Showing papers by "Juan M. Sánchez published in 2015"
TL;DR: In this paper, the authors construct a new dataset of estimates for the output shares of natural resources for a large panel of countries and find a significant and persistent degree of misallocation of physical capital.
Abstract: Are production factors allocated efficiently across countries? To differentiate misallocation from factor intensity differences, we construct a new dataset of estimates for the output shares of natural resources for a large panel of countries. We find a significant and persistent degree of misallocation of physical capital. We also find a remarkable movement toward efficiency during last 35 years, associated with the elimination of interventionist policies and driven by domestic accumulation. In contrast, we find a much larger and persistent misallocation of human capital. Interestingly, when both production factors can be reallocated, capital would often flow from poor to rich countries.
21 citations
TL;DR: In this paper, a new dataset of estimates for the output shares of natural resources for a large panel of countries was constructed, and a significant and persistent degree of misallocation of physical capital was found.
Abstract: Are production factors allocated efficiently across countries? To differentiate misallocation from factor intensity differences, we provide a new methodology to estimate output shares of natural resources based solely on current rent flows data. With this methodology, we construct a new dataset of estimates for the output shares of natural resources for a large panel of countries. In sharp contrast with Caselli and Feyrer (2007), we find a significant and persistent degree of misallocation of physical capital. We also find a remarkable movement toward efficiency during last 35 years, associated with the elimination of interventionist policies and driven by domestic accumulation. Interestingly, when both physical and human capital can be reallocated, capital would often flow from poor to rich countries.
13 citations
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TL;DR: In this paper, a dynamic contract model is embedded into a general equilibrium setting with competitive intermediation, where the terms of finance are dictated by an intermediary?s ability to monitor and control a firm?s cash flow, in conjunction with the structure of the technology that the firm adopts.
Abstract: What is the role of a country?s financial system in determining technology adoption? To examine this, a dynamic contract model is embedded into a general equilibrium setting with competitive intermediation. The terms of finance are dictated by an intermediary?s ability to monitor and control a firm?s cash flow, in conjunction with the structure of the technology that the firm adopts. It is not always profitable to finance promising technologies. A quantitative illustration is presented where financial frictions induce entrepreneurs in India and Mexico to adopt less-promising ventures than in the United States, despite lower input prices.
11 citations
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TL;DR: A delinquency rate of 15 percent for all student loan borrowers implies a delinquency ratio of 27.3 percent for borrowers with loans in repayment as mentioned in this paper, which is the worst possible.
Abstract: A delinquency rate of 15 percent for all student loan borrowers implies a delinquency rate of 27.3 percent for borrowers with loans in repayment.
6 citations
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TL;DR: In this paper, the authors explore the efficiency in the allocation of physical capital and human capital across countries, and find that the world has decidedly moved in the direction of efficiency, from global output losses around 7% in the 1970s to a still substantial 2% by 2005.
Abstract: We explore the efficiency in the allocation of physical capital and human capital across countries. The observed marginal products can differ across countries because of differences in technology (i.e. production functions) and in distortions (i.e. differences in use of factors) across countries. To identify differences in technology, we use new data and propose a simple method to estimate output shares of natural resources, and thus adjust the estimated marginal products of physical and human capital. With a sample of 79 countries from 1970 to 2005, we find that the world has decidedly moved in the direction of efficiency in the allocation of physical capital, from global output losses around 7% in the 1970s to a still substantial 2% by 2005. This trend is accounted for by domestic capital accumulation, as external flows have had little impact. There is also a large degree of heterogeneity in the net gains across countries. For example, we find larger gains for countries with more interventionist policies. With respect to human capital, we uncover much larger global losses from its misallocation. Indeed, contrary to physical capital, we find that the human capital allocation had worsened over time.
4 citations
TL;DR: A delinquency rate of 15 percent for all student loan borrowers implies a delinquency ratio of 27.3 percent for borrowers with loans in repayment as discussed by the authors, which is the worst possible.
Abstract: A delinquency rate of 15 percent for all student loan borrowers implies a delinquency rate of 27.3 percent for borrowers with loans in repayment.
4 citations
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TL;DR: This article used a simple model to study the optimal design of unemployment insurance and employment protection and found that when the risk of informality is extreme, unemployment benefits should be negative, which is (in effect) a positive tax on the lack of formal employment.
Abstract: The authors use a simple model to study the optimal design of unemployment insurance and employment protection. Workers are risk averse and face the possibility of unemployment. Firms are risk neutral and face random shocks to productivity. Workers can participate in a shadow economy, or informal sector. The model yields several lessons. First, countries should encourage formal employment to address the issue of informal employment. In extreme cases, such encouragement translates into high severance payments and negative payroll taxes. Along these same lines, unemployment payments cannot be too large. In fact, when the risk of informality is extreme, the authors find that unemployment benefits should be negative, which is (in effect) a positive tax on the lack of formal employment.
2 citations
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TL;DR: In this paper, the authors argue that changes in income of rich and poor households might overstate changes in welfare because the cost of goods favored by the rich is rising faster than the costs of goods consumed mainly by the poor and middle class.
Abstract: Changes in income of rich and poor households might overstate changes in welfare because the cost of goods favored by the rich is rising faster than the cost of goods consumed mainly by the poor and middle class.
1 citations
TL;DR: The authors used a simple model to study the optimal design of unemployment insurance and employment protection and found that when the risk of informality is extreme, unemployment benefits should be negative, which is (in effect) a positive tax on the lack of formal employment.
Abstract: The authors use a simple model to study the optimal design of unemployment insurance and employment protection. Workers are risk averse and face the possibility of unemployment. Firms are risk neutral and face random shocks to productivity. Workers can participate in a shadow economy, or informal sector. The model yields several lessons. First, countries should encourage formal employment to address the issue of informal employment. In extreme cases, such encouragement translates into high severance payments and negative payroll taxes. Along these same lines, unemployment payments cannot be too large. In fact, when the risk of informality is extreme, the authors find that unemployment benefits should be negative, which is (in effect) a positive tax on the lack of formal employment.
TL;DR: Reduced credit creation, and not increased credit destruction, has been the key driver of the recent evolution of U.S. household debt as discussed by the authors, and reducing credit creation is not the same as increasing credit destruction.
Abstract: Reduced credit creation, and not increased credit destruction, has been the key driver of the recent evolution of U.S. household debt.
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TL;DR: Reduced credit creation, and not increased credit destruction, has been the key driver of the recent evolution of U.S. household debt as mentioned in this paper, and reducing credit creation is not the same as increasing credit destruction.
Abstract: Reduced credit creation, and not increased credit destruction, has been the key driver of the recent evolution of U.S. household debt.