- Limited Enforcement, Financial
Intermediation and Economic Development: A Quantitative
Assessment
(accepted by the International Economic Review). Joint
with
Erwan Quintin (Federal Reserve Bank of
Dallas).
Abstract:
We present a model of economic development
where the importance of financial differences
caused by limited enforcement can be
measured. Economies where enforcement is poor direct less capital to
the production sector, and employ less efficient technologies.
Calibrated simulations reveal that the resulting effect on output is
large. Furthermore, the model correctly predicts that the average
scale of production should rise with the quality of enforcement.
Finally, we find that the importance of limited enforcement rises
with the importance of capital in production.
- A Competitive
Model of the Informal
Sector
Journal
of Monetary Economics 53 (7), 1541-53 (2006).
Joint
with
Erwan Quintin (Federal Reserve Bank of
Dallas).
Abstract: In most developing nations, formal workers tend to
be more
experienced, more educated, and earn more than informal workers. These
facts are often interpreted as evidence that low-skill workers face
barriers to entry into the formal sector. Yet, there exists little
direct evidence that such barriers are important. This paper describes
a model where significant differences arise between formal and informal
workers even though labor markets are perfectly competitive. In
equilibrium, the informal sector emphasizes low-skill work because
informal
managers have access to less outside financing, and choose to
substitute
low-skill labor for physical capital. As a result, the model is able to
replicate the
evidence cited above.
Technical
Appendix for: "A Competitive
Model of the Informal
Sector".
- The Great Depression
in
Canada and
the United States: A Neoclassical Perspective
Review
of
Economic
Dynamics 5, 55-72 (2002). Joint
with
James MacGee
( University
of Western Ontario).
Abstract: Canada
suffered
a major depression from 1929 to 1939. In terms of output it was similar
to the Great Depression in the United States. However, total factor
productivity (TFP) in Canada did not recover relative to trend, while
in the United States TFP had recovered by 1937. We find that the
neoclassical growth model, with TFP treated as exogenous, can account
for over half
of the decline in output relative to trend in Canada. In contrast, we
find
that conventional explanations for the Great Depression - monetary
shocks,
terms of trade shocks and labor market and competition policies
– do
not
work for Canada.
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