monetary policy of the United States, using the interest rate as instrument, on unemployment and inflation rates of Puerto Rico: an economy with special features. We discuss a theoretical model that support the construction of a VAR system defined by the three Variables mentioned. The empirical estimations indicated that the U.S. monetary policy actions precede the movements of the two economics indicators of the Island. Any implementation of the monetary policy is transmitted directly to prices in short run, and to the real sector, in the long run. [ABSTRACT FROM AUTHOR]

This paper summarises the policy implications of a growing debate about the connections between taxation and the quality of governance in developing countries. Taxation --or the absence of tax-- impacts on the quality of governance through two main channels. The first relates is the degree of dependence of governments on general taxation for their financial resources. Many governments do not need to make much tax effort because they have large non-tax incomes from oil, gas and mineral exports or from foreign aid. State elites are then financially independent of citizen-taxpayers. This changes the political incentives that they face, and the ways in which they seek to obtain, use and retain power. The long term consequences for governance are malign: state elites are less responsive and accountable to citizens; and, depending on the sources of non-tax revenue, may have less incentive to build up the political and organisational capacities of the state. States are likely to be simultaneously arbitrary and weak. All else being equal, the dependence of governments on general taxation has positive effects on the quality of governance. But that relations hip is not automatic. How governments tax also matters. We cannot assume that, because they are fully dependent on taxation for revenues, governments will be capable, accountable, or responsive. They may levy taxes coercively, and thereby damage state-society relations and reinforce poor governance. Public authorities in contemporary poor countries face some incentives to tax coercively. Establishing more consensual taxation practices is an important practical route to improving governance. Aid donors could play a more constructive role. [ABSTRACT FROM AUTHOR]

This paper studies Mexican poverty levels by state during the 1992-2002 period, in order to evaluate the effect that the business cycle and governmental policies have had on poverty levels. We find that behind the business cycle and the urban poverty are inversely related and that institutional transfers reduce poverty both in urban and rural areas. [ABSTRACT FROM AUTHOR]

The purpose of this paper is to determine whether elections in Mexico affect the growth of GNP, unemployment, inflation and public expenditure. According to the results of an econometric exercise elections have no effect on all these variables except for public expenditure. It turns out that public expenditure increases just before the presidential elections having no effect on the economic cycle. [ABSTRACT FROM AUTHOR]

After some decades of being almost forgotten, since the late eighties, the issue of economic growth has resurged again in the theoretical and empiric investigation worldwide. Nevertheless, in countries like Mexico very little applied research has been carried out; due to the fact, perhaps, that there are no existing official series of capital stock. This paper estimates the Mexican capital stock for 1980.I-2004.IV through the modified perpetual-inventory method suggested by Almon (1999). The outcome is statistic and economically consistent. [ABSTRACT FROM AUTHOR]

Social programs can reduce productivity and growth as they inadvertently generate perverse incentives for workers and firms. The core hypothesis is that these programs segment the labor market, tax formal salaried employment and subsidize informal salaried and non-salaried employment. Larger than optimal self-employment and employment by informal firms lowers aggregate labor productivity. In turn, differences in the cost of labor produce differences in returns to capital across films, some formal legally hiring salaried workers and some informal illegally hiring salaried workers. Given the cost of credit, higher labor costs for formal firms distort the allocation of investment in favor of the informal sector; this investment is distributed in many small firms that may fail to exploit advantages of size as a result of firms' strategies to evade social security contributions. This lowers the average productivity of capital causing dynamic productivity losses. The analytical argument is linked to empirical evidence indicating that differences in labor anti capital productivity between sectors and firms contribute to explain differences in productivity growth across countries, on one hand; and to evidence suggesting a negative association between productivity and informality, on the other. A subsidiary hypothesis is that social programs are partly financed by reducing public investment rather than raising taxes, limiting the expansion of growth-promoting public infrastructure. The paper suggests that social programs that lower total factor productivity together with the effects of lower public investment partly account for Mexico's lackluster growth and productivity performance in the context of intensified international competition and the erosion of the advantages of the North American Free Trade Agreement. [ABSTRACT FROM AUTHOR]

This paper carries out an analysis of the most common structured notes traded in Financial markets. A detailed description of such financial instruments emphasizing their particular characteristics and technical difficulties in the valuation process is provided. Due to the fact that most of the structured notes traded in the mexican financial markets are certificate deposits with granted capital, we supply the basic elements for their valuation, such as floating coupon-bearing bonds and interest-rate contingent claims. Moreover, for most of the studied structured notes, theoretical pricing models are developed. Finally, for illustrative purposes, several numerical examples of notes are fully developed. [ABSTRACT FROM AUTHOR]

This paper investigates the relationship between exports and economic growth for the case of Guatemala and El Salvador, emphasizing the quantification of spillover effects. Cointegration vectors are estimated for each country, which includes the variables exports, GDP, public investment and private investment. It was found that one cointegration vector exists in each country. Error correction models were estimated including the error term from the other country's cointegration vector as an indicator of "excess demand". The cointegration vectors were re-estimated, including in each case the exports variable from the neighbor country. The existence of one cointegration vector was inferred for both countries. The paper concludes stressing the interdependence of economic variables gives rise to an interdependence of national social policies, and arguing for the convenience of establishing policy coordination framework on a Central American scale, with view towards utilizing economic interdependece to impart more dynamism to economic growth. [ABSTRACT FROM AUTHOR]

This paper presents a robust finding for the relationship between money growth and inflation in Chile: inflation causes (precedes) money and not the other way around. This result holds irrespectively of the way in which monetary policy was conducted, the sample period, the choice of monetary aggregate, the consideration of conditional second moments, or the inclusion of inflation targets. A simple theoretical model is used to motivate why money and inflation are not necessarily correlated. [ABSTRACT FROM AUTHOR]

This paper analyzes the relationship between the dividend and debt policies, firm risk and the directors' ownership. Firstly, results show that the payment of dividends reduces the risk and the leverage, and increases the ownership. Secondly, the firm risk presents a negative effect on the debt ratio and on the payment of dividends and a positive repercussion on the ownership. Thirdly, we can see that the most indebted companies distribute an inferior quantity of dividends, they show a lower risk level and they present a bigger ownership. Finally, it is observed that the mentioned ownership increases the risk, dividend payments and the indebtedness. [ABSTRACT FROM AUTHOR]

After years of effective functioning, the intermediate exchange rate systems ended up becoming prone to suffering speculative attacks, as the process of financial integration advanced. The empirical evidence collected in this paper endorses the fact that the less strict pegged exchange rate systems, that is soft pegs, were the epicentre of the most of exchange rate crises during '90's in Europe, Latin America and Eastern Asia. Consequently, intermediate systems and, especially soft pegs, have lost credit to the benefit of more extreme systems of exchange rate spectrum. This paper contributes new evidence on the tendency toward the bipolarization of the exchange rate systems and studies their evolution between 1990 and 2004, both in the advanced economies and in the emerging economies most integrated in the international capital markets. [ABSTRACT FROM AUTHOR]

Innovation and development are strategic issues supporting the competitiveness of regions in the global world; consequently education plays a critical roll. Though, economic policies applied by most of the governments has been insufficient to promote growth and equity, which may be explained greatly by the failure of large groups of micro and small enterprises to increase productivity and become more competitive in markets. This fact makes promoting knowledge spillovers and learning toward these enterprises priority as to overcome their technological constraints. In this context, higher education institutions become strategic. This paper presents an assistance program based in the university community service in favor of unprivileged micro enterprises which encourages innovation and productivity through knowledge and technological spillovers as to turn these enterprises more competitive. Results show that these enterprises are able to improve their economic performance through the university technical assistance and that universities are capable of contributing with an industrial policy promoting their development and mitigating poverty. [ABSTRACT FROM AUTHOR]

Latin America has been dominated by growth expansions that, more often than not, have ended in crises and protracted periods of stagnation. This has led to poor growth performance during most of the past century. This paper reviews Latin American growth experiences and discusses some particular areas that help to explain why sustainable growth has been so elusive in the region. In particular, it discusses the role of openness and intraregional trade, the role of institutions, macroeconomic stability and inequality, all factors that are central to resume and maintain growth. The paper also discusses more general issues related to growth, such as the importance of protecting property rights and having an adequate structure of rewards to effort, which includes equal opportunities. Finally, a brief overview on current macroeconomic developments is presented. [ABSTRACT FROM AUTHOR]

By using a Cournot competition model, this paper aims at determining prices, quantities and market power of the largest intermediaries in Mexico's masterpieces paintings market. The main hypothesis is that those variables critically depend on the intermediaries' strategies of product differentiation, costs and conjectural variations. Results from simulation show that the model performs very well when explaining the behavior of intermediaries, especially when a parameter of product differentiation is introduced. In particular the model identifies two market niches; the one which is controlled by auction houses (the market for unique or highly differentiated pieces) and the other one which is monopolized by art galleries and art dealers (the market for common or lowly differentiated pieces). This distinction grounds the whole body of this research. [ABSTRACT FROM AUTHOR]

Dual inflation takes place when price increases in non-tradable goods are higher than those of tradable goods. In this paper, we develop a simple model where public spending has a positive externality on the production of both sectors. The main results suggested by the paper are the following: i) An increase in non-productive public spending does not generate dual inflation, as the usual Balassa- Samuelson result states ii) An increase in productive public spending rises the productivity of both sectors and this can result in dual inflation, dual deflation or no effect on prices; and, iii) Dual inflation only takes place when productive public spending has a higher effect on the technology of the tradable sector than on the non-tradable one, as illustrated in the Spanish data. [ABSTRACT FROM AUTHOR]

This paper identifies the origins and types of price rigidities that are present in Mexican manufacturing industries. The results were obtained through a survey carried out during the second semester of 2005 with 398 participating firms. The main findings may be summarized as follows: First, on average, firms maintain their prices unchanged for a period close to six months. Second, the majority of firms review their price schedules on a predetermined period of time; however, when significant shocks occur, more than half switch to a pricing strategy contingent on the evolution of the variables that affect their balance sheet. Third, price stickiness is mainly associated to production costs and to the existence of explicit and implicit contracts. Finally, prices react to the type and direction of the shocks that impact each firm. [ABSTRACT FROM AUTHOR]

One of the usual hypotheses in standard economic growth theory is that labor force follows exponential growth. This is an unrealistic assumption because growing exponentially population can be arbitrarily large. In this paper we reformulate the neoclassical Solow model of economic growth by assuming that the law describing population growth verifies two stylized facts: i) population is strictly increasing and bounded and ii) the rate of growth of population is strictly decreasing to zero. The main result of the paper is the proof of the convergence of capital per worker to a constant value independently of the initial condition. [ABSTRACT FROM AUTHOR]

The fundamental idea of this paper is the use of a market mechanism to induce a redistribution of wealth in the exchange economy. In this market, operating parallel to the goods market, consumption rights initially assigned by the planner are exchanged freely. Such trades generate a variety of Walras equilibrium solutions, in a way similar to what can be obtained from lump-sum transfers. In this paper we analyze the special case with an egalitarian initial distribution of consumption rights across the population and applying a simple price rule for consumption rights. This case has the advantage that no information of the population's initial endowments is required to induce a redistribution of wealth that reduces the gap between the rich and the poor. [ABSTRACT FROM AUTHOR]

In this paper we define a particular dynamic solution (Shenoy, 1980) for abstract games related to games with transferable utilities (TU-games). We show that this solution must contain some cycles of pre-imputations, maximal U-cycles (pro- vided this cycles exist). The existence of such cycles is strongly connected to the non-balancedness of the TU-game under study. Besides, the dynamic solution coincides with the core of the game in the case of balanced lu-games. Thus, it pro- vides an unifying solution concept for games with transferable utilities. [ABSTRACT FROM AUTHOR]

In this paper we give matrix version of the deferred-acceptance algorithm for the matching model one to one. The new algorithm modifies the matrix of the agents preference. When the algorithm stops, it is shown that it coincides with the agents' optimal-stable matching. [ABSTRACT FROM AUTHOR]

In this paper we analyze the feasibility of exporting spiral notebooks from Argentina to Mexico. We consider this possibility for a leader Argentinean enterprise both, the Argentinean and Mexican markets are studied, and also the strategic positioning of the several enterprises operating in the Mexican market. We also include a sensitive analysis on the exchange rate, giving as a result several alternative scenarios for possible competition among the enterprises. We conclude that it is very convenient for this type of enterprise. [ABSTRACT FROM AUTHOR]

Labor markets are important, because most people, especially the poor, derive all or the great bulk of their income from the work they do. This paper approaches labor markets through multisector modeling. The first main substantive section presents the essence of multisector modeling, in particular, the role of labor market dualism. Given that labor markets often consist of quite distinct segments, a useful and insightful analytical approach is to start with just two interrelated segments, formal and informal. Accordingly, the next sections present models of wages and employment in the formal economy, the informal economy, and intersectoral linkages respectively. The final substantive section shows the contributions that these models make to understanding and to policy analysis in labor markets. It would not be expected that the same model would fit East Africa and East Asia or South Africa and South Korea. Surely, the "correct" model is context-specific. Blending empirical observation and analytical modeling has yielded great advances. Sound labor market policies require sound labor market models. [ABSTRACT FROM AUTHOR]

This paper studies the effects on insurance premiums and consumer welfare when commissions to insurance agencies exist and are used strategically to sell insurance policies. The opportunistic behavior of agency insurers that sell the policy paying the highest commission is considered. Different market structures are considered, namely: a duopoly of insurers that compete in commissions (insurer competition), collusion among insurers with agency insurers remaining independent (horizontal collusion or insurer monopoly) and collusion between insurers and agency insurers (vertical integration or exclusive agents). We find that insurer competition and vertical integration trigger higher premiums than horizontal collusion with independent agencies. Furthermore, we argue that the optimal commission from the consumer viewpoint may be greater than the commission offered under any of the above three market structures. [ABSTRACT FROM AUTHOR]