Parallel to the extensive line of study presented, the literature on explaining the wealth distribution has made extensive use of Bewley models. De Nardi (2015) makes a fine review of these papers, broadly qualified into five categories: High earnings risk for top earners would explain abnormally high saving rates for the wealthy, as in Casta˜ neda et al. (2003); entrepreneurship and borrowing constraints are the key according to Quadrini (2000); Krussell & Smith (2008) propose heterogeneity in patience, the richer being more patient; Hubbard et al. (1995) explains the bottom of the distribution with social in- surance policies; and De Nardi (2004) herself models intergenerational links, but only through bequests and productivity inheritance. None of these authors consider tertiary education expenses as a significant savings motive, and none of the literature mentioned in the previous paragraphs focuses on the effects on the wealth distribution. The purpose of this investigation is to join these two separate strands of literature, using graduate taxes as a means of financing the reform, and in the Chilean context which would be specially suitable as argued the next section.
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Inquiring into the relationship between financial development and economic perfor- mance, it seems pretty obvious that financial systems set the pace for the stability of optimal saving rates, good investment decisions and long-run growth rates in the economy. Specific financial models that focus on the interactions between finance, aggregate growth and income distribution provide an important source to understand the impact between real and financial sectors. In this sense, Levine (2005a) claimed that inefficiencies in the financial intermediary development comes with a major economic impact on the poorest. Likewise, Galor and Zeira (1993) state that informational asymmetries produce credit constraints that are binding to the poor due to the lack of access to bank credit. Therefore, we can see how financial frictions determine wealth holdings through credit constraints. Restricting the poor from exploiting investment opportunities come with a negative social impact on wealth distribution, but al- lows one to measure on financial asymmetries, specially the interest rate spreads. Along with this, having a poorly functioning financial system will also produce higher income inequality by keeping capital away from entrepreneurs. However, alleviating credit constraints doesn’t solve income inequalities issues. For example, income could possibly deviate to those rich and politically connected who might benefit from improvements in the financial system.
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The empirical analysis of this paper shows that fiscal policy has an important economic impact on national saving, any impact on private saving and a negative but non-significant effect on the output gap. This is consistent with the textbook Keynesian view, and with results obtained by Pradahn and Upadhyaya (2001), Blanchard and Perotti (2002), Hayford (2005) in United States, and Gómez Oliver (1989), Arrau and Van Wijberger (1991), Oks (1992), Corbo and Schmidt-Hebbel (1992) in Mexico. However, it is important to keep in mind that the estimation was made with adjusted series. Assuming that the adjustments are correct and relevant for the Mexican case, two major conclusions which affect policy formulation could be drawn. The first is that substitution effects facing a positive shock on the output gap net wealth effects out. The second is that adjusted national saving responds in a positive manner and adjusted private saving does not respond to positive shocks to the adjusted structural surplus. The policy formulation recommendation for the Mexican case that follows is that since fiscal policy and the output gap have no effect on private saving, the only way to increase national saving is to formulate policies that improve the government budgetary position. Throughout Mexican history, especially during the 1994 crisis, the country has suffered the consequences of low levels of national saving. High levels of national saving assure enough liquidity for bad times, and release the country of new and old debt commitments.
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be accounted for by a number of factors. first, saving rates net o depreciation have been mar edly higher in hina, typically as large as 30–35%, as compared to 15–20% at most in russia. if a country saves more, it is natural that it will accumulate more wealth. second, these hinese savings ere used or the most part to finance domestic investment and hence domestic capital accumulation in China. in contrast, a very large raction typically about hal o ussia s national savings ere used to finance oreign investment, via very large trade surpluses and current account surpluses, rather than domestic investment. this is not necessarily disadvantageous in itsel , but these large flo s o oreign savings resulted in little ealth accu- mulation as a result o the general mismanage- ment o the surpluses, including bad port olio investment, capital flight, and o shore lea ages Again, the gap bet een ussia and hina ould be even larger i o shore ealth ere not included in russian national wealth calculations. Its inclusion is undoubtedly illuminating in helping readers to understand the evolution o ealth trends in ussia, but given that o shore ealth is largely out o the reach o the national government, its presence in ussian ealth calculations could also be argued to overestimate its tangible value or the country In contrast, i the full value of cumulated trade surpluses in russia’s national wealth were considered in esti- mations, then russia’s national wealth-income ratio would have been at the same level as China’s by 2015, at around 700% of national income he magnitude o change hen including and e cluding these actors illustrates the macroeconomic significance o this issue finally, China’s national wealth-income ratios are higher than in ussia because relative asset prices have increased more in the former than the latter. in particular, tobin’s q ratios are much closer to one in China than in russia. 16
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good in the economy under consideration. Households own assets in the economy and distribute their incomes to consume and save. Firms use inputs such as labor with varied levels of human capital, dif ferent kinds of capital, knowledge and natural resources to produce material goods or services. Exchanges take place in perfectly competitive markets. Factor markets work well; factors are inelastically supplied and the available factors are fully utilized at every moment. Saving is undertaken only by households. All firm earnings are distributed in the form of payments to factors of production, labor, managerial skill and capital ownership. Each group has a fixed population, N– j , (j = 1, … ,J). Let prices be measured in terms of the commodity and the price of the commodity be unitary. We denote wage and interest rates by w j (t) and r(t) respectively. We use H j (t) to stand for group j’s level of human capital.
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In this paper we present the ESC Simulator (ESCS) based in our ESC tool. This simulator reproduces the activity of this tool under realistic workloads and for various platform conﬁgurations. The simulator applies the desired activa- tion/deactivation policies to a given input workload, and can be easily conﬁgured to accommodate diﬀerent platform conﬁgurations. Among other statistics, the simulator re- ports the percentage of the time that each node in the clus- ter is turned on/oﬀ and, therefore, oﬀers an estimation of the energy consumption. Therefore, the main beneﬁt of this simulator is that it can serve as a demonstrator/testing tool of the energy savings that a particular power-aware policy can deliver compared with a conventional cluster in which all nodes are permanently active.
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The differences in income and productivity between countries have been widely studied by economic literature. One line of this literature underlines the fact that aggregate productivity is equivalent to the weighted average of the productivity of the different parts of an economy (Lewis, 2004). One of the central insights of this literature is that economic growth entails structural change: growth comes together with the reallocation of factors from agriculture to manufactures and services. As production factors move from agriculture into modern economic activities, overall productivity rises and incomes expand (McMillan, Rodrik and Verduzco, 2014). When factors move from less to more productive activities, the economy grows even if there is no productivity growth within sectors. This growth-enhancing structural change can be an important contributor to overall economic growth. In addition, among the positive effects of reallocating factors within sectors, it has been proved that competition brought by trade liberalization has forced manufacturing industries to become more productive. 3
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We present a theoretical argument to identify the conditions under which a firm prefers to invest in factor saving innovations rather than neutral innovations. We prove that incentives to invest in factor saving innovations positively depend on i) total factor productivity and ii) the scarcity of the factor.
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Some frictional unemployment is inevitable in a changing economy. For many reasons, the types of goods that firms and households demand vary over time. As the demand for goods shifts, so does the demand for the labor that produces those goods. The invention of the personal computer, for example, reduced the demand for typewriters and, as a result, for labor by typewriter manufacturers. At the same time, it increased the demand for labor in the elec- tronics industry. Similarly, because different regions produce different goods, the demand for labor may be rising in one part of the country and falling in another. A decline in the price of oil may cause the demand for labor to fall in oil-producing states such as Texas, but because cheap oil makes driving less expensive, it increases the demand for labor in auto-producing states such as Michigan. Economists call a change in the composition of demand among in- dustries or regions a sectoral shift. Because sectoral shifts are always occur- ring, and because it takes time for workers to change sectors, there is always frictional unemployment.
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level of private consumption. For tractability reasons, we restrict our analysis to the case wherein the marginal utility of private consumption does not depend on the consumption level of a public good, which unambiguously implies that aggregate rent-seeking efforts are positively affected by group-size. 2 This allows us to study how wealth and group size asymmetries affect aggregate rent-seeking when the latter is not neutral. Although we concentrate on this case, we claim that our main general results (i.e., that less between- group asymmetries does not necessarily imply more aggregate rent-seeking efforts, and that the interaction between asymmetries in wealth and group size plays a key role in determining how between-group asymmetries affect aggregate rent-seeking efforts) still holds under less restrictive assumptions on the marginal utility of private consumption vis- à-vis the consumption level of public goods.
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From the previous analysis, it follows clearly that had a different spatial break- down been used, the population in assisted regions would have been visibly different in many countries (Table 2); therefore the distribution of the budget among coun- tries would have also changed. Table 3 offers an approximation of the distribution of the amount of convergence and phasing-out funds that each country would receive under the different EU NUTS divisions. These new allocations of funds has been obtained under the hypothesis that amounts assigned to Convergence and «phasing- out» regions would have maintained constant at their current levels. This hypothesis seems quite reasonable for Convergence funds since the total population located in Convergence regions is fairly stable at approximately 145 million under the three NUTS classifications. For the budget devoted to «phasing-out» regions, this assump- tion could nevertheless be debatable. In NUTS-1 and NUTS-3 scenarios, the change would have entailed a significant increment of the population living in the areas clas- sified as «phasing-out»: a growth of almost 50% under NUTS-1 and around 150% with NUTS-3. This fact undoubtedly suggests that, in these cases, more funds could have been assigned to the transitional support system, especially under NUTS-3. Nonetheless, taking into account the residual character of this part of the budget and the fact that it will disappear in the next period, we have considered it appropriate to follow the same criterion fixed for Convergence funds and to maintain constant the total «phasing-out» budget. In particular, the allocation of funds that would be as- signed to each country under each scenario has been obtained, working out independ- ently to allocate Convergence and phasing-out funds, assuming a linear relationship without an intercept between funds and population. A per capita allocation for each country has been computed by dividing the funds actually assigned to the country and the total inhabitants the country has in each kind of eligible regions. To those coun- tries that have no aid under NUTS-2, the average of per capita allocations has been used as their per capita allocation. Then, by multiplying the per capita allocations and the corresponding number of persons in each kind of assisted regions, initial financial amounts were assigned to each country. These initial figures were adjusted proportionally to fulfil the requirement of the Convergence and «phasing-out» budg- ets constancy. Their sums are the figures reported in Table 3.
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We also suggest that Economics as a science should not be separated from Po- litics and Ethics. The natural family is a fundamental institution and a science at the heart of the wealth of nations. Civic virtue and/or civic viciousness are first and foremost nurtured in the family and then in related civic associations. In the good family lies the question of demand and supply; for it is in good fa- milies and cities or self-sufficient communities that the most optimal econo- mic decisions can be made. Most of all the nature of paternity, maternity, fi- liation and moral friendship is such that these relationships do not follow the logic of economic exchange as we understand it from a chrematistic perspec- tive. In other words, a child cannot somehow calculate what price to pay pa- rents for having given birth and educated him. Neither is it logical to apply the principles of equalization in economic exchange within moral friendship since one is a friend on the basis of certain delight in being together which is moral rather than quantitative. Even if sometimes one can give money to the parents or to a friend it is not reasonable to imagine those gifts of material things as equalization within the framework of economic exchange. They are simply gifts and the appreciation is according to the moral acknowledgement of one to the other.
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But the laws that unleashed the most virulent opposition, and mobilized all of the rhetorical and organizational arsenal of the opposition Republicans, where those aimed at internal enemies, at the fifth column and seditious elements that would dilute the patriotic unity with which America had to face its foe: the ‘Alien Friends Act‘ gave the President authority to remove, without judicial process, those foreigners of any nationality whom he considered “dangerous to the peace and safety of the Unites States.” That which reformed the “Act for the punishment of certain crimes against the United States” —better known as the Sedition Act— ordered the prosecution of anyone responsible for the publication of “any false, scandalous and malicious writing” against the government. 8 These laws were supposed to be in effect only for as long as the national emergency that justified them lasted, and it was thus established that they were to expire in 1800. At the same time, Congress changed the Naturalization law of 1795, in order to lengthen the residency period required for acquiring citizenship, from five to fourteen years. 9
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In the same way, Morley (2016) analyses the puzzle for 34 OECD countries during the period 1980-2012, and impinge on the saving retention coefficient differences before the bursting of the real estate bubble and afterwards. As a result, as shown by Ford and Horioka (2016), the globalization of financial markets would be a necessary but not sufficient condition for capital mobility. Furthermore, the demise of market failures would be convenient, and however, they still remain currently and inhibit full financial integration. Despite the increase in capital mobility among countries before the Great Recession of 2008, its crash increased uncertainty and protectionism, once again boosting the saving-investment correlation.
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Dahl & Lockner (2008), Blau (1999), Burton et al. (2002), Cunha & Heckman (2007) and Cunha, Heckman & Schennach (2010) argue that OLS estimates might be biased due to unob- served heterogeneity. Wealthier households could systematically differ to the poorer ones in non- observable characteristics and (S3) . will no longer hold. On one hand, wealthier households have a higher level of innate cognitive skills and, consequently, OLS estimates could overestimate the impact of wealth on non-cognitive skills. On the other hand, as wealth increases, the number of at-home mothers decreases as well as the time the primary caregiver spends with the child while mother’s participation on labor market increases (see Figure 5.) There is evidence pointing out the negative impact of these facts on psychosocial development (Bernal, 2008). The direction of the OLS bias, thus, is not evident. Richer households display a higher level of innate cognitive skills, but at the same time, they show an inferior resource allocation (particularly amount and quality of time) in the development of non-cognitive skills in children.
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In the last decade, health has joined education in a unified conception of human capital. Nobel Prize winning historical studies by Fogel and Wimmer (1992) and Fogel (1994) find that a third or even one half of the economic growth in England over the last 200 years is due to improvements in nutrition and health. Arora (2001) finds comparable results for seven advanced countries using 100 to 125 year time series of diverse health indicators. This line of research has concluded that the synergism between technological and physiological improvements has produced a rapid, culturally transmitted form of human evolution that is biological but not genetic. This long-term process, which continues in both rich and developing nations, is called technophysio evolution by Fogel (2002).
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This paper di¤ers from the existing literature in several ways. For example, Kennedy (1964), Zeira (1998), and Acemoglu (2002), among others, present models with endogenous biased and directed technological change. However, they use this concept to explain di¤erences in productivity across countries, the behavior of wage dispersion and other related facts but they do not explain long run growth. Boldrin and Levine (2002) provide a model of perfect competition, where long run growth is completely explained by factor saving innovations but they don’t consider the e¤ect of technology on capital income share.
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facts for a wide range of LAC countries in a comparative way. The dimensions considered are important for empirical or theoretical reasons. Among other Butelmann and Gallego (2001) and Dynan et al (2004) report large disparities in saving rates by current income. The latter authors argue that the more meaningful comparison would take lifelong income and proposes a methodology for doing so. 2 Butelmann and Gallego (2001) also report disparities in savings rates by education level. Those with superior education were the only group with a positive median saving rate in Chile. Differences in savings rates by age are predicted by life cycle models theories and have been reported in several empirical exercises (e.g. Demery and Duck 2006 for UK and Alegre and Pou 2008 for Spain).
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The use of alternative cognitive processes and the development of skills that improve their output are a function of history and the perception of the individual stakes associated to the decision problem. It is not necessar- ily the case that learning process should converge to a state in which all players end up with high sophistication levels. Tversky et al. (1974) sug- gest that biases in intuitive judgments might not be eliminated if the errors in past predictions are not properly processed. Even for the case of sophis- ticated households, it is not necessarily the case that their models of others will converge to the right model. For convergence to occur environment needs to be stable, the feedback needs to be frequent and results have to be processed in a way that the mistake is identified.
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Literature reviews by Berggren (2003) and De Haan, Lundstrom, and Sturn (2006) show that countries with higher-quality economic institutions as measured by the EFW index, have higher per capita incomes, and countries that improve their economic freedom as measured by the index have higher rates of economic growth. Subsequent studies, such as Faria and Montesinos (2009), have reaffirmed the positive impact of market institutions. Countries with higher quality institutions, as measured by the EFW index, are more prosperous. This makes the EFW index the ideal measure of the quality of economic institutions for present purposes, because of the many studies that have shown it is positively correlated with per capita income and income growth. While there is little doubt that higher-quality economic institutions improve the economic well-being of a country, the question examined here is whether autocrats who maintain low-quality institutions to the detriment of their citizens receive personal benefits in the form of higher personal wealth. It is a more direct measure of personal benefit than was used in any of the previous studies.
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