Volume 11, Issue 1

Deep recessions and disruptions in credit markets have caused social concern and motivated research for a long time. They still challenge macroeconomic analysis. We map some observable features of a set of such episodes, trying to find common elements of the whole family of events. The different macroeconomic experiences show a high degree of heterogeneity. Given that, what emerges as a central element of crises is their character as a life-changing episode for the people concerned, which remains in their memory and triggers a search for lessons, as they frustrate past expectations and force widespread reevaluations of wealth and income prospects. Critical periods involve dynamics at different time scales, as economic changes with lasting implications take place in an environment of dramatic day-to-day variability. Crises tend to be associated with breaks in the growth trends of the economies in question, in a way that may surprise not only agents inclined to eccentric behavior, but also those who held beliefs based on prevalent economic analysis. Macroeconomic disturbances of this sort raise strong questions about the pertinence, and the logic, of usual rational expectations assumptions and modeling practices. These issues are briefly discussed in an opening section.

This research analyzes the cocaine market from an economic perspective. The consumption of the coca leaf is ancient, and cocaine has been consumed for over 100 years. Longitudinal data from producing countries is taken to estimate cocaine cost structure, and longitudinal data from regions around the world is taken to estimate demand curve. Data is annual and comes from United Nation Office on Drugs and Crime reports. A microeconomic model under imperfect competition is calibrated to estimate volumes and prices of cocaine under illegal market and legal market. Results show that cocaine production has internal economies of scale, and the demand curve satisfies law of demand . Moreover, the world demand for this narcotic segmented by regions is elastic and normal good as income increases. From this economic picture, it is necessary to regulate this market efficiently through price within a context of legality in production and consumption.

This study examines the role of official development assistance (ODA) in affecting adolescent fertility rates in low- and middle-income countries. Approximately 95% of adolescent births occur in middle- and low-income countries, and the average adolescent fertility rate in low-income countries is five times higher than in high-income countries. Aid donors typically pursue multiple objectives when providing development aid, many of which can go beyond changes in per capita GDP and include human capital factors such as adolescent fertility and infant mortality. Using data over the period from 1995 to 2015, our results suggest that total ODA has a beneficial impact by lowering the adolescent fertility rate either directly or through the channel of income growth. Our results also show that this beneficial effect on the adolescent fertility rate is stronger in low-income countries than in middle-income countries. Findings based on sectoral aid suggest that health aid has a stronger effect than aid in other sectors.