Cristina Terra | ESSEC - Ecole Supérieure des Sciences Economiques et Commerciales (original) (raw)

Papers by Cristina Terra

Anais, 2001

... We thank CNPq for nancial support. Terra is also sponsored by PRONEX. 1 ... skill. On the ot... more ... We thank CNPq for nancial support. Terra is also sponsored by PRONEX. 1 ... skill. On the other hand, not all white-collar workers tasks require skill, and someblue-collar workers can have highly skill demanding assignments. ...

Brazilian Review of Econometrics, Nov 2, 1997

This paper develops and tests a model that predicts a negative link between the degree of opennes... more This paper develops and tests a model that predicts a negative link between the degree of openness of an economy and its equilibrium inflation rate. The effect arises in an economy going through a debt crisis, and in which inflation tax constitutes an important source of the government's revenue. The predictions of the analysis are compared to those in Romer (1993), which uses a Barro-Gordon type model to argue that openness puts a check on a government's incentive to engage in unanticipated inflation, because of induced exchange rate depreciation. Romer's tests are reevaluated, and it is shown that the degree of openness is only a significant determinant of inflation among highly indebted countries, during the debt crisis period. The empirical results indicate that the model of openness and inflation' presented here explains the data better than Romer. Resumo • I thank Kenneth Rogoff, Peter Kenen, Laurence Ball, Afonso Bevilaqua, partic ipants in the Department of Economics seminar at PUC-Rio and in the Modeling Inflation session at the Econometric Society 7th World Congress for very useful com ments and suggestions, All remaining errors are my own. I am grateful to CNPq, Brazil, for financial assistance .

Social Science Research Network, 1999

Revista Brasileira De Economia, Dec 1, 1999

The balance of payments registers all the international transactions of a country, and it is part... more The balance of payments registers all the international transactions of a country, and it is part of the National Accounts system, which registers economic activity based on a standardized accounting system between nations. This chapter describes the balance of payments and the main aggregates of the National Accounts. We show that the current-account balance results from the difference between the economy’s aggregate savings and investment. We discuss the notion of equilibrium of the balance of payments as well as the condition for sustainability of current account deficits. Finally, we discuss the main hypothesis of different open economy models regarding the functioning of the goods, assets, and money markets.

This chapter describes currency crises, or balance of payment crises, by presenting the theoretic... more This chapter describes currency crises, or balance of payment crises, by presenting the theoretical frameworks used to capture the main characteristics of such crises. It divides crises into three generations of models. The first generation emphasizes the speculative attack as an arbitrage of asset prices. The second centers around the choice of governments to defend or not to defend exchange rate parity, where the cost to defend depended on the expectations of exchange rate depreciation, and the third is based on the financial fragility of firms and bank balance sheets.

This chapter derives a model that determines the optimal current-account balance, as the result o... more This chapter derives a model that determines the optimal current-account balance, as the result of the optimal savings and investment decisions. We show that both borrower and lender countries benefit from the access to international markets. We discuss how shocks to the economy affect the optimal current-account balance, as well how the model helps understanding some observed trajectories of current-account balances.

Advances in spatial science, Sep 22, 2012

This paper addresses the question of whether further trade liberalization in Brazil may exert som... more This paper addresses the question of whether further trade liberalization in Brazil may exert some influence on its already heterogeneous economic landscape. This is a rather relevant issue for the Brazilian economy, still one of the closest economies in the world, with huge economic disparities among its regions. The central question was motivated by an influent (and also controversial) theoretical insight brought about by Krugman and Elizondo (J Develop Econ 49: 137–150, 1996). Trough the specification of an interregional CGE model for the Brazilian economy, this paper argues that the adoption of (horizontal) liberal trade policies in Brazil, beyond traditional gains from trade, can also contribute to ameliorate regional inequality in the country, a result quite in line with Krugman and Elizondo’s predictions. In this sense, it makes the case for trade liberalization in Brazil as an additional (horizontal) public policy apparently effective in fighting regional inequality trough traditional market forces.

RePEc: Research Papers in Economics, 2014

RePEc: Research Papers in Economics, 1999

RePEc: Research Papers in Economics, Oct 1, 2007

This paper reviews part of the political economy literature on exchange rate policy relevant to u... more This paper reviews part of the political economy literature on exchange rate policy relevant to understanding the political motivations behind the Brazilian exchange rate policy. We shall …rst examine the distributive role of the exchange rate, and the way it unfolds in terms of the desired political goals. We will follow by analyzing exchange policy as indicative of government e¢ ciency prior to elections. Finally, we discuss …scal policy from the point of view of political economy, in which the exchange rate results from the macroeconomic equilibrium. Over this review, the Brazilian exchange rate policy is discussed in light of the theories presented.

RePEc: Research Papers in Economics, Oct 1, 1995

RePEc: Research Papers in Economics, Oct 1, 2001

Foundation, UFRJ, UnB and CIRANO for comments and discussion, and Ivana Dall 'Agnol for research ... more Foundation, UFRJ, UnB and CIRANO for comments and discussion, and Ivana Dall 'Agnol for research assistance. We also acknowledge research fellowships from CNPq and financial support from PRONEX. 1 Bonomo and Terra (1999) use a Markov Switching Model to characterize statistically the exchange rate regimes in Brazil, defined as overvalued or undervalued real exchange rates, and the influence of political economy variables on regime changes. They found an election cycle: the probability of having an overvalued exchange rate is higher in the months preceding elections, while the probability of having a undervalued exchange rate is higher in the months succeeding elections.

RePEc: Research Papers in Economics, Sep 1, 2002

RePEc: Research Papers in Economics, Apr 1, 2005

Looking closely at the PPP argument, it states that the currencies purchasing power should not ch... more Looking closely at the PPP argument, it states that the currencies purchasing power should not change when comparing the same basket goods across countries, and these goods should all be tradable. Hence, if PPP is valid at all, it should be captured by the relative price indices that best …ts these two features. We ran a horse race among six di¤erent price indices available from the IMF database to see which one would yield higher PPP evidence, and, therefore, better …t the two features. We used RER proxies measured as the ratio of export unit values, wholesale prices, value added de ‡ators, unit labor costs, normalized unit labor costs and consumer prices, for a sample of 16 industrial countries, with quarterly data from 1975 to 2002. PPP was tested using both the ADF and the DF-GLS unit root test of the RER series. The RER measured as WPI ratios was the one for which PPP evidence was found for the larger number of countries: six out of sixteen when we use DF-GLS test with demeaned series. The worst measure of all was the RER based on the ratio of foreign CPIs and domestic WPI. No evidence of PPP at all was found for this measure.

Brazilian Review of Econometrics, 1994

In a normative approach, this paper studies the use of economic policy when environmentally harmf... more In a normative approach, this paper studies the use of economic policy when environmentally harmful externalities of production/consumption cross the countries' frontiers. In a model with two countries, one of the countries produces an air polluting good, while the other produces a good that destroys its rain forest. Pollution destroys the ozone layer, and the rain forest helps in rebuilding it. Two solutions will be analyzed: the cooperative solution, where the two countries implement the globally optimizing solution; and the non-cooperative solution, where each country separately implements the national best allocation. The main result of this paper is that, absent worldwide coordination, the implementation of environmental policies could actually worsen welfare. The reason is that the countries would take the opportunity to introduce protectionist policies to exploit their monopoly power in the world market for goods.