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In this paper we obtain expressions for both the tax benefit of debt and the return on equity, when the company and the debt grow, under the non-integrated tax system prevailing in the USA. Then we develop the equivalent expressions under a totally integrated tax system. The main contribution of this paper is the extension and generalization of the company valuation and cost of equity formulas to a tax system different to the one used in the USA, but prevailing in many other countries in the world. [ABSTRACT FROM AUTHOR]

One of the legacies of the financial crisis in the United States and Europe is the adoption of macroprudential policies in an increasing number of countries, including in Latin America. These policies aim to prevent future financial crises through the adoption of far-reaching reforms that involve changing the institutional framework for monetary and financial policies, using models and indicators to monitor the buildup of systemic risks, and utilizing instruments designed to prevent the materialization of those risks. The objective of this paper is to examine the institutional aspects of macroprudential policy in Latin America. In particular, it assesses the strengths and weaknesses of existing institutional models and offers suggestions to improve the effectiveness of those models. The analysis focuses on the two main institutional arrangements that exist in this region, the "Pacific" model which includes countries like Chile, Colombia, Peru, Costa Rica and Mexico, and the "Atlantic" model, which includes countries such as Argentina, Brazil and Uruguay. [ABSTRACT FROM AUTHOR]

Many analysts argue that the substantial growth in agri-food trade between Mexico and the United States can be attributed to changes in exchange rate, exchange rate volatility and NAFTA. This paper quantifies the effects of the changes in Mexico-United States real exchange rate, its volatility and NAFTA on Mexico-United States flows of milk powder and contributes, with empirical evidence, to the debate on the effects of real exchange rate changes and its volatility on agri-food trade flows. Maximum Likelihood Cointegration Analysis and a Vector Error Correction (VEC) approach are used in estimating an import demand function for milk powder in Mexico. To guide the empirical analysis, an expected utility maximization model is developed in this study and a set of reduced form equations are estimated. The results show that while changes in real exchange rate have a positive effect on milk powder imports in Mexico from the United States, volatility of the real exchange rate has a negative effect on imports, both in the short-run and in the long-run. The NAFTA has no significant effect on milk powder imports in Mexico from the United States [ABSTRACT FROM AUTHOR]