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The purpose of this paper is to explain the humped-shaped behavior of the growth rate. Within a dynamic general equilibrium framework, it is found that, in the early stages of development, the source of growth is the reallocation of resources from sectors low-productivity sectors to high-productivity sectors (\"extensive growth\"), resulting in increasing growth rates. In the middle and mature stages of development, the source of growth is the higher average productivity achieved by the competition among entrepreneurs (\"intensive growth\"). As a result, the growth rate could be increasing in the middle stage and then displays a decreasing pattern during the mature stage.

This study examines how depositors choose among different banks and over time in Colombia, focusing on whether they discipline bank behavior. By controlling for a more comprehensive set of risk/return factors, the study improves upon conventional market discipline tests. Panel data estimations for 1985-99 show that depositors prefer banks with stronger fundamentals, and that banks tend to improve their fundamentals after being \"punished\" by depositors. Banks with stronger fundamentals benefit from lower interest costs and higher lending rates. Market (or \"regulatory\") discipline therefore appears to exist in Colombia, perhaps thanks to certain key design features of the deposit insurance scheme.

Reforming economies have typically placed little attention on the impact of illegal activities on the success of reform/stabilization packages and optimal policy design. This paper aims at developing a framework in which to assess an economy's response to alternative stabilization/reform packages as a function of the scope of corruption activities. The framework developed herein is a basic one in which only the most fundamental questions (such as the effects of anti-corruption government policies on output and welfare) are examined. The more interesting questions of the optimal design of stabilization and economic reform policies remain to be addressed in future extensions of the model. The framework also accommodates political-economy analysis, and is able to explain why, even when able to eliminate corruption activity altogether, governments may choose not to do so. Our framework differentiates between developing and developed economies according to the income share accruing to capital, as is common in the literature. In equilibrium, the effect of anti-corruption penalties on the economy's capital stock is greater in developing countries; in particular, we find that the elasticity of the steady state average per capita stock of capital with respect to increases in anti-corruption penalties is increasing in the income share accruing to capital. The model also shows that reductions in public good output, as a fraction of the economy's total expenditure, lead to larger welfare decreases when in the presence of corruption.

Backed by experience and strong empirical support, academics and policymakers alike agree that high inflation distorts decisions private agents make about investment, saving, and production and ultimately leads to slower economic growth. As a consequence, during the last 15 years or so, a growing number of countries have granted institutional independence to central banks and statutorily committed them to aim monetary policy primarily at achieving some form of price stability.

To monitor fiscal sustainability, this paper proposes a recursive algorithm derived from the law of motion of the debt-to-GDP ratio, subject to a government reaction function that links convergence to the targeted debt ratio with primary fiscal surpluses. Based on quarterly estimates of this algorithm in the 1990s, 12 developed and developing countries are ranked according to their degree of sustainability. For a number of countries, the paper finds evidence of causality between the fiscal policy stance and growth-adjusted real interest rates.

We study the performance of the four Western Hemisphere trading blocs during the period 1978-2001. For the North American Free Trade Agreement (NAFTA), trade integration outweighed trade diversion; for MERCOSUR, increased integration and trade diversion went hand in hand; for the Central American Common Market (CACM) and the Andean Community, the evidence points to trade diversion only. We also find that trade among neighboring countries has increased since the early 1990s. The estimations are based on a nonlinear gravity equation that incorporates the hypothesis that exports create externalities that affect trade costs. This hypothesis might help reconcile the theoretical unitary income elasticity with most empirical findings of a non-unitary income elasticity in studies using the gravity equation.

This paper studies the main determinants of the sharp decline in Colombia's private saving rate which accompanied the steep deterioration of the country's external current account deficit in the 1990s. The paper rejects current arguments pointing to a consumption boom and corporate behavior as the main causes of the decline. It concludes that: private consumption, explained mainly by permanent income, has only increased moderately in the 1990s; household behavior—not corporate behavior—determines private saving; and tax increases do not entirely explain the fall of private saving. Thus, reliance on external saving could be reduced by increasing public saving.

A large number of basic researches and observational studies suggested the cancer preventive activity of vitamin E, but large-scale human intervention trials have yielded disappointing results and actually showed a higher incidence of prostate cancer although the mechanisms underlying the increased risk remain largely unknown. Here we show through in vitro and in vivo studies that vitamin E produces a marked inductive effect on carcinogen-bioactivating enzymes and a pro-oxidant status promoting both DNA damage and cell transformation frequency. First, we found that vitamin E in the human prostate epithelial RWPE-1 cell line has the remarkable ability to upregulate the expression of various phase-I activating cytochrome P450 (CYP) enzymes, including activators of polycyclic aromatic hydrocarbons (PAHs), giving rise to supraphysiological levels of reactive oxygen species. Furthermore, our rat model confirmed that vitamin E in the prostate has a powerful booster effect on CYP enzymes associated with the generation of oxidative stress, thereby favoring lipid-derived electrophile spread that covalently modifies proteins. We show that vitamin E not only causes DNA damage but also promotes cell transformation frequency induced by the PAH-prototype benzo[a]pyrene. Our findings might explain why dietary supplementation with vitamin E increases the prostate cancer risk among healthy men.