nep-dev New Economics Papers
on Development
Issue of 2009‒05‒23
33 papers chosen by
Jeong-Joon Lee
Towson University

  1. Remittances, financing constraints and growth volatility : Do remittances dampen or magnify shocks ? By Dramane Coulibaly
  2. Preliminary evidence on internal migration, remittances, and teen schooling in India: By Mueller, Valerie; Shariff, Abusaleh
  3. Preferential trade agreements between the monetary community of Central Africa and the European Union: Stumbling or building blocks? A general equilibrium approach By Ngeleza, Guyslain K.; Muhammad, Andrew
  4. Trends in Kenyan Agricultural Productivity: 1997-2007 By Betty Kibaara; Joshua Ariga; John Olwande; T.S. Jayne
  5. Access to Land, and Poverty Reduction in Rural Zambia: Connecting the Policy Issues By T.S. Jayne; Ballard Zulu; Gear Kajoba; Michael T. Weber
  6. Methodology for Two Weighting Applications for the 2008 Zambia Supplemental Survey. By David J. Megill
  7. Household Income and Assets in Rural Mozambique, 2002- 2005: Can Pro-Poor Growth Be Sustained? By David Mather; Benedito Cunguara; Duncan Boughton
  8. The China Great Leap Forward Famine: The Lasting Impact of Mothers’ Fetal Malnutrition on Their Offspring By Belton M. Fleisher; Seonghoon Kim
  9. A Comparison and Decomposition of Reform-Era Labor Force Participation Rates of China's Ethnic Minorities and Han Majority By Maurer-Fazio, Margaret; Hughes, James W.; Zhang, Dandan
  10. Remittances: An Automatic Output Stabilizer? By Ralph Chami; Dalia Hakura; Peter Montiel
  11. The Challenge of Reforming Budgetary Institutions in Developing Countries By Richard Allen
  12. Grants, Remittances, and the Equilibrium Real Exchange Rate in Sub-Saharan African Countries By Brett Rayner; Joannes Mongardini
  13. Global Relative Poverty By Lynge Nielsen
  14. National rural employment guarantee scheme, poverty and prices in rural India By Raghav Gaiha; Vani Kulkarni; Manoj Pandey; Katsushi Imai
  15. Pro-poor growth, poverty, and inequality in rural Vietnam: welfare gap between the ethnic majority and minority By Raghav Gaiha; Vani Kulkarni; Manoj Pandey; Katsushi Imai
  16. Measurement of Employment And Unemployment in India : Some Issues By K. Sundaram
  17. Backward Linkages of Foreign Subsidiaries in Guangdong, China: A Country- of –Origin Analysis By Filip De Beule
  18. When Economic Growth is Less than Exponential By Christian Groth; Karl-Josef Koch; Thomas M. Steger
  19. On Hunger and Child Mortality in India By Raghav Gaiha; Vani S. Kulkarni; Manoj K. Pandey; Katsushi S. Imai
  20. National Rural Employment Guarantee Scheme, Poverty and Prices in Rural India By Raghav Gaiha; Vani S. Kulkarni; Manoj K. Pandey; Katsushi S. Imai
  21. Estimating Income Poverty and Inequality from the Gallup World Poll: The Case of Latin America and the Caribbean By Leonardo Gasparini; Pablo Gluzmann
  22. Market Disciplining of the Developing Countries' Sovereign Governments By Levent Bulut
  23. The Impact of Aid on Growth Revisited: Do Donor Motives Matter? By Christopher Kilby; Axel Dreher
  24. Coping with Rising Food Prices: Policy Dilemmas in the Developing World By Nora Lustig
  25. Does wealth inequality reduce the gains from trade? By Caselli, Mauro
  26. The determinants of net interest income in the Mexican banking system: an integrated model By Maudos, Joaquin; Solisa , Liliana
  27. The Long-run Effects of Household Liquidity Constraints and Taxation on Fertility, Education, Saving, and Growth By Erasmo Papagni
  28. Impact of "Seguro Popular" on Prenatal Visits in Mexico, 2002-2005: Latent Class Model of Count Data with a Discrete Endogenous Variable By Jeffrey E. Harris; Sandra G. Sosa-Rubi
  29. Quantity-Quality and the One Child Policy:The Only-Child Disadvantage in School Enrollment in Rural China By Nancy Qian
  30. Requiescat in Pace? The Consequences of High Priced Funerals in South Africa By Anne Case; Alicia Menendez
  31. The Impact of the AIDS Pandemic on Health Services in Africa: Evidence from Demographic and Health Surveys By Anne Case; Christina Paxson
  32. Quantitative Evaluation of Determinants of Export and FDI: Firm-level evidence from Japan By TODO Yasuyuki
  33. Analysis on β and σ Convergences of East Asian Currencies By OGAWA Eiji; YOSHIMI Taiyo

  1. By: Dramane Coulibaly (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I)
    Abstract: This paper studies empirically the link between remittances and growth volatility by examining the impact of remittances on the propagation of real and monetary shocks. This study is conducted by employing dynamic panel generalized method of moment (GMM) technique for a sample of 63 countries over the 1980-2004 period. The volatility of terms of trade and inflation is used to proxy for real and monetary volatility, respectively. The results show that the impact of remittances on the propagation of shocks depends on the nature of shock. Precisely, the results show that remittances dampen the effect of terms of trade volatility, but, magnify the effect of inflation volatility. The results also suggest that the dampening effect of remittances on propagation of terms of trade volatility is greater in country with high level of financial development.
    Keywords: Remittances, financing constraints, volatility.
    Date: 2009–03
  2. By: Mueller, Valerie; Shariff, Abusaleh
    Abstract: "Migration can serve as an outlet for employment, higher earnings, and reduced income risk for households in developing countries. We use the 2004–2005 Human Development Profile of India survey to examine correlations between the receipt of remittances from internal migrants and human capital investment in rural areas. We employ a propensity score–matching approach to account for the selectivity of households into receiving remittances. We interpret the results conservatively due to the cross-sectional nature of the data. We find a positive correlation between remittances received from internal migrants and the schooling attendance of teens. The magnitude of the correlation is greater when focusing on low-caste households, and male schooling attendance in particular becomes more positive and statistically significant. Our findings provide a basis for establishing future research in the areas of migration and social protection in India." from authors' abstract
    Keywords: Migration, Transfers, Human capital, Labor supply, Urban-rural linkages, Nonfarm rural development, Development strategies,
    Date: 2009
  3. By: Ngeleza, Guyslain K.; Muhammad, Andrew
    Abstract: "This paper uses a computable general equilibrium approach to simulate two opposing views describing regional trade agreements either as building blocks for or stumbling blocks to multilateral trade liberalization. This study focuses on the free trade agreement (FTA) between the Economic and Monetary Community of Central Africa (CEMAC) and the European Union (EU). Results show that although a regional trade agreement may slightly raise welfare among the members of the agreement, the cost to nonmembers can be high. In this paper we argue that multilateral liberalization and a regional free trade agreement between the EU and CEMAC are not mutually exclusive. Regional trade agreements should be complementary and consistent with a multilateral agreement, not an attempt to replace it. The regional breakdown in our design considers 14 regions, allowing for country-specific analysis for one least-developed country (Democratic Republic of Congo) and one non-least-developed country (Cameroon). Multilateral liberalization amplifies welfare gain for Cameroon. The Democratic Republic of Congo, with its weaker institutional capacity, is affected negatively. An EU-CEMAC FTA without multilateralism produces gains for both Cameroon and the Democratic Republic of Congo. The gain for Cameroon is, however, moderate compared with that achieved when the EU-CEMAC FTA is accompanied with a multilateral agreement." from authors' abstract
    Keywords: Regional trade, multilateral trade, Computable General Equilibrium Models, European Union, Development strategies,
    Date: 2009
  4. By: Betty Kibaara; Joshua Ariga; John Olwande; T.S. Jayne
    Abstract: Agriculture continues to be a fundamental instrument for sustainable development, poverty reduction and enhanced food security in developing countries. Agricultural productivity levels in Sub Sahara Africa are far below that of other regions in the world, and are well below that required to attain food security and poverty reduction goals. On the other hand, the rate of agricultural productivity growth since the early 2000s has been quite impressive in many African countries, including Kenya, yet this is no cause for complacency. Sustained and accelerated growth requires a sharp increase in productivity of smallholder farmers. The Strategy to Revitalize Agriculture (SRA), Kenya Vision 2030, Comprehensive African Agricultural Development Program (CAADP) and Alliance for Green Revolution in Africa (AGRA) have underscored the importance of increasing agricultural productivity in the fight against poverty. In the past, agricultural production was largely a function of acreage, but further growth in production will have to be driven by productivity growth.
    Keywords: Africa, Kenya, productivity
    JEL: Q10
    Date: 2008–09
  5. By: T.S. Jayne; Ballard Zulu; Gear Kajoba; Michael T. Weber
    Abstract: It might be considered unlikely that inadequate access to land would be one of the major causes of rural poverty in Zambia. However, evidence presented in this paper shows that economically viable arable land is not in great abundance in Zambia after considering the current situation with respect to access to road infrastructure and access to services and markets. In fact, access to land is already a major problem for large segments of the rural population in Zambia. Moreover, depending of future land allocation policy, access to good quality land with a market potential may become increasingly beyond the reach of many small-scale farm households, making it more difficult to achieve a smallholder-led, pro-poor agricultural development trajectory.
    JEL: Q13
    Date: 2008–11
  6. By: David J. Megill
    Abstract: In 2001 the first Supplemental Survey (SS) was conducted using the panel of the sample households selected for the 1999/2000 Post-Harvest Survey (PHS). All of the sample households in the PHS 99/00 that were found in the sample standard enumeration areas (SEAs) in 2001 were included in the sample for this first SS. The SS04 and SS08 followed this same panel of sample households three and seven years later to provide additional longitudinal data for these households. The main objective of the SS was to provide longitudinal data for the sample households in the panel that can be used to study micro-level changes in agricultural practices and socio-economic characteristics over time. The correlation in the sample data between each SS and the PHS 99/00 will improve the precision of the estimates of trends over time for relative indicators such means and proportions.
    JEL: Q19
    Date: 2009–04
  7. By: David Mather; Benedito Cunguara; Duncan Boughton
    Abstract: Mozambique made impressive reductions in poverty from 1996 to 2002. The national poverty rate, as documented by the National Household Consumption Survey Inquérito aos Agregados Familiares (IAF) expenditure surveys in those years, fell from 69.4% in 1996/97 to 54.1% in 2002/03. Consistent with the IAF expenditure survey results, Trabalho de Inquerito Agricola (TIA) rural household income surveys showed that mean and median rural household income per adult equivalent increased by 65% and 30% respectively from 1995/96 to 2001/02, and that all income quintiles shared in the income growth. Yet in spite of these impressive gains in household welfare, the majority of the country’s population remained below the poverty line in 2002/03 (51.5% in urban areas, 55.3% in rural). The first objective of this paper is to determine whether the upward trends in household welfare found from 1996 to 2002 have continued from 2002 to 2005, as measured in terms of TIA income and assets. The second objective of this paper is to use information about the structure of rural household income, asset levels, and access to technology and public goods in TIA 2002 and 2005, to investigate the prospects for continued rural economic growth, as well as the question of whether or not one could expect income growth to continue to be as broad- based as it was from 1996 to 2002. A key insight from the analysis of rural income growth in Mozambique from 1996 to 2002 is that the poorest 80% of rural households derived most of their gains from increases in crop income, which appear to have come primarily from expansion of cultivated area, not improved productivity. To address the first two objectives, we use data from the rural household income survey conducted by the Ministry of Agriculture in 2005, the TIA, which re-surveyed more than 80% of the households included in the previous TIA rural household income survey conducted in 2002, thus generating the first nationally representative panel household dataset for rural Mozambique. The third objective of this paper is to provide background information on the methods used to construct the income variables for the TIA 2002-2005 panel and the TIA 2002 and TIA 2005 full cross-sectional datasets. This panel household income dataset has already been used in two related papers, one which investigates household income poverty dynamics from 2002-2005 (Cunguara et al. 2008), and another which uses multivariate panel regression analysis to assess the relative impact on household crop income of changes in household asset levels, input choices, and access to crop production technology and public goods (Mather forthcoming).
    Keywords: africa, agriculture, mozambique, income, growth
    JEL: Q12
    Date: 2008–12
  8. By: Belton M. Fleisher (Department of Economics, Ohio State University); Seonghoon Kim (Department of Economics, Ohio State University)
    Abstract: Mothers born around the China Great Leap Forward Famine (famine-born mothers) are likely to have worse adult outcomes due to a negative relationship between fetal malnutrition and their health and cognitive ability. Using data from the China Health and Nutrition Survey, I investigate whether famine-born mothers transmit less human capital to their offspring through various channels, including less cognitive ability and other innate traits and by the choice of less investment in children’s human capital. My study also focuses on possible gender differences in these effects. I find that in-utero famine experience of famine-born mothers is negatively related to the education and labor outcomes of their offspring. However, female children are less affected by mothers’ famine experience than are men. This outcome suggests that Trivers-Willard (1973) effects dominate parental-choice effects despite the well-known son-preference of China.
    Keywords: Gender difference, Malnutrition, Health, Labor Market Outcomes, Schooling, Barker hypothesis, Trivers-Willard hypothesis, China Famine
    JEL: I12 J16 P36
    Date: 2009–05
  9. By: Maurer-Fazio, Margaret (Bates College); Hughes, James W. (Bates College); Zhang, Dandan (Australian National University)
    Abstract: This paper examines differences in China's ethnic majority and minority patterns of labor force participation and decomposes these differences into treatment and endowment effects using the technique developed by Borooah and Iyer (2005). Population census data are used to estimate gender-separated urban labor force participation rates (lfpr) using logit regressions which control for educational attainment, marital status, pre-school and school-age children, household size, age, and measures of local economic conditions. We focus on six minority groups (Hui, Koreans, Manchu, Mongolians, Uygurs, and Zhuang) and the majority Han. We find sizable differences between the lfpr of urban women of particular ethnic groups and the majority Han. Men's lfpr are very high and exhibit little difference between Han and ethnic minorities. For almost all pair-wise comparisons between Han and minority women, we find that differences in coefficients account for more than 100% of the Han-ethnic difference in labor force participation. Differences in endowments often have substantial effects in reducing this positive Han margin in labor force participation. Roughly speaking, treatment of women's characteristics, whether in the market or socially, tend to increase the Han advantage in labor force participation. The levels of these characteristics on average tend to reduce this Han advantage.
    Keywords: China, ethnic minorities, labor force participation, economic reform, population censuses
    JEL: J1 J2 J7 O1 O5 P2
    Date: 2009–04
  10. By: Ralph Chami; Dalia Hakura; Peter Montiel
    Abstract: Remittance flows appear to be falling worldwide for the first time in decades as a result of the ongoing financial turmoil. It is suspected that the drop in remittance income into developing and emerging markets will have a destabilizing effect on these economies. The paper estimates the impact of remittances on output stability for countries that are dependent on these income flows. Using a sample of 70 countries, including 16 advanced economies and 54 developing countries, we find robust evidence that remittances have a negative effect on output growth volatility of recipient countries. This result supports the notion that remittance flows are a stabilizing influence on output. Thus, the fall in remittances precipitated by the ongoing global financial crisis could potentially increase output variability in recipient countries. This would present a hard challenge for governments in those countries already suffering from the crisis: they must resort to an already stressed and limited set of policy instruments, such as fiscal policy, to counter the resulting adverse economic and social impacts of lower remittances.
    Keywords: Inward remittances , Developing countries , Developed countries , Capital inflows , Economic growth , Production , External shocks , Financial crisis , Poverty , Financial stability , Economic models , Cross country analysis ,
    Date: 2009–04–23
  11. By: Richard Allen
    Abstract: The paper notes that the development of sound budgetary institutions in countries such as France, the U.K. and the U.S. has taken a very long time?200 years or more?and is still evolving. It discusses Douglass North's prediction?which is supported by available data?that institutional reform is also likely to be very slow in developing countries since the budget is especially prone to rent-seeking influences. Finally, the paper discusses the currently fashionable emphasis on complex, multiannual PFM reform strategies, which have been strongly promoted by the donor community; and advocates a simpler approach grounded on Schick's important principle of "getting the basics right." The paper identifies several areas where further research would be fruitful.
    Keywords: Budgetary reforms , Developing countries , Budgets , Public finance , Financial management , World Bank ,
    Date: 2009–05–12
  12. By: Brett Rayner; Joannes Mongardini
    Abstract: This paper builds on the methodology developed by Chudik and Mongardini (2007) to estimate the relationship between grants and remittances and the equilibrium real exchange rate in Sub-Saharan African (SSA) countries using panel techniques. The results indicate that grants and remittances are not associated, in the long run, with an appreciation of the real effective exchange in SSA and are therefore not likely to give rise to Dutch disease effects. These findings suggest that grants and remittances may be serving to ease supply constraints or boost productivity in the non-tradable sector in the recipient economies.
    Keywords: Capital inflows , Sub-Saharan Africa , Low-income developing countries , Inward remittances , Real effective exchange rates , Development assistance , Millennium Development Goals , Economic models ,
    Date: 2009–04–22
  13. By: Lynge Nielsen
    Abstract: The paper provides estimates of global relative poverty trends from 1970 onwards. Relative poverty is shown to have decreased significantly, but at the same time there has been a worsening poverty outcome among up to one billion of the world's poorest citizens. The paper also proposes a straightforward method for dividing an income distribution into classes of poor, rich, and middle-class.
    Keywords: Poverty , Income distribution , Economic growth , Economic forecasting , Social indicators ,
    Date: 2009–04–28
  14. By: Raghav Gaiha; Vani Kulkarni; Manoj Pandey; Katsushi Imai
    Date: 2009
  15. By: Raghav Gaiha; Vani Kulkarni; Manoj Pandey; Katsushi Imai
    Date: 2009
  16. By: K. Sundaram
    Abstract: This paper offers a review of the concepts and definitions used in the NSS Employment-Unemployment Surveys (EUS, for short) which have remained virtually unchanged since they were introduced in the NSS 27th Round (1972-73) based on the analysis and recommendations in the Report of the Expert Group on Unemployment Estimate – better known as the Dantwala Committee Report (GOI, 1970). It also examines critically the employment-unemployment estimates derived/derivable from EUS and the use of such estimates for planning and policy. [CDE DSE WP 174]
    Keywords: Employment-Unemployment Surveys; United Nations System of National Accounts; Indian System of National Accounts; primary products; Dantwala Committee; Planning Commission; NSS 61st Round Employment-Unemployment Survey; regular wage/salary workers; National Accounts Division of the Central Statistical Organization; Gross Value Added; Usual Principal Status; Directorate General of Employment and Training; work force participation rates; NIC-Codes; Modified Current Weekly Status
    Date: 2009
  17. By: Filip De Beule
    Abstract: Multinational companies exercise their impact on the economic development of the host countries and regions through Foreign Direct Investments (FDI). The host countries tap the benefits from these FDIs through the production linkages between the foreign affiliates and domestic firms. This paper attempts to examine with regards to backward linkages of foreign invested enterprise in the province of Guangdong, China. The study shows that the Triad investors have a tendency to source less than the Chinese investors, Hong Kong being the largest. The study draws that local sourcing doesn’t automatically increase overtime. Sourcing from abroad seems rather stable, with approximately half of the inputs being imported.
    Keywords: backward linkages; foreign subsidiaries; Guangdong; China; local sourcing; multinational companies; foreign direct investments; foreign invested enterprises; Hong Kong Direct Investment
    Date: 2009
  18. By: Christian Groth (Department of Economics, University of Copenhagen); Karl-Josef Koch (University of Siegen); Thomas M. Steger (University of Leipzig and CESifo Munich)
    Abstract: This paper argues that growth theory needs a more general notion of “regularity” than that of exponential growth. We suggest that paths along which the rate of decline of the growth rate is proportional to the growth rate itself deserve attention. This opens up for considering a richer set of parameter combinations than in standard growth models. And it avoids the usual oversimplistic dichotomy of either exponential growth or stagnation. Allowing zero population growth in three different growth models (the Jones R&D-based model, a learning-by-doing model, and an embodied technical change model) serve as illustrations that a continuum of “regular” growth processes fill the whole range between exponential growth and complete stagnation.
    Keywords: quasi-arithmetic growth; regular growth; semi-endogenous growth; knife-edge restrictions; learning by doing; embodied technical change
    JEL: O31 O40 O41
    Date: 2009–05
  19. By: Raghav Gaiha; Vani S. Kulkarni; Manoj K. Pandey; Katsushi S. Imai
    Abstract: Despite accelerated growth there is pervasive hunger, child undernutrition and mortality. Our analysis focuses on their determinants. Raising living standards alone will not reduce hunger and undernutrition. Reduction of rural/urban disparities, income inequality, consumer price stabilisation, mothers’ literacy have all roles of varying importance in different nutrition indicators. Somewhat surprisingly, PDS does not have a significant effect on any of them. Generally, child undernutrition and mortality rise with poverty. Our analysis confirms that media exposure triggers public action, and helps avert child undernutrition and mortality. Drastic reduction of economic inequality is in fact key to averting child mortality.
    Keywords: Hunger, underweight, child mortality, prices, inequality, literacy, India
    JEL: I10 I31 I32
    Date: 2009
  20. By: Raghav Gaiha; Vani S. Kulkarni; Manoj K. Pandey; Katsushi S. Imai
    Abstract: The objective of this analysis is mainly to construct an intuitive measure of the performance of the National Rural Employment Guarantee Scheme (NREGS) in India -a nation-wide poverty alleviation programme which was introduced in 2005. The focus is on excess demand at the district level. Some related issues addressed are (i) whether excess demand responds to poverty, and (ii) whether recent hikes in NREGS wages are inflationary. Our analysis confirms responsiveness of excess demand to poverty. Also, apprehensions expressed about the inflationary potential of recent hikes in NREGS wages have been confirmed. More importantly, higher NREGS wages are likely to undermine self-selection of the poor in it. So, in order to realise the poverty reducing potential of this scheme, a policy imperative is to ensure a speedier matching of demand and supply in districts that are highly poverty prone, as also to avoid the trade-offs between poverty reduction and inflation.
    Keywords: Employment Guarantee, NREGS, wages, demand, supply, poverty, prices, India
    JEL: C21 I30 I38 J48 O12
    Date: 2009
  21. By: Leonardo Gasparini (Centro de Estudios Distributivos, Laborales y Sociales (CEDLAS) - Universidad Nacional de La Plata); Pablo Gluzmann (Centro de Estudios Distributivos, Laborales y Sociales (CEDLAS) - Universidad Nacional de La Plata)
    Abstract: This paper takes advantage of a new source of information – the Gallup World Poll 2006 – to estimate and characterize income poverty and inequality in Latin America and the Caribbean (LAC) at the country level, and to compare LAC estimates to those in other regions of the world. The Gallup survey has the advantage of being conducted in over 130 nations with almost the same questionnaire in all countries, and then it stands as a complement to national household surveys for international comparison purposes.
    Keywords: poverty, inequality, incomes, Latin America, Caribbean, Gallup
    JEL: D31
    Date: 2009–04
  22. By: Levent Bulut
    Abstract: This paper contributes to the current literature on market disciplining of the sovereign gov- ernments in two ways: Firstly, it distinguishes the both sides of the market discipline hypothesis (MDH) by adopting 3SLS to incorporate the contemporaneous feedback e®ects between primary structural budget balances and country default risk premium. Secondly, by utilizing the IMF's disaggregated government ¯nance statistics data, structural primary budget balances are esti- mated to test the MDH for developing countries. The results show a disciplinary e®ect of the ¯nancial markets on the sovereign governments and the ¯ndings are robust to two alternative measurements of structural budget balances. After controlling for the exchange rate regime, the results con¯rm that sovereign governments are more disciplined in °oating countries, while, in countries with ¯xed exchange rate regime, sovereigns seem to be irresponsive to the change in the default risk premium posed by the market. As for the market's response to change in ¯scal indicators, 3SLS estimation results show well-functioning ¯nancial markets in the sample countries. Controlling for political ideology does not change the conclusion but ¯nancial markets seem to function more e±cient in the ¯xed exchange rate regime seeking countries.
    Date: 2009–02
  23. By: Christopher Kilby (Department of Economics, Villanova University, Villanova, PA USA); Axel Dreher (University of Goettingen, Goettingen Germany)
    Abstract: The typical identification strategy in aid effectiveness studies assumes donor motives do not influence the impact of aid on growth. We call this homogeneity assumption into question, first constructing a model in which donor motives matter and then testing the assumption empirically.
    Keywords: Aid, Growth, Politics
    JEL: F35 O40
    Date: 2009–05
  24. By: Nora Lustig (Department of Economics, Tulane University)
    Abstract: Rising food prices cause considerable policy dilemmas for developing country governments. Letting domestic prices adjust to reflect the full change in international prices generates inflationary pressures and causes severe hardship for poor households lacking access to social safety nets. Alternatively, governments can use food subsidies or export restrictions to stabilize domestic prices, yet this exacerbates global food price increases and undermines a rules-based trading system. The recent episode shows that many countries chose to shift the burden of adjustment back to international markets. Corn and oilseeds use for biofuels' production will result in a recurrence of such episodes in the foreseeable future.
    Keywords: food prices, inflation, poverty, Africa, Asia, Latin America and the Caribbean
    JEL: E31 I38 Q18 O24
    Date: 2009–05
  25. By: Caselli, Mauro
    Abstract: Panel data on 54 developing countries between 1960 and 2000 are used to investigate how the impact of opening to trade on economic growth is affected by wealth inequality. The results suggest (a) that opening to trade tends to accelerate growth but (b) that the addition to growth depends inversely on the level of wealth inequality prior to opening. These findings confirm the general importance for rapid growth in developing countries of reducing inequalities of opportunity.
    Keywords: growth; inequality; openness; trade; developing countries
    JEL: O1 F1
    Date: 2009–04
  26. By: Maudos, Joaquin; Solisa , Liliana
    Abstract: This paper analyzes net interest income in the Mexican banking system over the period 1993-2005. Taking as reference the seminal work by Ho and Saunders (1981) and subsequent extensions by other authors, our study models the net interest margin simultaneously including operating costs and diversification and specialization as determinants of the margin. The results referring to the Mexican case show that its high margins can be explained mainly by average operating costs and by market power. Although non-interest income has increased in recent years, its economic impact is low
    Keywords: banking; net interest income; operating cost; non-interest income
    JEL: L10 G21
    Date: 2009
  27. By: Erasmo Papagni (-)
    Abstract: This paper investigates economic growth under liquidity constraints by taking into account the choices of fertility, human capital and saving. In a model of four overlapping generations, parents are altruistic towards their offspring and finance their education investment. The government provides education subsidies to young adult parents and levies taxes on income of the adult generation. Sensitivity analysis on borrowing limits and tax parameters highlights effects with opposite sign on the main endogenous variables at steady state. A lift in liquidity constraints decreases savings and capital accumulation and this effect is responsible for the ambiguous sign of comparative statics on the rate of fertility and on human capital investment. From model simulation, we derive an inverted U-shaped curve relating the borrowing limit with fertility, education and growth, meaning that financial reforms in the less developed countries have positive effects on the economy in the long-run, even if they raise fertility and reduce savings. Greater government subsidies to human capital investments and lower income taxes have positive effects on savings and fertility. The same parameters present ambiguous effects on education investments and growth. Numerical simulations show that a) human capital investment has an inverted U-shaped relation with income taxes and education subsidies; b) economic growth decreases with greater income taxes and increases with higher education subsidies.
    Keywords: -
    JEL: O40 O16 J13 D91
    Date: 2008–09–30
  28. By: Jeffrey E. Harris; Sandra G. Sosa-Rubi
    Abstract: We employ a latent class model to assess the impact of Mexico’s Seguro Popular ("SP") program on the number of prenatal visits in a cross-sectional sample of 4,381 women who gave birth during 2002-2005. We specify an ordered probit model to permit a pregnant woman’s probability of membership in one of three latent classes to depend on observed covariates. In the ordered probit model, enrollment in SP is explicitly treated as an endogenous variable. We model the number of prenatal visits, conditional upon membership in a particular latent class, as a Poisson regression. We employ the EM algorithm to reduce the computational burden of model estimation. At any iteration of the algorithm, the parameters of the model of latent class membership can be estimated separately from the parameters of the model of prenatal care utilization. We find that enrollment in SP was associated with a mean increase in 1.65 prenatal visits during pregnancy. Approximately 59 percent of this treatment effect is the result of increased prenatal care among women in the first latent class, that is, women who had with little or no access to care. The remaining 41 percent of the treatment effect is the result of a shift in membership from the second to the third latent class, which we interpret as increased recognition of complications of pregnancy prior to labor and delivery. Our model has a better fit and predicts a larger impact of SP than alternative models that relax the assumption of endogeneity, do not impose ordering on the latent classes, or incorporate only two latent classes. Our findings are consistent with prior work on the favorable impact of SP on maternal health (Sosa-Rubí, Galárraga, Harris 2009).
    JEL: C13 C34 C5 C63 I1 I12 I18 I38
    Date: 2009–05
  29. By: Nancy Qian
    Abstract: Many believe that increasing the quantity of children will lead to a decrease in their quality. This paper exploits plausibly exogenous changes in family size caused by relaxations in China's One Child Policy to estimate the causal effect of family size on school enrollment of the first child. The results show that for one-child families, an additional child significantly increased school enrollment of first-born children by approximately 16 percentage-points. The effect is larger for households where the children are of the same sex.
    JEL: I20 J13 O1
    Date: 2009–05
  30. By: Anne Case; Alicia Menendez
    Abstract: We examine the costs associated with funerals and the effects of funeral spending on household functioning, using data collected in the Agincourt Demographic Surveillance Site in South Africa. We find that large outlays of money at the time of the funeral leave households vulnerable to future hardship. Households that buried a member report lower spending per person, poorer adult affect, and lower rates of school enrollment for children than do other households. We present evidence consistent with the financial burden associated with a funeral having direct, adverse effects on households.
    JEL: D12 O12
    Date: 2009–05
  31. By: Anne Case; Christina Paxson
    Abstract: We document the impact of the AIDS crisis on non-AIDS related health services in fourteen sub-Saharan African countries. Using multiple waves of Demographic and Health Surveys (DHS) for each country, we examine antenatal care, birth deliveries, and rates of immunization for children born between 1988 and 2005. We find deterioration in nearly all of these dimensions of health care over this period. The most recent DHS survey for each country collected data on HIV prevalence, which allows us to examine the association between HIV burden and health care. We find that erosion of health services is highly correlated with increases in AIDS prevalence. Regions of countries that have light AIDS burdens have witnessed small or no declines in health care, using the measures noted above, while those regions currently shouldering the heaviest burdens have seen the largest erosion in treatment for pregnant women and children. Using semi-parametric techniques, we can date the beginning of the divergence in health services between high and low HIV regions to the mid-1990s.
    JEL: I18 O12 O55
    Date: 2009–05
  32. By: TODO Yasuyuki
    Abstract: This paper examines determinants of the export and FDI decision, using firm-level data for Japan. Contributions of this paper are twofold. First, this paper employs a mixed logit model to incorporate unobserved characteristics of firms. Second, special attention is paid to quantitative evaluation of effects of the covariates. We find that the impact of productivity on the export and FDI decision is positive and statistically significant but economically negligible in size, despite the theoretical prediction of recent heterogeneous-firm trade models. The impact of the firm size and information spillovers from experienced neighboring firms in the same industry are also positive but small in size. Quantitatively, the dominant determinants of the export and FDI decision are firms' status on internationalization in the previous year and unobserved firm characteristics. The evidence suggests that there may be some kind of inefficiency in the selection process of exporters and FDI firms.
    Date: 2009–05
  33. By: OGAWA Eiji; YOSHIMI Taiyo
    Abstract: This paper focuses on recent events which include the RMB reform in China and the global financial crisis to investigate statistically recent diverging trends among East Asian currencies. For the purpose, their weighted average value (Asian Monetary Unit: AMU) and their deviations (AMU Deviation Indicators) from benchmark levels are used to analyze both β and σ convergences of East Asian currencies. Our analytical results show that the monetary authority of China has still kept stabilizing the exchange rate of the Chinese yuan against only the US dollar even though it announced its adoption of a managed floating exchange rate system with reference to a currency. Analytical results on β and σ convergences show that deviations among the East Asian currencies have been diverging in recent years, especially after 2005. The widening deviations reflect not the RMB reform but recent international capital flows and the global financial crisis. In addition, it is important as its background that the monetary authorities of the countries are adopting a variety of exchange rate systems. In other words, a coordination failure in adopting exchange rate systems among these monetary authorities increases volatility and misalignment of intra-regional exchange rates in East Asia.
    Date: 2009–05

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