Persistence of innovations and economic policy : the Brazilian experience

34 Pages·1991·1.9 MB·English

by  Cribari-Neto, Francisco

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http://www.archive.org/details/persistenceofinn91128crib

Faculty Working Paper 91-0128
Graduate Student Series #75
330
B385
1991:128 COPY 2
Persistence of Innovations and Economic Policy:
The Brazilian Experience
The Library of the
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Universityof Minds
of Urbana-ChampaifK;
Francisco Cribari-Neto
Department ofEconomics
Bureau of Economic and Business Research
College ofCommerce and Business Administration
University ofIllinois at Urbana-Champaign

BEBR
FACULTY WORKING PAPER NO. 91-0128
College of Commerce and Business Administration
University of Illinois at Urbana-Champaign
April 1991
Persistence of Innovations and Economic Policy.
The Brazilian Experience
Francisco Cribari-Netof
Department of Economics
I am especially thankful to William Maloney for his careful readings of several earlier drafts and
insightful suggestions. Also, thanks goto Ana Dolores Novaes and Carlos Brandao Cavalcanti for their
helpful comments. benefitted from conversations with Paul Newbold as well. The usual disclaimers
I
apply.
f From the Ph.D. Program in Economics at the University of Illinois at Urbana-Champaign.

Persistence of Innovations and Economic Policy:
The Brazilian Experience
Francisco Cribari-Neto
April 1991
- Abstract -
According to the conventional view, shocks in output have effects
on the short-run, but are not persistent in the long-run. However,
it has been argued in the recent literature that shocks in output
do have long-run effects. This paper utilizes a nonparametric
technique in order to check whether innovations in Brazilian GDP
are persistent. We find that an innovation of one percent today is
more than proportionately incorporated in the long-run, and we call
this situation shock dominance. We also examine whether economic
policies can alter the persistence of shocks. Our results indicate
that on some occasions stabilization policies do have long-run
effects.
t I am especially thankful to William Maloney for his careful
readings of several earlier drafts and insightful suggestions.
Also, thanks go to Ana Dolores Novaes and Carlos Brandao Cavalcanti
for their helpful comments. benefited from conversations with
I
Paul Newbold as well. The usual disclaimers apply.
$ From the PhD Program in Economics at the University of Illinois
at Urbana-Champaign.