|
on Development |
| By: | Ulimwengu, John M. |
| Abstract: | "The A stochastic frontier production function is used to estimate agricultural efficiency index. Then, controlling for household characteristics and other exogenous variables, the efficiency index is regressed on the probability of being sick. Estimation is performed using the treatment effect model where the probability of being sidelined by sickness is modeled as a probit. This framework allows policy simulations that underscore the impact of farmers' health status on both agricultural efficiency and poverty reduction. Overall, regression results confirm the negative impact of health impediment on farmers' agricultural efficiency. Simulation results show that improving farmers' agricultural efficiency by investing in farmers' health may not necessarily lead to poverty reduction. Additional policy instruments may be needed to achieve simultaneous increase in agricultural productivity and reduction in poverty rate." from authors' abstract |
| Keywords: | health, Agriculture, productivity, Poverty, Farmers, Efficiency, Stochastic, Production, Science and technology, Institutional change, Innovation, |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:868&r=dev |
| By: | Asenso-Okyere, Kwadwo; Workneh, Sindu; Rhodes, Edward; Sutherland, John |
| Abstract: | "The civil war in Sierra Leone, caused by a mix of political, social, and economic factors, had a huge impact on the overall economy in general and on the performance of the agricultural sector in particular. The agricultural research system of Sierra Leone was severely affected by the civil war. Research infrastructure was destroyed, laboratories were damaged and abandoned, and well-trained researchers and scientists fled from the country. With the cessation of hostilities in 2002, the government of Sierra Leone concentrated its efforts on the resettlement of displaced persons and on social and economic reconstruction. The efforts of the government include the rehabilitation and reorganization of the former National Agricultural Research Coordinating Council (NARCC), which was coordinating agricultural research in Sierra Leone. The Sierra Leone Agricultural Research Institute (SLARI) Act was passed by the parliament of Sierra Leone in 2007 to replace NARCC. As a new organization, SLARI needed to make strategic decisions to guide its operations in order to make it effective in responding to the demands of stakeholders within the food and agriculture system. To provide a focus for SLARI and link its agenda to national development priorities, a strategic plan and operational plan were developed. The methodology used to design the SLARI strategic plan applied an organizational innovation model through which the plan was nested within the strategic plan of the Forum for Agricultural Research in Africa (FARA) and Conseil Ouest et Center Africain pour la Recherche et le Développement Agricoles (CORAF) / West and Central African Council for Agricultural Research and Development (WECARD), and the operational plan was hinged on Comprehensive African Agricultural Development Program (CAADP) and Framework for African Agricultural Productivity (FAAP) principles. This would ensure synergy with regional and subregional strategies. The strategic plan would promote increased coordination, interaction, interlinkages, partnerships, and networks among the various agents associated with agricultural research for development systems in Sierra Leone. It would also help achieve SLARI's vision of increasing food security and wealth among Sierra Leone's rural population. For SLARI to make a meaningful contribution to agricultural development in Sierra Leone, the operational plan must be implemented in such a way that the results envisaged in the strategic plan can be achieved. This requires funds and commitment from all stakeholders, especially the government of Sierra Leone." from authors' abstract |
| Keywords: | war, Agriculture, Development, Research, Strategic plan, Operational plan, Science and technology, Agricultural research, |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:869&r=dev |
| By: | Wiesmann, Doris; Bassett, Lucy; Benson, Todd; Hoddinott, John |
| Abstract: | "The objective of this study is to validate the World Food Programme's (WFP) method of establishing the prevalence of food insecurity. WFP's method has two parts: (1) the construction of a Food Consumption Score (FCS) and (2) the classification of food security status based on the FCS. Our validation work has the following components: (1) collecting and analyzing survey data from three countries—Burundi, Haiti, and Sri Lanka—that contain information about calorie consumption at the household level and information needed to construct the FCS; (2) establishing the extent to which an assessment of food security status based on the FCS mimics food security status based on household calorie consumption; and (3) assessing whether changes to the construction of the FCS would improve its predictive power and whether such changes are feasible, given the environment in which these assessments are typically conducted. To achieve the third objective, alternative dietary diversity and food frequency indicators are constructed by either modifying WFP's calculation method for the FCS or following a different approach, such as that for the Household Dietary Diversity Score developed by the Food and Nutrition Technical Assistance Project. By comparing indicator performance, we can answer the questions of whether the FCS could be simplified by using food group diversity instead of food frequency by food group, if further disaggregation of food groups would improve its validity, and what the merits and demerits of other aspects of WFP's standard method are. Based on our findings about the validity of the FCS and the results for alternative proxy indicators, we then suggest changes to the construction of the FCS. Our findings on the usefulness of the FCS are encouraging. The same holds true for the alternative indicators of dietary diversity and food frequency we considered. There are positive and statistically significant associations with calorie consumption per capita, particularly when small quantities are excluded from food frequencies. In two out of three study sites, food frequency scores are clearly superior to simpler measures of diet diversity (food or food group count). Higher levels of disaggregation are advantageous, but with diminishing marginal returns. We note, however, that the provision of food aid seems to weaken the association of the FCS with calorie consumption. All of these observations support the use of WFP's FCS for food security assessments. However, the cutoff points used by WFP to define poor, borderline, and adequate Food Consumption Groups are too low when the FCS classification is compared to estimates of calorie deficiency from our survey data and other sources. As a food security classification device, the FCS could be improved by excluding foods consumed in small quantities from the FCS and, even more important, adjusting the cutoffs used to classify households as having poor, borderline, or acceptable food security. Minor gains in the validity of the FCS could be achieved by making several technical adjustments to the calculation of the FCS, for example, using a 12-group food classification instead of an 8-food group classification. This study has several limitations. We did not validate the proxy indicators against diet quality, because this would have required the collection of individual 24-hour recall data for all household members, which was beyond the scope of our study. The use of seven-day household recall data is a limitation for our analysis; information on dietary intakes from individual 24-hour recalls is generally considered more accurate. The lack of precise information on the effects of excluding small quantities from food frequencies is another constraint." from authors' abstract |
| Keywords: | food security, Dietary diversity, Food frequency, Proxy indicators, Food consumption score, Validation study, |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:870&r=dev |
| By: | Kazuya Wada |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:hst:ghsdps:gd09-073&r=dev |
| By: | Alfonso Herranz-Loncán (Departament d’Història i Institucions Econòmiques, Universitat de Barcelona) |
| Abstract: | This paper presents preliminary estimates of the contribution of the railway technology to GDP growth in Argentina, Brazil and Mexico before 1914, and compares them with the available figures for two European economies (Britain and Spain). The results of the estimation indicate that the growth contribution of railways was substantially higher in those three Latin American economies than in Britain or Spain, although in Argentina and Mexico that high contribution was disguised behind the fast growth of the aggregate economy. This result is interpreted as a sign of the central role that the railways performed in the export-led growth episode of those three economies. |
| Keywords: | railways, Latin America, Growth Contribution, Internal Transport, Export-Led Growth |
| JEL: | N76 H54 L92 |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:ahe:dtaehe:0903&r=dev |
| By: | Bauer, Michal (Charles University, Prague); Chytilová, Julie (Charles University, Prague) |
| Abstract: | In this paper we study the link between women's responsibility for children and their preferences. We use a large random sample of individuals living in rural India, incentive compatible measures of patience and risk aversion, and detailed survey data. We find more patient choices among women who have a higher number of children. The age of children matters: The link with patience is specific for children below 18 years old, and the highest level of patience is associated with having three children. We do not observe this link among men. Taken together, we find significant gender differences in patience that are predicted by a higher number of children. The results are robust to controlling for age, education, income constraints, and individual and location characteristics. These findings suggest an important context when the spending preferences of spouses diverge, and support the view that empowering women in developing countries should lead to more future-oriented choices of households. |
| Keywords: | time discounting, gender, children, experiment, India |
| JEL: | C93 D13 D91 |
| Date: | 2009–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4241&r=dev |
| By: | Eslava, Marcela (Universidad de los Andes); Haltiwanger, John C. (University of Maryland); Kugler, Adriana (University of Houston); Kugler, Maurice (Wilfrid Laurier University) |
| Abstract: | We use plant output and input prices to decompose the profit margin into four parts: productivity, demand shocks, mark-ups and input costs. We find that each of these market fundamentals are important in explaining plant exit. We then use variation across sectors in tariff changes after the Colombian trade reform to assess whether the impact of market fundamentals on plant exit changed with in creased international competition. We find that greater international competition magnifies the impact of productivity, and other market fundamentals, on plant exit. A dynamic simulation that compares the distribution of productivity with and without the trade reform shows that improvements in market selection from trade reform help to weed out the least productive plants and increase average productivity. In addition, we find that trade liberalization increases productivity of incumbent plants and improves the allocation of activity within industries. |
| Keywords: | trade liberalization, plant exit, market selection |
| JEL: | F43 L25 O47 |
| Date: | 2009–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4256&r=dev |
| By: | Heywood, John S. (University of Wisconsin, Milwaukee); Siebert, W. Stanley (University of Birmingham, UK); Wei, Xiangdong (Lingnan University) |
| Abstract: | The determinants of worker job satisfaction are estimated using a representative survey of three major cities in China. Legally segregated migrants, floaters, earn significantly less than otherwise equivalent non-migrants but routinely report greater job satisfaction, a finding not previously reported. We confirm a positive role for membership in the communist party but find that it exists only for non-migrants suggesting a club good aspect to membership. In contrast to earlier studies, many controls mirror those found in western democracies including the "paradox of the contented female worker." |
| Keywords: | job satisfaction, internal migrants, party membership, China |
| JEL: | J28 J61 O17 D73 |
| Date: | 2009–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4254&r=dev |
| By: | Qin, Pin (College of Environmental Sciences and Engineering, Peking University); Carlsson, Fredrik (Department of Economics, School of Business, Economics and Law, Göteborg University); Xu, Jintao (College of Environmental Sciences and Engineering, Peking University) |
| Abstract: | Various decentralization experiments are currently underway in the Chinese forestry sector. However, a key question often ignored by researchers and policy makers is what farmers really want from reform. This paper addresses this question using a survey-based choice experiment. We investigated farmers’ preferences for various property-rights attributes of a forestland contract. We found that farmers are highly concerned with what types of rights a contract provides. Reducing perceived risks of contract termination and introducing a priority right in the renewal of an old contract significantly increase farmers’ marginal willingness to pay (MWTP) for a forest contract. An extended waiting time for rights to harvest the forest reduces a farmer’s perceived value of a contract. Farmers are also concerned with the tenure length. In one region, the annual willingenss to pay for a 50-year contract is even higher than the annual willingness to pay for 25-year contract.<p> |
| Keywords: | China; Choice experiment; Forest; MWTP; Property rights |
| JEL: | D61 Q15 Q23 Q50 Q51 |
| Date: | 2009–06–30 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0370&r=dev |
| By: | Ljungwall, Christer (China Economic Research Center); Xiong, Yi (Peking University National School of Development, China Center for Economic Research); Zou, Yutong (Peking University National School of Development, China Center for Economic Research) |
| Abstract: | This paper investigates the current monetary policy regime of China’s Central Bank, the People’s Bank of China (PBoC). This is done from the specific viewpoint of PBoC financial strength and the cost of its monetary policy instruments. The result shows that PBoC is constrained by the costs of its monetary policy instruments. PBoC tend to use less costly but market-distorting instruments such as deposit interest rate cap and reserve-ratio requirements, rather than more market-oriented but more costly instruments such as central bank note issuance. These costs remain under control today, but may rise in the future as PBoC accumulates more foreign assets. This, in turn, will jeopardize the Chinese monetary authority’s capability to maintain price stability. |
| Keywords: | Central banking; Monetary policy; China |
| JEL: | E51 E52 E58 E63 O53 |
| Date: | 2009–05–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:hacerc:2009-008&r=dev |
| By: | Johansson, Anders C. (China Economic Research Center) |
| Abstract: | It is commonly argued that China's financial markets are effectively insulated from the rest of the world. To see if this is true and to better understand China's financial development, we analyze China's integration with major financial markets. Using conditional copulas, we show that China has experienced an increasing level of integration with several major financial markets during the last decade, even though the country's financial markets are commonly seen as being insulated. Furthermore, the level of integration has increased with several major markets during the current financial crisis. The results and possible reasons for the increasing integration are analyzed and the implications for policymakers and market participants are discussed. |
| Keywords: | China; financial market integration; codependence; copula |
| JEL: | F30 G15 |
| Date: | 2009–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:hacerc:2009-010&r=dev |
| By: | Steve DeLoach (Department of Economics, Elon University); Erika Lamanna (Department of Economics, Elon University) |
| Abstract: | Access to credit has become a staple of modern development policy as a means to facilitate anything from gender equality to growth. In economic terms, it provides an important tool for smoothing household consumption in the wake of unexpected economic shocks, including drought and financial crises. Using data from the Indonesian Family Life Survey (1993-2000), this paper investigates whether access to microfinance institutions affects child health outcomes. Specifically, we estimate a difference-in-differences model to test whether a change in the availability of microfinance institutions at the community level affects the average weight gain of young children. |
| Keywords: | Microfinance, child health, nutrition, Indonesia |
| JEL: | G21 I1 J13 |
| Date: | 2009–06–19 |
| URL: | http://d.repec.org/n?u=RePEc:elo:wpaper:2009-02&r=dev |
| By: | Katsuhiko Hori; Katsunori Yamada |
| Abstract: | This paper combines three prototype endogenous growth models, themodels with human capital accumulation introduced by Uzawa [1965] andLucas [1988], variety expansion by Romer [1990], and quality improvementsby Aghion and Howitt [1992], in order to investigate how these threeengines of growth interact. We show that a subsidy to human capital accumulation has a positive impact on R&D effort, as well as on human capital accumulation. On the other hand, a subsidy to R&D sectors does not affect human capital accumulation in our model. Moreover, we show that equilibrium dynamics is locally saddle-path stable around the steady growth path. It suggests that Schumpeterian growth models a la Howitt [1999] should share the locally saddle-path stable property. Finally, since in our model the percapita output growth rate is endogenously determined by both technology improvements and human capital accumulation, it bridges the gap between the literature on Schumpeterian growth models and that on growth empirics. |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:dpr:wpaper:0731&r=dev |
| By: | Proloy Barua |
| Abstract: | The objectives of this paper are to assess the knowledge retention on IGA training, and to explore the quality of participation in financial and non-financial services by the BDP ultra poor. We found that participants’ engagement in the IGA, their self-interest, training settings and number of training participants have strong association with the level of knowledge retention. The quality of microfinance participation of BDP ultra poor is encouraging in terms of increasing their regularity of microfinance involvement. The borrower member ratio of the BDP ultra poor who were recruited in 2003 is now over 85%, which is the industry standard. Such high borrower member ratio results from regular borrowing of the members, a reflection of their quality of participation.[CFPR Working Paper Series No. 16] |
| Keywords: | BDP ultra poor; IGA training; microfinance participation; IGA TRAINING AND KNOWLEDGE RETENTION; non financial services |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:2094&r=dev |
| By: | Mahjabeen Rahman |
| Abstract: | A large number of new Shasthya Shebikas were recruited under the maternal, neonatal and child health (MNCH) program besides the existing ones. This study attempts to explore whether and how the income earning capability of the Shasthya Shebikas, both old and new, was affected due to this new initiative, with respect to Nilphamari district of Bangladesh. The study also brings out the determinants of income Shasthya Shebikas and also the motivation for their work in general. Findings revealed that the motivation to become a Shasthya Shebika was mainly financial though for some the opportunity to provide socially beneficial services was also important. With respect to a number of factors affecting the Shebika’s income, it can be found that the new Shebikas were in disadvantage as compared to the existing Shebikas who were working already in that area. [RED WP no.06] |
| Keywords: | BRAC; Shasthya Shebika; Bangladesh; Nilphamari; maternal, neonatal and child health (MNCH) program; income; Shebika’s work; Shebika income. |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:2105&r=dev |
| By: | Third World Network |
| Abstract: | North-South free trade agreements (FTAs), bilateral investment treaties (BITs) and World Trade Organization (WTO) commitments often contain a number of provisions that can increase the likelihood of a financial crisis and make it more difficult to take the necessary measures to deal with one once it occurs. This note briefly highlights the main provisions in these agreements that can hamper the effective implementation of recommendations to deal with the current crisis. This note finds that a variety of chapters in these agreements can make it difficult to effectively carry out the measures to recover from the financial crisis. Whilst most barriers are likely to come from the services and investment chapters, the competition, goods and government procurement chapters in North-South FTAs can also have an effect. |
| Keywords: | financial crisis; trade; investment treaties; North-South Free Trade Agreements (FTAs); Bilateral Investment Treaties (BITs); World Trade Organisation (WTO); capital control; financial investments; financial services; trade provisions |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:2106&r=dev |
| By: | M. Golam Mortaza |
| Abstract: | In recent years, Bangladesh has experienced persistent price increases, especially of food items, in the domestic market in the backdrop of global increase in food prices. Such price developments in the international commodity markets have brought into forefront the effects of external price changes on domestic inflation, especially in the developing countries. This raises the issue of the existence and extent of import price pass-through to domestic prices. This paper analyzes the relationship between import and domestic prices in Bangladesh during 2000-2008. Using monthly data, the paper explores the relationship between domestic supply and passthrough elasticity and argues that commodities with higher share of domestic supply face a lower pass-through elasticity of import prices on domestic prices.[Bangladesh Bank WP NO 0807] |
| Keywords: | International Prices; Domestic Prices; Elasticity; Bangladesh |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:2083&r=dev |
| By: | Proloy Barua |
| Abstract: | Despite the general consensus that microfinance does not reach the poorest; recent evidence suggests that nearly 15% of microfinance clients in Bangladesh are among the poorest. It is from the realization that even within the existing microfinance membership of BRAC, there is a significant percentage of the poorest; the CFPR-TUP programme has included a special focus on this segment of the poor what it calls the ‘BDP ultra poor’. So, BDP ultra poor are those struggling members of existing village organization (VO) or very poor households in a village who with some additional support can more fully participate and benefit from microfinance services. This study attempts to assess the targeting effectiveness of the BDP ultra poor programme by measuring relative poverty of BDP ultra poor[CFPR/TUP Working Paper Series No. 13] |
| Keywords: | microfinance; BDP ULTRA POOR PROGRAMME; Houseold categories; poverty index; Benchmark indicator; PCA |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:2093&r=dev |
| By: | Eduardo Yeyati Levy |
| Abstract: | This paper analyzes the effects of capital controls and crises on financial integration, using stocks from emerging economies that trade in both domestic and international markets. The cross market premium provides a valuable measure of how capital controls and crises affect international financial integration. The paper shows that capital controls affect cross market premium in a sustainable way. Controls on capital inflows put downward pressure on domestic markets relative to international ones, generating a negative premium. The opposite happens in case of capital outflows. Crises affect financial integration by generating more volatility in the premium and putting more downward pressure on domestic prices. [ADBI WP no.121] |
| Keywords: | crises; capital controls; financial integration; cross market premium; cross country capital movement; capital controls on inflows; capital controls on outflows; stock market crises; capital market integration |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:2099&r=dev |
| By: | Vasant P Gandhi |
| Abstract: | Groundwater has rapidly emerged to occupy a dominant place in India’s agriculture and food security in the recent years. It has become the main source of growth in irrigated area over the past 3 decades, and it now accounts for over 60 percent of the irrigated area in the country. It is estimated that now over 70 percent of India’s food grain production comes from irrigated agriculture, in which groundwater plays a major role. Since the development of groundwater irrigation has not largely been government or policy driven - has happened gradually through highly decentralized private activity, this revolution has gone largely unnoticed.[IIMA W.P. No. 2009-03-08] |
| Keywords: | Groundwater; India; agriculture; food security; production; policy; Irrigation; Surface Water; equity; efficiency; externality; problems; laws and policies |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:2091&r=dev |
| By: | Abdul Shaban |
| Abstract: | The present study has been an attempt to examine spatial distribution of various forms of crimes in Mumbai city (Municipal Corporation) and find out their correlates. More specifically the attempts have been made to find out ‘hotspots’ of various forms of crimes, to analysed the types of crimes which occur in close spatial association with each other, to interrelate the spatial dimensions to other criminogenic factors, to examine whether recent emphasis on development has drastically changed the character of crimes and its causes where space has its role to play, and to study implication of space-induced crimes to law and order in the city. |
| Keywords: | mumbai, India, dowry deaths, crimes, criminogenic factors, law and order,unemployment, textile mills, labour unions, murder rates, population |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:2088&r=dev |
| By: | C Veermani |
| Abstract: | Knowledge accumulation in the richer countries provides them with comparative advantages in higher productivity products. The countries that import the higher productivity intermediate products and capital equipments produced in the richer countries, however, derive benefits from knowledge spillovers. The empirical analysis in this paper shows that what type of intermediate goods and capital equipments a country imports and from where it imports indeed matters for its long-run growth. Using highly disaggregated trade data for a large number of countries, we construct an index (denoted as IMPY) that measures the productivity level associated with a country's imports. Using instrumental variable method (to address the endogeneity problems), we find that a higher initial value of the IMPY index (for the year 1995) leads to a faster growth rate of income per capita in the subsequent years (during 1995-2005) and vice versa. The results imply that a 10% increase in IMPY increases growth by about 1.3 to1.9 percentage points, which is quite large.[IGIDR WP NO 2008 / 029] |
| Keywords: | Imports; Intermediate and Capital Goods; Economic Growth; Productivity |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:2092&r=dev |
| By: | Mechler, Reinhard |
| Abstract: | The debate on whether natural disasters cause significant macroeconomic impacts and indeed hinder development is ongoing. Most analyses along these lines have focused on impacts on gross domestic product. This paper looks beyond this standard national accounting aggregate, and examines whether traditional and alternative national savings measures combined with adjustments for the destruction of capital stocks may contribute to better explaining post-disaster changes in welfare as measured by changes in consumption expenditure. The author concludes that including disaster asset losses may help to better explain variations in post-disaster consumption, albeit almost exclusively for the group of low-income countries. The observed effect is rather small and in the range of a few percent of the explained variation. For low-income countries, capital stock and changes therein, such as forced by disaster shocks, seem to play a more important role than for higher-income economies, where human capital and technological progress become crucial. There are important data constraints and uncertainties, particularly regarding the quality of disaster loss data and the shares of capital stock losses therein. Another important challenge potentially biasing the results is the lack of data on alternative savings measures for many disaster-exposed lower-income countries and small island states. |
| Keywords: | Hazard Risk Management,Natural Disasters,Economic Theory&Research,,Emerging Markets |
| Date: | 2009–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4988&r=dev |
| By: | Demirguc-Kunt, Asli; Levine, Ross |
| Abstract: | This paper critically reviews the literature on finance and inequality, highlighting substantive gaps in the literature. Finance plays a crucial role in most theories of persistent inequality. Unsurprisingly, therefore, economic theory provides a rich set of predictions concerning both the impact of finance on inequality and about the relevant mechanisms. Although subject to ample qualifications, the bulk of empirical research suggests that improvements in financial contracts, markets, and intermediaries expand economic opportunities and reduce inequality. Yet, there is a shortage of theoretical and empirical research on the potentially enormous impact of formal financial sector policies, such as bank regulations and securities law, on persistent inequality. Furthermore, there is no conceptual framework for considering the joint and endogenous evolution of finance, inequality, and economic growth. |
| Keywords: | Access to Finance,Economic Theory&Research,,Debt Markets,Inequality |
| Date: | 2009–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4967&r=dev |
| By: | Yusuf , Shahid; Nabeshima, Kaoru |
| Abstract: | How can Penang upgrade and diversify its economy? This paper addresses this question using a number of methodologies that have been developed for assessing competitiveness and identifying the direction of future industrial evolution. The results show that although Penang was successful in attracting foreign direct investment to the electronics industry, this has not translated into a deepening of industrial capabilities or the nurturing of innovation capacity in Penang. No large Malaysian firms in Penang have taken the lead in innovation and there is little new entry by local firms, despite incentives provided by local and national governments are generous. Universiti Sains Malaysia, the principal university in Penang, is contributing through provision of skills, and it is beginning to multiply university industry linkages. However, the university’s research activities are too limited and too diffuse to significantly initiate innovation by local industry. Under the current circumstances, and given its relatively small size, Penang will have to try much harder to strengthen its competitive advantage in its most important industry -electronics- through actions that build research capital. It will also have to increase its efforts to develop the potential of other value-adding activities, such as medical services and tourism. A strategy focused on localization economies is likely to be the most feasible option. |
| Keywords: | Technology Industry,Tertiary Education,E-Business,ICT Policy and Strategies,Agricultural Knowledge&Information Systems |
| Date: | 2009–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4971&r=dev |
| By: | Loening, Josef L.; Durevall, Dick; Birru, Yohannes A. |
| Abstract: | Ethiopia has experienced a historically unprecedented increase in inflation, mainly driven by cereal price inflation, which is among the highest in Sub-Saharan Africa. Using monthly data from the past decade, the authors estimate error correction models to identify the relative importance of several factors contributing to overall inflation and its three major components, cereal prices, food prices, and non-food prices. The main finding is that, in a longer perspective, over three to four years, the main factors that determine domestic food and non-food prices are the exchange rate and international food and goods prices. In the short run, agricultural supply shocks and inflation inertia strongly affect domestic inflation, causing large deviations from long-run price trends. Money supply growth does affect food price inflation in the short run, although the money stock itself does not seem to drive inflation. The results suggest the need for a multi-pronged approach to fight inflation. Forecast scenarios suggest monetary and exchange rate policies need to take into account cereal production, which is among the key determinants of inflation, assuming a decline in global commodity prices. Implementation of successful policies will be contingent on the availability of foreign exchange and the performance of agriculture. |
| Keywords: | Markets and Market Access,Currencies and Exchange Rates,Economic Theory&Research,Food&Beverage Industry,Emerging Markets |
| Date: | 2009–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4969&r=dev |
| By: | Olaberria, Eduardo; Rigolini, Jamele |
| Abstract: | East Asia has experienced a dramatic decrease in output growth volatility over the past 20 years. This is good news, as output growth volatility affects poor households because of coping strategies that have long-term, harmful consequences, and the overall economy through its negative impact on economic growth. This paper investigates the factors behind this long decline in volatility, and derives lessons about ways to mitigate renewed upward pressure in face of the financial crisis. The authors show that if, on the one hand, high trade openness has sustained economic growth in the past several decades, on the other hand, it has made countries more vulnerable to external fluctuations. Although less frequent terms of trade shocks and more stable growth rates of trading partners have helped to reduce volatility in the past, the same external factors are now putting renewed pressure on volatility. The way forward seems therefore to be to counterbalance the external upward pressure on volatility by improving domestic factors. Elements under domestic control that can help countries deal with high volatility include more accountable institutions, better regulated financial markets, and more stable fiscal and monetary policies. |
| Keywords: | Economic Conditions and Volatility,Emerging Markets,Achieving Shared Growth,Fiscal&Monetary Policy,Currencies and Exchange Rates |
| Date: | 2009–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4989&r=dev |
| By: | Mohapatra, Sanket; Joseph, George; Ratha, Dilip |
| Abstract: | Macro- and micro-economic evidence suggests a positive role of remittances in preparing households against natural disasters and in coping with the loss afterwards. Analysis of cross-country macroeconomic data shows that remittances increase in the aftermath of natural disasters in countries that have a larger number of migrants abroad. Analysis of household survey data in Bangladesh shows that per capita consumption was higher in remittance-receiving households than in others after the 1998 flood. Ethiopian remittance-dependent households seem to use cash reserves rather than sell livestock to cope with drought. In Burkina Faso and Ghana, international remittance-receiving households, especially those receiving remittances from high-income developed countries, tend to have housing built of concrete rather than mud and greater access to communication equipment, suggesting that they are better prepared against natural disasters. |
| Keywords: | Population Policies,Access to Finance,Remittances,Natural Disasters,Debt Markets |
| Date: | 2009–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4972&r=dev |
| By: | Chen, Dandan |
| Abstract: | This paper examines the phenomenon of the over-supply of teachers but shortage of qualified teachers in Indonesia. Using a theoretical framework of government-dominated market with government-set wage rate and demand for teachers, the analysis explores how teacher supply, particularly the composition of the teaching force with low or high qualification, would be determined by current and future public policies. Using 2001 to 2008 Indonesian Labor Force Survey data, the paper further estimates the potential effect of the most recent teacher law, which could give college educated teachers a significant pay increase, on the composition of the Indonesian teaching force with differentiated education backgrounds. Using a sample of workers with college education, the author finds that the relative wage rate of teachers and that of alternative occupations significantly influence the decision of college educated workers to become teachers. It is also found that the wage rate set by the most recent teacher law would increase the share of teachers approximately from 16 to 30 percent of the college-educated labor force. This increase that is due to the new government-set wage rate, would result in a pupil-teacher ratio of 24 to 25 pupils per teacher with college education, but will require a more than 31 percent increase in the wage bill for teacher salaries. The empirical approach of this paper is derived from a structural model that takes into account the endogeneity of the wage rate and corrects for sample-selection bias due to occupational choice. |
| Keywords: | Tertiary Education,Primary Education,Education For All,Teaching and Learning,Secondary Education |
| Date: | 2009–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4975&r=dev |
| By: | Demirguc-Kunt, Asli; Lopez Cordova, Ernesto; Martinez Peria, Maria Soledad; Woodruff, Christopher |
| Abstract: | Despite the rising volume of remittances flowing to developing countries, their impact on banking sector breadth and depth in recipient countries has been largely unexplored. The authors examine this topic using municipio-level data on the fraction of households that receive remittances and on measures of banking breadth and depth for Mexico. They find that remittances are strongly associated with greater banking breadth and depth, increasing the number of branches and accounts per capita and the ratio of deposits to gross domestic product. These effects are significant both statistically and economically, even after conducting robustness tests and addressing the potential endogeneity of remittances. |
| Keywords: | Access to Finance,Banks&Banking Reform,Population Policies,Debt Markets, |
| Date: | 2009–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4983&r=dev |
| By: | Hochrainer, Stefan |
| Abstract: | There is an ongoing debate on whether disasters cause significant macroeconomic impacts and are truly a potential impediment to economic development. This paper aims to assess whether and by what mechanisms disasters have the potential to cause significant GDP impacts. The analysis first studies the counterfactual versus the observed gross domestic product. Second, the analysis assesses disaster impacts as a function of hazard, exposure of assets, and, importantly, vulnerability. In a medium-term analysis (up to 5 years after the disaster event), comparing counterfactual with observed gross domestic product, the authors find that natural disasters on average can lead to negative consequences. Although the negative effects may be small, they can become more pronounced depending mainly on the size of the shock. Furthermore, the authors test a large number of vulnerability predictors and find that greater aid and inflows of remittances reduce adverse macroeconomic consequences, and that direct losses appear most critical. |
| Keywords: | Natural Disasters,Economic Theory&Research,Hazard Risk Management,Disaster Management,Currencies and Exchange Rates |
| Date: | 2009–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4968&r=dev |
| By: | Brownbridge, Martin; Canagarajah, Sudharshan |
| Abstract: | The paper analyses how the global economic crisis will affect the economies of the low income Commonwealth of Independent States (CIS) and discusses the fiscal measures which can be taken to help mitigate the adverse impact of the crisis. It focuses on Tajikistan, the poorest member of the CIS but also highlights similarities with the economies of Armenia, the Kyrgyz Republic and Moldova. The main channels through which the global economic crisis will affect the low income CIS economies is through a sharp reduction in remittances from migrant workers in Russia and lower export earnings. The adjustment to this external shock will involve a reduction in imports, private consumption, domestic output and government revenue. Fiscal policy, constrained by very limited macroeconomic and fiscal space, faces acute challenges. Maintaining budget targets for fiscal deficits and domestic borrowing in the face of revenue shortfalls will lead to a tightening of the fiscal stance, exacerbating recessionary pressures and making it very difficult to protect priority social expenditures from cuts. To avoid these outcomes, external support from donors, preferably in the form of quick disbursing budget support, is required. If additional external budget support can be mobilized, the priorities for fiscal policy should be to protect spending on budgeted social sector programs and, if sufficient budget resources are available, to implement a program of labor intensive repair and maintenance of public infrastructure to provide employment for returning migrant workers. Tax cuts are unlikely to be an effective use of scarce budget resources, either to stimulate the economy or protect the incomes of the poor. Up scaling existing social assistance programs may be a feasible way to protect the poor in some low income CIS countries provided they are not as poorly targeted as in Tajikistan. |
| Keywords: | Debt Markets,Currencies and Exchange Rates,,Access to Finance,Banks&Banking Reform |
| Date: | 2009–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4970&r=dev |
| By: | Wang, Limin; Kanji, Shireen; Bandyopadhyay, Sushenjit |
| Abstract: | Extreme weather events are known to have serious consequences for human health and are predicted to increase in frequency as a result of climate change. Africa is one of the regions that risks being most seriously affected. This paper quantifies the impact of extreme rainfall and temperature events on the incidence of diarrhea, malnutrition and mortality in young children in Sub-Saharan Africa. The panel data set is constructed from Demographic and Health Surveys for 108 regions from 19 Sub-Saharan African countries between 1992 and 2001 and climate data from the Africa Rainfall and Temperature Evaluation System from 1980 to 2001. The results show that both excess rainfall and extreme temperatures significantly raise the incidence of diarrhea and weight-for-height malnutrition among children under the age of three, but have little impact on the long-term health indicators, including height-for-age malnutrition and the under-five mortality rate. The authors use the results to simulate the additional health cost as a proportion of gross domestic product caused by increased climate variability. The projected health cost of increased diarrhea attributable to climate change in 2020 is in the range of 0.2 to 0.5 percent of gross domestic product in Africa. |
| Keywords: | Health Monitoring&Evaluation,Population Policies,Climate Change,Disease Control&Prevention,Global Environment Facility |
| Date: | 2009–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4979&r=dev |
| By: | Loayza, Norman; Olaberria, Eduardo; Rigolini, Jamele; Christiaensen, Luc |
| Abstract: | There has been a steady increase in the occurrence of natural disasters. Yet their effect on economic growth remains unclear, with some studies reporting negative, and others indicating no, or even positive effects. These seemingly contradictory findings can be reconciled by exploring the effects of natural disasters on growth separately by disaster and economic sector. This is consistent with the insights from traditional models of economic growth, where production depends on total factor productivity, the provision of intermediate outputs, and the capital-labor ratio, as well as the existence of important intersector linkages. Applying a dynamic Generalized Method of Moments panel estimator to a 1961-2005 cross-country panel, three major insights emerge. First, disasters affect economic growth - but not always negatively, and differently across disasters and economic sectors. Second, although moderate disasters can have a positive growth effect in some sectors, severe disasters do not. Third, growth in developing countries is more sensitive to natural disasters - more sectors are affected and the magnitudes are non-trivial. |
| Keywords: | Natural Disasters,Disaster Management,Hazard Risk Management,Achieving Shared Growth,Economic Conditions and Volatility |
| Date: | 2009–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4980&r=dev |
| By: | Kazianga, Harounan; de Walque, Damien; Alderman, Harold |
| Abstract: | This paper uses a prospective randomized trial to assess the impact of two school feeding schemes on health and education outcomes for children from low-income households in northern rural Burkina Faso. The two school feeding programs under consideration are, on the one hand, school meals where students are provided with lunch each school day, and, on the other hand, take-home rations that provide girls with 10 kg of cereal flour each month, conditional on 90 percent attendance rate. After running for one academic year, both programs increased girls’ enrollment by 5 to 6 percentage points. While there was no observable significant impact on raw scores in mathematics, the time-adjusted scores in mathematics improved slightly for girls. The interventions caused absenteeism to increase in households that were low in child labor supply while absenteeism decreased for households that had a relatively large child labor supply, consistent with the labor constraints. Finally, for younger siblings of beneficiaries, aged between 12 and 60 months, take-home rations have increased weight-for-age by .38 standard deviations and weight-for-height by .33 standard deviations. In contrast, school meals did not have any significant impact on the nutrition of younger children. |
| Keywords: | Youth and Governance,Primary Education,Education For All,Street Children,Adolescent Health |
| Date: | 2009–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4976&r=dev |
| By: | Lall, Somik V.; Schroeder, Elizabeth; Schmidt, Emily |
| Abstract: | In many countries, place specific investments in infrastructure are viewed as integral components of territorial development policies. But are these policies fighting market forces of concentration? Or are they adding net value to the national economy by tapping underexploited resources? This paper contributes to the debate on the spatial allocation of infrastructure investments by examining where these investments will generate the highest economic returns"spatial efficiency", and identifying whether there re tradeoffs when infrastructure coverage is made more equitable across regions"spatial equity". The empirical analysis focuses on Uganda and is based on estimating models of firm location choice, drawing on insights from the new economic geography literature. The main findings show that establishments in the manufacturing industry gain from being in areas that offer a diverse mix of economic activities. In addition, availability of power supply, transport links connecting districts to markets, and the supply of skilled workers attract manufacturing activities. Combining all these factors gives a distinct advantage to existing agglomerations along leading areas around Kampala and Jinja. Infrastructure investments in these areas are likely to produce the highest returns compared with investments elsewhere. Public infrastructure investments in other locations are likely to attract fewer private investors, and will pose a spatial efficiencyequity tradeoff. To better integrate lagging regions with the national economy, lessons from the WDR2009"Reshaping Economic Geography"calling for investments in health and education in lagging areas are likely to be more beneficial. |
| Keywords: | Transport Economics Policy&Planning,E-Business,Banks&Banking Reform,Non Bank Financial Institutions,Economic Theory&Research |
| Date: | 2009–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4966&r=dev |
| By: | Kaufmann, Daniel; Kraay, Aart; Mastruzzi, Massimo |
| Abstract: | This paper reports on the 2009 update of the Worldwide Governance Indicators (WGI) research project, covering 212 countries and territories and measuring six dimensions of governance between 1996 and 2008: Voice and Accountability, Political Stability and Absence of Violence/Terrorism, Government Effectiveness, Regulatory Quality, Rule of Law, and Control of Corruption. These aggregate indicators are based on hundreds of specific and disaggregated individual variables measuring various dimensions of governance, taken from 35 data sources provided by 33 different organizations. The data reflect the views on governance of public sector, private sector and NGO experts, as well as thousands of citizen and firm survey respondents worldwide. The authors also explicitly report the margins of error accompanying each country estimate. These reflect the inherent difficulties in measuring governance using any kind of data. They find that even after taking margins of error into account, the WGI permit meaningful cross-country comparisons as well as monitoring progress over time. The aggregate indicators, together with the disaggregated underlying indicators, are available at www.govindicators.org. |
| Keywords: | Governance Indicators,National Governance,Public Sector Corruption&Anticorruption Measures,Economic Policy, Institutions and Governance,Banks&Banking Reform |
| Date: | 2009–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4978&r=dev |
| By: | Beine, Michel; Docquier, Frederic; Ozden, Caglar |
| Abstract: | Migration flows are shaped by a complex combination of self-selection and out-selection mechanisms. In this paper, the authors analyze how existing diasporas (the stock of people born in a country and living in another one) affect the size and human-capital structure of current migration flows. The analysis exploits a bilateral data set on international migration by educational attainment from 195 countries to 30 developed countries in 1990 and 2000. Based on simple micro-foundations and controlling for various determinants of migration, the analysis finds that diasporas increase migration flows, lower the average educational level and lead to higher concentration of low-skill migrants. Interestingly, diasporas explain the majority of the variability of migration flows and selection. This suggests that, without changing the generosity of family reunion programs, education-based selection rules are likely to have a moderate impact. The results are highly robust to the econometric techniques, accounting for the large proportion of zeros and endogeneity problems. |
| Keywords: | Population Policies,Voluntary and Involuntary Resettlement,Human Migrations&Resettlements,Anthropology,International Migration |
| Date: | 2009–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4984&r=dev |
| By: | Calderon, Cesar; Kubota, Megumi |
| Abstract: | Advanced and emerging market economies have rapidly integrated into international capital markets and this growing globalization of financial markets has led to some important changes in the patterns of saving and investment across the world. The main goal of this paper is to test whether the cross-border asset trade has led to improvements in the intermediation of these savings -- that is, foster development of domestic financial markets. The authors have collected annual information on financial market development, financial openness, and other control variables for a sample of 145 countries for the period 1974-2007. Controlling for the likely endogeneity of financial openness, the analysis finds that rising financial openness expands private credit, bank assets, and stock market and private bond market development, and generates efficiency gains in the banking system. However, the impact of financial openness on domestic financial development may depend on the level of institutional quality, the extent of investor protection, and the degree of trade openness. In general, rising financial openness will enlarge the size and activity of financial intermediaries, improve efficiency in the banking system, and contribute to deepen private bond markets in countries with moderate to high levels of institutional quality and investor protection as well as in countries with high trade openness. |
| Keywords: | Debt Markets,Emerging Markets,,Economic Theory&Research,Currencies and Exchange Rates |
| Date: | 2009–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4973&r=dev |
| By: | Bruhn, Miriam; Love, Inessa |
| Abstract: | This paper examines the effects of providing financial services to low-income individuals on entrepreneurial activity, employment, and income. The analysis exploits cross-time and cross-municipality variation in the opening of Banco Azteca in Mexico to measure these effects with a difference-in-difference strategy. Banco Azteca opened more than 800 branches simultaneously in 2002, focusing on low-income clients. The results show that the opening of Banco Azteca led to an increase in the number of informal business owners by 7.6 percent. Total employment also increased, by 1.4 percent, and average income went up by about 7 percent. |
| Keywords: | ,Access to Finance,Banks&Banking Reform,Labor Policies,Corporate Law |
| Date: | 2009–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4981&r=dev |
| By: | Ravallion, Martin |
| Abstract: | We are not seeing faster progress against poverty amongst the poorest developing countries. Yet this is implied by widely accepted"stylized facts"about the development process. The paper tries to explain what is missing from those stylized facts. Consistently with models of economic growth incorporating borrowing constraints, the analysis of a new data set for 100 developing countries reveals an adverse effect on consumption growth of high initial poverty incidence at a given initial mean. A high incidence of poverty also entails a lower subsequent rate of progress against poverty at any given growth rate (and poor countries tend to experience less steep increases in poverty during recessions). Thus, for many poor countries, the growth advantage of starting out with a low mean ("conditional convergence") is lost due to their high poverty rates. The size of the middle class--measured by developing-country, not Western, standards--appears to be an important channel linking current poverty to subsequent growth and poverty reduction. However, high current inequality is only a handicap if it entails a high incidence of poverty relative to mean consumption. |
| Keywords: | Achieving Shared Growth,Population Policies,Inequality,Rural Poverty Reduction,Services&Transfers to Poor |
| Date: | 2009–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4974&r=dev |
| By: | Yin-Wong Cheung (University of California, Santa Cruz); XingWang Qian (SUNY, Buffalo State College) |
| Abstract: | We investigate the empirical determinants of China¡¦s outward direct investment (ODI). It is found that China¡¦s investments in developed and developing countries are driven by different sets of factors. Subject to the differences between developed and developing countries, there is evidence that a) both market seeking and resources seeking motives drive China¡¦s ODI, b) the Chinese exports to developing countries induce China¡¦s ODI, c) China¡¦s international reserves promote its ODI, and d) the Chinese capital tends to agglomerate among developed economies but diversify among developing economies. Similar results are obtained using alternative ODI data. We do not find substantial evidence that China invests in African and oil-producing countries mainly for their natural resources. |
| Keywords: | Market Seeking, Resources Seeking, Servicing Exports, International Reserves, Agglomeration Effect |
| JEL: | F21 F36 O53 |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:hkm:wpaper:172009&r=dev |
| By: | Yin-Wong Cheung (University of California, Santa Cruz); Menzie D. Chinn (University of Wisconsin, Madison, NBER); Eiji Fujii (University of Tsukuba) |
| Abstract: | We examine whether the Chinese exchange rate is misaligned and how Chinese trade flows respond to the exchange rate and to economic activity. We find, first, that the Chinese currency, the renminbi (RMB), is substantially below the value predicted by estimates based upon a cross-country sample, when using the 2006 vintage of the World Development Indicators. The economic magnitude of the misalignment is substantial ¡V on the order of 50 percent in log terms. However, the misalignment is typically not statistically significant, in the sense of being more than two standard errors away from the conditional mean. However, this finding disappears completely when using the most recent 2008 vintage of data; then the estimated undervaluation is on the order of 10 percent. Second, we find that Chinese multilateral trade flows respond to relative prices ¡V as represented by a trade weighted exchange rate ¡V but the relationship is not always precisely estimated. In addition, the direction of the effects is sometimes different from what is expected a priori. For instance, Chinese ordinary imports actually rise in response to a RMB depreciation; however, Chinese exports appear to respond to RMB depreciation in the expected manner, as long as a supply variable is included. In that sense, Chinese trade is not exceptional. Furthermore, Chinese trade with the United States appears to behave in a standard manner ¡V especially after the expansion in the Chinese manufacturing capital stock is accounted for. Thus, the China-US trade balance should respond to real exchange rate and relative income movements in the anticipated manner. However, in neither the case of multilateral nor bilateral trade flows should one expect quantitatively large effects arising from exchange rate changes. And, of course, these results are not informative with regard to the question of how a change in the RMB/USD exchange rate would affect the overall US trade deficit. Finally, we stress the fact that considerable uncertainty surrounds both our estimates of RMB misalignment and the responsiveness of trade flows to movements in exchange rates and output levels. In particular, the results for trade elasticities are sensitive to econometric specification, accounting for supply effects, and for the inclusion of time trends. |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:hkm:wpaper:142009&r=dev |
| By: | Manoj K. Pandey |
| Abstract: | In this paper, the effect of maternal health on the under-five mortality has been examined. Third wave of micro-level National Family Health Survey 2005-06 data for rural India is used. Using various alternative measures of maternal health, the paper finds strong association between maternal health and child mortality. In particular, the effects of maternal height, weight, presence of any disease and anemia are found significant. Based on our findings, we argue that if the possible generational transfer of poor health from a mother to her child has to avoid, policies aimed at attaining the millennium development goal of reduced child mortality should be directed on improving the health of existing and future mothers. |
| Keywords: | under-five mortality, maternal height, maternal weight, body mass index, anemia |
| JEL: | D6 I12 J13 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:pas:asarcc:2009-12&r=dev |
| By: | Manoj K. Pandey |
| Abstract: | The paper examines the association between marital status and self-reported health status of Indian adults. A nationally representative cross-sectional data surveyed by National Sample Survey Organisation (NSSO) in 2004 is used. Results confirm linkages between marital status and health and show that this relationship is sensitive to the age and gender. Based on findings, the paper argues that the implication of marital status on health could be different for adults of different age group and gender. |
| Keywords: | Self-reported Health Status, Marital Status, Ordered Probit Regression |
| JEL: | I12 J12 J14 J16 C31 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:pas:asarcc:2009-10&r=dev |
| By: | Manoj K. Pandey |
| Abstract: | This paper attempts to analyze the depth of poverty and examines the causal relationship between disability and poverty among Indian elderly. We use 58th round of National Sample Survey Organisation (NSSO) data surveyed in 2002. Our analysis finds higher level of poverty and income inequality among disabled elderly as compared to non-disabled elderly and those differences in the income levels vary significantly across different age groups, gender, social groups and educational status. Finally, the estimation results confirm the hypothesis of causal relationship between poverty and disability. |
| Keywords: | poverty, disability, inequality, poverty measures, elderly, estimation |
| JEL: | I32 J14 D63 C13 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:pas:asarcc:2009-09&r=dev |
| By: | Manoj K. Pandey |
| Abstract: | In this paper, the trend and determinants of health and poverty among the elderly in rural India is analysed. Two rounds of National Sample Survey (NSS) data for the year 1995-96 and 2004 are employed. The analysis has been done with independent and pooled datasets. Our analysis shows that levels of consumption poverty have declined marginally between 1995-96 and 2004 while increased proportion of elderly with poor health status is continued. Results suggest that poverty is one of the key determinants of health among elderly in rural India. |
| Keywords: | health, poverty, elderly |
| JEL: | I32 J14 I12 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:pas:asarcc:2009-14&r=dev |
| By: | Manoj K. Pandey; Prakash Singh; Ram Ashish Yadav |
| Abstract: | This paper examines the effect of domestic violence on the health of ever-married women of reproductive age group in India. Micro-level National Family Health Survey (NFHS-III) data for the year 2005-06 has been used in the study. We employ disease, body mass index, under nutrition level and anemia as the measures of health and physical, emotional and sexual forms of domestic violence are used as indicators of domestic violence at both national and state levels. We find that domestic violence has negative impact on the overall women’s health and nutritional status. However, national level results are not consistent with that of the states level. Based on the findings, we argue that the issue of domestic violence should be addressed in national and state level health policies and programmes. |
| Keywords: | Domestic violence, health, prevalence rate |
| JEL: | I00 I12 J12 J16 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:pas:asarcc:2009-13&r=dev |
| By: | Manoj K. Pandey; Charanjit Kaur |
| Abstract: | This paper examines the trend and economic determinants of the suicidal deaths in India. Time-series data over the period 1967-2006 is used from various sources. The paper analyzes the suicidal trend and exploratory relationships between suicide rate and some of the demographic and other economic variates. Further, we use ARDL model to find out the association between suicide and some economic variables. We find that inflation, per capita real GDP and industrial growth encourages the incidences of suicides whereas increased per capita household income helps in reducing suicidal deaths in India. |
| Keywords: | Suicide, Economic factors, Trends, Time series, ARDL model |
| JEL: | C22 I12 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:pas:asarcc:2009-08&r=dev |
| By: | Manoj K. Pandey |
| Abstract: | The paper analyzes the effect of health status on labour force participation for aged Indians. The potential endogeneity in health and labour force participation has been taken care of by using full information maximum likelihood (FIML) and estimation results are compared with alternative two-stage methods. Results show that health has a significant and positive effect on labour force participation of the aged. In order to keep enough supply of elderly in the labour market, sufficient health care is necessary and hence more investment in this sector is imperative. |
| Keywords: | self-reported health status, labour force participation, elderly, endogeneity, exogeneity, simultaneous equation model |
| JEL: | J21 J14 I18 C35 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:pas:asarcc:2009-11&r=dev |
| By: | Shawn Cole; Xavier Giné; Jeremy Tobacman; Petia Topalova; Robert Townsend; James Vickery |
| Abstract: | Financial engineering offers the potential to significantly reduce the consumption fluctuations faced by individuals, households, and firms. Yet much of this potential remains unfulfilled. This paper studies the adoption of an innovative rainfall insurance product designed to compensate low-income Indian farmers in the event of insufficient rainfall during the primary monsoon season. We first document relatively low adoption of this new risk management product: Only 5-10 percent of households purchase the insurance, even though they overwhelmingly cite rainfall variability as their most significant source of risk. We then conduct a series of randomized field experiments to test theories of why product adoption is so low. Insurance purchase is sensitive to price, with an estimated extensive price elasticity of demand ranging between -.66 and -0.88. Credit constraints, identified through the provision of random liquidity shocks, are a key barrier to participation, a result also consistent with household self-reports. Several experiments find that trust plays an important role in the decision to purchase insurance. We find mixed evidence that subtle psychological manipulations affect purchases and no evidence that modest attempts at financial education change households' decisions to participate. Based on our experimental results, we suggest preliminary lessons for improving the design of household risk management contracts. |
| Keywords: | Households - Economic aspects ; Insurance ; Risk management |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:373&r=dev |
| By: | Daniel Platz |
| Abstract: | This paper sets out to explore the potential of sub-sovereign bonds in financing infrastructure in developing countries. Taking into account the historical experience of the US, it develops a supply and demand side framework for analysis of the market for sub-sovereign bonded debt in developing countries and applies this framework to Mexico, India and South Africa. Finally, it draws lessons for countries seeking to promote markets for sub-sovereign bonds. Evidence suggests that the regulatory environment, a diversified financial sector and increased capacity for debt support and management matter most for the development of the sub-sovereign bond market. |
| Keywords: | Sub-sovereign bonds, infrastructure finance, issuers, investors, financial sector, municipal finance |
| JEL: | H74 H54 H41 H81 |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:une:wpaper:76&r=dev |
| By: | Matthias Basedau (GIGA Institute of African Affairs); Alexander Stroh (GIGA Institute of African Affairs) |
| Abstract: | Despite earlier assumptions that ethnicity is a central feature of African party systems, there is little substantial evidence for this claim. The few studies with an empirical foundation rarely rely on individual data and are biased in favor of Anglophone Africa. This paper looks at four Francophone countries, drawing on four representative survey polls in Benin, Burkina Faso, Mali, and Niger. Multivariate regression models and bivariate control tools reveal that ethnicity matters as a determinant of party preference, but that its impact is generally rather weak and differs with regard to party systems and individual parties. “Ethnic parties” in the strict sense are almost completely absent, and only the Beninese party system is substantially “ethnicized.” In particular, regional ties between voters and leaders—rather than ethnic affiliation alone—deserve attention in the future study of voting behavior in Africa. |
| Keywords: | political parties, ethnic groups, voting intentions, multivariate logistic regression |
| Date: | 2009–05 |
| URL: | http://d.repec.org/n?u=RePEc:gig:wpaper:100&r=dev |
| By: | Mathieu Paquet (GREDI, Faculte d'administration, Université de Sherbrooke); Luc Savard (GREDI, Faculte d'administration, Université de Sherbrooke) |
| Abstract: | Ever since the end of the Biafra war, re-exportation has become an important economic activity for Benin’s economy. One of the reasons for the existence of this type of commerce resides in the disparity in economic policies between Benin and Nigeria. We model this sector and its interrelations with the remainder of the economy as well as on public finances. A CGE model was developed with data from Benin’s social accounting matrix for 1999. In the model, we distinguished between formal and informal households (households that work in the informal sector) and a distinction was incorporated into the model in regards of the re-exportation industry by dividing the latter into its 8 most important re-export sectors. We simulated a 10% depreciation of the CFA F and a 20% decrease in import tariffs. Our findings demonstrate a great sensitivity of government’s revenues to the activity of this informal sector. For one simulation, public savings dropped by almost 25%, but in both cases, the government’s income was strongly affected. |
| Keywords: | CGE model, informal trade, Benin, Nigeria, public finance |
| JEL: | F10 H61 C68 |
| Date: | 2009–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:shr:wpaper:09-14&r=dev |
| By: | Luiz Carlos, BRESSER-PEREIRA |
| Abstract: | The failure of the Washington Consensus and of macroeconomic policies based on high interest rates and non-competitive exchange rates to generate economic growth prompted Latin America to formulate national development strategies. New developmentalism is an alternative strategy not only to conventional orthodoxy but also to old-style Latin American national developmentalism. While old national developmentalism was based on the tendency of the terms of trade to deteriorate and, adopting a microeconomic approach, proposed economic planning and industrialization, the new nationaldevelopmentalism assumes that industrialization has been achieved, although in different degrees by each country, and argues that, in order to assure fast growth rates and catching up, the tendency that must be neutralized is that of the exchange rate to overvaluation. Contrary to the claims of conventional economics, a capable state remains the key instrument to ensure economic development, and industrial policy continues to be necessary; but what distinguishes the new approach is principally growth with domestic savings instead of with foreign savings, a macroeconomic policy based on moderate interest rates and a competitive exchange rate instead of the high interest rates and the overvalued currencies prescribed by conventional orthodoxy. |
| Date: | 2009–06–26 |
| URL: | http://d.repec.org/n?u=RePEc:fgv:eesptd:193&r=dev |
| By: | Ronald Jean Degen (International School of Management Paris) |
| Abstract: | The purpose of this paper is to describe China?s unique historical development that transformed the Celestial Empire into the largest economy in the world in the beginning of the nineteenth century, with a GDP that exceeded that of Western Europe, Japan, the US and Russia combined, and the decline during the ?Century of Humiliation?, and Mao Zedong?s communism that culminated in the ?Three Bitter Years? from 1958 to 1961 that produced the large famine with an estimated death of 20 to 30 million people. After this disaster, aggravated by the ?Cultural Revolution? that followed, came the amazing growth started by Deng Xiaoping?s economic reforms in 1978, that is only comparable to the United States emergence as an economic giant during the nineteenth century. China?s sustained growth, at an astounding 10 percent per year over the last 30 years, is without precedent. Many economists predict this growth rate will continue at 7 to 8 percent per year for several decades. This extraordinary sustained growth was partially fueled by the formation of its rapidly expanding financial market, and the profit and risks that its stock marked provides investors. |
| Keywords: | China?s historical development, China?s social-capitalism, China?s economic growth, Risks to China?s growth, China?s remaining poverty, China?s bureaucracy and corruption, China?s stock market, China?s mutual funds China?s unsustainable growth |
| JEL: | M0 M1 M2 |
| Date: | 2009–07–05 |
| URL: | http://d.repec.org/n?u=RePEc:pil:wpaper:35&r=dev |
| By: | Mussa, Richard |
| Abstract: | The paper uses data from the Second Malawi Integrated Household Survey (IHS2) to investigate the impact of fertility on poverty in rural Malawi. We use two measures of poverty; the objective and the subjective. After accounting for endogeneity of fertility by using son preference as an instrumental variable, we nd that fertility increases the probability of being objectively poor. This e¤ect is robust for all poverty lines used.It is also robust to accounting for economies of scale and household composition as well as assuming that poverty is continuous. We also nd that when fertility is treated as an exogenous variable its impact is underestimated. When poverty is measured subjectively, the results are opposite to those of objective poverty. We nd that fertility lowers the likelihood of feeling poor, and that fertility is exogenous with respect to subjective poverty. |
| Keywords: | Objective poverty; subjective poverty; fertility; Malawi |
| JEL: | D10 |
| Date: | 2009–01–27 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:16089&r=dev |
| By: | Nguyen, Quang |
| Abstract: | We combine an artefactual field experiments and household survey data to investigate whether involvement in a unique occupation such as fishery makes the fishermen exhibit different risk and time preferences than those in other occupations. Using a structural model approach, we integrate prospect theory and hyperbolic time discounting into a single framework to simultaneously estimate and correlate the parameters of both risk and time preferences with other demographic variables. The key finding is that fishermen are found to be less risk-averse and more patient than others. |
| Keywords: | Experimental Economics; Prospect Theory; Hyperbolic Discounting; Risk Behavior; Vietnam fishermen |
| JEL: | D81 C93 Q22 |
| Date: | 2009–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:16012&r=dev |
| By: | Mussa, Richard |
| Abstract: | The paper investigates two issues regarding household expenditure on primary education of own children using the Second Malawi Integrated Household Survey(IHS2) data. Firstly, we look at factors which infuence a household's decision to spend or not (the participation decision), and by how much (the expenditure decision). This is done for urban and rural households. We find that there are differences in the factors which influence both decision levels for the two groups of households. Secondly, to get a deeper understanding of these rural-urban spending differences, the study develops the Blinder-Oaxaca decomposition technique for the independent Double Hurdle model. The proposed decomposition is done at the aggregate and disaggregated levels. The aggregated decomposition allows us to isolate the expenditure differences into a part attributable to differences in characteristics and a part which is due to differences in coefficients. The detailed (disaggregated) decomposition enables us to pinpoint the major factors behind the spending gap. At the aggregate decomposition level, our results show that at least 66% of the expenditure differential is explained by differences in characteristics between rural and urban households, implying that an equalization of household characteristics would lead to about 66% of the spending gap disappearing. At the disaggregated decomposition level, the rural-urban difference in household income is found to be the largest contributor to the spending gap, followed by quality of access of primary schools. Besides, rural-urban di¤erences in mothers education and employment are found to contribute more to the spending differential relative to the same for fathers. |
| Keywords: | Education expenditure; double hurdle; Blinder-Oaxaca decomposition; Malawi tion |
| JEL: | D13 |
| Date: | 2009–01–27 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:16090&r=dev |
| By: | Gagnon, Jason; Xenogiani, Theodora; Xing, Chunbing |
| Abstract: | The rapid and massive increase in rural-to-urban worker flows to the coast of China has drawn recent attention to the welfare of migrants working in urban regions, particularly to their working conditions and pay; serious concern is raised regarding pay discrimination against rural migrants. This paper uses data from a random draw of the 2005 Chinese national census survey to shed more light on the discrimination issue, by making comparisons of earnings and the sector of work between rural migrants on one hand, and urban residents and urban migrants on the other. Contrary to popular belief, we find no earnings discrimination against rural migrants compared to urban residents. However, rural migrants are found to be discriminated in terms of the sector in which they work, with a vast majority working in the informal sector lacking adequate social protection. |
| Keywords: | Migration; China; Discrimination; Informal Employment |
| JEL: | O15 J71 J24 R23 |
| Date: | 2009–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:16109&r=dev |
| By: | Mussa, Richard |
| Abstract: | The paper examines the relationship between household income and schooling costs in the presence of ntrahousehold schooling bias against non-biological children. To this end, we construct a two-period model of intrahousehold schooling bias. The model predicts that there is an symmetry in the impact of changes in costs and income on schooling in the sense that the impact is larger for the non-biological child. It predicts that the asymmetry increases as the relationship distance between the non biological child and the parents gets wider. It also shows that an increase in cost of schooling leads to a bigger reduction in schooling for poor households, and that the di¤erence in the impact of cost changes between the biological and the non-biological child declines as household income increases i.e.there is convergence. And the convergence is faster the more distantly related to the parents the non-biological child is. An empirical nvestigation of these predictions using the Second Malawi Integrated Household Survey (IHS2) data, shows that when current enrolment and grade attainment are used to measure schooling, the price and income elasticities of schooling are larger for non-biological children. The results also indicate that households in the lowest income quintile (the poorest)have the largest price elasticities, and households in the highest income quintile (the wealthiest) have the smallest price elasticities. We also nd that the price elasticities for biological and non-biological children converge as we move from the lowest income quintile to the highest income quintile, and that the convergence is faster for non-biological children who are non-relatives. |
| Keywords: | Human capital; schooling bias; household economic status; Malawi |
| JEL: | D13 |
| Date: | 2009–01–27 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:15855&r=dev |
| By: | Tanaka, Tomomi; Camerer, Colin; Nguyen, Quang |
| Abstract: | This paper compares the social norms of distributive transfers within village communities in the north and south of Vietnam by analyzing household survey and experimental data. The results of household data analysis show private transfers flow from high-income households to low-income households in the south where social safety net is limited. In contrast, private transfers do not correlate with pre-transfer income in the north where public transfers are more widespread. In addition, public transfers crowd out private transfers in the north. We conducted trust game in both regions and found consistent results. People in the south are more altruistic toward the poor: they send more to the poor without expecting higher repayment. This pattern is consistent with the idea that private norms of redistribution from rich to poor are active in the south but are crowded out in the north, possibly by communist public institutions, although we observe a strong overall positive effect of communism on reciprocity in the north. |
| Keywords: | Field experiment; Trust; Vietnam |
| JEL: | D81 D64 C93 |
| Date: | 2009–07–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:16119&r=dev |
| By: | Adriana Cardozo (University of Göttingen / Germany); Melanie Grosse (University of Göttingen / Germany) |
| Abstract: | In this paper, we analyze how the distribution of selected non-income welfare indicators changed between 1997 and 2003 in Colombia. We use multidimensional pro-poor growth measurement techniques and create indices for assets, health, education, and subjective welfare using two alternative weighing techniques: polychoric principal components and normatively selected weights. Results show that while income and expenditures fluctuated according to economic growth, reflecting the effects of the 1999 economic crisis, non-income indicators had minor changes. While income and expenditures decreased for all income percentiles, and relatively more for the richest, the non-income dimensions stagnated and remained in 2003 as unequally distributed as in 1997. |
| Keywords: | Pro-Poor Growth, Inequality, Welfare Measurement, Multidimensionality of Poverty, Latin America, Colombia |
| JEL: | D30 I30 O10 O12 |
| Date: | 2009–06–24 |
| URL: | http://d.repec.org/n?u=RePEc:got:iaidps:192&r=dev |
| By: | Loren Brandt; Johannes Van Biesebroeck; Yifan Zhang |
| Abstract: | We present the first comprehensive set of firm-level total factor productivity estimates for China’s manufacturing sector that spans her entry into WTO. We find that productivity growth is among the highest compared to other countries. For our preferred estimate, the weighted average annual productivity growth for incumbents is 2.7% for a gross output production function and 7.7% for a value added production function over the period 1998-2006. Of the various sensitivity checks we carry out, controlling for the increase in labor quality and labor hours, as proxied by the rising real wage, has the largest (downward) effect on the productivity estimates. We further document that new entrants are a particularly dynamic force and that firms experience large productivity declines before exiting from the sample. Overall, net entry contributes roughly half to total TFP growth. Aggregate productivity growth, however, is tempered by a much lower effect of reallocation of inputs towards higher productivity firms, compared to the U.S. benchmark. |
| JEL: | D24 O14 |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15152&r=dev |
| By: | Esther Duflo; Michael Kremer; Jonathan Robinson |
| Abstract: | While many developing-country policymakers see heavy fertilizer subsidies as critical to raising agricultural productivity, most economists see them as distortionary, regressive, environmentally unsound, and argue that they result in politicized, inefficient distribution of fertilizer supply. We model farmers as facing small fixed costs of purchasing fertilizer, and assume some are stochastically present-biased and not fully sophisticated about this bias. Even when relatively patient, such farmers may procrastinate, postponing fertilizer purchases until later periods, when they may be too impatient to purchase fertilizer. Consistent with the model, many farmers in Western Kenya fail to take advantage of apparently profitable fertilizer investments, but they do invest in response to small, time-limited discounts on the cost of acquiring fertilizer (free delivery) just after harvest. Later discounts have a smaller impact, and when given a choice of price schedules, many farmers choose schedules that induce advance purchase. Calibration suggests such small, time-limited discounts yield higher welfare than either laissez faire or heavy subsidies by helping present-biased farmers commit to fertilizer use without inducing those with standard preferences to substantially overuse fertilizer. |
| JEL: | O12 O33 |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15131&r=dev |
| By: | David E. Bloom; David Canning; Günther Fink |
| Abstract: | In a recent paper, Acemoglu and Johnson (2007) argue that the large increases in population health witnessed in the 20th century may have lowered income levels. We argue that this result depends crucially on their assumption that initial health and income do not affect subsequent economic growth. Using their data we reject this assumption in favor of a model of conditional convergence, with income adjusting to its steady state over time. We show that, allowing for conditional convergence, exogenous improvements in health due to technical advances associated with the epidemiological transition appear to have increased income levels. |
| JEL: | I10 J11 O40 |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15137&r=dev |
| By: | Daron Acemoglu; Melissa Dell |
| Abstract: | We document substantial within-country (cross-municipality) differences in incomes for a large number of countries in the Americas. A significant fraction of the within-country differences cannot be explained by observed human capital. We conjecture that the sources of within-country and between-country differences are related. As a first step towards a united framework, we propose a simple model incorporating both differences in technological know-how across countries and differences in productive efficiency within countries. |
| JEL: | O18 O40 R11 |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15155&r=dev |
| By: | Gnanaraj Chellaraj; Keith E. Maskus (University of Colorado at Boulder); Aaditya Mattoo (The World Bank) |
| Abstract: | In this paper we analyze changes in the inbound and outbound investment between Singapore and a sample of industrialized and developing countries. The nature of Singapore's two-way investment with the industrialized nations has shifted into skill-seeking activities over the period, while Singapore's investments in developing countries have increased sharply and become concentrated in labor-seeking activities. Over the 1984-2003 period, as host Singapore became skill abundant relative to parent industrialized countries, average inbound investment stocks from these countries increased by US$ 24.8 billion annually, while the corresponding figure for outbound stocks to host developing countries was US$ 9.5 billion. |
| JEL: | F |
| Date: | 2009–02 |
| URL: | http://d.repec.org/n?u=RePEc:ewc:wpaper:wp100&r=dev |
| By: | Gnanaraj Chellaraj; Aaditya Mattoo (The World Bank); |
| Abstract: | Using the knowledge-capital model, we compare factors affecting the inbound and outbound manufacturing and services investment between Singapore and a sample of industrialized and developing countries. The nature of Singapore's two-way investment with the industrialized nations is essentially skill seeking, while with the developing countries it is low wage seeking with the exception of inbound services investment, which is skill seeking. During 1994-2003 time period, Singapore's skill abundance relative to all parent countries, increased annual average inbound investment in manufacturing and services by US$ 8.15 billion and US$ 15.19 billion respectively. |
| JEL: | F |
| Date: | 2009–03 |
| URL: | http://d.repec.org/n?u=RePEc:ewc:wpaper:wp101&r=dev |
| By: | Weiqi Tang (Fudan University); Libo Wu (Fudan University); ZhongXiang Zhang (East-West Center) |
| Abstract: | A considerable body of economic literature shows the adverse economic impacts of oil-price shocks for the developed economies. However, there has been a lack of empirical study of this kind on China and other developing countries. This paper attempts to fill this gap by answering how and to what extent oil-price shocks impact China's economy, emphasizing on the price transmission mechanisms. To that end, we develop a structural vector auto-regressive model. Our results show that an oil-price increase negatively affects output and investment, but positively affects inflation rate and interest rate. However, with the differentiated price control policies for materials and intermediates on the one hand and final products on the other hand in China, the impact on real economy, represented by real output and real investment, lasts much longer than that to price/monetary variables. Our decomposition results also show that the short-term impact, namely output decrease induced by the cut of capacity-utilization rate, is greater in the first one to two years, but the portion of the long-term impact, defined as the impact realized through an investment change, increases steadily and exceeds that of short-term impact at the end of the second year. Afterwards, the long-term impact dominates, and maintains for quite some time. |
| JEL: | F |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:ewc:wpaper:wp102&r=dev |