This paper studies the relationship between demand uncertainty—the key source of excess capacity—and capacity utilization in the U.S. airline industry. We present a simple theoretical model that predicts that lower demand realizations are associated with higher demand volatility. This...

We present a dynamic model of capacity utilization and growth which takes into due account the joint determination of the international competitiveness (measured by the real exchange rate) and functional income distribution. It follows that how distribution, capacity utilization and growth vary...

Typically, firms change their size through a row of discrete leaps over time. A very basic model allowing for discontinuous growth can be based on a couple of assumptions: (a) in the short run, the firm’s equipment and organization provide the maximum profit only for a given production level,...

Typically, firms change their size through a row of discrete leaps over time. Sunk costs, regulatory, financial and organizational constraints, talent distribution and other factors may explain this fact. However, firms tend to grow or fall discontinuously even if those inertial factors were...

Structural reforms and market liberalization have led to a transformation of the Tanzanian economy since the mid-1980s. Studies on enterprises in the manufacturing sector seem to indicate that entrepreneurs persistently operated with low capacity utilization in the 1990s. In a liberalized market...

In most manufacturing industries output is adjusted in a lumpy way along three margins: shiftwork, weekend work, and closing a plant temporarily down. We incorporate such decisions into a dynamic general equilibrium model and study: (i) if such micro-level nonconvexities magnify business cycles;...

In a world of heterogeneous capital the aggregate capital-capacity ratio can change in a complicated way as the real wage rate changes and, therefore, nothing useful can be said, a priori, about the relationships between the real wage rate (or the aggregate profit share), the degree of capacity...

Brazil is a country with long-standing ambitions for a major role in the world economy and in global governance, but its footprint in various measures of both remains relatively modest. On current trends, the gap between ambition and achievement will likely remain large, so we provide a critique...

In the last two decades, more than half of the countries in the world have introduced a reform process in their power industries and billions of dollars have been spent on liberalizing electricity markets around the world. This thesis presents a doctoral research concerned with the cross-country...

This paper develops variants of the model suggested by Glick and Rogoff (1996) and VAR models to analyze short term effects of the main determinants for the current account in Costa Rica. Empirical evidence suggests that, lagged investment, government’s primary surplus, terms of trade,...