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on Central and Western Asia |
| By: | Raghbendra Jha |
| Abstract: | Inflation targeting (henceforth IT) has emerged as a significant monetary policy framework in both developed and transition economies. It has been in place for a decade or more in a number of countries - with around 20 central banks adopting it as their basic monetary policy framework. Some authors have argued that for transition economies undergoing sustained financial liberalization and integration in world financial markets IT is an attractive monetary policy framework. Consequently there is some pressure for such economies to adopt IT as a core element in their monetary policy frameworks. The present paper evaluates the case for IT in India. It begins with stating, almost from first principles, the objectives of monetary policy in India. I argue that inflation control cannot be an exclusive concern of monetary policy in a country such as India with a substantial poverty problem. The rationales for IT is then spelt out as are some nuances of the practical implementation of IT. The paper provides some evidence on the effects of IT in developed and transition economies and argues that although IT may have been responsible for maintaining a low inflation regime it has not brought down the inflation rate itself substantially. Further, the volatility of exchange rate and output movements in transition countries adopting IT has been higher than in developed market economies. The paper then discusses India’s experience with using rules-based policy measures (nominal targets) and elaborates on the reasons (as espoused in the extant literature) why India is not ready for IT. It is further shown that even if the Reserve Bank of India wanted to, it could not pursue IT since the short-term interest rate (the principal policy tool used to affect inflation in countries working with IT) does not have significant effects on the rate of inflation. The paper concludes by listing monetary policy options for India at the current time. |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:pas:asarcc:2005-04&r=cwa |
| By: | Lahcen ACHY (INSEA, Rabat, Morocco) |
| Abstract: | The purpose of this paper is to investigate how the functioning of the labor market in Morocco is affecting economic growth. The first section examines the demographic factors affecting the supply side of the labor market such as the population growth, the pace of urbanization, and the increase of female labor force participation over the last decades. These three demographic factors, although dealt with jointly, don’t have the same effects on the labor market conditions and may be connected to economic growth through different channels. The second section explores the potential distorting effects of policy choices undertaken by policy makers in Morocco over the last four decades. For a long time, the government provided much more incentives to capital intensive investment at the extent of labor intensive technologies, which distorted the allocation of resources and crowded out the abundant labor force. As a consequence, formal sector has not crated enough job opportunities while survival activities in the informal sector have expanded very rapidly. The third section investigates the educational system as the main mechanism through which human capital is accumulated. As in Lucas-Uzawa framework, human capital is accumulated endogenously as a result of individual optimal investment decisions on the basis of the expected returns on the labor market. One of the key issues is the increasing rate of graduates unemployed. Does this mean that educational system is not adequately responding to the needs of the productive system? Or that the productive system is still underdeveloped to absorb all the available skilled labor supplied on the marketplace. The fourth section of the paper examines the contribution of the public sector to employment and the nature of qualifications required by public sector jobs. The public sector wage bill in Morocco is excessive and tends to put constantly pressure on the government budget, which threatens macroeconomic stability and restrains growth prospects. The fifth section presents briefly the labor market regulation in Morocco and the extent to which they are effectively enforced. It attempts to assess the extent to which the existence of minimum wage has protected the purchasing power of workers. It also deals with the impact of existing regulations imposed to the formal sector on the expansion of a large informal sector. |
| Keywords: | Labor Market, Education, Public employment, Morocco |
| JEL: | J |
| Date: | 2005–12–14 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpla:0512007&r=cwa |
| By: | Dubois, P. |
| Abstract: | In this paper, we study the determinants of the value of informal risk sharing groups. In particular, we look at the effects of heterogeneity of preferences and of limited commitment constraints that restrict feasible allocations differently if individuals can deviate form risk sharing agreements in coalitions or not. We test impirically several predictable implications in rural Pakistan taking into account the heterogeneity of households' preferences. Our results show that exogenous size of risk sharing groups can be rejected or that only imperfect risk sharing is obtained within the village because of limited commitment and because of the risk of coalition formation that needs to be deterred. ...French Abstract : L'auteur étudie les déterminants de la valeur du partage de risque informel dans un groupe. En particulier, il étudie les effets de l'hétérogénéité des préférences et de l'engagementlimité sur les limites au partage des risques. Plusieurs implications sur des données au Pakistan sont testées, en tenant compte de l'hétérogénéité des préférences des ménages. Les résultats montrent qu'une taille, exogène des groupes de partage de risque peut-être rejetée ou qu'un partage de risque imparfait est obtenu dans le village à cause de contraintes d'engagement limité et à cause du risque de formation de coalitions. |
| Keywords: | RISK; INSURANCE; RISK AVERSION; LIMITED COMMITMENT; COALITIONS; PAKISTAN ; ASSURANCE; RISQUE; MILIEU RURAL; THEORIE DES CONTRATS; PAYS EN DEVELOPPEMENT ; PAKISTAN |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:rea:inrawp:200505&r=cwa |
| By: | Boris Najman (ROSES-CNRS, University of Paris 1, France); Richard Pomfret (University of Adelaide, Australia); Gael Raballand (World Bank, Washington DC, USA); Patricia Sourdin (University of Adelaide, Australia) |
| Abstract: | Kazakhstan’s economy has been driven by an oilboom since the discovery of large new oilfields coincided with the upturn of world oil prices after 1998. This paper uses national household expenditure survey data to examine whether Kazakhstan’s experience supports a curse or a blessing outcome. We assess the extent to which the benefits from the oilboom are retained in the oil-producing regions, or spread evenly across the national economy, or are concentrated in the cities where the country’s elite lives. We then analyze the data to determine the transmission mechanisms (higher wages, social transfers or informal income) from the oilboom to household expenditure. |
| Keywords: | resource boom; redistribution |
| JEL: | D30 Q32 O13 |
| Date: | 2005–12–13 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpdc:0512012&r=cwa |
| By: | J. David Brown; John Earle; Almos Telegdy |
| Abstract: | This paper estimates the effect of privatization on multifactor productivity (MFP) using long panel data for nearly the universe of initially state-owned manufacturing firms in four economies. We exploit the key longitudinal feature of our data to measure and control for pre-privatization selection bias and to estimate long-run impacts. We find that the magnitudes of our estimates are robust to alternative functional forms, but sensitive to how we control for selection. Our preferred random growth models imply that majority privatization raises MFP about 15% in Romania, 8% in Hungary, and 2% in Ukraine, while in Russia it lowers it 3%. Privatization to foreign rather than domestic investors has a larger impact, 18-35%, in all countries. Positive domestic effects appear within a year in Hungary, Romania, and Ukraine and continue growing thereafter, but take 5 years after privatization to emerge in Russia. |
| Keywords: | privatization, productivity, foreign ownership, random growth model, transition, Hungary, Romania, Russia, Ukraine |
| JEL: | D24 G34 L33 P31 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:hwe:certdp:0508&r=cwa |