Spatial Panel Models
This paper provides a survey of the existing literature on spatial panel data models.
Financial Crisis and Macro-prudential policies
Stochastic general equilibrium models of small open economies with occasionally binding financial
frictions are capable of mimicking both the business cycles and the crisis events associated with the
sudden stop in access to credit markets (Mendoza, 2010). In this paper we study the inefficiencies
associated with borrowing decisions in a two-sector small open production economy. We find that this
economy is much more likely to display "under-borrowing" rather than "over-borrowing" in normal
times. As a result, macro-prudential policies (i.e. Tobin taxes or economy-wide controls on capital
inflows) are costly in welfare terms in our economy. Moreover, we show that macro-prudential
policies aimed at minimizing the probability of the crisis event might be welfare-reducing in
production economies. Our analysis shows that there is a much larger scope for welfare gains from
policy interventions during financial crises. That is to say that, within our modeling approach, ex post
or crisis-management policies dominate ex ante or macro-prudential ones.
Who is (More) Rational?
Revealed preference theory offers a criterion for decision-making
quality: if decisions are high quality then there exists a utility function
that the choices maximize. We conduct a large-scale field experiment
that enables us to test for consistency with utility maximization. We
find that high-income and high-education subjects display greater levels
of consistency than low-income and low-education subjects, men are
more consistent than women, and young subjects are more consistent
than older subjects. We also find that consistency with utility maximization
is strongly related to wealth: a standard deviation increase
in standard consistency scores is associated with 15-19 percent more
On Intertemporal Poverty: Affluence Dependent Measures
Abstract: This paper proposes a class of intertemporal poverty measures based on a sequence-specific
weighted average of an individual’s snapshot poverty measures. The weight assigned to the level of
poverty in each time period is determined by the number of periods of relative affluence directly
preceding that poor period. These can have a short-lived mitigating effect on a subsequent poverty
period. The properties of the measures are elaborated and an axiomatic foundation is provided.