Three Essays on Savings and the Term Structure of Lending PDF Download
Are you looking for read ebook online? Search for your book and save it on your Kindle device, PC, phones or tablets. Download Three Essays on Savings and the Term Structure of Lending PDF full book. Access full book title Three Essays on Savings and the Term Structure of Lending by Hernando Vargas. Download full books in PDF and EPUB format.
Author: Hernando Vargas Publisher: ISBN: Category : Capital costs Languages : en Pages : 204
Book Description
This dissertation explores two subjects. The first one is the relationship between low liquidity in secondary markets for capital and the insufficient supply of long term funding for productive investment. The first chapter shows how shallow or non-existent secondary markets for capital can induce a short term bias in lending, a problem observed in developing countries. A general equilibrium model is developed with government debt and private capital that is costly to trade. The transaction costs reduce the proportion of savings held as capital. Three main results are established. First, larger government deficits cause a greater proportion of savings to be held as debt. Second, deficit finance alternatives (taxes vs. debt) have different effects on investment. And third, a rationale is provided for why intermediation occurs when capital trading is costly. The second subject studied in this dissertation is the effect of incomplete insurance on individual savings. The second chapter compares a two-period-lived, risk-averse agent's optimal consumption decision under complete and incomplete markets in the presence of labor income uncertainty. Initially, markets are completed by Arrow-Debreu securities and a risk-free asset. Then, the market for a contingent claim is closed, and the change in the individual's current consumption is examined, assuming that the prices of the remaining assets are constant. Two results are derived. First, the change in the risk-free asset position is a non-negative fraction of the insurance lost when a contingent claim market is eliminated. Second, if the utility function exhibits constant absolute risk aversion, savings increase whenever an insurance market is removed. If the utility function displays constant relative risk aversion and under complete markets high consumption states are associated with negative insurance, or low consumption states with positive insurance, then the elimination of one contingent claim market increases savings. The third chapter extends some of these results to situations in which markets are initially incomplete, and then a contingent claim market is removed.
Author: Hernando Vargas Publisher: ISBN: Category : Capital costs Languages : en Pages : 204
Book Description
This dissertation explores two subjects. The first one is the relationship between low liquidity in secondary markets for capital and the insufficient supply of long term funding for productive investment. The first chapter shows how shallow or non-existent secondary markets for capital can induce a short term bias in lending, a problem observed in developing countries. A general equilibrium model is developed with government debt and private capital that is costly to trade. The transaction costs reduce the proportion of savings held as capital. Three main results are established. First, larger government deficits cause a greater proportion of savings to be held as debt. Second, deficit finance alternatives (taxes vs. debt) have different effects on investment. And third, a rationale is provided for why intermediation occurs when capital trading is costly. The second subject studied in this dissertation is the effect of incomplete insurance on individual savings. The second chapter compares a two-period-lived, risk-averse agent's optimal consumption decision under complete and incomplete markets in the presence of labor income uncertainty. Initially, markets are completed by Arrow-Debreu securities and a risk-free asset. Then, the market for a contingent claim is closed, and the change in the individual's current consumption is examined, assuming that the prices of the remaining assets are constant. Two results are derived. First, the change in the risk-free asset position is a non-negative fraction of the insurance lost when a contingent claim market is eliminated. Second, if the utility function exhibits constant absolute risk aversion, savings increase whenever an insurance market is removed. If the utility function displays constant relative risk aversion and under complete markets high consumption states are associated with negative insurance, or low consumption states with positive insurance, then the elimination of one contingent claim market increases savings. The third chapter extends some of these results to situations in which markets are initially incomplete, and then a contingent claim market is removed.
Author: Joshua Junshik Kim Publisher: ISBN: Category : Languages : en Pages :
Book Description
This dissertation, "Three Essays in the Microeconomics of Savings and Consumption", is comprised of three chapters which together, focus on how low-income communities and households living in the developing world make important savings and consumption decisions. The first chapter, titled "Currency Depreciations and Savings Behavior: Evidence from Household Deposits in Armenia", is co-authored with Diego Jimenez-Hernandez and Aleksandr Shirkhanyan. In this chapter, I study how households living in financially dollarized economies make currency and savings decisions following a significant currency depreciation. Those living in the developing world often face the problem of how to safely store their assets when the value of their local currency is unstable. This instability leads to several complicated decisions households must make, such as how much to save and which currencies to save in. These choices are especially important for households during periods of macroeconomic volatility such as currency depreciations. This chapter studies how households make such savings decisions following a large currency depreciation in Armenia. We exploit the unique structure of Armenian financial instruments, which generates quasi-random variation in which savers are nudged into paying attention to the depreciation. We then study how this random difference in initial attention affects the future savings choices that individuals make. Using a differences-in-differences design, we find that individuals who received a nudge to pay attention to the currency depreciation significantly reduced their total savings, held their savings for shorter periods of time, and chose to save their assets in USD. We find that these effects are strongest for individuals who predominantly saved their in the domestic currency and individuals who are less financially sophisticated. We also find that while some of the differences in savings decisions are temporary, others persist long after the original depreciation event. The second chapter, "Are High-Interest Loans Predatory? Theory and Evidence from Payday Lending", evaluates the welfare impacts of payday loans and payday lending regulation. It is often argued that consumer lending regulations can increase welfare, because high-interest loans cause "debt traps" where people borrow more than they expect or would like to in the long run. We test this using an experiment with a large payday lender. While the most inexperienced quartile of borrowers underestimate their likelihood of future borrowing, the more experienced three quartiles predict correctly on average. This finding contrasts sharply with priors we elicited from 103 payday lending and behavioral economics experts, who believed that the average borrower would be highly overoptimistic about getting out of debt. Borrowers are willing to pay a significant premium for an experimental incentive to avoid future borrowing, implying that they perceive themselves to be time-inconsistent. We combine these data with a novel sufficient statistic-based identification strategy to estimate a a structural model of time preferences and beliefs. Using our estimated parameters, we carry out a behavioral welfare evaluation of common payday lending regulations. In our model, payday loan bans unambiguously reduce welfare, and limits on repeat borrowing generate at best small welfare gains. The last chapter, "Food Labeling: Effects on Supply and Demand", studies front of package labeling regulations. Front-of-package labeling (FoPL) regulations are an increasingly popular policy used to combat obesity. FoPLs place warning stickers on food products which are deemed to be unhealthy. However, the welfare consequences of FoPL regulations are ambiguous; while firms may produce healthier foods to avoid receiving a label, they may also increase prices due to higher production costs and increased product differentiation. We study how FoPL regulations impact consumer surplus and nutritional intake in the context of Chile, which passed a nationwide regulation mandating FoPL stickers on all processed food products which surpass a threshold level of critical nutrients such as calories or sugar. Combining detailed scanner-level data from Walmart and field-collected data on products' nutritional content and consumers beliefs, we find a decrease in sugar and caloric intake by 9% and 7% respectively. We find that consumers shifted demand from labeled to unlabeled products, and this substitution is highest for products which consumers had miscalibrated nutritional beliefs about. On the supply side, we find firms bunch the nutritional composition of their products at the regulatory thresholds to avoid receiving a label. We develop and estimate a model of supply and demand for food and nutrients, and find that accounting for strategic responses from firms increases the effect of FoPL regulations on nutritional intake by 20 to 30 percent. Finally, we compare FoPL with sin taxes.
Author: Ludwig Van den Hauwe Publisher: BoD – Books on Demand ISBN: 2810602212 Category : Monetary policy Languages : en Pages : 188
Book Description
Recent events in international financial markets have revived the scientific interest in conceivable institutional alternatives to prevailing monetary arrangements. In the essays reprinted in this book, the author critically examines some of the more influential arguments which have been made in favour of decentralization in banking.
Author: Robert N. McCauley Publisher: MIT Press ISBN: 9780262263665 Category : Business & Economics Languages : en Pages : 442
Book Description
An entertaining summary of the broad reshaping of U.S. corporate finance in the last decade and a half. The late 1980s saw a huge wave of corporate leveraging. The U.S. financial landscape was dominated by a series of high-stakes leveraged buyouts as firms replaced their equity with new fixed debt obligations. Cash-financed acquisitions and defensive share repurchases also decapitalized corporations. This trend culminated in the sensational debt-financed bidding for RJR-Nabisco, the largest leveraged buyout of all time, before dramatically reversing itself in the early 1990s with a rapid return to equity.This entertaining summary of the broad reshaping of U.S. corporate finance in the last decade and a half looks at three major issues: why corporations leveraged up in the first place, why and how the leverage wave came to an end, and what policy lessons are to be drawn.Using the Minsky-Kindleberger model as a framework, the authors interpret the rise and fall of leveraging as a financial market mania. In the course of chronicling the return to equity in the 1990s, they address a number of important corporate finance questions: How important was the return to equity in relieving corporations' debt burdens? How did the return to equity affect the ability of young high-tech firms to finance themselves without selling out to foreign firms?
Author: International Monetary Fund. External Relations Dept. Publisher: International Monetary Fund ISBN: 1451922140 Category : Business & Economics Languages : en Pages : 60
Book Description
Young people, hardest hit by the global economic downturn, are speaking out and demanding change. F&D looks at the need to urgently address the challenges facing youth and create opportunities for them. Harvard professor David Bloom lays out the scope of the problem and emphasizes the importance of listening to young people in "Youth in the Balance." "Making the Grade" looks at how to teach today's young people what they need to get jobs. IMF Deputy Managing Director, Nemat Shafik shares her take on the social and economic consequences of youth unemployment in our "Straight Talk" column. "Scarred Generation" looks at the effects the global economic crisis had on young workers in advanced economies, and we hear directly from young people across the globe in "Voices of Youth." Renminbi's rise, financial system regulation, and boosting GDP by empowering women. Also in the magazine, we examine the rise of the Chinese currency, look at the role of the credit rating agencies, discuss how to boost the empowerment of women, and present our primer on macroprudential regulation, seen as increasingly important to financial stability. People in economics - C. Fred Bergsten, American Globalist. Back to basics - The multi-dimensional role of banks in our financial systems.
Author: Hernando Vargas
Author: Hernando Vargas
Author: Joshua Junshik Kim
Author: Ludwig Van den Hauwe
Author: Armando Perez-Gea
Author: 
Author: Lien Huong Tran
Author: Gaofeng Han
Author: Robert N. McCauley
Author: Hiroyuki Ito
Author: International Monetary Fund. External Relations Dept.