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5901. Identifying VARs Based on High Frequency Futures Data

Author:
Jonathan H. Wright, Jon Faust, and Eric Swanson
Publication Date:
02-2002
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
Using the prices of federal funds futures contracts, we measure the impact of the surprise component of Federal Reserve policy decisions on the expected future trajectory of interest rates. We show how this information can be used to identify the effects of a monetary policy shock in a standard monetary policy VAR. This constitutes an alternative approach to identification that is quite different, and, we would argue, more plausible, than the conventional short-run restrictions. We find that the usual recursive identification of the model is rejected, but we nevertheless agree with the literature's conclusion that only a small fraction of the variance of output can be attributed to monetary policy shocks.
Topic:
Economics, Emerging Markets, and International Trade and Finance
Political Geography:
United States

5902. Inflation Targeting and Nominal Income Growth Targeting: When and Why Are They Suboptimal?

Author:
Dale W. Henderson and Jinill Kim
Publication Date:
02-2002
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
We derive optimal monetary stabilization rules and compare them to simple rules under both full and partial information. The nominal interest rate is the instrument of monetary policy. Special attention is devoted to inflation targeting and nominal-income-growth targeting. We use an optimizing-agent model of a closed economy which features monopolistic competition in both product and labor markets. A stabilization problem exists because there are one-period nominal contracts, either for wages alone or for both wages and prices, and three shocks that are unknown when contracts are signed. In order to highlight basic theoretical results, we deliberately keep our model simple enough that we can obtain exact solutions. Optimal rules maximize the expected utility of the representative agent subject to the information set of the policymaker. A key result, possibly surprising at first, is that even with monopolistic competition, the optimal full information policy makes the economy mimic the hypothetical equilibrium with flexible prices and wages. We explain why strict versions of inflation targeting, nominal income growth targeting, and other such simple rules are suboptimal under both full and partial information and derive flexible versions that are optimal under certain partial information assumptions. Nominal income growth targeting dominates inflation targeting for plausible parameter values.
Topic:
Economics, Emerging Markets, and International Trade and Finance
Political Geography:
United States

5903. On the Sequencing of Projects, Reputation Building, and Relationship Finance

Author:
David C. Smith, Steven Ongena, and Dominik Egli
Publication Date:
02-2002
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
We study the decision an entrepreneur faces in financing multiple projects and show that relationship financing will arise endogenously in an environment where strategic defaults are likely, even when firms have access to arm's-length financing. Relationship financing allows an entrepreneur to build a private reputation for repayment that reduces the cost of financing. However, in an environment where the risk of strategic default is low, the benefits from reputation building are outweighed by holdup rents extractable by the incumbent lender. Entrepreneurs then choose to finance projects from single or multiple arm's-length lenders.
Topic:
International Relations, Economics, and International Trade and Finance
Political Geography:
United States

5904. Determinants and Repercussions of the Composition of Capital Inflows

Author:
Mark Carlson and Leonardo Hernandez
Publication Date:
01-2002
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
The Mexican, Asian, and Russian crises of the mid- and late 1990s have renewed the interest among policymakers in the determinants and effects of private capital flows. This paper analyzes whether policies can affect the composition of capital inflows and whether different compositions aggravate crises. We find that, while fundamentals matter, capital controls can affect the mix of capital inflows that countries receive. We find that during the Asian crisis countries with more Yen denominated debt faired worse, while during the Mexican crisis larger short-term debt stocks increased the severity of the crisis.
Topic:
Conflict Resolution and Economics
Political Geography:
Russia, Asia, and North America

5905. Terrorism's Financial Lifeline: Can It be Severed?

Author:
Kimberley L. Thachuk
Publication Date:
05-2002
Content Type:
Working Paper
Abstract:
To operate effectively, transnational terrorists and criminals need ready access to money and the ability to maneuver it quickly and secretly across borders. On a large scale, such money maneuvers can ripple across entire regions, embroiling global markets and threatening vital American economic interests as well as destabilizing other countries politically. The ability to move vast quantities of wealth rapidly and anonymously across the globe—sometimes combining modern-day wire transfers, faxes, and Internet connections with centuriesold practices, such as the hawala, of personal connections and a handshake—gives terrorist and criminal networks a strategic advantage over many states. Yet it also might be their vulnerability.
Topic:
Security, Defense Policy, Economics, and Terrorism
Political Geography:
America

5906. Inequalities in the Light of Globalization

Author:
Denis Goulet
Publication Date:
08-2002
Content Type:
Working Paper
Institution:
Kroc Institute for International Peace Studies, University of Notre Dame
Abstract:
Shortly before his death last year (2001) the Brazilian geographer and philosopher Milton Santos published a book entitled For Another Globalization. The literary scholar and sociologist António Cândido praised him as one “in whose writings scientific rigor was never an obstacle to a developed social conscience.” And although Santos viewed globalization as a “perverse phenomenon” he strove “to show that it is possible to carry it out differently.” The Santos book is but one among many works now issuing from Brazil and calling for a qualitatively different kind of globalization. At the World Social Forum II organized around the theme “Another World is Possible” held in Porto Alegre, Brazil (31 January – 5 February, 2002), thousands of voices from 135 countries likewise launched appeals for Another Globalization. These were the voices of political and church leaders; of NGO's working on diverse fronts (human rights, economic justice, debt relief, environmental protection, gender equality, democratic governance, the Tobin tax, citizen participation in public decision-making, peace, struggles against social exclusion); of rural and urban labor unions; of organizations of the landless and the homeless. Across wide differences in ideology, substantive positions and emphasis, participants at Porto Alegre II nonetheless proclaimed common value allegiances to equity and social justice over maximum economic growth, to participatory decision-making over secretive elite institutional planning, to fair over free trade, to active protection of cultural diversity over uniform economic strategies, to re-empowerment of national states as decisive agents of development over subordination to international corporations or financial agencies. They counterposed these values to their opposites, which they attributed to the elite Davos World Economic Forum, held in New York this year in support of that battered city – maximum economic growth, unregulated capital mobility, free trade, privatization, and a uniform reliance on competitive markets to serve as the motor force of national development everywhere.
Topic:
Development, Economics, and Globalization
Political Geography:
New York and Brazil

5907. Precocious British Industrialization: A General Equilibrium Perspective

Author:
N.F.R. Crafts and C. Knick Harley
Publication Date:
01-2002
Content Type:
Working Paper
Abstract:
The British industrial revolution created an industrial economy. While casual discourse conflates industrialization and economic growth, Britain was remarkable primarily for the pronounced structural change that occurred rather than for rapid economic growth. Uniquely the British labour force became highly industrialized even prior to the move to free trade in the 1840s. On the eve of the abolition of the Corn Laws the share of agriculture in employment had already declined to levels that were not reached in France and Germany until the 1950s.
Topic:
Economics and Industrial Policy
Political Geography:
Britain, Europe, France, and Germany

5908. Social Insurance Regimes: crises and 'reform' in the Argentine and Brazil, since c. 1900

Author:
Colin Lewis and Peter Lloyd-Sherlock
Publication Date:
01-2002
Content Type:
Working Paper
Abstract:
The paper examines the structural and organisational problems of social insurance systems in Brazil and the Argentine in order to illuminate current debates about pension 'reform'. Much of the present discussion depicts social insurance 'crisis' as a modern phenomenon. Similarly, preoccupations about the macroeconomic objectives of reform - profitable pension funds as an adjunct to capital market deepening, about sustainability - the financial viability of systems, and about equity and coverage, are often assumed to be peculiar to the late twentieth century. The papers stresses the generational (or cyclical) nature of crises that have plagued social insurance regimes in both countries. It also identifies what may be learnt from differences, as well as similarities, between the two systems - not least the relatively larger historic role the private sector and earlier substantive provision for rural workers in Brazil. Following an appraisal of different 'models' (individual 'capitalised' accounts versus pay-as-you-go schemes and monopolistic state systems versus pluralistic/competitive arrangements), the paper concludes with an evaluation of the administrative and financial stability of current schemes.
Topic:
Economics, Government, and Industrial Policy
Political Geography:
Brazil, Argentina, South America, and Latin America

5909. The Argentine Implosion

Author:
Luigi Manzetti
Publication Date:
11-2002
Content Type:
Working Paper
Institution:
The North-South Center, University of Miami
Abstract:
In December 2001, Argentina recorded the world's largest default ever, as it failed to honor payments on its US$132 billion foreign debt. Since then, five presidents have been in power, the Argentine peso has been devalued by 120 percent, and the banking system has virtually collapsed, dragging the economy into a depression. The gross domestic product (GDP) contracted 16.3 percent in the first quarter of 2002. Argentina's per capita income has become one of the worst in Latin America, and, as a result, more than one-third of its people live under the poverty line. 1 Argentines' confidence in their elected officials has disappeared. By most accounts, the country has literally imploded to a degree that has no precedent in Latin America's contemporary history. This is particularly bewildering, considering that only 10 years ago Argentina was hailed around the world as a model of successful economic reforms, with standards of living that were not only the highest in the region but comparable to those of some southern European countries. How could Argentina go from role model to international outcast so quickly? Some place the blame on external shocks created by the financial crises in Mexico (1995), Indonesia (1997), Thailand (1998), and Russia (1998). Others say the cause of the problem was misguided policy advice from the International Monetary Fund (Stiglitz 2002). Yet, most analyses ascribe much of the trouble to the Convertibility Law's fixed exchange rate policy adopted in 1991.
Topic:
Economics, Government, and International Trade and Finance
Political Geography:
Russia, Indonesia, Argentina, South America, Latin America, Mexico, and Thailand

5910. Divergence and dispersion in the Russian economy

Author:
Per Botolf Maurseth
Publication Date:
12-2002
Content Type:
Working Paper
Institution:
Norwegian Institute of International Affairs
Abstract:
In the Soviet Union, one result of central planning was geographical decentralisation of economic activity to a large set of remote peripheral regions. For Russian post-Soviet regions an important question is whether centripetal market forces may alter the pre-existing industrial location. This paper addresses some aspects of regional economic development in Russia. The Russian economic landscape differs from what is common in market economies. Peripheral regions are generally richer than the average. During the 1990s, differences in gross regional product increased. These developments have also meant less spatial concentration of economic activity. During the last half of the 1990s, economic growth was higher in central regions than in the peripheries. If these trends continue, the Russian economic landscape will alter significantly in the future, with income per capita, total income and population being concentrated in economic central regions.
Topic:
Development, Economics, and Industrial Policy
Political Geography:
Russia and Soviet Union

5911. Economic Convergence through Savings, Trade and Technology Flows—Lessons from Recent Research

Author:
Per Botolf Maurseth
Publication Date:
10-2002
Content Type:
Working Paper
Institution:
Norwegian Institute of International Affairs
Abstract:
This paper reviews the theoretical and empirical literature on income disparity between countries and convergence in economic growth. New theoretical models modify and often reverse the prediction of convergence in the traditional neo-classical model of economic growth. A particular feature of the recent literature as compared to traditional studies of economic growth is that it acknowledges interdependence between countries. International capital flows, trade in goods and (maybe most important) international technology flows influence individual countries growth performance. The empirical literature on the dynamics of the international distribution of income per capita reveals massive unconditional divergence in income levels. For sub-samples of countries on the other hand, the data support the conditional convergence hypothesis: when other factors are accounted for, there is a tendency for income per capita to converge. For the OECD countries, as well as for some other countries, knowledge flows, either embodied in traded goods or disembodied seem to be important for whether poorer countries are able to catch up with richer ones.
Topic:
International Relations, Economics, International Trade and Finance, and Science and Technology

5912. International R Spillovers and the Effect of Absorptive Capacity

Author:
Leo A. Grünfeld
Publication Date:
08-2002
Content Type:
Working Paper
Institution:
Norwegian Institute of International Affairs
Abstract:
We study the productivity effects of R spillovers through imports, foreign direct investment and domestic intermediates, using a highly disaggregated data set for Norwegian business sectors. As opposed to the large body of similar studies, we explicitly analyse the importance of absorptive capacity effects, claiming that the positive contribution from R spillovers is an increasing function of the R activities of the economic units that receive the spillovers. We find strong support for the existence of R spillovers through imports and domestic intermediates, but no sign of such spillovers through foreign ownership. Surprisingly, we identify absorptive capacity effects relating to spillovers from imports, but no such effects with respect to domestic intermediates. One possible explanation is that the cost of learning from international R sources is larger than from domestic R sources, implying that own R investments can counteract the negative effect of geographical and cultural distance on R spillovers.
Topic:
International Relations, Economics, Industrial Policy, and International Trade and Finance
Political Geography:
Norway

5913. Multinationals Searching for R Spillovers

Author:
Leo A. Grünfeld
Publication Date:
08-2002
Content Type:
Working Paper
Institution:
Norwegian Institute of International Affairs
Abstract:
This paper surveys the literature on R and technology spillovers as a motive for FDI. During the last years, a growing body of theoretical studies has generated formal arguments supporting the economic rationale for such behaviour. Yet, theoretical contributions are clustered within a few schools and a wider approach is necessary in order to understand the mechanisms that relate R spillovers to FDI. The empirical literature is more numerous, but provides ambiguous conclusions with respect to the strength of this motive. Micro studies provide less supportive results as compared to studies based on more aggregate data. Studies based on patent information are generally supportive to the existence of this motive.
Topic:
International Relations, Economics, International Trade and Finance, and Science and Technology

5914. International R Spillovers and the Absorptive Capacity of Multinationals

Author:
Leo A. Grünfeld
Publication Date:
08-2002
Content Type:
Working Paper
Institution:
Norwegian Institute of International Affairs
Abstract:
This paper studies R spillovers as a motive for firms to go multinational. The establishment of a foreign subsidiary may increase a firm's ability to learn from foreign R activity since R spillovers between firms are moderated by geographical distance. As opposed to earlier studies on this subject, we also model the concept of absorptive capacity where spillovers are endogenised as a function of the firms'own R investments. We employ a three-stage Cournot duopoly model to identify under what conditions a firm chooses to service a foreign market through exports or localised production (going multinational). With exogenous R investments, the absorptive capacity effect contributes to increase the gains from going multinational when the firm is a technology leader in terms of R If R investments are endogenous, only medium-sized absorptive capacity effects will result in firms going multinational. Also, higher spillover rates do not necessarily drive down R and profits for the multinational firm. This stands in contrast to models that ignore the aspect of absorptive capacity.
Topic:
International Relations, Economics, International Trade and Finance, and Science and Technology

5915. Civil Society and the OECD - update November 2002

Publication Date:
11-2002
Content Type:
Policy Brief
Institution:
The Organisation for Economic Co-operation and Development
Abstract:
The OECD recognises the valuable contribution that civil society can make to the public policy-making process, and attaches great importance to the Organisation's own consultation and dialogue with civil society organisations (CSOs). This continuing dialogue builds trust in public institutions and promotes public understanding of the benefits and challenges of global economic and social change.
Topic:
Development, Economics, International Trade and Finance, and Non-Governmental Organization

5916. Territorial Review on Helsinki, 2002

Publication Date:
11-2002
Content Type:
Policy Brief
Institution:
The Organisation for Economic Co-operation and Development
Abstract:
The on-going structuring of the Greater Helsinki Region (GHR) should be encouraged by the central government. Managing the growth of the Helsinki region is crucial to avoid urban sprawl and the waste of resources, especially in the long run. With priorities for the Greater Helsinki Region identified, there is room to negotiate a general agreement between the central government and municipalities of the GHR. This agreement should receive large publicity and raise a debate in Parliament as the goal is to reassess both the role and the dependence of Helsinki upon the rest of the country, i.e. how can Finland develop as a whole by making better use of the motor, Helsinki.
Topic:
Development, Economics, and International Trade and Finance

5917. Measuring the Non-Observed Economy

Author:
Derek Blades and David Roberts
Publication Date:
11-2002
Content Type:
Policy Brief
Institution:
The Organisation for Economic Co-operation and Development
Abstract:
Strictly speaking, the Gross Domestic Product (GDP) is only a measure of economic activity, but in practice it is often used to compare the relative wellbeing of countries as well as their overall economic performance. To measure the latter, users normally look at the rates of growth of GDP, while for comparing relative wellbeing the levels of GDP percapita are used. The absolute level of GDP is also used for calculating policy-relevant indicators such as the ratio of government deficit to GDP, the ratio of R expenditure to GDP and the ratio of carbon dioxide emissions to GDP.
Topic:
Economics and International Organization
Political Geography:
Russia

5918. Measuring Student Knowledge and Skills: The PISA 2000 Experience

Author:
Andreas Schleicher and Claudia Tamassia
Publication Date:
06-2002
Content Type:
Policy Brief
Institution:
The Organisation for Economic Co-operation and Development
Abstract:
How well do school systems perform in providing young people with a solid foundation of knowledge and skills, and in preparing them for life and learning beyond school? International comparisons of the outcomes of education systems have in the past been elusive. While it has been possible to compare basic structural characteristics of educational programmes and qualifications across countries, such as their entry requirements, their labour-market destination or typical patterns of student participation (see OECD, 1999b), there are no agreed standards that would allow to compare the level of content and quality of the underlying educational activities and services. It is thus difficult to make inferences regarding the knowledge and skills individuals have actually attained from such comparisons. Moreover, knowledge and skills are acquired not just through formal education but also, and increasingly, through formal and informal learning outside regular educational programmes. However, since 1997 governments of the OECD have been working on establishing a comparative framework to assess how well their education systems meet core objectives. The result has been the OECD Programme for International Student Assessment (PISA), the most comprehensive and rigorous international effort to date to assess learning outcomes and to identify the policy levers that may help improving the performance of education systems.
Topic:
Economics and Political Economy

5919. Purchasing Power Parities - Measurement and Uses

Author:
Paul Schreyer and Francette Koechlin
Publication Date:
03-2002
Content Type:
Policy Brief
Institution:
The Organisation for Economic Co-operation and Development
Abstract:
How does one compare economic data between countries that is expressed in units of national currency? And in particular, how should measures of production and Gross Domestic Product (GDP) be converted into a common unit? One answer to this question is to use market exchange rates. While straightforward, this turns out to be an unsatisfactory solution for many purposes – primarily because exchange rates reflect so many more influences than the direct price comparisons that are required to make volume comparisons. Purchasing Power Parities (PPPs) provide such a price comparison and this is the rationale for the work of the OECD and other international organisations in this field (see chart 1). The OECD publishes new sets of benchmark PPPs every three years, drawing on detailed international price comparisons. Every time a new set of benchmark PPPs is released, this also gives rise to a new set of international comparisons of levels of GDP and economic welfare.
Topic:
Economics and Political Economy

5920. Creation of the Euro Area: Implications for Economic Statistics

Author:
Paul Schreyer
Publication Date:
02-2002
Content Type:
Policy Brief
Institution:
The Organisation for Economic Co-operation and Development
Abstract:
A major event in early 2002 was the arrival of the euro banknotes and coins and the withdrawal of the existing twelve national currencies from circulation. The event has influenced every citizen in the euro area and is clearly a historic change. It heralds a new phase in forging an “ever closer union among the peoples of Europe”. In economic terms, however, the introduction in January 1999 of the single currency after determining the irrevocably fixed exchange rates of the national currencies with the euro was a more important event. It meant that decisions on monetary policy moved from national central banks to the Governing Council of the European Central Bank. This Statistics Brief highlights some of the consequences for economic statistics of the creation of the euro area.
Topic:
Economics and Political Economy
Political Geography:
Europe

5921. China — Securities Opening

Publication Date:
06-2002
Content Type:
Policy Brief
Institution:
Oxford Analytica
Abstract:
The China Securities Regulatory Commission issued rules on June 3 outlining the participation of foreign firms in fund management and securities business. Issued earlier than expected, the rules re-state concessions made in the trade and investment agreement China signed with the United States in November 1999. Modernisation and liberalisation of the sector is a prerequisite to channelling more of China's 1 trillion dollars of private savings to equity investment.
Topic:
Economics, International Trade and Finance, and Political Economy
Political Geography:
United States and China

5922. International — Auto Consolidation

Publication Date:
06-2002
Content Type:
Policy Brief
Institution:
Oxford Analytica
Abstract:
Fiat announced a sharp fall in May car sales in Italy on June 5 and its debt is under review for a possible ratings downgrade. The world's sixth-largest car maker is one of many manufacturers facing difficult profitability conditions. Global sales volumes in the industry have remained high, but profits have not followed suit. Mergers, the most rational panacea, are confounded by bitter experience.
Topic:
Economics, Industrial Policy, and International Trade and Finance
Political Geography:
United States and Europe

5923. International — Weak Dollar

Publication Date:
05-2002
Content Type:
Policy Brief
Institution:
Oxford Analytica
Abstract:
This week's piece is on the international implications of a weaker US dollar. Seventeen weeks of dollar weakness raise the questions of whether the dollar is on a sustained path of decline, and what the implications are internationally. The 6% nominal effective decline in the dollar since January 31 might be sustained due to US financial and macroeconomic factors. Overall, the effect would be positive for Europe and the United States, and might encourage domestic demand growth in export-oriented Asian economies.
Topic:
Economics and International Trade and Finance
Political Geography:
United States and Europe

5924. East Asia: Currency Cooperation

Publication Date:
05-2002
Content Type:
Policy Brief
Institution:
Oxford Analytica
Abstract:
Former IMF First Deputy Managing Director Stanley Fischer expressed support for regional currency arrangements in a speech at the Hong Kong Monetary Authority on May 21. East Asian nations continue to discuss swap arrangements and other forms of cooperation in the hope of defending local currencies. Fischer endorsed the swap plans while throwing critical light on currency 'management' schemes. Such schemes could result in perverse consequences for regional economies.
Topic:
Economics, International Organization, and International Trade and Finance
Political Geography:
Asia and Hong Kong

5925. United States — First-Quarter Surge

Publication Date:
04-2002
Content Type:
Policy Brief
Institution:
Oxford Analytica
Abstract:
First-quarter GDP grew by 5.8%, the US government announced on Friday, 26 April 2002. The high growth figure will provide sustenance for optimists and help support high stock market valuations. However, the contrast with high-profile corporate earnings disappointments, together with a closer look at sources of demand, suggests a far weaker performance in the rest of 2002 and in 2003.
Topic:
Economics, Government, and Political Economy
Political Geography:
United States

5926. International — Global Economy

Publication Date:
04-2002
Content Type:
Policy Brief
Institution:
Oxford Analytica
Abstract:
A textbook approach to economic growth suggests the world is in for a difficult period. However, there are reasons to believe that the global economy will defy convention. The global economy will continue to support US external imbalances for the medium term, barring marked deterioration in certain areas of US weakness. However, European integration and Asian development could provide alternative sources of global demand, relieving the current imbalance of global dependence on the US economy.
Topic:
Economics, International Political Economy, and International Trade and Finance
Political Geography:
United States and Europe

5927. International — Pension Funding

Publication Date:
04-2002
Content Type:
Policy Brief
Institution:
Oxford Analytica
Abstract:
This week's piece is on policy options for pension funding from an intergenerational risk-sharing perspective. Demographic and business-cycle trends point to a shortfall in pension provision for retiring generations over the medium term.
Topic:
Demographics, Economics, Government, and International Trade and Finance

5928. European Union — Insecure Recovery

Publication Date:
03-2002
Content Type:
Policy Brief
Institution:
Oxford Analytica
Abstract:
This week's piece examines the outlook for euro-area economic performance. Despite some indications of improvements in the global and euro-area economies, it is too early to assume that these signify a lasting recovery.
Topic:
Economics, International Political Economy, and International Trade and Finance
Political Geography:
Europe

5929. International — Steel Fortress

Publication Date:
03-2002
Content Type:
Policy Brief
Institution:
Oxford Analytica
Abstract:
The United States on March 5 announced tariffs on the vast majority of US steel imports. Despite rumours that he would impose moderate duties, US President Bush levied 30% tariffs on the types of steel accounting for about three-quarters of steel imports. Given that these duties follow hundreds of anti-dumping duties imposed on steel products over the past three years, the decision means that virtually no foreign steel will be sold in the United States. It will also have a host of unforeseen international consequences.
Topic:
Foreign Policy, Economics, International Political Economy, and International Trade and Finance
Political Geography:
United States

5930. International — Market Screening

Publication Date:
02-2002
Content Type:
Policy Brief
Institution:
Oxford Analytica
Abstract:
The largest US-based pension fund last week listed 13 emerging markets that its fund managers will be allowed to invest in. Investment firms appointed by the California Public Employees' Retirement System (CalPERS) will actively manage up to one billion dollars in equity investments in 13 countries and unwind CalPERS' equity positions in markets outside them. As a large institutional investor, CalPERS' decisions have an important signalling role for a variety of institutional funds.
Topic:
Economics, Government, International Trade and Finance, and Political Economy
Political Geography:
United States

5931. United States/European Union — WTO Sanctions

Publication Date:
02-2002
Content Type:
Policy Brief
Institution:
Oxford Analytica
Abstract:
US trade officials said last week that EU estimates of damages arising from US export subsidies were exaggerated. EU trade officials have asked the WTO to approve 4 billion dollars worth of trade sanctions against the United States, after the latter lost an appeal before the WTO on the tax treatment of foreign-source income — judged to be illegal export subsidies. Washington must amend its tax laws or face the prospect of retaliatory trade restrictions.
Topic:
Economics and International Trade and Finance
Political Geography:
United States, Europe, and Washington

5932. United States — Productivity Surprise

Publication Date:
02-2002
Content Type:
Policy Brief
Institution:
Oxford Analytica
Abstract:
The government announced yesterday that productivity increased at a 3.5% annual rate in the fourth quarter of 2001. The figure, previously available in its component form, has been interpreted as evidence of underlying improvement in productivity in the post-1995 period. Sustainability of productivity growth determines the reliability of fiscal forecasts, growth, inflation and unemployment.
Topic:
Economics and International Trade and Finance
Political Geography:
United States

5933. European Union — ECB Policy

Publication Date:
01-2002
Content Type:
Policy Brief
Institution:
Oxford Analytica
Abstract:
This week's piece examines the ECB's monetary and communication policy. The Governing Council of the ECB has appeared fairly unmoved either by widespread criticism of its communication policy or by growing pressure for lower interest rates. The ECB has no choice but to remain committed to its price stability mandate, despite the change in economic climate. However, in doing so, it remains vulnerable to the dilemmas posed by the combination of strong independence and a narrow mandate.
Topic:
Economics and Politics
Political Geography:
Europe

5934. International — Socially Responsible Investment

Publication Date:
01-2002
Content Type:
Policy Brief
Institution:
Oxford Analytica
Abstract:
This week's piece examines the impact of strong growth and low volatility in socially responsible investment. Current trends suggest that fund managers and stock index compilers will introduce more socially responsible investment products in 2002. Of all the developments within the SRI (socially responsible investment) industry the high persistency rates of social investors stand out. If the growth of this asset class continues and if financial returns continue to be deprioritised among investors, gradual changes in the style and approach of corporate boards of directors, operations and accounting and disclosure will occur.
Topic:
Economics and International Trade and Finance

5935. Non-Cooperative Dynamics of Multi-Agent Teams

Author:
Robert L. Axtell
Publication Date:
07-2002
Content Type:
Working Paper
Institution:
The Brookings Institution
Abstract:
Results on the formation of multi-agent teams are reviewed and extended. Conditions are specified under which it is individually rational for agents to spontaneously form coalitions in order to engage in collective action. In a cooperative setting the formation of such groups is to be expected. Here we show that in non-cooperative environments—presumably a more realistic context for a variety of both human and software agents—self-organized coalitions are capable of extracting welfare improvements. The Nash equilibria of these coalitional formation games are demonstrated to always exist and be unique. Certain free rider problems in such group formation dynamics lead to the possibility of dynamically unstable Nash equilibria, depending on the nature of intra-group compensation and coalition size. Yet coherent groups can still form, if only temporarily, as demonstrated by computational experiments. Such groups of agents can be either long-lived or transient. The macroscopic structure of these emergent 'bands' of agents is stationary in sufficiently large populations, despite constant adaptation at the agent level. It is argued that assumptions concerning attainment of agent-level (Nash) equilibrium, so ubiquitous in conventional economics and game theory, are difficult to justify behaviorally and highly restrictive theoretically, and are thus unlikely to serve either as fertile design objectives or robust operating principles for realistic multi-agent systems.
Topic:
Economics and International Trade and Finance
Political Geography:
United States and Latin America

5936. Spatial and Temporal Patterns in Civil Violence: Guatemala 1977-1986

Author:
Timothy R. Gulden
Publication Date:
02-2002
Content Type:
Working Paper
Institution:
The Brookings Institution
Abstract:
This paper examines detailed records from the civil conflict in Guatemala between 1977 and 1986. It reveals a number of novel patterns which support the use of complex systems methods for understanding civil violence. It finds a surprising, non-linear relationship between ethnic mix and killing; thereby inviting analysis based on group dynamics. It shows the temporal texture of the conflict to be far from smooth, with a power spectrum that closely resembles that of other, better understood, complex systems. The distribution of incident sizes within the data seems to fall into two distinct sets, one of which, corresponding to "regular" conflict, is Zipf distributed, the other of which includes acts of genocide and is distributed differently. This difference may indicate that that agents of the state were proceeding under different types of orders. These results provide an empirical benchmark for the modeling of civil violence and may have implications for conflict prevention, peace keeping, and the post-conflict analysis of command structures.
Topic:
Economics and International Trade and Finance
Political Geography:
United States, Latin America, Central America, and Guatemala

5937. Strengthening Financial Sector Governance in Emerging Markets

Author:
Robert Litan, Michael Pomerleano, and V. Sundararajan
Publication Date:
07-2002
Content Type:
Policy Brief
Institution:
The Brookings Institution
Abstract:
Policymakers and analysts are still sifting through the wreckage of the Asian financial crisis of 1997 and the subsequent crises in Russia, Turkey, and Argentina to discern key lessons so that similar crises will not recur. Some lessons are by now well understood. Pegged exchange rates can encourage excessive borrowing and expose countries to financial collapse when foreign exchange reserves run dry. Inadequate disclosures by both private companies and public bodies can lead to similar dangers. Although many factors undoubtedly contributed to these crises, it is now widely recognized that each suffered from a failure in “governance,” and in particular a failure in governance in their financial sectors. Accordingly, the World Bank Group, the International Monetary Fund (IMF), and the Brookings Institution devoted their fourth annual Financial Markets and Development Conference, held in New York from April 17-19, 2002, to the subject of financial sector governance in emerging markets. This conference report summarizes some of the highlights of the conference, whose full proceedings will be published as a Brookings book in the fall of 2002.
Topic:
Economics, Emerging Markets, Government, and International Trade and Finance
Political Geography:
Russia, New York, Turkey, Asia, and Argentina

5938. Odious Debt

Author:
Michael Kremer and Seema Jayachandran
Publication Date:
07-2002
Content Type:
Policy Brief
Institution:
The Brookings Institution
Abstract:
When the international community wants to put pressure on a government that suppresses democracy and human rights, a common approach is to impose economic sanctions. Traditional sanctions, however, are often criticized as either ineffective or inhumane. The targeted government can find ways to evade them, and the sanctions may hurt rather than help the people in the country. For example, when trade sanctions are deployed, smugglers and even some national governments will likely flout them, enticed by profits boosted by the sanction itself. When trade sanctions are not evaded, the loss of national income can impoverish citizens. This policy brief proposes a new form of sanction that avoids these shortcomings and hence could be a valuable addition to the toolkit of sanctions available to the international community and national governments.
Topic:
International Relations, Economics, and Political Economy

5939. The Trezise Symposium on the Japanese Economy

Author:
Edward J. Lincoln
Publication Date:
06-2002
Content Type:
Policy Brief
Institution:
The Brookings Institution
Abstract:
The Japanese economy has undergone a decade of sluggish growth marked by three recessions, including the current one. This time, recession is accompanied by general price deflation, a situation unprecedented among industrialized nations since the Great Depression of the 1930s. Meanwhile, the financial sector sits on a rising mountain of bad loans. A serious financial crisis and deeper recession are real possibilities.
Topic:
Economics and International Trade and Finance
Political Geography:
Japan, Israel, and East Asia

5940. Avoiding a Cyprus Crisis

Author:
Philip H. Gordon and Henri Barkey
Publication Date:
06-2002
Content Type:
Policy Brief
Institution:
The Brookings Institution
Abstract:
The resumption of negotiations between the Greek Cypriot and Turkish Cypriot leaders has led to renewed hopes that the divided island of Cyprus can be reunified ahead of its likely invitation to join the European Union (EU) in December 2002. In fact, however, there is no guarantee that the renewed talks will produce a deal. Americans and other interested observers should support the process and encourage the leaders to compromise. But they should also be prepared for a scenario in which the parties cannot overcome their differences and the EU extends an invitation to join that would only apply to the Greek portion of the island.
Topic:
Economics
Political Geography:
America, Europe, and Island

5941. New Role in U.S. Trade Policy

Author:
John Audley
Publication Date:
09-2002
Content Type:
Policy Brief
Institution:
Carnegie Endowment for International Peace
Abstract:
On a hot day in August, President George W. Bush signed into law the Trade Act of 2002. Months of debate between the administration and members of Congress, their constituencies, and other governments were over; with the stroke of his pen President Bush became the first president in almost a decade to enjoy the benefits of trade promotion authority (TPA).
Topic:
Economics, Environment, International Trade and Finance, and Political Economy
Political Geography:
United States

5942. Russia's Decline and Uncertain Recovery

Author:
Thomas E. Jr. Graham
Publication Date:
05-2002
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
For much of the first decade after the collapse of the Soviet Union, the issue of reform—of transition to free-market democracy—dominated discussions of Russia in Russia itself and in the West. Russian president Boris Yeltsin advocated reform; Western governments declared their support and offered their assistance. This was particularly true of the U.S. government. President Clinton's administration came into office in 1993 determined to assist Russia in its transformation into “a normal, modern state—democratic in its governance, abiding by its own constitution and by its own laws, market-oriented and prosperous in its economic development, at peace with itself and the rest of the world,” as deputy secretary of state Strobe Talbott, the chief architect of the U.S. administration's Russia policy, was wont to put it.
Topic:
Economics and Government
Political Geography:
Russia, United States, Europe, Asia, and Soviet Union

5943. Sustainable Development A Dubious Solution in Search of a Problem

Author:
Jerry Taylor
Publication Date:
08-2002
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
From August 26 through September 4, 2002, approximately 100 heads of state and 60,000 delegates will gather in Johannesburg, South Africa, to attend a “World Summit on Sustainable Development.” The conference—convened on the 10th anniversary of the Earth Summit in Rio de Janeiro and expected to be the largest U.N. summit in history— will explore domestic and international policy options to promote the hottest environmental buzzwords to enter the public policy debate in decades.
Topic:
Economics, Environment, Globalization, and Poverty
Political Geography:
South Africa

5944. The Globalization of Human Well-Being

Author:
Indur M. Goklany
Publication Date:
08-2002
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
Controversy over globalization has focused mainly on whether it exacerbates income inequality between the rich and the poor. But, as opponents of globalization frequently note, human well-being is not synonymous with wealth. The central issue, therefore, is not whether income gaps are growing but whether globalization advances well-being and, if inequalities in well-being have expanded, whether that is because the rich have advanced at the expense of the poor.
Topic:
Economics, Globalization, and Human Welfare

5945. Fixing Argentina

Author:
Kurt Schuler
Publication Date:
07-2002
Content Type:
Working Paper
Institution:
The Cato Institute
Abstract:
Argentina's currency crisis and economic depression have been caused by the bad policies of its government—not by banks, speculators, the International Monetary Fund (despite the bad advice it has given), or other scapegoats. The De la Rúa and Duhalde governments have made several gigantic blunders, namely, increasing tax rates, freezing bank deposits, devaluing the peso, and forcibly converting dollar bank deposits and contracts into pesos (“pesofication”).
Topic:
Economics, Globalization, and Political Economy
Political Geography:
Argentina, South America, and Latin America

5946. Rethinking the Export-Import Bank

Author:
Aaron Lukas and Ian Vásquez
Publication Date:
03-2002
Content Type:
Working Paper
Institution:
The Cato Institute
Abstract:
The Export-Import Bank of the United States (Ex-Im Bank) was created in 1934 as an independent federal agency operating under a renewable congressional charter. That charter most recently expired on September 30, 2001. Since then, the Ex-Im Bank has been operating under a series of continuing resolutions set to expire on March 31, 2002.
Topic:
Economics and International Trade and Finance
Political Geography:
United States

5947. Tax Reforms and "Modell Deutschland": Lessons from Four Years of Red-Green Tax-Policy

Author:
Achim Truger and Wade Jacoby
Publication Date:
12-2002
Content Type:
Working Paper
Institution:
Institute of European Studies (IES), UC Berkeley
Abstract:
When the red-green (SPD-Bündnis90/DieGrünen) coalition took over the federal government from the Christian-Democrat/Free-Democrat (CDU/CSU/FDP) coalition in 1998, tax reforms had a very high political priority. And, in fact, the government pushed through an astonishing number of far-reaching tax reforms/tax changes within a period of little more than two years. This paper follows two aims. First, it gives a short description of the measures taken and evaluates them with respect to tax theory and the German tax reform debate of the 1990s. Second, it explicitly addresses the question whether the tax changes were influenced by the wish to reform the Modell Deutschland, i.e. whether something substantial was done to change Germany ́s status as a perceived high tax country and if so, whether the attempt was successful. It will be shown that even though the problem of high taxes might have been many observers ́ and, indeed, also the government ́s dominant concern, there was much more to the German debate. The chapter will also ask whether generously cutting taxes was the right thing to do. It demonstrates that under Germany ́s peculiar economic and institutional circumstances at the end of the 1990s, the attempt to cut taxes led to serious problems for fiscal policy, growth, and employment.
Topic:
Economics, Government, and Political Economy
Political Geography:
Europe

5948. Lessons of the Euro for the Rest of the World

Author:
Barry Eichengreen
Publication Date:
12-2002
Content Type:
Working Paper
Institution:
Institute of European Studies (IES), UC Berkeley
Abstract:
Europe's single currency is widely invoked as a potential solution to the monetary and exchange rate problems of other regions, including Asia, Latin America, North America and even Africa. This lecture asks whether the Europe's experience in creating the euro is exportable. It argues that the single currency is the result of a larger integrationist project that has political as well as economic dimensions. The appetite for political integration being less in other parts of the world, the euro will not be easily emulated. Other regions will have to find different means of addressing the tension between domestic monetary autonomy and regional integration. Harmonized inflation targeting may be the best available solution.
Topic:
Economics, International Trade and Finance, and Political Economy
Political Geography:
Africa, Europe, Asia, and Latin America

5949. The Enlargement Challenge: Can Monetary Union be Made to Work in an EU of 25 Members?

Author:
Barry Eichengreen
Publication Date:
02-2002
Content Type:
Working Paper
Institution:
Institute of European Studies (IES), UC Berkeley
Abstract:
This lecture considers how Europe's monetary union will evolve in the next five to ten years. It concentrates on what is likely to be the most important change in that period, namely, the increasing number and heterogeneity of participating states. By 2006, less than four years from now, it is virtually certain that EMU will be enlarged to include a number of Eastern European countries that have not yet been admitted to the EU itself. These new members will differ sharply from the incumbents in terms of their economic structures, their per capita incomes, and their growth rates. The analysis focuses on the implications of this momentous change for the structure, organization and operation of EMU.
Topic:
Economics and Political Economy
Political Geography:
Europe

5950. Immigrant Well-Being in New York and Los Angeles

Author:
Randy Capps and Michael E. Fix
Publication Date:
08-2002
Content Type:
Working Paper
Institution:
Urban Institute
Abstract:
Despite their strong attachment to the labor force, large numbers of immigrants and their families in New York and Los Angeles have low incomes, lack health insurance, and are food insecure. The most powerful predictor of poverty and hardship is their limited English skills. Legal immigrants arriving after welfare reform's enactment in 1996—who have the most restricted access to public benefits—are poorer than immigrants arriving before the law's enactment.
Topic:
Economics, Human Welfare, and Migration
Political Geography:
United States and New York

5951. The Community Capacity Fund: Understanding its Role in Strengthening the Washington, D.C. Region After 9/11

Author:
Rachel Mosher-Williams
Publication Date:
09-2002
Content Type:
Working Paper
Institution:
Urban Institute
Abstract:
The Community Capacity Fund (CCF), a program of Washington Grantmakers, is acknowledged as a new model of national funding for local, collaborative grantmaking. In the face of serious community needs and concerns post–September 11, 2001, as well as many potential ways to address those needs, the Fund developed a framework for strengthening the ability of nonprofits to respond to the terrorist attacks. An investment by the Ford Foundation (and, ultimately, several other funders) in the Washington, D.C., region's recovery enabled a large group of experienced local grant makers and nonprofit leaders to jointly translate that framework into action. Within less than a year, CCF awarded $1,400,055 in grants to organizations advocating for and reemploying workers dislocated by September 11, as well as to organizations developing cross-jurisdictional efforts to respond to future disasters.
Topic:
Economics, Human Welfare, and Non-Governmental Organization
Political Geography:
United States and Washington

5952. Measuring Unemployment Benefit Recipiency in New Zealand

Author:
Wayne Vroman
Publication Date:
07-2002
Content Type:
Working Paper
Institution:
Urban Institute
Abstract:
This is a paper about measurement. It originated within a project that is examining the performance of unemployment compensation (UC) programs from a cross-national perspective. At the current time the larger project has assembled data on the UC programs of more than 20 countries along with supporting labor market data. Within the set of OECD countries, the project has singled out for particular attention six English speaking countries: Australia, Canada, Ireland, New Zealand, the United Kingdom and the United States. An analysis of the unemployment protection systems in these six countries was recently completed by Brusentsev (2002).
Topic:
Economics, Government, and Human Welfare
Political Geography:
United States, United Kingdom, Canada, Australia, Ireland, and New Zealand

5953. Regulatory Europeanization, National Autonomy and Regulatory Effectiveness: Marketing Authorization for Pharmaceuticals

Author:
Jürgen Feick
Publication Date:
11-2002
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
The EC harmonized market entry regulation for pharmaceuticals from the early sixties on, but it achieved neither its goal of uniform national regulatory decisions nor that of automatic mutual recognition. Subsequent attempts to Europeanize the procedures themselves resulted in two alternatives in 1995: a Centralized Procedure for innovative pharmaceutical products implemented at the EU level, and a Decentralized Procedure which tries to assure mutual recognition. First, the paper analyzes the distinctive modes of Europeanization employed in these regulatory alternatives, examining both their impact on the effectiveness of European governing and the balance they strike between European interventionism, national participation and national autonomy. Second, it tries to assess whether Europeanization furthers the goals of pharmaceutical market entry policy as defined in European regulations – public health protection, creation of a single market and the reduction of regulatory costs to industry. There is little evidence that the public's health is less well protected when regulation is Europeanized. Only the Centralized Procedure contributes significantly to the goal of establishing a single market. Regulatory costs in terms of approval time did go down especially for pharmaceutical firms using the Centralized Procedure, mainly because of efficiency-enhancing legal provisions and institutionally induced regulatory competition between national authorities.
Topic:
Economics, International Trade and Finance, and Science and Technology
Political Geography:
Europe

5954. The European Social Model: Coping with the Challenges of Diversity

Author:
Fritz W. Scharpf
Publication Date:
07-2002
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
European integration has created a constitutional asymmetry between policies promoting market efficiencies and policies promoting social protection and equality. National welfare states are legally and economically constrained by European rules of economic integration, liberalization, and competition law, whereas efforts to adopt European social policies are politically impeded by the diversity of national welfare states, differing not only in levels of economic development and hence in their ability to pay for social transfers and services but, even more significantly, in their normative aspirations and institutional structures. In response, the "Open Method of Coordination" is now applied being in the social-policy field. It leaves effective policy choices at the national level, but tries to improve these through promoting common objectives and common indicators and through comparative evaluations of national policy performance. These efforts are useful but cannot overcome the constitutional asymmetry. Hence there is reason to search for solutions which must have the character of European law in order to establish constitutional parity with the rules of European economic integration, but which also must be sufficiently differentiated to accommodate the existing diversity of national welfare regimes. The article discusses two such options, "Closer Cooperation" and a combination of differentiated "framework directives" with the Open Method of Coordination.
Topic:
Civil Society, Economics, and Political Economy
Political Geography:
Europe

5955. Breaking the Path of Institutional Development? Alternatives to the New Determinism

Author:
Colin Crouch and Henry Farrell
Publication Date:
06-2002
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
The concept of path dependence is being used in highly deterministic ways in neo-institutionalist analysis, so that studies using this framework have difficulty in accounting for, or predicting, change. However, the original Polya urn model from which path dependence theory draws predicts that alternative paths will be possible. It can be argued that actors will be able to use these when they perceive a need to change. This article seeks to capture this possibility through accommodating a Bayesian parametric decision maker, interacting with an environment. This makes it possible to examine how change may involve such processes as: the use of past or redundant institutional repertoires; transfer of experience across action spaces; or from other agents, through networks of structured relationships; the emergence of perceived “one best” solutions. This approach points to the need to change how typologies are used in neo-institutionalist research, so that those features of cases which do not fit the pre-conceived framework of a type are not disregarded as “noise”, but properly evaluated as potential resources for change.
Topic:
Economics, Emerging Markets, and International Trade and Finance

5956. How Reliable is Pooled Analysis in Political Economy? The Globalization-Welfare State Nexus Revisited

Author:
Bernhard Kittel and Hannes Winner
Publication Date:
05-2002
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
Panel data analysis has become very popular in comparative political economy. However, in order to draw meaningful inferences from such data, one has to address specification and estimation issues carefully. This paper aims to demonstrate various pitfalls that typically occur in applied empirical work. To illustrate this, we refer to the debate on the globalization-welfare state nexus. We reexamine a model by Garrett and Mitchell (2001), a leading study in this regard. Utilizing a data set of 17 OECD countries and the time period 1961 to 1993, they find evidence that globalization and partisan composition have a significant impact on the extent of public activity. However, because they apply a dynamic specification in levels, they do not adequately take into account both the dynamic and spherical nature of the data. In contrast, we propose an autoregressive model in first differences that is shown to perform well in statistical terms. Further, we explicitly pay attention to the time pattern of the globalization-welfare state nexus. Substantively, we find evidence that government spending is primarily driven by the state of the domestic economy. Neither partisan effects nor the international economic environment have affected public expenditure considerably.
Topic:
Economics, Globalization, International Trade and Finance, and Political Economy

5957. Political Parties, Institutions, and the Dynamics of Social Expenditure in Times of Austerity

Author:
Herbert Obinger and Bernhard Kittel
Publication Date:
01-2002
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
The containment of social expenditure growth has been (and still is) a core issue of public policy in advanced industrial countries since the 1980s and has received much academic attention during that period. Among the most extensively discussed explanatory factors of social expenditure are partisan politics and political institutions, as well as the dependency of the real impact of the former on the latter. The paper distinguishes five competing theoretical perspectives and explores their power to explain the empirical variation in the period 1982–1997 in 21 OECD countries. The empirical analysis of short-term dynamics is performed in a time-series cross-section framework while long-term level effects are explored in a cross-sectional setting. By using an interactive model specification the authors show that there is empirical evidence for this conditional effect, albeit it is neither thoroughly convincing nor leading to lasting long-term level effects. Extensive specification tests show that the 1990s witnessed a weakening of partisan effects which were still present in the 1980s. In total, the evidence tends to give most support to the “growth-to-limits” and the “new politics” perspectives.
Topic:
Economics, Government, International Trade and Finance, and Political Economy

5958. Special Policy Forum Report: Prospects for Economic Reform in Turkey

Author:
Kemal Derviş
Publication Date:
04-2002
Content Type:
Policy Brief
Institution:
The Washington Institute for Near East Policy
Abstract:
Turkey's recovery from the economic crisis of February 2001 has so far been very successful. Fundamental reforms have been undertaken and strict fiscal discipline has been implemented. Furthermore, this process is, to a large degree, irreversible. For the recovery to be truly successful, however, it is essential that Turkey's relations with the European Union (EU) be promoted and that foreign direct investment be encouraged.
Topic:
Security, Economics, and Religion
Political Geography:
Turkey and Middle East

5959. Special Policy Forum Report: Power to the People?

Author:
Ellen Laipson and Patrick Clawson
Publication Date:
03-2002
Content Type:
Policy Brief
Institution:
The Washington Institute for Near East Policy
Abstract:
In the year 1000, the Middle East had a population of approximately 30 million people, and it remained around that level until 1800. Between 1800 and 1900, however, the figure grew by 75 percent, and then by another 565 percent during the twentieth century, bringing the population to 386 million, or nearly thirteen times its historically stable level. But this increase is coming to an end. In the year 2050, the population will be less than twice what it was in the year 2000, and it will stop increasing entirely by the late twenty-first century, when it will reach its maximum of approximately twice the level it was in the year 2000. In other words, the population increase over one thousand years is essentially concentrated in a 150-year period between 1875 and 2025. This anomalous period of population growth has been a time of tremendous social, political, and economic turmoil.
Topic:
Security, Economics, and Religion
Political Geography:
Middle East and Arabia

5960. U.S.-Turkish Economic Partnership Commission: Time to Take a Look at QIZs

Author:
Helena Kane Finn
Publication Date:
02-2002
Content Type:
Policy Brief
Institution:
The Washington Institute for Near East Policy
Abstract:
The U.S.-Turkish military strategic relationship has been a strong one historically, based on the loyalty of Turkey — a staunch NATO ally — over the past half century. As a result of Prime Minister Bulent Ecevit's visit to Washington in January, business contacts between the United States and Turkey have intensified, adding a new and very significant dimension to the relationship. Perhaps the most concrete result of the meeting between President George W. Bush and the Turkish prime minister is the State Department's creation of the Economic Partnership Commission (EPC), scheduled to hold its first meeting in Ankara on February 26-27. State Department undersecretary for economic affairs Alan Larson will lead the U.S. delegation.
Topic:
Security, Economics, and Religion
Political Geography:
United States, Turkey, Middle East, and Arabia

5961. Globalization and Catching-up in Emerging Market Economies

Author:
Grzegorz W. Kolodko
Publication Date:
05-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
The study discusses conditions and prospects for fast and durable growth in emerging market economies. In the course of history less than 30 nations have become rich and still more than 80 per cent of the world population lives in the middle and low-income countries, some of them in extreme poverty. It is true not only for the majority of economies traditionally considered as 'developing countries', but also for the new, post-socialist emerging markets. Thus the questions arise: what is the influence of globalization process on economic growth and how real are the prospects for these emerging markets to catch up with more advanced countries? What factors may contribute to sustained and rapid growth over the long term? The paper examines strategies that can help taking the contemporary wave of globalization to the advantage of fast growth of less advanced countries and hence containing the existing development gaps.
Topic:
Economics, Emerging Markets, Globalization, and International Trade and Finance

5962. The Benefits and Costs of Group Affiliation: Evidence from East Asia

Author:
Stijn Claessens, Joseph P.H. Fan, and Larry H.P. Lang
Publication Date:
05-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This paper investigates the benefits and associated agency costs of using internal capital markets through affiliating with groups using data of two thousand firms from nine East Asian economies between 1994-6. We find that mature and slow-growing firms with ownership structures more likely to create agency problems gain more from group affiliation, while young and high-growth firms more likely lose. Agency problems are important explanatory factors of firm value in economies outside Japan, but less so in Japan. Consistent with the literature, financially constrained firms benefit from group affiliation. Our results are robust to different time periods and estimation techniques.
Topic:
Economics and International Trade and Finance
Political Geography:
Israel and East Asia

5963. The Macroeconomic Repercussions of Agricultural Shocks and their Implications for Insurance

Author:
Paul Collier
Publication Date:
04-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
The paper considers the macroeconomic impact of shocks to agricultural output and of negative and positive price shocks. It is shown that negative price shocks have particularly large externalities: it is estimated that the overall impact of these negative shocks on GDP may well be double their direct impact. In terms of policy, the presence of externalities justifies subsidising the provision of insurance. If insurance is not feasible, then foreign aid may be helpful. Turning to other systemic shocks, it is argued that the macroeconomic consequences of negative output shocks are far less important. Positive price shocks also have substantial macroeconomic externalities via their effect on asset demand. Appropriate central bank policy is crucial and requires a detailed understanding of asset demand changes in response to price shocks. Since this may well be unlikely, dollarization may be a better strategy.
Topic:
Economics, Government, and International Trade and Finance

5964. Financial Regulation and Supervision in Emerging Markets. The Experience of Latin America since the Tequila Crisis

Author:
Barbara Stallings and Rogerio Studart
Publication Date:
04-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
The paper deals with changes in the regulation and supervision of the Latin American financial sector in the aftermath of the 'Tequila Crisis' of 1994–95. While it finds that both have improved, regulation and supervision cannot resolve all problems; good macroeconomic policy and performance are essential complements. This is especially true because of the procyclical nature of financial activity. The paper presents both regional data for Latin America, contrasting it with other emerging markets, and four country case studies (Argentina, Brazil, Chile, and Mexico). The latter show how individual country characteristics and experiences affect the operation of the financial systems. We close with some policy recommendations.
Topic:
Economics, Emerging Markets, and Government
Political Geography:
Brazil, Argentina, South America, Latin America, North America, Mexico, and Chile

5965. Debt Relief under the HIPC Initiative. Context and Outlook for Debt Sustainability and Resource Flows

Author:
Lisandro Abrego and Doris C. Ross
Publication Date:
04-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This paper analyses debt relief efforts by creditors to alleviate the debt burden of low- income countries. The Heavily Indebted Poor Countries (HIPC) Initiative builds on traditional debt relief, and for the first time involves relief on multilateral debt. It seeks to reduce debt to sustainable levels and eliminate any debt overhang that might hinder growth and investment. It provides substantial debt relief to eligible countries by reducing their overall debt stocks by about one-half, or, together with traditional relief over time, by some 80 per cent. It lowers debt service payments of HIPCs substantially, provides room for increased social spending, and provides a solid basis for debt sustainability. The latter requires efforts by both debtors and creditors. To find poverty reduction efforts, HIPC relief is important, but much broader international support is needed as external transfers to HIPCs in the past far exceeded debt service paid. Experience has shown that external support can only be effective if it reinforces sound policies implemented by HIPCs themselves. Thus debt relief and ODA are most important not in isolation, but as help for self-help.
Topic:
Economics, International Organization, and International Trade and Finance

5966. Assessing the Impact of Fiscal Policy on Poverty

Author:
Andrew McKay
Publication Date:
04-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
Fiscal policy measures are a key means by which governments can influence distribution and poverty, but in fact the relationships between fiscal policy and poverty are not well understood. The most commonly used technique for assessing the distributional impact, benefit incidence analysis, is straightforward, but applied by itself it suffers from a number of serious limitations. Assessment of the impact of fiscal policy needs to be developed in various directions, including allowing for behavioural responses and incorporating a broader range of information. In parallel with this careful attention needs to be paid to more effective monitoring of the poverty impsact of fiscal policy.
Topic:
Economics, Government, and International Trade and Finance

5967. International Bank Lending. Water Flowing Uphill?

Author:
John Hawkins
Publication Date:
04-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
International bank lending is a major component of capital flows between advanced and emerging economies. However, in recent years these flows have been going the wrong way, like water flowing uphill. Even four years after the Asian crisis, there is a net flow of funds from emerging economies to banks in advanced economies. This paper looks at this phenomenon, starting by setting out the relevant data, and then looking at factors influencing these flows. These include both cyclical influences (both 'push' and 'pull') and structural changes within the banking industry. There is some evidence that international lenders are now discriminating more between the various emerging economies.
Topic:
Economics, Emerging Markets, and International Trade and Finance
Political Geography:
Asia

5968. Countercyclical Fiscal Policy. A Review of the Literature, Empirical Evidence and some Policy Proposals

Author:
Carlos Budnevich L.
Publication Date:
04-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
For many emerging market economies, over reliance on monetary policy may bring worse macro results, when compared to a more balanced framework of countercyclical fiscal and monetary policy. The use of countercyclical fiscal policy requires as a precondition solvent and sustainable fiscal accounts and the re-engineering of fiscal institutions to increase the timeliness and flexibility of fiscal policy. A higher degree of tax or pension fund and/or unemployment insurance contribution flexibility may help in economies subject to significant external shocks. Automatic indexing rules to terms of trade or country risk spreads for pension contributions and interest payments on public debt may also contribute to the stabilization effort. If fiscal revenues are highly volatile, structural budget rules and commodity stabilization funds may provide the necessary framework to achieve saving (dissaving) during expansions (contractions).
Topic:
Economics, Government, and International Trade and Finance

5969. Aid, Public Sector Fiscal Behaviour and Developing Country Debt

Author:
Mark McGillivray and Simon Feeny
Publication Date:
04-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This paper looks at public sector debt in developing countries, being concerned specifically with the relationship between aid inflows and the public sector borrowing requirement net of aid loans. After examining the public sector budget constraint and various conditions under which aid might lead to an increase in this borrowing, the paper surveys the empirical results of literature on aid and public sector fiscal behaviour. It finds that the results of a number of studies are consistent with aid leading to increases in this borrowing. Further investigation, in the form of econometric analysis of panel data, also points to this outcome. The paper then looks at a number of theoretical scenarios in which aid leads to increases in borrowing net of aid loans.
Topic:
Economics, Government, and International Trade and Finance

5970. Producing an Improved Geographic Profile of Poverty: Methodology and Evidence from Three Developing Countries

Author:
Chris Elbers, Peter Lanjouw, Johan Mistiaen, Gabriel Demombynes, Jenny Lanjouw, and Berk Özler
Publication Date:
03-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This paper implements a methodology for estimating poverty in Ecuador, Madagascar and South Africa, at levels of disaggregation that to date have not generally been available. The methodology is based on a statistical procedure to combine household survey data with population census data, imputing into the latter a measure of per capita consumption from the former. The countries are very unlike each other—with different geographies, stages of development, quality and types of data, and so on. Yet the paper demonstrates that in all three countries the poverty estimates produced from census data are both plausible (in that they match well stratum-level estimates calculated directly from the household surveys) and satisfactorily precise (at a level of disaggregation far below that allowed by household surveys).
Topic:
Development, Economics, Government, and International Trade and Finance
Political Geography:
South Africa

5971. One Third of the World's Growth and Inequality

Author:
Danny Quah
Publication Date:
03-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This paper studies growth and inequality in China and India—two economies that account for a third of the world's population. By modelling growth and inequality as components in a joint stochastic process, the paper calibrates the impact each has on different welfare indicators and on the personal income distribution across the joint population of the two countries. For personal income inequalities in a China-India universe, the forces assuming first-order importance are macroeconomic: Growing average incomes dominate all else. The relation between aggregate economic growth and within-country in- equality is insignificant for inequality dynamics.
Topic:
Development and Economics
Political Geography:
China, South Asia, India, and Asia

5972. (Re)Distribution of Personal Incomes, Education and Economic Performance Across Countries

Author:
Günther Rehme
Publication Date:
03-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
In many OECD countries income inequality has risen, but surprisingly redistribution as well. The theory attributes this partly to the redistributive effect of education spending. In the model income inequality and growth depend in an inverted U-shaped way on education. To maintain a given level of human capital it is shown that a less efficient schooling technology requires more resources, which lowers pre-tax and post-tax income inequality as well as growth. Using consistently defined income data from the Luxembourg Income Study suggests that there is a negative relationship between growth and income inequality in rich countries. It is argued that using some unadjusted inequality measures in growth regressions may yield estimates that are biased upwards. The evidence suggests that a rich country would raise growth with lower pre-tax and post-tax inequality if it spent more on education.
Topic:
Development, Economics, and Education

5973. Non-Financial Corporate Risk Management and Exchange Rate Volatility in Latin America

Author:
Graciela Moguillansky
Publication Date:
03-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This article studies the currency risk management of multinational companies with investments in Latin American countries. The analysis is centred on episodes of currency or financial shocks, searching into the behaviour of the financial management of a firm expecting a significant devaluation. This allowed us to explore the interaction and transmission mechanisms between the microeconomic behaviour and the macroeconomic impact on the foreign exchange market. The analysis was carried out interviewing financial managers of multinational companies from different sectors with headquarters in the United Kingdom and Spain, by reviewing literature on business and currency risk management, and by analysing some surveys on financial risk management in developed countries.
Topic:
Economics and International Trade and Finance
Political Geography:
United Kingdom, South America, Latin America, and Spain

5974. Does a Switch of Budget Regimes Constrain Managerial Discretion? Evidence for Italian Public Enterprises' Investment

Author:
Elisabetta Bertero and Laura Rondi
Publication Date:
03-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This study examines the effect of the hardening of the budget constraint on the investment behaviour of Italian state owned enterprises (SOEs). It carries out a natural experiment that exploits the 1987 shift of budget regimes due to the pressure of European Union economic policies on the Italian government.Drawing from the theory of capital market imperfections, we apply the empirical framework for the analysis of investment-cash flow sensitivity to a panel of state-owned manufacturing firms during the period 1977-93. We parallel state firms to Anglo-Saxon public corporations which, under separation of ownership and control, are afflicted by agency problems, managerial discretion, misallocation of free cash-flow and overinvestment. We argue that, under a soft budget constraint, state firms' managerial discretion and, in particular, collusion between managers and vote-seeking politicians, lead to wasteful investment.
Topic:
Economics and International Trade and Finance
Political Geography:
Europe and Italy

5975. Why isn't there more Financial Intermediation in Developing Countries?

Author:
Jonathan Conning and Michael Kevane
Publication Date:
02-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This paper proposes to organize thinking about the opportunities for improving and extending financial markets and safety nets for the poor, by focusing on factors that may explain why the linkage of local financial networks and safety nets with the larger economy often fails or is incomplete. Understanding the nature of these impediments is the first step in proposing policies to help promote more effective linkage and intermediation. We propose four explanations for the slowness of adoption of intermediation (high costs of delegated monitoring aggravated by limited intermediary capital; lock-in and crowding out effects from local insurance arrangements, social norms against cooperation with intermediaries; and political resistance to new institutions that shift the balance of power in local polities). Of course, financial repression and weak legal systems remains important as cause of lack of intermediation. We conclude with a review of public policy for more effective intermediation.
Topic:
Development, Economics, and Government

5976. Insolvency and Debt Recovery Procedures in Economic Development: An Overview of African Law

Author:
Clas Wihlborg
Publication Date:
02-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
Insolvency and debt recovery procedures are as crucial to a well-performing financial sector as credit provision itself. They are even more important in Africa, where attempts are underway to create fully-fledged financial markets. For the financial system to be credible, creditors must be ensured that lenders will meet their obligations and that cases against them will be brought to closure. A good legal framework for insolvency also ensures distressed firms a form of orderly exit, thereby enabling their owners to start afresh. However, institutions of this nature take time to take effect, and need to be supported politically and by reforms in other sectors of the economy.
Topic:
Development, Economics, and Government
Political Geography:
Africa

5977. The Gradual Erosion of the Social Security Function of Customary Land Tenure Arrangements in Lineage-Based Societies

Author:
Jean-Philippe Platteau
Publication Date:
02-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
Customary rules governing access to land and other natural resources in village societies have characteristics that allow them to fulfil social security functions and achieve equity objectives. This is true of both common-property resources and land parcels held under individualized tenure. However, when land pressure increases under the combined influences of population growth and market integration, a shift occurs from extensive to intensive resource use patterns. As a result, the efficiency costs of erstwhile equity-and insurance-oriented arrangements rise, thus forcing them to evolve significantly. In particular, land tenure arrangements undergo a major transformation towards more individualized forms with the consequence that property rights in land are increasingly defined without regard for equity and insurance concerns.
Topic:
Development, Economics, and Government

5978. The Growth Elasticity of Poverty

Author:
Rasmus Heltberg
Publication Date:
02-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
How much does economic growth contribute to poverty reduction? I discuss analytical and empirical approaches to assess the growth elasticity of poverty, and emphasize that the relationship between growth and poverty change is non-constant. For a given poverty measure, it depends on initial inequality and on the location of the poverty line relative to mean income. In most cases, growth is more important for poverty reduction than changes in inequality, but this does not render inequality unimportant. Reduction in inequality may be triple effective: (1) it will reduce poverty for a given level of income, (2) it will accelerate the poverty reducing impact of economic growth, and (3) according to cross-country growth regressions, it may contribute to a larger rate of growth.
Topic:
Development, Economics, and International Trade and Finance

5979. Poverty Incidence and Sectoral Growth: Evidence from Southeast Asia

Author:
Peter G. Warr
Publication Date:
02-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
In recent decades, absolute poverty incidence declined in most countries of Southeast Asia, even though in some of these countries inequality increased at the same time. This paper examines the relationship between these outcomes and the rate of economic growth in the agricultural, industrial and services sectors. It develops a time series of available data on the headcount measure of poverty incidence for Thailand, Indonesia, Malaysia and the Philippines over the period from the 1960s to 1999, in aggregate and in both rural and urban areas. It then uses this pooled data set to analyze the economic determinants of changes in poverty incidence.
Topic:
Development, Economics, and International Trade and Finance
Political Geography:
Indonesia, Malaysia, Philippines, Thailand, and Southeast Asia

5980. How Economic Growth Reduces Poverty: A General Equilibrium Analysis for Indonesia

Author:
Peter G. Warr and George Fane
Publication Date:
02-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
Do changes in poverty and inequality depend directly on the rate of economic growth, or does the source of the growth also matter? This paper uses a computable general equilibrium model of the Indonesian economy to explore this question by simulating increases in GDP arising from (i) technical progress in each of seven broad sectors, and (ii) the accumulation of each of six types of physical and human capital. The more a given amount of growth raises the returns to the factors that are more important sources of income for the poor than for the non-poor, the more it reduces poverty and inequality. Different sources of growth affect poverty and inequality differently because they affect factor returns differently, and because the poor and the non-poor own factors in different proportions.
Topic:
Development, Economics, and International Trade and Finance
Political Geography:
Indonesia and Southeast Asia

5981. Hardening a Soft Budget Constraint Through 'Upward Devolution' to a Supranational Institution: The Case of Italian State-Owned Firms and the European Union

Author:
Elisabetta Bertero and Laura Rondi
Publication Date:
01-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This paper contributes to the literature on the role of decentralization in hardening the budget constraint of public enterprises. Following Qian and Roland the study adopts a 'federalist' approach. However, it interprets federalism as the upward devolution of domestic economic policies to a supranational authority and examines its role in disciplining public enterprises operating in a soft budget regime. The methodology is a case study of the shift in budget regime in Italy in the late 1980s. The study shows that a determinant role in driving this shift was played by European economic policies. The discipline imposed by participation in the EMS, the Single Market Programme and, later, the requirements to enter the EMU pushed the Italian government toward a much tougher approach to its budget deficit.
Topic:
Economics, Government, and International Trade and Finance
Political Geography:
Europe

5982. Privatization in sub-Saharan Africa: On Factors Affecting Implementation

Author:
Steve Kayizzi-Mugerwa
Publication Date:
01-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
Although privatization has been a key feature of economic policy in Africa since the early 1990s its sequencing and intensity have varied from country to country, with donor leverage being an important determinant of the pace of implementation. However, although many privatization schemes were undertaken in response to donor demands for reduced government participation in business, the process soon achieved its own dynamics. The positive view of privatization suggests that it went ahead, in spite of domestic opposition, because politicians and bureaucrats perceived real benefits to themselves and their supporters. They could influence the sales to their own benefit, while, on the other hand, a more focused public sector improved service delivery.
Topic:
Development, Economics, and Government
Political Geography:
Africa

5983. Understanding the Silicon Valley Phenomena

Author:
Masahiko Aoki and Hirokazu Takizawa
Publication Date:
01-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This paper analyzes the "Silicon Valley model" as a novel economic institution in the domain of technological product system innovation such as computers. We focus on the information structural relationship as well as governance relationships between venture capitalists and a cluster of entrepreneurial firms. The informational conditions under which the Silicon Valley model is efficient are identified, leading to understanding the significance of standardization of interfaces, modularization and information encapsulation. We then examine the governance/incentive aspect of the model by integrating the models by Aoki (2001) and Baldwin and Clark (2000) to give comparative statics results regarding the optimal number of entrepreneurial firms competing in the same component product. The analyses enable us to evaluate the applicability of the model beyond specific localities and industries.
Topic:
Economics and Industrial Policy
Political Geography:
United States

5984. Household Income Dynamics in Rural China

Author:
Martin Ravallion and Jyotsna Jalan
Publication Date:
01-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
It is well known in theory that certain forms of non-linear dynamics in household incomes can yield poverty traps and distribution-dependent growth. The potential implications for policy are dramatic: effective social protection from transient poverty will be an investment with lasting benefits, and pro-poor redistribution will promote aggregate economic growth. We test for non-linearity in the dynamics of household expenditures and incomes using panel data for rural south-west China. While we find evidence of non-linearity, there is no sign of a dynamic poverty trap. Existing private and social arrangements in this setting appear to protect vulnerable households from the risk of destitution. However, the concavity we find in the recursion diagram does imply that the speed of recovery from an income shock is lower for the poor, and that current inequality reduces growth in mean incomes.
Topic:
Development and Economics
Political Geography:
China and Asia

5985. Institutional Investors, Corporate Ownership, and Corporate Governance: Global Perspectives

Author:
Stuart L. Gillan and Laura T. Starks
Publication Date:
01-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
We examine the role of institutional investors in financial markets and in corporate governance. In many countries, institutional investors have become the predominant players in financial markets and their influence worldwide is growing, chiefly due to the privatization and development of pension fund systems. Moreover, foreign institutional investors are becoming a significant presence, bringing their trading habits and corporate governance preferences to international markets. In fact, we argue that the primary actors prompting change in many corporate governance systems are institutional investors, often foreign institutional investors. In other countries the role of institutional investors is limited. Instead, large blockholders, often in the form of individuals, family groups, other corporations, or lending institutions are the dominant players. We present the theoretical arguments for the involvement of investors in shareholder monitoring and a brief history of institutional ownership and activism in the United States and other countries. We also discuss studies of the efficacy of such activism.
Topic:
Economics, Government, and International Trade and Finance
Political Geography:
United States

5986. Inequality and Risk

Author:
Marcel Fafchamps
Publication Date:
01-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
There has been a lot of interest in the risk coping strategies of the poor in the recent literature but little work on the relationship between these strategies and inequality (Fafchamps 1999). Some have begun to suspect that certain risk coping strategies further impoverish the poor (e.g. Dasgupta 1993, Sen 1981). Labor bonding and debt peonage are examples that have been discussed in the literature (e.e. Srinivasan 1989, de Janvry 1981). Patronage, that is, the protection of the poor by the rich in exchange for labor and services, is also suspected of perpetuating poverty (e.g. Platteau 1995, Platteau 1995, Fafchamps and Quisumbing 1999).
Topic:
Development, Economics, and Poverty

5987. Do Public Transfers Crowd Out Private Transfers? Evidence from a Randomized Experiment in Mexico

Author:
Pedro Albarran and Orazio P. Attanasio
Publication Date:
01-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
The paper will use the data from the PROGRESA evaluation to show the extent to which such a programme crowds out private transfers. An interesting aspect of the paper is the fact that it can use the randomization (one-third of the villages in the sample were randomized in the programme for evaluation purposes).
Topic:
Development and Economics
Political Geography:
Latin America, North America, and Mexico

5988. Redistribution Does Matter Growth and Redistribution for Poverty Reduction

Author:
Hulya Dagdeviren, Rolph van der Hoeven, and John Weeks
Publication Date:
01-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
Recent development literature has placed priority on poverty reduction, and on possible growth enhancement from a more equal distribution of assets and income. At the same time, empirical work consistently shows that economic growth is no more than distribution neutral. In that context, this paper explores the relationship among growth, inequality and poverty, and demonstrates the following general conclusions: 1) a redistributive growth path is always likely to be superior to a distribution neutral path ('trickle down') for reducing poverty; 2) a redistributive growth path is always superior if a country's per capita income and inequality are relatively high; and 3) a static redistribution from the rich to the poor is superior to a redistributive growth path in its effect on poverty for most countries, but not for all. The paper then considers policy that might be used to make growth more equitable.
Topic:
Development, Economics, Government, and Poverty

5989. Proposals for Curbing the Boom-Bust Cycle in the Supply of Capital to Emerging Markets

Author:
John Williamson
Publication Date:
01-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This paper examines what might be done to limit the boom-bust cycle in the flow of capital to emerging markets. Although the paper accepts that some types of capital flow (notably foreign direct investment) are much less problematic in this respect than others (notably short-term bank loans), it argues that influencing the mix would have to be done by capital controls by capital-importing countries rather than supply-side policies. Where supply-side reforms might help is in making some types of flow less unstable: for example, the Buiter/Sibert proposal for a Universal Debt Rollover Option (which needs amendment to alter the term for which rollover might apply); allowing investors with fiduciary responsibilities to hold (though not to buy) bonds of sub-investment grade; penalizing put options in bond contracts and inserting collective action clauses; requiring foreign loans to be denominated in domestic currency; and modifying the remuneration practices of portfolio managers.
Topic:
Economics, Emerging Markets, and International Trade and Finance

5990. Ratings since the Asian Crisis

Author:
Helmut Reisen
Publication Date:
01-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
The increased importance of rating agencies for emerging-market finance has brought their work to the attention of a wider group of observers - and under criticism. This paper evaluates whether the importance of ratings for developing-country finance has changed since the Asian Crisis and whether rating agencies have modified the determinants for their rating decisions. It also provides an analysis on recent suggestions by the Basel Committee on Banking Supervision, as these are very important for gauging the future role of sovereign ratings for foreign debt finance in developing countries. While the explanatory power of conventional rating determinants has declined since the Asian crisis, recent rating performance for Argentina and Turkey can still be qualified as lagging the markets, as variables of financial-sector strength and the endogenous effects of capital flows on macroeconomic variables seem to remain underemphasized in rating assessments. The market impact of sovereign ratings is predicted to decline as agencies have started to modify their country ceiling policy and as market participants try to exploit bond trading opportunities arising from the lagged nature of ratings. The paper presents theory and evidence to suggest that the Basel II Accord will destabilise private capital flows to the developing countries, if the current proposal to link regulatory bank capital to sovereign ratings is maintained: Assigning fixed minimum capital to bank assets whose risk weights are in turn determined by market-lagging cyclically determined ratings will reinforce the tendency of the capital ratio to work in a pro-cyclical way.
Topic:
Development, Economics, and International Trade and Finance
Political Geography:
Turkey, Asia, and Argentina

5991. Performance of Microfinance Institutions in Burkina Faso

Author:
Youssoufou Congo
Publication Date:
01-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This study tests the performance of microfinance institutions (MFIs) in Burkina Faso using indicators such as the sustainable interest rate and the subsidy dependence index. The results indicate that MFIs outreach performance remains very low compared with potential demand, and the factors responsible appear to be both the refusal of most MFIs to mobilize local savings and the high costs of supply of microfinancial services. The results also show that MFIs are not viable and sustainable. Their interest rates are kept low and do not allow them to cover all the costs. In addition, the results indicate that MFIs are dependent on subsidies. However, the oldest MFIs and/or institutions providing deposit services have the lowest subsidy dependence index. It is suggested that more attention should be placed on savings mobilization and ceilings on interest rates should be removed in order to allow MFIs to charge sustainable interest rates.
Topic:
Development and Economics
Political Geography:
Africa

5992. Turkey's Elections and the United States

Author:
Philip H. Gordon and Henri J. Barkey
Publication Date:
11-2002
Content Type:
Policy Brief
Institution:
Center for Strategic and International Studies
Abstract:
The landslide victory of an Islamic party in a Turkish election would hardly seem to be good news for Americans at anytime. Butwithwarlooming inIraq,Turkeytrying torecoverfromits worst financial crisis ever, emerging questions about European defense and NATO, Cyprus talks at a critical stage, and Ankara's application for membershipinthe EuropeanUnioninthe balance, the November3electoralvictory oftheJusticeand DevelopmentParty(AKP)probably struck many U.S. observers as the wrong outcome at the wrong time.
Topic:
NATO, Economics, and Politics
Political Geography:
United States, Europe, and Middle East

5993. Euro-Focus, After The German Electoral Storm: Mending Bridges, Rebuilding Confidence

Author:
Simon Serfaty and Christina Balis
Publication Date:
09-2002
Content Type:
Policy Brief
Institution:
Center for Strategic and International Studies
Abstract:
This past summer began with predictions of the return of a new conservative government in Germany and the alleged demise of Europe's left. The consecutive victories of leftwing parties in Sweden and Germany this month proved the fallacy of both predictions, while raising serious questions in Europe and the United States about the future course of German policies.
Topic:
Economics and Politics
Political Geography:
United States, Europe, Germany, and Sweden

5994. Euro-Focus, September 11, One Year Later A Fading Transatlantic Partnership?

Author:
Simon Serfaty
Publication Date:
09-2002
Content Type:
Policy Brief
Institution:
Center for Strategic and International Studies
Abstract:
One year ago, the two summits scheduled by the North Atlantic Treaty Organization (NATO) and the European Union (EU) for the end of 2002 were expected to start the final phase of the Euro-Atlantic vision: two institutions with overlapping sets of members engaged in missions that might not always be pursued in common but would always remain compatible in their goals and complementary in their methods. Instead, as the year has unfolded since September 11, that vision has become increasingly blurred. Now, there is a sense that the two sides of the Atlantic are drifting away from the lofty goals they set after World War II and during the Cold War, and sought to reassert after the Cold War. The relationship is not only said to be lacking coherence; it is also said to be losing its necessity, as Americans and Europeans no longer share values or even interests—and, even when they do, lose their commonalities in the increasing capabilities gap that divides them.
Topic:
NATO, Cold War, Economics, Politics, and Terrorism
Political Geography:
United States and Europe

5995. Chirac's Blind Date with History

Author:
Simon Serfaty, Christina V. Balis, Pierre Messerlin, and Chris Wiley
Publication Date:
06-2002
Content Type:
Policy Brief
Institution:
Center for Strategic and International Studies
Abstract:
The French elections held during the past eight weeks—first for the presidency and then for the National Assembly—were the most significant elections held in France since 1981. On the whole, their outcome is good for France, for Europe, and for the United States. They restore a political coherence that had been lacking during seven of the last nine years, when the French political system lived under the strained conditions of political cohabitation (1993–1995 and 1997–2002). Moreover, by renewing the primacy of the French presidency, these elections enable Jacques Chirac to assert his leadership during the decisive years that loom ahead for the European Union (EU), as well as for its relations with the United States within the North Atlantic Treaty Organization (NATO). Finally, these elections also confirm Europe's political drift to a center-right that the elections in Germany scheduled for September 23 are likely to make complete (Euro-Focus, September 15, 2002).
Topic:
Economics, Politics, and Terrorism
Political Geography:
Russia, United States, Europe, and France

5996. Taxing Decisions for Europe

Author:
Jennifer Lee, Simon Serfaty, and Christina V. Balis
Publication Date:
04-2002
Content Type:
Policy Brief
Institution:
Center for Strategic and International Studies
Abstract:
Ten years after the target date for the completion of the European internal market, much remains to be desired in the area of common policies. The absence of a coherent EU tax policy, in particular, has been a continued obstacle. Yet, with the introduction of the euro and in view of the EU's anticipated enlargement (Euro-Focus, January 9, 2002), the timeline for addressing these deficiencies is shortening.
Topic:
Economics, Migration, Politics, and Terrorism
Political Geography:
United States and Europe

5997. Bigger Europe, Smaller Agenda

Author:
Simon Serfaty, Christina V. Balis, George Handy, and Georgeta Pourchot
Publication Date:
02-2002
Content Type:
Policy Brief
Institution:
Center for Strategic and International Studies
Abstract:
“More Europe in every area” may sound like an ill-chosen motto for a six-month presidency facing an already demanding and inflated agenda. It is reflective of a concern, however, not to expand the current list of priorities to new initiatives that would risk the fate of past abortive attempts. Avoiding new confrontations, while ensuring the smooth pursuit of ongoing reforms, has become Spain's principal goal during its presidency in the first half of 2002.
Topic:
Economics, Politics, and Terrorism
Political Geography:
Russia, United States, and Europe

5998. The Year of Enlargement

Author:
Simon Serfaty and Christina V. Balis
Publication Date:
01-2002
Content Type:
Policy Brief
Institution:
Center for Strategic and International Studies
Abstract:
Preparations for EU enlargement, combined with more of the unfolding debate on the constitutional future of Europe, will dominate Europe's institutional agenda in 2002. The three Baltic countries and all four countries in central Europe, plus Slovenia, Malta, and Cyprus should be able to conclude their bilateral access negotiations by December 2002, and even, in a few cases, on time for the European Council of June 21–22, in Seville, Spain. Expect, therefore, the enlargement of the EU to 25 members—one that might start as early as January 2004 and end, possibly, no later than June 30, 2007. What follows is a 17-step primer on the process and pattern, the various timetables, and the possible outcomes of an enlargement that will begin to emerge, at last, in 2002.
Topic:
NATO, Economics, and Politics
Political Geography:
United Kingdom, Europe, and France

5999. Composite Indexes of Leading, Coincident, and Lagging Indicators: December 2002

Publication Date:
12-2002
Content Type:
Policy Brief
Institution:
The Conference Board
Abstract:
The Conference Board announced today that the U.S. leading index increased by 0.1 percent, the coincident index held steady, and the lagging index decreased 0.3 percent in December.After declining from May through September 2002, the leading index has now improved for three straight months, suggesting a stronger economic recovery in the first half of 2003.The negative contribution from unemployment insurance claims in December was more than offset by the positive contributions from housing permits, average manufacturing workweek, and consumer expectations. The leading index has almost regained its level in May 2002, or when it started to decline.The coincident index, a measure of current economic activity, was flat in each of the last three months of 2002. But it\'s still 0.8 percent above its cyclical low reached in November 2001.
Topic:
Economics and Political Economy
Political Geography:
United States

6000. Composite Indexes of Leading, Coincident, and Lagging Indicators: November 2002

Publication Date:
11-2002
Content Type:
Policy Brief
Institution:
The Conference Board
Abstract:
The Conference Board announced today that the U.S. leading index increased by 0.7 percent, the coincident index increased by 0.1 percent, and the lagging index decreased 0.2 percent in November.This month's gain in the leading index is the largest since December of last year. With this increase, the index has now recovered its losses since May 2002, and is nearly 3.6 percent above its most recent trough in March 2001.Strength in the financial sector - coupled with a rebound in consumer expectations and a decline in unemployment insurance claims - contributed to the increase in the leading index this month.The coincident index, a measure of current economic activity, increased modestly in November. Despite this increase, the coincident index remains essentially flat since July 2002, reflecting a sluggish recovery from the last recession.
Topic:
Economics and Political Economy
Political Geography:
United States