Economics

Using a large data set including over 7,000 households in the four most important cities of Colombia, this paper studies the relationship between the kidnap victimization probability a household faces with its migration decision. The key identifying exclusion restriction is that the upper tail of the neighborhood inequality afects directly the kidnap victimization probability but not the household migration decision. We …nd that while the kidnap victimization probability has a positive and statistically signi…cant e¤ect on the household's international migratory decision it has no e¤ect on the domestic one. We also …nd evidence supporting the theory that there may be a positive selection of urban migrants from Colombia. This …nding contradicts Borja's "negative selection theory" of migrants from less developed countries and supports the idea that a "brain drain" from Colombia is taking place.

E. Villa es estudiante del doctorado en Economía en la Universidad de Boston, J. Arévalo es estudiante de la Maestría en Teoría y Política Económica en la Universidad Nacional de Colombia; y A. Castro es estudiante del Magíster en Economía de la Universidad de Los Andes. Este artículo se recibió el 25 de agosta del 2000 y fue aprobado por el Comité Editorial el 15 de septiembre de 2000. Resumen Villa, Edgar, Julián Arévalo y Angélica Castro. "Equilibrio general no competitivo con formación endógena de precios", Cuadernos de Economía, v. xx, n. 35, Bogotá, 2001, páginas 11-47 En este artículo se presenta una -concepción de equilibrio que, a diferencia de la tradicional walrasiana, permi te el desbalance entre oferta y la demanda en los diferentes mercados facilitando el análisis de situaciones en las cuales estas difieren persistentemente, como en el caso del mercado laboral. De igual forma, se hace endógeno el proceso de formación de precios y se muestra que un equilibrio con formación de precios endógena es un caso particular de un equilibrio de precio fijo. Hacia el final se presentan algunos ejemplos que ayudan a sustentar estos argumentos. Palabras claves: modelo, precios, equilibrio no walrasiano. Abstract Villa, Edgar, Julián Arévalo and Angélica Castro. "Non competitive general equilibrium with endogenous price setting", Cuadernos de Economía, v. xx, n. 35, Bogotá, 2001, pages 11-47 This article presents an equilibrium concept that, contrary to the traditional walrasian one, allows for the unbalance between supply and demand in different markets, making easier the analysis of those situations in which they differ persistently, as in the case of the labor market. Furthermore, the process of price setting becomes endogenous and it i s shown that an equilibrium with endogenous price setting is a particular case of an equilibrium of fixed prices. Toward the end some examples are presented which help us to sustain these arguments.

An optimal monetary policy Taylor rule is developed for an open economy, which we then estimate following a Markov regime-switching model for quarterly data from Colombia during 1990-2011. We find two opposite monetary regimes characterized by different policy rules: until October 2000 the Central Bank of Colombia reacted only statistically to output gap changes while after October 2000, when inflation targeting was of ficially adopted, monetary policy reacted only statistically to changes in the inflation rate. The latter regime is consistent with the Taylor principle as shown analytically and verified empirically by a unit root test for a Markov regime-switching model.

We analyze the interplay between economic incentives and social norms when individuals decide whether or not to engage in criminal activity. More specifically, we assume that there is a social norm against criminal activity and that deviations from the norm result in feelings of guilt or shame. The intensity of these feelings is here endogenous in the sense that they

This paper develops a theoretical setting that models gun interactions between workers and delinquents under a rational expectations equilibrium. We show that a gun ban increases the gun carrying costs of both workers and delinquents, decreasing unambiguously the fraction of armed delinquents while weakly lowering (not necessarily) the fraction of armed workers. We then evaluate the impact of a temporary ban on gun-carrying licenses in Colombia during December of 2009 up to February of 2010 at the department level to verify our theoretical prediction. The gun control intervention operated by extending law enforcement activities that target gun carriers across territories and periods, thus increasing gun costs for all gun carriers especially for illegal guns. Under a common trend assumption between treated and untreated departments, which is then empirically veri…ed, we exploit regional and temporal variations of the gun ban …nding a large and signi…cant violence reduction impact, both in terms of fatal (gun homicides drop by approximately a 23% on average) as well as non-fatal gun related intentional injuries (gun injuries drop a 53% on average). Moreover, we do not …nd evidence of an increase in homicides and injuries with non-…rearms, suggesting that the gun ban did not generate a substitution of weapons by potential attackers. Nonetheless, e¤ects for only gun homicides seem to diminish as time passes by since the e¤ect starts to deteriorate after 40 days after the implementation of the ban even though the enforcement of the ban did not diminish over time.

The harshness of punishment society chooses to impose on crime o¤enders is mandated by law. However, the quality of life in prison can make this punishment harsher. This creates a variation in the severity of punishment which is not legislated and may di¤er from society's taste for penalties. Indicators of in prison violence and con ‡icts seem to be appropriate proxy variables for prison conditions. Using indicators of in prison violent behavior, we use an exogenous source in education participation in educational programs in order to asses the e¤ect of education on such measures of con ‡ict. Applying instrumental variables techniques to census data for Argentine prisons, we …nd that educational programs signi…cantly reduce indicators of property damages in prison. Such reductions amounts to a 60 percent decrease relative to the mean level of property damages. The authors would like to thank Rafael DiTella, Sebastián Edwards, Ernesto Schargrodsky and all participants in the Inter-American Seminar on Economics, Seminario Universidad Javeriana, LACEA-LAMES 2008 and Canadian Economic Association 2008 for helpful comments. Ignacio Dussaut provided an excellent research assistance. Finally, the authors wish to thank Francisco Scarfo and Hernan Olaetta for their useful help and the Dirección Nacional de Política Criminal of Argentina for providing the data used in this paper. Even though we made our best e¤ort to incorporate these useful comments all remaining errors are the authors.

Using census data for Argentine prisons for the period 2002-2005, this paper presents evidence of the positive e¤ect that prisoner education programs (primary and some part of secondary schooling) have on in prison con ‡ictivity measured as sanctions or violent behavior of the prisoner. In order to overcome the problems of endogeneity that education decisions generate we use an instrumental variables approach. Our results show a decrease in participation in violent con ‡icts and bad behavior which can be partially attributed to education.

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

Este artículo se recibió el 25 de agosta del 2000 y fue aprobado por el Comité Editorial el 15 de septiembre de 2000. Resumen Villa, Edgar, Julián Arévalo y Angélica Castro. "Equilibrio general no competitivo con formación endógena de precios", Cuadernos de Economía, v. xx, n. 35, Bogotá, 2001, páginas 11-47 En este artículo se presenta una-concepción de equilibrio que, a diferencia de la tradicional walrasiana, permi te el desbalance entre oferta y la demanda en los diferentes mercados facilitando el análisis de situaciones en las cuales estas difieren persistentemente, como en el caso del mercado laboral. De igual forma, se hace endógeno el proceso de formación de precios y se muestra que un equilibrio con formación de precios endógena es un caso particular de un equilibrio de precio fijo. Hacia el final se presentan algunos ejemplos que ayudan a sustentar estos argumentos.

En este artículo se presenta el modelo básico de generaciones translapadas de intrecambio puro y se introduce el modelo OLG monetario. Se examinan las condiciones que garantizan la existencia de equilibrios bajo expectativas racionales y sus características de optimalidad, y se describen las tendencias actuales en la literatura reciente sobre los desarrollos del modelo OLG como modelo monetario.

We analyze the interplay between economic incentives and social norms when individuals decide whether or not to engage in criminal activity. More specifically, we assume that there is a social norm against criminal activity and that deviations from the norm result in feelings of guilt or shame. The intensity of these feelings is here endogenous in the sense that they are stronger when the population fraction obeying the norm is larger. As a consequence, a gradual reduction of the sanctions against criminal activity, or of the taxation of legal incomes, may weaken the social norm against crime. Due to the potential multiplicity of equilibria in our model, such a gradual change may even induce a discontinuous increase in the crime rate. We show that law enforcement policies may have dramatic and permanent effects on the crime rate, and lead to hysteresis. We also define political equilibrium under majority rule and show how a majority of individuals, who feel no guilt or shame from violating the law, in political equilibrium can exploit a minority who do have such feelings.

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

En este artículo, parte de un estudio más amplio, se hace una presentación del modelo Arrow-Debreu y se analizan algunas de sus limitaciones teóricas. Su objetivo principal es mostrar que el modelo es estático y que no pueden aerivarse consideraciones dlnámicas de él. Además, se muestra que las principales malas interpretaciones del modelo surgen al considArársele como un modelo dinámico.