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This contribution relates uncertainty to time. It illustrates that the uncertainty inherent in different theories diverges in a manner dictated by the time system used and its associated construction of how agents perceive time to pass. Different time systems relate to different contexts. Only one time system is shown to be consistent with fundamental uncertainty. If this so, then it can be shown that Kaleckian theory of the firm can be consistent with post Keynesian radical uncertainty.

This thesis collects three essays in applied microeconomic theory. Chapter 1 studies entry in a market where firms compete in shopping hours and prices. I explore the effect of shopping hours deregulation on social welfare. I show that an incumbent firm can strategically choose its opening hours to deter entry of a new firm, and that shopping hours deregulation can be harmful to consumers and social welfare. Chapter 2 examines the implications of prominence when firms' R&D investment is endogenous and consumers search sequentially. In the benchmark case consumers visit a firm randomly while in the prominence case all consumers visit the prominent firm first. I find that the prominent firm is the most efficient firm. The non-prominent firm is the least efficient firm if R&D cost is high but invests more in R&D than with random search if R&D cost is low. Second, if the efficiency asymmetry is sufficiently low prices with prominence are lower than prices with random search. If the efficiency asymmetry is high prices with prominence are higher than prices with random search. If the efficiency asymmetry is not too low the prominent firm charges a lower price than the non-prominent firm, and the price with random search lies between those prices. Third, when a firm is prominent both consumer surplus and social welfare are higher than with random search. Chapter 3 discusses whether taxes, subsidies and cash incentives are effective in reducing unhealthy food consumption, and which one is the most appropriate policy to tackle the obesity problem in the US and the UK. Cash incentives may be the most effective policy in reducing unhealthy food consumption, yet it can be the most costly one. Taxes are ineffective in reducing unhealthy food consumption. Subsidies have the best balance between effectiveness and monetary benefits to society.

The aims of this thesis are threefold: (i) to investigate empirically the political and economic determinants of income inequality, paying particular attention to the role of institutions and institutional development; (ii) to determine the impact of macro-shocks (such as financial crises) on some of the most widely used human well-being indicators, such as poverty and mortality; (iii) to assess the importance of institutions and institutional change, investigating the impact of key aspects of institutional change in former communist countries (rapid privatization programmes) onto human well-being (mortality). Fulfilling these aims is important in its own right, but also from a policy point of view. In terms of income inequality, an enhanced understanding of its determinants, will help facilitate the adoption of policies aimed at reducing it. This is particularly important, since a reduction in income inequality could have positive spill-over effects on other human well-being indicators such as health or education. Finally, a deeper understanding of the impact of financial crises helps to facilitate immediate policy responses that might better shelter those that suffer the most during periods of macroeconomic shocks. The overall findings of the thesis support the notion that financial (and economic) crises carry negative consequences for the most vulnerable parts of society. Vis-à-vis the determinants of inequality, the thesis finds that economic determinants carry more weight than political ones (and some of the determinants, for example, financial sector development, have an inverted U-shaped relationship with inequality). Finally, the thesis finds no evidence in support of the claim that rapid privatization in the countries of Central and Eastern Europe and the former USSR was associated with increases in mortality rates, further shedding light onto the social implications of the transition process.

The Thesis investigates issues of growth and development economics from both a theoretical and empirical perspective. The basic stylised fact which motivate the analysis are the existence, documented in the work, of poverty traps and the observation that there is a critical stage in which growth becomes the normal condition of a society. The main objective of the work is to identify economic determinants which explain the growth-stagnation dichotomy, or why countries find more difficulties in activating growth rather than in keeping growth going. In the first chapter, I construct a model which combines self-sustained growth and 'underdevelopment traps' into a common analytical framework. The model exhibits aggregate non-convexities and thresholds which separate a region in which the equilibrium growth path converges to a stationary steady-state from a region in which growth is self-sustained. The core of the chapter is a set of original formal propositions about non-linear economic dynamics of which I make use in both this and the following chapter. The outcome of some simulations are also discussed. The findings are used to interpret some historical episodes like the take-off experience of different countries during the Industrial Revolution. The second chapter presents a model built on a similar analytical framework, based on the parable of an economy of many island which grow different fruits from specific trees, whose fertility increases when fertilisers taken from different islands are employed. The parable aims at explaining how the cost of 'market activity' and intermediation affect growth and, possibly, cause underdevelopment traps. The following chapter tests some implications of the model. The fourth chapter introduces into the analysis foreign direct investments as a potential source of growth, stressing how enforcement problems may limit their flow towards poor countries. Overlapping generations of heterogeneous agents choose the level of individual investment in human capital, whose effects are transmitted between dynasties, and elect the government. The political equilibrium is determined by the distribution of income across generations. Simulations show that it is possible for structurally identical countries to select alternative equilibria at some period and converge to either a constant positive growth rate or a low income stationary state. The last chapter is an empirical investigation of the sources of macroeconomic fluctuations using the methodology of structural vector autoregression analysis. It extends to a multicountry framework the decomposition analysis of the GNP into permanent and temporary components and present the results of an application to the United States and United Kingdom using a sample of about one century length. The results confirm other authors' findings about the large relative importance of temporary disturbances in explaining business cycle fluctuations.

The standard approach to the study of poverty assumes the existence of an ideal variable that captures the extent of deprivation. In our first chapter, we postulate that poverty is involved with many dimensions. We use a latent variable framework to predict the extent of an individual's hardship as a function ψi=ax1i+bx2i + ..., where the x's are indicators of i's income status, yi, and the latter variable is not observed. In chapter 2, the problem of allocating benefits for poverty relief is considered in a situation of uncertainty about who the poor are. The decision to grant a benefit of fixed size is analyzed in the context of a social objective of minimizing poverty, subject to the social costs incurred by expenditure on poverty alleviation programmes. Chapters 1 and 2 contain empirical applications based on the Panel Study of Income Dynamics (PSID). We then construct a theoretical model for the purpose of studying the relationship between poverty and credit market imperfections. These imperfections originate from information asymmetries between borrowers and lenders. We assess to what extent the above type of information asymmetry can be a cause of poverty. We identify cases where the presence of information asymmetries has a neutral effect, and other situations where it can cause reductions in the level of poverty. We then review the issues pertaining to the topic of intergenerational earnings mobility. We define a criterion for the justice assessment of intergenerational mobility processes, based on the comparison of the earnings distributions of children originating from privileged groups and those from disadvantaged backgrounds. We apply our concept to intergenerational data from the PSID.

Differently from orthodox stabilization programmes, exchange rate based stabilization programmes (ERBS) show a peculiar cycle. Output, growth and consumption rise from the onset and there is a huge current account deficit. Since several programmes have been accompanied by huge capital inflows, the economic cycle is known as the capital inflows problem. The economic literature has identified the capital inflows problem with a situation where there is not fiscal adjustment or people do not believe in the programme (see chapter two). However, chapter one of this thesis shows that the cycle has been observed in successful and consistent programmes (Argentina 1991- , Bolivia 1985- , Israel 1985- and Mexico 1987-1994). It has been also observed in absence of capital inflows (Mexico 1988). Furthermore, some of its negatives consequences (eg balance of payments crises) have occurred in programmes under fiscal adjustment. These observations deserve an explanation. Chapter two makes a review of the literature about the economic effects of ERBS. Chapter three questions why successful ERBS have observed, increases in long run growth and/or output from the onset and also the symptoms of the capital inflows problem (higher consumption, current account deficits). To answer the question, the chapter sets a growth model in a cash in advance economy. The main results are that sluggish disinflation can increase the long run growth and definitely increases the long run output of the economy. However, it cannot explain the symptoms of the capital inflows problem by itself. When the model is extended to capture some externalities, then it suggests that the structural policies accompanying successful ERBS are responsible of higher consumption and current account deficits. In those cases, that situation is not a problem. Chapter four questions why the symptoms of the capital inflows problem may appear in absence of capital inflows. The answer is that these symptoms emerge when there is lack of credibility and the monetary policy is accommodative. In this context, actual fiscal policy is irrelevant to combat the problem if it cannot change expectations of future inflation. Monetary policy is effective but often produces huge fiscal costs since real interest rates have to rise considerably. When the actual fiscal deficit increases the future expected inflation, tight monetary policy may generate a perverse effect fuelling the symptoms of the problem. Chapter five questions why ERBS that apparently are consistent may be subject to the capital inflows problem and eventually to balance of payments crises. Political factors are responsible of this situation. The chapter sets a model that resembles the Mexican political system. Actual government chooses its successor. The former has incentives to choose a future candidate with preferences for high inflation. People, forecasting this possibility, consumes more in periods of low inflation. That generates the capital inflows problem. Chapter six concludes.

The opportunity cost concept has been advocated as the prime decision cost concept by economists and accountants, notably scholars of the London School since Nineteen Thirties. However, there are certain conditions as discussed by Edwards (1937) and Coase (1938) which have to be met before the opportunity cost concept can be functionally applied in the accounting context. Moreover, there are few research into the decision practices of accountants and business managers relating to the application of the opportunity cost concept in business decisions. Thus, it is uncertain if the concept is adopted in practices by managers and executives. The purposes of this paper are, therefore, to carry out a critical review of the opportunity cost concept, both in terms of its theoretical validity and its applicability to the business context, as well as to investigate whether the concept has actually been adopted in practice for business decisions. Based on the contents of the agency theory, behavioural decision theory (which includes the Resouceful, Evaluative, Maximising Model), expectancy theory, and the theory of choice, a model which is termed the Expectancy Decision Processing Model is proposed to explain the decision behaviour of business managers and how they would adopt or otherwise the opportunity cost concept, represented by the opportunity cost accounting model within the accounting context, in making decisions under different circumstances. Results of the analyses indicate that accountants and managers very often do not invoke the opportunity cost accounting model in making decision calculations. Managers will only invoke the opportunity cost accounting model in calculating the possible payoffs of different decision alternatives when two conditions are satisfied. The first condition is that they find no difficulty in making use of the opportunity cost accounting model; the second condition is that the opportunity cost accounting model will provide a priority ranking of the decision alternatives that is desired by the managers who are maximising their own decision benefits.

This thesis provides an economic analysis of banking crisis, regulation and deposit insurance. Chapter 1 offers a critical review of the literature, identifying the main determinants of banking crises and their channels of contagion. Chapter 2 studies the effectiveness of deposit insurance in containing panic runs when depositors have private information. The region of panic runs decreases with the size of the guarantee and the degree of supervisory involvement of the agency in charge of insurance. High levels of insurance tend to increase the equilibrium demand deposit contract and so the probability of runs, but supervision can also limit this effect. Therefore, a scheme with limited insurance and a high degree of supervisory involvement should be preferred. Chapter 3 evaluates subordinated debt and disclosure requirements as instruments of market discipline. In the presence of deposit insurance, the former can be used to complement the latter, providing a new set of information which is useful to the regulator. If the subordinated bond has a long maturity, the probability of insolvency decreases for any level of noise in the information disclosed by the manager. If the bond can be rolled over, the quality of information improves substantially but the probability of insolvency increases slightly. Chapter 4 studies the inter-temporal effects of capital adequacy requirements. A bank's risk-taking dynamic depends on critical thresholds of the capital requirements in each period. When the requirement binds in the initial period, risk can be reduced to the social optimum but at the cost of reducing financial intermediation as well. Moral hazard increases because, among the binding banks, the better capitalised ones raise relatively more insured deposits and take on relatively more risk. When the requirement binds in the interim period risk-taking increases, the more so the less capitalised is the bank, making smaller banks weaker.

This thesis addresses the sources and propagation mechanisms of business cycles in small open emerging economies. Vector autoregressive analyses (Chapter 1) of Brazil - whose regularities are common to other emerging economies - show that exogenous global credit disturbances affecting international liquidity, uncertainty and risk appetite account for over 40% of output variability. These disturbances explain the bulk of emerging economies' excess macroeconomic volatility. They transmit via credit frictions, mainly as shocks to the real interest rates that emerging economies face in international markets. They comprise about 60% of the country spread variations. Responses of output and other real aggregates to credit shocks reveal growth persistence, hump-shaped recession and recovery patterns. These regularities are examined within proposed dynamic stochastic general equilibrium models of a small open economy with permanently binding endogenous constraint on foreign credit. When accumulating capital works as collateral in the constraint, the model (Chapter 2) exhibits unprecedented intertemporal propagation, mainly through wedges between consumption's marginal rate of substitution and the return on capital. Interest rate shocks have significant persistent effects which mitigate the dominance of uncorrelated productivity shocks. The model nests properties of real business cycle models and overcomes typical anomalies of small open economy models which are derived from weak consumption substitution effects. A second model (Chapter 3) tackles the macroeconomic implications of country spread as an endogenous state variable affecting credit and business cycles. The spread is built into an endogenous credit constraint, similar to an external financial premium. Amplification and propagation mechanisms are further enhanced through an enriched intertemporal wedge. Independent US real interest rate and exogenous country spread shocks - representing exogenous credit disturbances to emerging economies - are equally important over business cycle horizons. Calibrated for Brazil, both models match qualitative and quantitative regularities empirically observed in response dynamics, second moments and variance decompositions.