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on Central and Western Asia |
| By: | Marco Lagi; Yaneer Bar-Yam |
| Abstract: | During the last two years, Europe has been facing a debt crisis, and Greece has been at its center. In response to the crisis, drastic actions have been taken, including the halving of Greek debt. Policy makers acted because interest rates for sovereign debt increased dramatically. High interest rates imply that default is likely due to economic conditions. High interest rates also increase the cost of borrowing and thus cause default to be likely. If there is a departure from equilibrium, increasing interest rates may contribute to---rather than be caused by---default risk. Here we build a quantitative equilibrium model of sovereign default risk that, for the first time, is able to determine if markets are consistently set by economic conditions. We show that over the period 2001-2012, the annually-averaged long-term interest rates of Greek debt are quantitatively related to the ratio of debt to GDP. The relationship shows that the market consistently expects default to occur if the Greek debt reaches twice the GDP. Our analysis does not preclude non-equilibrium increases in interest rates over shorter timeframes. We find evidence of such non-equilibrium fluctuations in a separate analysis. According to the equilibrium model, the date by which a half-default must occur is March 2013, almost one year after the actual debt write-down. Any acceleration of default by non-equilibrium fluctuations is significant for national and international interventions. The need for austerity or bailout costs would be reduced if market regulations were implemented to increase market stability to prevent short term interest rate increases. We similarly evaluate the timing of projected defaults without interventions for Portugal, Ireland, Spain and Italy to be March 2013, April 2014, May 2014, and July 2016, respectively. All defaults are mitigated by planned interventions. |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1209.6369&r=cwa |
| By: | Sergey Mityakov; Heiwai Tang; Kevin K. Tsui |
| Abstract: | We provide evidence that deterioration of relations between the United States and another country, measured by divergence in their UN General Assembly voting patterns, reduces US imports from that country during the second wave of globalization. Though statistically, significant, such an effect of "political distance" on trade is small compared with the frictions imposed by other trade barriers. Indeed, using sector-level trade data, we show that except for petroleum and some chemical products, US imports are not affected by international politics. American firms, however, diversify their import of crude oil significantly away from the political opponents of the US, even after controlling for wars, sanctions, and tariffs. To explain the distinctive political impact on oil import diversification, we test the strategy commodity hypothesis over the hold-up risk hypothesis, because while oil is widely thought to be a strategic commodity, oil trade is also often associated with backward vertical FDI that is subject to the risks of hold-up and expropriation. Our results suggest both political and economic forces are at work. First, although the political limits on oil import are only significant when American firms import oil from dictators, the effect is even more pronounced when the exporting countries have high expropriation risk. Second, a similar import pattern is observed only for other major powers or countries with oil companies operating overseas. Finally, we show that while the US imports of a few strategic commodities, such as tin, are also discouraged by political distance, a similar political effect is also observed in the import of R&D intensive goods, in which case quasi-rents derived from backward FDI in R&D may be expropriated by a hostile government. |
| Keywords: | international politics, hold-up risk, energy security |
| JEL: | F13 F51 F59 Q34 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:tuf:tuftec:0770&r=cwa |
| By: | Masood, Sarwar Awan; Muhammad, Waqas; Amir, Aslam |
| Abstract: | Since the seminal work of Sen, it has been acknowledged that poverty is a multidimensional phenomenon and the unprecedented availability of relevant data has renewed interest in the multidimensionality of the poverty. The purpose of present study is to estimate the multidimensional poverty in Pakistan by using the data of Pakistan Social and Living Standard Measurement Survey 2005-06. The study used nine dimensions i.e. electricity, asset, water, sanitation, housing, education, expenditures, land, and empowerment. Results indicate that majority of Pakistan’s households are deprived in five dimensions: Empowerment, Land, Housing, Sanitation and Asset. Overall 22.8 percent households are living below the expenditure poverty line, and in urban area 11.3% are expenditure deprived and 28.6% are expenditure deprived in rural area. |
| Keywords: | Pakistan; Multidimensional Deprivation; Regional Analysis |
| JEL: | I3 P46 I32 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:41532&r=cwa |
| By: | Pardey, Philip G.; Alston, Julian M.; Chan-Kang, Connie |
| Abstract: | Recent trends in farm productivity and food prices raise concerns about whether the era of global agricultural abundance is over. Agricultural R&D is a crucial determinant of agricultural productivity and production, and therefore food prices and poverty. In this paper we review past and present agricultural production and productivity trends and present entirely new evidence on investments in public agricultural R&D worldwide as an indicator of the prospects for agricultural productivity growth over the coming decades. The agricultural R&D world is changing, and in ways that will definitely affect future global patterns of poverty, hunger and other outcomes. The global picture is mixed. In the world as a whole crop yield growth has slowed. In high-income countries productivity growth has slowed significantly, and real spending on agricultural R&D is being reduced. In China, and other middle-income countries, spending on agricultural R&D is being ramped up and productivity growth has not slowed. The overall picture is one in which the middle-income countries are growing in relative importance as producers of agricultural innovations through investments in R&D and have consequently better prospects as producers of agricultural products. |
| Keywords: | Agricultural and Food Policy, Production Economics, Research and Development/Tech Change/Emerging Technologies, |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:ags:umaesp:133745&r=cwa |
| By: | Benkovskis, Konstantins (BOFIT); Wörz, Julia (BOFIT) |
| Abstract: | This analysis of global competitiveness of emerging market economies accounts for non-price aspects of competitiveness. Building on the methodology pioneered by Feenstra (1994) and Broda and Weinstein (2006), we construct an export price index that adjusts for changes in the set of competitors (variety) and changes in non-price factors (quality in a broad sense) for nine emerging economies (Argentina, Brazil, Chile, China, India, Indonesia, Mexico, Russia and Turkey). The highly disaggregated dataset covers the period 19992010 and is based on the standardized 6-digit Harmonized System (HS). Unlike studies that use a CPI-based real effective exchange rate, our method highlights notable differences in non-price competitiveness across markets. China shows a huge gain in international competitiveness due to non-price factors, suggesting that China critics may be overstressing the role of renminbi undervaluation in explaining China’s competitive position. Oil exports account for strong improvement in Russia’s non-price competitiveness, as well as the modest losses of competitiveness for Argentina and Indonesia. Brazil, Chile, India and Turkey show discernible improvements in their competitive position when accounting for non-price factors. Mexico’s competitiveness deteriorates regardless of the index chosen. |
| Keywords: | non-price competitiveness; quality; relative export price; emerging countries |
| JEL: | C43 F12 F14 L15 |
| Date: | 2012–09–24 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bofitp:2012_019&r=cwa |
| By: | Frederick van der Ploeg |
| Abstract: | We show how a monopolistic owner of oil reserves responds to a carbon-free substitute becoming available at some uncertain point in the future if demand is isoelaastic and variable extraction costs are zero but upfron exploration investment costs have to be made. Not the arrival of this substitute matters for efficiency, but the uncertainty about the timing of this substitute coming on stream. Before the carbon-free substitute comes on stream, oil rserves are depleted too rapidly; as soon as the substitute has arrived, the oil depletion rate drops and the oil price jumps up by a discrete amount. Subsidizing green R&D to speed up the introduction of breakthrough renewables leads to more rapid oil extraction before the breakthrough, but more oil is left in situ as exploration investment will be lower. The latter offsets the Green Paradox. |
| Keywords: | Hotelling principle, exhaustible resources, carbon-free substitute, regime switch, oil stock, uncertainty, hold-up problem, green R&D, Green Paradox |
| JEL: | D81 H20 Q31 Q38 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:oxcrwp:091&r=cwa |
| By: | Francesco Nicolli; Giulia Bettin |
| Abstract: | The evolution of worldwide climatic conditions doubtless represents one of the major and uncertain challenges in the near future. The adaptation strategies might differ a lot according to local institutional, political and financial constraints but migration is certainly one of the main possibilities individuals have to escape from the most affected regions. Regional – maybe temporary - small-scale movements might be the first, immediate response but international mobility as well is likely to take place in response to climatic variations. Empirical literature dealing with the effects of climate change on international migration is still rather scarce. In particular, it focuses on international migration to developed countries as a consequence of weather-related natural disasters while alternative measures for climate change based on deviations in temperature and rainfall from the long term means have been used only in a few studies. Building on this little empirical evidence, we collect ten-year bilateral data on international migration from 1960 to 2000 and look simultaneously at both anomalies in precipitations and temperature and weather-related natural disaster as determinants of international movements. The use of bilateral data let us consider not only long-distance migration (typically from low income to developed countries) but also short-distance regional movements. International migration is found to be significantly affected by different climate change proxies in the overall sample of countries, but results are confirmed also when focusing on specific geographical areas like Africa or Asia. |
| Keywords: | international migration; climate change; natural disasters |
| JEL: | F22 Q54 |
| Date: | 2012–06–15 |
| URL: | http://d.repec.org/n?u=RePEc:udf:wpaper:201210&r=cwa |
| By: | Nikolay Aleksandrov; Raphael Espinoza; Lajos Gyurko |
| Abstract: | We study the optimal oil extraction strategy and the value of an oil field using a multiple real option approach. The numerical method is flexible enough to solve a model with several state variables, to discuss the effect of risk aversion, and to take into account uncertainty in the size of reserves. Optimal extraction in the baseline model is found to be volatile. If the oil producer is risk averse, production is more stable, but spare capacity is much higher than what is typically observed. We show that decisions are very sensitive to expectations on the equilibrium oil price using a mean reverting model of the oil price where the equilibrium price is also a random variable. Oil production was cut during the 2008-09 crisis and we find that the cut in production was larger for OPEC, for countries facing a lower discount rate, as predicted by the model, and for countries whose governments' finances are more dependent on oil revenues. However, the net present value of a country's oil reserves would be increased significantly (by 100 percent, in the most extreme case) if production was cut completely when prices fall below the country's threshhold price. If several producers were to adopt such strategies, world oil prices would be higher but more stable. |
| Keywords: | Oil production, Real Options, Capacity Expansion, Equilibrium Price of Oil, OPEC |
| JEL: | C61 Q30 Q43 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:oxcrwp:092&r=cwa |
| By: | Athina Economou; Christos Kollias |
| Abstract: | Terrorism is widely regarded as a public bad vis-à-vis security - a public good - affecting the subjective well-being of citizens. As studies have shown, citizens' risk-perceptions and risk-assessment are affected by large scale terrorist acts. Reported evidence shows that individuals are often willing to trade-off civil liberties for enhanced security particularly as a post-terrorist attack reaction as well as adopting more conservative views. Within this strand of the literature, this paper examines whether terrorism and in particular mass-casualty terrorist attacks affect citizens' political selfplacement on the left-right scale of the political spectrum. To this effect the Eurobarometer Surveys for twelve European Union countries are utilised and Ordered Probit models are employed for the period 1985-2010 with over 230 thousand observations used in the estimations. On balance, the findings reported herein seem to be pointing to a shift in respondents' self-positioning towards the right of the political spectrum. |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diweos:diweos73&r=cwa |
| By: | Zimmermann, Laura (University of Michigan) |
| Abstract: | Recent years have seen an increasing interest in using public-works programs as anti-poverty measures in developing countries. This paper analyzes the rural labor market impacts of the Indian National Rural Employment Guarantee Scheme, one of the most ambitious programs of its kind, by using a regression discontinuity design. I find that private-sector wages increase substantially for women, but not for men, and that these effects are concentrated during the main agricultural season. In contrast, there is little evidence for negative private employment effects. |
| Keywords: | public works program, National Rural Employment Guarantee Scheme, NREGA, NREGS, India, regression discontinuity design |
| JEL: | H53 I38 J22 J23 J38 |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp6858&r=cwa |
| By: | Nayak, Purusottam |
| Abstract: | The paper is a brief account of findings of various human development reports and studies undertaken by individual researchers on the states of northeast India. The findings reveal that achievement of northeastern region is quite satisfactory in comparison to all India average achievements in some dimensions of human development but it has miserably failed in bringing commensurate economic growth and equitable distribution. There exists wide spread disparity of socioeconomic achievements across different states and within, from urban to rural areas and between male and female. If the problems of poor economic growth, poverty, gender disparity and general health of the people are not properly addressed the region may fall into the trap of vicious quadrant instead of moving to a virtuous one. The way out from this trap is through achievement of a productive, balanced and sustainable economy with appropriate intervention in health sector and poverty alleviation programs. |
| Keywords: | Human development index; North East India |
| JEL: | O53 O15 |
| Date: | 2012–08–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:41582&r=cwa |
| By: | Ghazala Azmat; Rosa Ferrer |
| Abstract: | Ghazala Azmat and Rosa Ferrer analyse data on young lawyers to understand what drives differences in earnings between highly skilled men and women. |
| Keywords: | performance measures, gender gaps, lawyers |
| JEL: | M52 J16 K40 J44 |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepcnp:379&r=cwa |
| By: | Galina Besstremyannaya (Center for Economic and Financial Research at New Economic School); Jaak Simm (Tokyo Institute of Technology, Graduate School of Information Science and Engineering) |
| Abstract: | The 1991 law ‘On health insurance for the citizens of the Russian Federation’ established that social health insurance is to be offered by multiple private insurance companies. The paper is the first econometric analysis measuring the effect of private health insurers on quality related outcomes of social health insurance (SHI) systems in Russian regions. The baseline model introduces regional SHI system as a binary variable with unity value corresponding to the presence of private health insurers as the only agents at the SHI market. The extended model captures endogeneity by employing an instrumental variable approach. The non-parametric model uses kernel regressions. The results of parametric and kernel regressions reveal that the presence of private insurers is a significant determinant of infant and under-five mortality. The positive impact of private insurers is explained by regional institutional reforms. The methods of provider reimbursement are related to infant and under-five mortality, which offers suggestive evidence for enabling insurer competition through selective contracting with health care providers. |
| Keywords: | social health insurance, infant mortality, under-five mortality, kernel regression, health care systems, health care quality, provider payment |
| JEL: | I10 I18 G22 R22 |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:cfr:cefirw:w0177&r=cwa |
| By: | Tomas Frejka (Max Planck Institute for Demographic Research, Rostock, Germany); Sergei Zakharov |
| Abstract: | The transformation of traditional childbearing patterns of early family formation to later family formation characterized recent fertility trends in Russia. These were intrinsically interwoven with fundamental changes in all aspects of life of young people in the 1990s and the 2000s. The past quarter century was also marked by concern with low fertility and attempts to increase fertility in the early 1980s and the late 2000s. The family policies of the 1980s failed to raise fertility. Preliminary analyses indicate that the fate of the 2007 policies could be similar. In both cases the main emphasis was on material birth and child benefits, parental leaves and child care. Presumably insufficient attention was devoted to improving living conditions of young people and promoting gender equality. Will government efforts to raise fertility during the 2010s be sufficiently effective to offset economic and social forces challenging childbearing? As of 2012 the outlook for a future fertility increase does not appear hopeful. |
| Keywords: | Russian Federation, fertility |
| JEL: | J1 Z0 |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:dem:wpaper:wp-2012-027&r=cwa |
| By: | Richard Layard |
| Abstract: | Richard Layard and colleagues reveal the shocking scale of mental illness in Britain - and how little the NHS does about it. |
| Keywords: | Wellbeing, mental health, NHS, government policy |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepcnp:380&r=cwa |
| By: | Moayedi, Vafa |
| Abstract: | By employing a parsimonious econometric approach, based on an ARIMA model, this study detects significant Islamic calendar effects on U.S. meat consumption. This surprising finding strengthens the assumption that the size of the Muslim community is considerably larger than assumed by U.S. authorities and NGOs. This study fills a gap in the existing literature which has not addressed this issue with such an approach before. Furthermore, this study suggests considering Islamic festivities for the seasonal adjustment of U.S. time series data. |
| Keywords: | ARIMA; Calendar Effects; Islamic Festivities; Muslims; Seasonal Adjustment |
| JEL: | E27 C22 |
| Date: | 2012–03–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:41554&r=cwa |