The permanent income/transitory income distinction from consumption functions can be applied to cost functions. Transitory deviations of actual output from potential output, i.e. variations in capacity utilization, are relevant for the pattern of U-shaped average costs found in econometric...

Previous results on political cycles as a signal of competency assumed that opportunism was common knowledge. If opportunism is not common knowledge, there may be a partially pooling equilibrium where cycles indicate opportunism rather than competency. Insofar as more discretionality increases...

Aunque la inflación lleva a la substitución de monedas, en principio no tiene por qué afectar a un sistema financiero indexado. Sin embargo, en la Argentina la intermediación financiera se fue evaporando en el transcurso del proceso inflacionario. La inflación se enfoca como síntoma de una...

An incumbent's drive for reelection can lead to political budget cycles. The distortion cycles cause in economic policy may be offset by the information they indirectly provide about the incumbent's competency. The informative content of cycles depends on the sophistication of voters, i.e. on...

This paper focuses on a monetary explanation of real exchange rate fluctuations, namely capital flight provoked by the process of currency substitution. Under fixed exchange rates, capital inflows to reconstitute domestic money holdings produce a positive liquidity effect due to the creation of...

La hipótesis de racionalidad es central en teoría económica actual, y sirve de hilo unificador en la historia del análisis económico. Se ha extendido a otras ciencias sociales bajo el enfoque de decisión racional. Se puede distinguir entre racionalidad en sentido limitado (maximización de...

Conventional theory leads to expect bonds to be a financing vehicle for large firms because of economies of scale and contracting costs. We find both in our econometric evidence for firms quoted on Latin American stock exchanges, and in our survey results for Argentina, that size of assets is a...

The paper ask why trade unions' attitudes to stabilization policy can be colored by political considerations, as suggested for example by Argentina's history of bitter divisions over Peronism. Wage decisions are considered as part of a game between the government and trade unions, where income...

We describe the evolution of three types of corporate securities in Argentina, namely, corporate bonds, asset-backed securities and deferred checks. Corporate bonds (obligaciones negociables) were legally authorized in 1988, and after a tax reform in 1991 they became an important financing...

We develop the implications of political budget cycles for real exchange rates in a two-sector small open economy with a cash-in-advance constraint. Policy makers are office motivated politicians. Voters have incomplete information on the competence and the opportunism of incumbents. Devaluation...