Essays on business cycles and corporate governance

This dissertation consists of three distinct essays.; Essay 1: A neoclassical analysis of the Brazilian "lost-decades". After the World War II, Brazil was one of the fastest growing economies in the world, growing at an average rate of more than 7% from 1950 to 1980. While Brazilian per capita GDP was roughly 15% of the U.S. per capita GDP in 1950, it achieved 30% in 1980. However, since then, Brazil has been growing at small or even negative rates, and in 1998 its per capita GDP was back to 20% of the U.S.. This paper investigates possible reasons for what is usually called the Brazilian "lost decades", based on an accounting procedure applied to a simple neoclassical model. After decomposing four types of shocks (productivity, labor, capital and income accounting), each of them is fed back into the model and the predicted and actual data are compared. It is shown that, for the case of the Brazilian "lost decades", productivity shocks seem to be the most important factor in explaining the behavior of output and consumption during the eighties, and labor shocks are the main responsible for the behavior of the variables of interest during the nineties. Increased barriers to competition and the changes imposed by the 1988 Constitution in labor markets are possible explanations for the results.; Essay 2: Early and modern business cycles (with Lee Ohanian). The composition of the U.S. economy has changed considerably over time. More than 40% of employment was in agriculture in the end of the 19th century, and in 2004 this percentage was only 1.7%. On the other hand, the services sector (plus the government sector) went from 32.9% to more than 80% in 2004. This paper analyzes the implications of changes in the sectoral composition of output for the characteristics of U.S. business cycles.; Essay 3: Campaign finance and corporate governance in Brazil (with Andre Carvalhal da Silva). Corporate governance mechanisms, such as transparency, accounting standards, responsibility, accountability, fairness, business ethics, efficient shareholder controls, and ownership rights are key tools in combating corruption. This paper investigates on a firm-level basis the relation between corporate governance practices and campaign finance in Brazil. We interpret campaign finance as a proxy for political influence by interest groups. Our results indicate that family-owned firms contribute significantly more for political campaigns, both in terms of proportion of firms and total amount spent to finance the candidates. Higher concentration of capital, and the separation of ownership and control are positively related to campaign donations, while better corporate governance is negatively related to political contributions.