Bachelor of Arts University Catolica Andres Bello, Caracas, Venezuela, 1978. Doctor of Philosophy University Pennsylvania, 1983.
Research Fellow, Economics Research Unit, University Pennsylvania, United States of America, 1979-1983.
Economics, Quantitative Studies, Intematational Finance Division, Board of Governors, Federal Research System, United States of America, since 1983.
My main research interest has been the determination of optimal price strategies for nonrenewable resources in a general equilibrium framework, allowing for the effects that changes in these prices have on the macroeconomy. In particular, it is possible to demonstrate that not recognising these macroeffects results in an underestimation of the demand price elasticity and an overestimation of the optimal price path. This framework is applied to the international oil market where I model international trade flows (in oil, raw materials, and manufactures), income, and price determination among developed countries, Organisation of Petroleum Export Countries, and nonOPEC developing countries.
In this context one can study the effects of (exo genous) oil price changes on international trade, price, and income. Using optimal control theory, I then determine the optimal price of oil from Organisation of Petroleum Export Countries’s viewpoint, but recognising that oil price changes affect real income of oil importers and that changes in real income of oil importers affect oil prices. This analysis has been extended to allow for the existence of an (uncertain) upper limit to prices and uncertainty with respect to the magnitude of the macroeffects.
In this context, producers learn about the underlying stochastic structure by changing their prices. The information acquired is used to update the initial distribution of backstop prices and of oil price effects, which then leads to a recalculation of the optimal price strategy. A second line of research interest has been the relationship between relative prices and inflation. According to neoclassical general equilibrium analysis, relative prices are determined by ‘real’ forces only and not by the money supply, which determines the price level.
However, an enormous amount of empirical evidence has indicated a positive association between movements in relative price changes and movements in the inflation rate. The questions that I have addressed in this context are: What kind of theoretical explanation can be offered for such a relationship? To what extent does this relationship between relative price changes apply to developing countries? What are the implications for existing theories of the inflationary process?.