Working Papers

CEMFI publishes two series of research papers: Working Papers and Master Theses. The Working Papers series contains research work from full-time professors and PhD students.

  • [1601]

    Monica Martinez-Bravo, Priya Mukherjee, Andreas Stegmann

    An empirical investigation of the legacies of non-democratic regimes: The case of Soeharto's mayors in Indonesia


    A large theoretical literature argues that legacies of non-democratic regimes can affect the quality of governance in new democracies. However, the empirical evidence is scarce. This paper exploits a natural experiment that took place in the Indonesian democratic transition: the Soeharto-regime mayors were allowed to finish their five year terms before being replaced by new leaders. Since mayors' political cycles were not synchronized, this event generated exogenous variation in how long the agents of the old regime remained in their position during the democratic transition. The results suggest that districts which had an old-regime mayor for longer exhibit worse governance outcomes, lower public good provision, and greater electoral support for Soeharto's party. These effects persist several years after the oldregime mayors are no longer in office. The results are consistent with the hypothesis that slower transitions towards democracy allow the old-regime elites to find ways of capturing democracy in the medium and long run.

  • [1602]

    Anatoli Segura, Javier Suarez

    How excessive is banks’ maturity transformation?


    We quantify the gains from regulating maturity transformation in a model of banks which finance long-term assets with non-tradable debt. Banks choose the amount and maturity of their debt trading off investors’ preference for short maturities with the risk of systemic crises. Pecuniary externalities make unregulated debt maturities inefficiently short. The calibration of the model to Eurozone banking data for 2006 yields that lengthening the average maturity of wholesale debt from its 2.8 months to 3.3 months would produce welfare gains with a present value of euro 105 billion, while the lengthening induced by the NSRF would be too drastic.

  • [1603]

    Manuel García-Santana, Enrique Moral-Benito, Josep Pijoan-Mas, Roberto Ramos

    Growing like Spain: 1995-2007


    Spanish GDP grew at an average rate of 3.5% per year during the expansion of 1995-2007, well above the EU average of 2.2%. However, this growth was based on factor accumulation rather than productivity gains as TFP fell at an annual rate of 0.7%. Using firm-level administrative data for all sectors we show that deterioration in the allocative efficiency of productive factors across rms was at the root of the low TFP growth in Spain, while misallocation across sectors played only a minor role. Cross-industry variation reveals that the increase in misallocation was more severe in sectors where government infl uence is more important for business success, which represents novel evidence on the potential macroeconomic costs of crony capitalism. In contrast, sectoral di erences in nancial dependence, skill intensity, innovative content, tradability, or capital structures intensity appear to be unrelated to changes in allocative eciency. All in all, the observed high output growth together with increasing firm-level misallocation in all sectors is consistent with an expansion driven by a demand boom rather than by structural reforms.

  • [1604]

    Xavier Giné, Monica Martinez-Bravo, Marian Vidal-Fernández

    Are labor supply decisions consistent with neoclassical preferences? Evidence from Indian boat owners


    This paper studies the labor supply of South Indian boat owners using daily labor participation decisions of 249 boat owners during seven years. It tests the standard neoclassical model of labor supply, which predicts that (i) individuals should be more likely to work when earnings are temporarily high and (ii) recent accumulated earnings should play no role in the participation decision. It finds that boat owners' labor participation depends positively on expected earnings but also on recent accumulated earnings, albeit weakly. Participation elasticities with respect to expected earnings range between 0.8 and 1.3 and about -0.05 and -0.01 with respect to changes in recent income. While the standard neoclassical model is statistically rejected, it is still a good approximation of the labor supply behavior of boat owners in southern India.


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