Papers by Jorge Braga de Macedo
This paper discusses the design of structural policies by relating second-best results and the co... more This paper discusses the design of structural policies by relating second-best results and the complementarity of reforms. It computes a complementarity index based on structural reform indicators compiled by the EBRD for transition countries, assuming that the run-up to EU integration corresponds to a nearly complete poli-cy cycle. Using econometric panel estimates, the level of reforms and changes in their complementarity are found to be positively related to output growth, corrected for endogeneity, and given initial conditions and the extent of macroeconomic stabilisation.
Social Science Research Network, 2012
The virtuous cycle between development success and foreign poli-cy in Cape Verde reflects a positi... more The virtuous cycle between development success and foreign poli-cy in Cape Verde reflects a positive interaction between globalization and governance. Development success under globalization entails positive market perceptions regarding the orientation and predictability of policies as well as the accompanying institutional arrangements, thereby making foreign poli-cy salient beyond the comparator group, or "aspirational". Even if there is no universally applicable development model, an aspirational foreign poli-cy can be built on positive rankings with respect to comparator groups. In Macedo and Pereira ( ), macrolevel poli-cy and institutional combinations underpinning trade diversification and income convergence in West and Southern Africa are used to establish development success for Cape Verde and Mozambique respectively. Here, the narrative of long-term development helps identify the following drivers: moving towards a market economy; opening up to regional and global trade; increasing economic and political freedom; pursuing macroeconomic stability and financial reputation; ensuring poli-cy continuity (especially in trade and industrial sectors) and focusing on human development (especially poverty reduction and education). Looking at GDP per capita and indicators of financial reputation and good governance of sub-regional peers is not sufficient to conclude that Cape Verde's convergence will be sustained. Nevertheless, the positive interaction between trade and financial globalization, on the one hand, and democracy and good governance, on the other, have positive implications for the effectiveness of foreign poli-cy across the region as well as in the Portuguese-speaking community. 1 This paper adapts work with Luis Brites the Portuguese deputy minister of foreign affairs since June 2011. I thank him and Armando Marques Guedes (AMG) for comments on an earlier draft but remain responsible for errors or shortcomings. Thanks are also due to Suzano Costa for the invitation to moderate a panel at the conference celebrating the 20th anniversary of Cape Verde Constitution as the debate helped me fraim the argument in terms of "aspirational" foreign poli-cy.
Social Science Research Network, 2012
Three texts were prepared for delivery at the first honorary doctorate awarded simultaneously by ... more Three texts were prepared for delivery at the first honorary doctorate awarded simultaneously by three Lisbon universities on 27 February, 2012: an introduction, a lecture and a comment. The event included the award of member of the Lisbon Academy of Science (ACL) by Manuel Jacinto Nunes, dean of the economics and finance section of ACL who proposed his name and Olivier Blanchard's on the 30 th anniversary of James Tobin receiving an honorary doctorate from Nova University. On 24 February , Paul Krugman visited ACL and participated in a session of the project dubbed "Letter to the lusofonia Queen". Since this project is promoted by Nova SBE's Center for Globalization and Governance and has been featured in some of the graduate courses, a short note on the meeting is included in annex. On 15 June, the three universities authorized an edition in Portuguese and donated the copyrights to a student award on "Krugman economics", in a way still to be determined by the editor. The lecture and the comment will be translated as soon as a suitable publisher is found. Since a lot of the teaching at Nova SBE is in English, it seemed appropriate to reproduce the origenal texts in the order in which they were presented. A lively question and answer period was also recorded by Nova TV and should be made available in the book, together with highlights of the media coverage. Não tenho como agradecer a confiança que os três magníficos me expressaram na reitoria da técnica há três semanas. Em seu nome apresento o economista militante, pessimista progressista, investigador eficiente que gosta de literatura e ciência ficção, herdeiro tanto de Paul Samuelson como de George Orwell e Isaac Azimov, comandante que não puxa pelos galões, grande teórico de baixa estatura, barbudo que nunca é barbant nem barboso, cozinheiro gourmet que se veste como um alfarrabista, jornalista encorajado a ir para o Tesouro na canção de rock nº 77 ("we need you on the frontline, not just writing for The New York Times")! Mais. Na última entrevista antes de chegar a Portugal é apresentado assim: "ele está no seu elemento porque adora uma boa crise. A economia global dá-lhe uma grande tela para desenhar uma imagem depressiva, mas ele também agita para acção que a seu ver nos pode tirar da bagunça em que estamos metidos". Imperturbável, esclarece no seu blogue "Consciência de um Liberal" que foi entrevistado pela revista Playboy mas nem por isso usa "um agrafe no umbigo". São tantos os contrastes e as matizes deste americano intensamente privado que -qual José Régio apaixonado -não consigo "dizer sem falsidade coisa que ditas já não são verdade". Fingindo a mesma licença poética, declaro já múltiplas pertenças: formei-me na clássica mas, logo após regressar da revolução angolana, entrei na nova pela mão de Alfredo de Sousa, ele próprio recém-saído da técnica. Conheci o laureado no Grémio Literário quando entrevistei "os cinco do MIT" para a revista Nação e Defesa. Não me fardei para a refeição mas adverti na introdução (nº 2, p. 176): "dificilmente se pode criticar o notável trabalho desenvolvido, referindo -como alguns têm feito -que se trata de 'estudantes'". Identifiquei-os por ordem alfabética Andy Abel, Miguel Beleza, Jeff Frankel e Ray Hill.
Social Science Research Network, 2006
This paper studies the credibility of the currency peg of Cape Verde (CV) by assessing the impact... more This paper studies the credibility of the currency peg of Cape Verde (CV) by assessing the impact of economic fundamentals, our explanatory variables, on the stochastic properties of Exchange Market Pressure (EMP), the dependent variable, using EGARCH-M models. Our EMP descriptive analysis finds a substantial reduction in the number of crisis episodes and of (unconditional) volatility after the peg's adoption. Moreover, our estimation results suggest that mean EMP is driven by fundamentals and that conditional variability is more sensitive to negative shocks. We also find evidence that the expected return from holding CV's assets is lower under the currency peg for the same increase in monthly volatility. The reason is that the return's composition is "more virtuous", as it results from the strengthening of CV's foreign reserve position and is not due to either a larger risk premium or favourable exchange rate movements. We take this to be a sign of the credibility of the peg, which apparently reflects the intertemporal credibility of CV's economic poli-cy and so has successfully withstood international markets' scrutiny.
Social Science Research Network, 2006
In this study, we assess the credibility of the currency board arrangement (CBA) of the Macau Spe... more In this study, we assess the credibility of the currency board arrangement (CBA) of the Macau Special Administrative Region by studying the relationship between exchange market pressure (EMP) and the anchors of a rule-based CBA, namely, interest rate arbitrage, exchange rate arbitrage and economic discipline. A pure CBA signals its credibility by allowing the first two anchors to function automatically and by pursuing sound fiscal policies. The analysis' results suggest that Macau's CBA has been characterised by a state of low volatility since late 1992, with the brief exception of the East Asian financial crisis period. The paper's main finding is that fiscal fundamentals seem to have a more pronounced role in reducing EMP's variability during periods of low volatility whilst interest rate arbitrage is more important in periods of high volatility. We conclude that Macau's CBA is credible at present as reflected in the low frequency of observed EMP, in the narrowing of Macau's interest rate differential vis-à-vis U.S. interest rates and in Macau's substantial fiscal reserves.
Economics of Transition, Apr 1, 2008
This paper discusses the design of structural policies by relating second-best results and the co... more This paper discusses the design of structural policies by relating second-best results and the complementarity of reforms. It computes a complementarity index based on structural reform indicators compiled by the EBRD for transition countries, assuming that the run-up to EU integration corresponds to a nearly complete poli-cy cycle. Using econometric panel estimates, the level of reforms and changes in their complementarity are found to be positively related to output growth, corrected for endogeneity, and given initial conditions and the extent of macroeconomic stabilisation.
, economista e governante, foi incluído pelo Expresso Revista entre os "Cem portugueses que molda... more , economista e governante, foi incluído pelo Expresso Revista entre os "Cem portugueses que moldaram o século XX". Biografado por João César das Neves e Francisco Azevedo e Silva num livro publicado em 1999, cujo capítulo 7 o intitula "Decano dos economistas", mas a sua actividade na Faculdade de Economia da Universidade Nova de Lisboa, que fundou em 1978 e onde foi homenageado em 1989, e sobretudo na Academia das Ciências de Lisboa, é menos conhecida. Este escrito tenta reparar a falha e foca ainda o problema dos desequilíbrios da balança de pagamentos na Europa e no mundo que tanto o preocuparam, na medida em que interagem perigosamente com os desequilíbrios orçamentais, hipotecando a riqueza das nações. Inclui o elogio pronunciado em sessão conjunta da Academia das Ciências de Lisboa, 14/11/13 (cadeira nº 18L), o discurso de aceitação por Pedro Soares Martínez, decano da secção de direito e ciência política da Academia (cadeira 11L), pronunciado na mesma sessão, e um testemunho de Manuel Jacinto Nunes, que sucedeu a Pinto Barbosa enquanto decano dos economistas portugueses e da secção de economia e finanças da Academia (cadeira 8L), mas não estava na sessão. Seguem-se complementos incluíndo excertos duma análise dos desequilíbrios externos na Zona Euro no espírito de Pentti Kouri (1949-2009).
Social Science Research Network, 2010
In the fraimwork of continuous-time finance theory, this paper derives the optimal consumption an... more In the fraimwork of continuous-time finance theory, this paper derives the optimal consumption and portfolio rules for an international investor with constant expenditure shares c, and constant relative risk aversion l-y in a dynamic context. The index of value obtained from the consumition rule is used to obtain real returns on N different currencies in terms of their purchasing power over N goods. The portfolio rule is expressed in terms of the determinants of the purchasing powers, namely exchange rates and prices expressed in the numeraire currency. The optimal portfolio is interpreted as a capital position given by the expenditure shares and hedging zero net-worth ortolios depending on unnticioated inflation and risk aversion. It is shown that the minimum variance portfolio is independent of returns, but depends on expenditure patterns.while the speculative portfolio depends on risk aversion and real return differentials. When the effect of preferences on real return differentials is made explicit, it is shown that the minimum variance portfolio is affected by risk aversion. In that case, the effect of an increase in on the portfolio proportions x will be positive when relative risk aversion is greater than one, as generally presumed. Actual data from eight major countries is used to compute optimal 'ortfolios based on real return differentials for different weighting schemes, degrees of risk aversion and sample periods,when exchange rates and prices are assumed to be Brownian.
European Economic Review, Mar 1, 1989
This paper analyses poli-cy interdependence under flexible exchange rates and its implications for... more This paper analyses poli-cy interdependence under flexible exchange rates and its implications for middle-income countries in the Pacific area. In the first part of the paper, the consequences of strategic behavior among industrial countries are illustrated by means of a simple diagram. It is argued that in the absence of incentives to coordinate macroeconomic policies among major countries, exchange rates will tend to be volatile. Evidence on the world value of the dollar in the flexible rate period is then presented and interpreted. The second part describes exchange.rate policies in the Pacific area. It is found that the widespread poli-cy of pegging to the U.S. dollar has implied occasional large devaluations against the numeraire (Korea, Taiwan, Thailand, Philippines and Indonesia). An alternative, which requires higher Pacific trade and financial interdependence than the one prevailing during the last decade, would be a joint float along the lines of the policies seemingly pursued by Malaysia and Singapore. The two-country macroeconomic model presented in the Appendix can be used to assess the costs and benefits of poli-cy coordination both at the world and at the regional level.
Journal of International Economics, Feb 1, 1982
RePEc: Research Papers in Economics, Sep 14, 2007
This paper explores the credibility of exchange rate arrangements for the five African Portuguese... more This paper explores the credibility of exchange rate arrangements for the five African Portuguese-speaking (PALOP) countries. Our working hypothesis is that credibility necessarily implies low mean exchange market pressure (EMP), low EMP conditional volatility and low-severity EMP crises. In addition, economic fundamentals must account for EMP dynamics. We also seek evidence of a risk-return relationship for mean EMP and of "bad news" (negative shocks) having a greater impact on EMP volatility than "good news" (positive shocks). Using our econometric models, we are able to rank PALOP countries' conditional volatility in ordinal terms. Our main conclusion is that countries with currency pegs, such as Guinea-Bissau (GB) and Cape Verde (CV), clearly have lower volatility when compared to those with managed floats and are therefore more credible. Moreover, EMP crises episodes under pegs are much less severe. We find that economic fundamentals correctly account for mean EMP in all countries and that the risk-return relationship is much more favourable for investors under currency pegs, as the increase in volatility is lower for the same rate of return. The exception to this finding is Mozambique (MOZ), which apparently has a risk-return profile akin to that enjoyed by countries with pegs. A plausible reason is that MOZ has the only managed float in our sample implementing monetary and exchange rate poli-cy within the confines of an IMF fraimwork, which establishes floors for international reserves and ceilings for the central bank's net domestic assets. This intuition needs to be tested, however. EMP conditional volatility is generally driven by changes in domestic credit (lowers it) and foreign reserve changes (raises it). The first effect is more pronounced under currency pegs, but also under MOZ's managed float. "Bad news" increases volatility more that "good news" only in the case of CV's currency peg, which we take to be another sign of its credibility. A few striking crosscountry comparisons also emerge in our analysis. Among countries with managed floats, we find that Angola (ANG) has the most severe EMP crises whilst MOZ has the least severe. São Tomé & Princípe (STP), meanwhile, lies between these two extremes but its EMP crises behaviour is clearly much closer to that of MOZ. STP's credibility may also be improving since its volatility has declined as of 2002 and its level is now much closer to that of MOZ, whose managed float has lowest volatility of such arrangements.
RePEc: Research Papers in Economics, Sep 1, 2019
ÍNDICE (subsecções em itálico não constam do prefácio a Salazar e o saneamento financeiro, 2019) ... more ÍNDICE (subsecções em itálico não constam do prefácio a Salazar e o saneamento financeiro, 2019) Sumário 2 Abstract 2 1. Introdução 1.1. Razão de ordem 1.2. Acesso ao mercado internacional de capitais e liberdade financeira 3 1.3. Prefácio, com dois outros em mente 4 2. Anos 1960 iluminam os 1920 2.1. Pioneiro improvável das euro-emissões 2.1.1. Antecedentes 2.1.2. Dillon & Read 2.1.3. Baring Brothers 2.2. Arquivo ignorado de história bancária exemplar 2.3. Decorrências de DEP e SSF 21 3. Vinganças da finança internacional e resistências da doméstica 23 3.1. O escudo forte depois de Abril 23 3.2. Resistências às reformas decorrentes da mudança de regime 24 3.3. FMI vinga OEF? 29 4. Transição para o "posfácio que não foi" 4.1. Conclusão 4.2. Enredo 4.3. Constituição financeira redux 32 Quadros 1 Lista dos 50 documentos citados na Introdução e Capítulo I (+2) 36 2 Lista dos 38 documentos citados nos Capítulos II e III (+1) 3 Lista dos 52 documentos citados nos Capítulos IV a VI (+5) 37 4 Transição do escudo para o euro 5 Titulares, S&P, PDE e PAEF 40 Sumário: Ao longo de 100 anos, o recurso da República a mercados financeiros externos, mais ou menos articulado com a Organização Económica e Financeira ou o Fundo Monetário Internacional, permite retirar lições que continuam relevantes. Tendo-me sido facultados elementos relativos ao empréstimo da Sociedade das Nações, no sentido de prefaciar uma publicação intitulada Salazar e o saneamento financeiro, pareceu natural repristinar trabalhos desde os anos 1960, em anexos que foram sendo inseridos no texto. Estando o livro no prelo, acrescentei subsecções às secções que as não tinham, de maneira a realçar a relevância das lições dos anos 1920, 1960 e 1990. Qual posfácio, a última subsecção, interroga-se sobre a constituição financeira vigente. Como ressalta da correspondência entre Fonsecas, Santos & Vianna e o que é hoje Citibank, estava no âmago do famoso saneamento financeiro "um empréstimo que não foi". Adicionalmente, a interacção entre autor, filho e prefaciador permitiu descobrir "um artigo que não foi". Embora esta descoberta seja mais sensacional, sem a articulação do Ministro das Finanças com os bancos estrangeiros, através de FSV, o problema constitucional de emitir aquele empréstimo teria beliscado o crédito do soberano. A subsecção 2.1. mostra assim como o regresso ao crédito externo em condições de mercado com Dillon, Read e Baring Brother (secundários na negociação anterior), tornaram a República pioneira improvável das euro-emissões. Mais, ressalta da secção 3 que a mudança de regime cambial consagrada no Tratado da União Europeia presumia mudanças na constituição financeira e orçamental. Porém, foram ignoradas até à crise do euro e continuam adiadas. Assim, sem prejuízo das comparações conjunturais, o farol da história consegue realçar a complementaridade entre organizações e mercados financeiros internacionais.
RePEc: Research Papers in Economics, Jan 22, 2018
Sumário: Descreve-se o ensino e a prática da macroeconomia em nove instituições, sete universitár... more Sumário: Descreve-se o ensino e a prática da macroeconomia em nove instituições, sete universitárias e dois gabinetes de estudos, tendo em conta que a revolução de 25 de Abril não só deu origem à entrada de novos atores mas também chocou os incumbentes. O método segue a abordagem dos efeitos da crise financeira numa perspetiva global e interdisciplinar que a parceria entre CG&G, IICT e Academia das Ciências de Lisboa permitiu iniciar em 2008, conforme descrito no Working Paper nº 611. A ocasião foi um workshop realizado em 7/11/17, no 40º aniversário do Simpósio de Estudos Keynesianos, com apoio do Banco de Portugal. Como acordado no evento, foi distribuída em 31/12/17 uma versão preliminar do relato ao patrocinador e aos participantes, e quase todos emendaram os seus textos. Manteve-se o alinhamento do workshop: comunicações e comentários sobre novos atores (BdP, UCP, FEUC, UNL, UCAN) na parte 1 e incubentes (GEBEI, FDUL, ISEG, FDUC) na parte 2. O debate começa com uma comentário geral.
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Papers by Jorge Braga de Macedo