The first two chapters of this thesis assess whether South American firms' liquidity has recently constrained their investment. Such constraints have profound implications for the relationship between saving and growth. If investment is so constrained, convergence between poor and rich economies may occur more slowly than otherwise. In this scenario growth drives corporate saving, echoing the ideas of Nicholas Kaldor. The third chapter develops a theoretical framework for treating dual labor markets, a strand of thinking about economic development with antecedents going back to Arthur Lewis. The common thread is the attempt to cast venerable themes of development in the light of newer economic models that incorporate incomplete information.;The pattern of investment sensitivities to cash flow in Chilean manufacturing in the 1980s does not suggest financing constraints. The data support an alternative "fundamentals" explanation of liquidity effects: that managers interpret profits as signaling future returns. These results are surprising, given claims that firms in richer countries than Chile face financial barriers to investment. The results are, however, consonant with the role of outside finance in South American investment found in other research.;In Brazil since the 1994 real plan, cash-stock effects do suggest that investment has been credit-constrained. Significant stock effects are limited to small illiquid companies. Cash- flow effects are not, however, owing to capital-market imperfections: they show no significant pattern across groups of firms classified by a priori expected liquidity. Moreover, liquidity stocks drive out cash-flow effects from investment equations. Finally, the fundamentals hypothesis is not supported by tests based on retained earnings and lags of earnings.;Chapter three presents a search model of a labor market comprising high- and low-productivity firms that cannot observe workers' productivity. A complementarity condition guarantees existence of a stable equilibrium, in which identical workers may earn different wages even within the same sector. Multiple equilibria can occur, in which wages react discontinuously to changes in productivity or in workers' outside options, and in which wages may be path dependent. The model therefore generates results traditionally associated with dual labor markets.
展开▼
