New Economics Papers
on Business, Economic and Financial History
Issue of 2005‒10‒22
29 papers chosen by

  1. "Determinants and Effects of Employing Professional Corporate Executives: A Case of Cotton Spinning Companies in Pre-war Japan" By Tetsuji Okazaki
  2. The IMF and the Force of History: Ten Events and Ten Ideas that Have Shaped the Institution By James M. Boughton
  3. 'A Balance of Power that Favors Freedom'. The Historical and Ideological Roots of the Neo-Conservative Persuasion By Mario del Pero
  4. Historical Financing of Small- and Medium-Sized Enterprises By Robert Cull; Lance E. Davis; Naomi R. Lamoreaux; Jean-Laurent Rosenthal
  5. From "Hindu Growth" to Productivity Surge: The Mystery of the Indian Growth Transition By Dani Rodrik; Arvind Subramanian
  6. The Rise of U.S. Antidumping Activity in Historical Perspective By Douglas A. Irwin
  7. Was Frank Knight an Institutionalist? By Pier Francesco Asso; Luca Fiorito
  8. Banking in Sub-Saharan Africa: What Went Wrong? By François Leroux; Roland Daumont; Françoise Le Gall
  9. The Low Pay Commission After Eight Years By William Brown
  10. John Bates Clark on Trusts: New Light from the Columbia Archives By Luca Fiorito; John F. Henry
  11. Data Consistency in IMF Publications: Country Staff Reports Versus International Financial Statistics By John Cady; Anthony J. Pellechio
  12. Too Much of a Good Thing? Credit Booms in Transition Economies: The Cases of Bulgaria, Romania, and Ukraine By Nikolay Gueorguiev; Christoph Duenwald; Andrea Schaechter
  13. The Late 1990s Financial Crisis in Ecuador: Institutional Weaknesses, Fiscal Rigidities, and Financial Dollarization at Work By Luis Ignacio Jácome
  14. Sistemas Locales de Trabajo y Distritos Industriales Marshallianos en España By Rafel Boix Domenech
  15. Latin American Central Bank Reform: Progress and Challenges By Agustin Carstens; Luis Ignacio Jácome H.
  16. Did the Basel Accord cause a Credit Slowdown in Latin America? By Adolfo Barajas; Ralph Chami; Thomas F. Cosimano
  17. India in the 1980s and 1990s: A Triumph of Reforms By Arvind Panagariya
  18. Implicit Transfers in IMF Lending, 1973-2003 By Priyadarshani Joshi; Jeromin Zettelmeyer
  19. Turkey's Reform Effort Reconsidered, 1987-2004 By Kivanç Ulusoy
  20. Variations in the Wage Returns to a First Degree: Evidence from the British Cohort Study 1970 By Massimiliano Bratti; Robin Naylor; Jeremy Smith
  21. Thalomide, BSE and the Single Market: A Historical-Institutionalist Approach to Regulatory Regimes in the European Union By Sebastian Krapohl
  22. Jean-Baptiste Say et la théorie quantitative de la monnaie By Alain Béraud
  23. The IMF and Russia in the 1990s By J. C. Odling-Smee
  24. Ten Years After the CFA Franc Devaluation: Progress Toward Regional Integration in the WAEMU By Charalambos G. Tsangarides; Pierre van den Boogaerde
  25. Overview of the Indian Corporate Sector: 1989-2002 By Petia Topalova
  26. How Private Creditors Fared in Emerging Debt Markets, 1970-2000 By Christoph Klingen; Jeromin Zettelmeyer; Beatrice Weder
  27. How Has NAFTA Affected the Mexican Economy? Review and Evidence By M. Ayhan Kose; Guy Meredith; Christopher M. Towe
  28. The Aid Effectiveness Literature. The Sad Result of 40 Years of Research By Hristos Doucouliagos; Martin Paldam
  29. The Political Economy of Seigniorage By Ari Aisen; Francisco José Veiga

  1. By: Tetsuji Okazaki (Faculty of Economics, University of Tokyo)
    Abstract: This paper examines how professional corporate executives diffused among cotton spinning companies in prewar Japan, and analyzes the determinants as well as implications of the employment of professional executives. While simple scale variables such as paid-in capital and production did not correlate with employment of professional executives, those variables reflecting complexity of management, such as number of factories and dummy variable indicating integrated production, have positive correlation with it. At the same time, availability of managerial capability among owners negatively correlates with employment of professional executives. Also, we found that employment of professional executives had a positive effect on corporate profitability, after controlling for the endogeneity.
    Date: 2005–10
  2. By: James M. Boughton
    Abstract: The International Monetary Fund was designed during World War II by men whose worldview had been shaped by the Great War and the Great Depression. Their views on how the postwar international monetary system should function were also shaped by their economics training and their nationalities. After the IMF began functioning as an institution, its evolution was similarly driven by a combination of political events (Suez, African independence, the collapse of global communism), economic events (the rising economic power of Europe, the Middle East, and Asia), and trends and cycles in economic theory (the monetary approach to the balance of payments, new classical economics, the rise and fall of the Washington Consensus). As they happened, these forces had effects that were perceived as adaptations to current events and new ideas within a fixed institutional structure and mandate. The cumulative effect of history on the institution has been rather more profound and requires a longer and larger perspective.
    Keywords: Fund , Fund history , Financial institutions , International capital markets , Debt problems , Monetary measures , Balance of payments , Floating exchange rates , Supply-side policy , Inflation targeting , Globalization ,
    Date: 2004–05–21
  3. By: Mario del Pero
    Abstract: The paper offers a genealogy of neoconservatism, concentrating on its ideological and historical foundations in the early 1970s. In the first part, it shows how neoconservatism represented a reaction to the crisis-real and perceived-the United States was undergoing, and an answer Cold War liberalism gave to Kissinger's realism, to the radicalism of the New Left and to the emerging theories of interdependence. In the second part, the paper examines the influence neoconservatives were able to exert on the foreign policy of George W. Bush, particularly after the terrorist attacks of September the 11th, 2001. It argues that neoconservatism, as a visionary and utopian form of 'crisis internationalism', was ideally fit to dominate post 9/11 U.S. foreign policy discourse. But it underlines also the intrinsic limits and contradictions of the neoconservative project.
    Keywords: power analysis
    Date: 2005–05–15
  4. By: Robert Cull; Lance E. Davis; Naomi R. Lamoreaux; Jean-Laurent Rosenthal
    Abstract: We focus on the economies of the North Atlantic Core during the nineteenth and early twentieth centuries and find that an impressive variety of local financial institutions emerged to supply the needs of SMEs wherever there was sufficient demand for their services. Although these intermediaries had significant weaknesses, they were able to tap into local information networks and so extend credit to firms that were too young or small to secure funds from large regional or national institutions. In addition, by raising the return to savings for local households, they helped to mobilize significant new resources for economic development.
    JEL: G2 N2
    Date: 2005–10
  5. By: Dani Rodrik; Arvind Subramanian
    Abstract: This paper explores the causes of India's productivity surge around 1980, more than a decade before serious economic reforms were initiated. Trade liberalization, expansionary demand, a favorable external environment, and improved agricultural performance did not play a role. We find evidence that the trigger may have been an attitudinal shift by the government in the early 1980s that unlike the reforms of the 1990s, was probusiness rather than promarket in character, favoring the interests of existing businesses rather than new entrants or consumers. A relatively small shift elicited a large productivity response, because India was far away from its income-possibility frontier. Registered manufacturing, which had been built up in previous decades, played an important role in determining which states took advantage of the changed environment.
    Keywords: Productivity , India , Economic growth , Trade liberalization , Demand , Public investment , Agricultural production , Manufacturing ,
    Date: 2004–05–20
  6. By: Douglas A. Irwin
    Abstract: Empirical studies of antidumping activity focus almost exclusively on the period since 1980. This paper puts recent U.S. antidumping experience in historical context by studying the determinants of annual case filings over the past half century. The conventional view that few antidumping cases existed prior to 1980 is not correct, although most did not result in the imposition of duties. The increased number of cases in recent decades largely reflects petitions that target multiple source countries; the number of imported products involved has actually fallen since the mid 1980s. The annual number of antidumping cases is influenced by the unemployment rate, the exchange rate, import penetration (closely related to the decline in average tariffs), and changes in the antidumping law and enforcement in the early 1980s.
    Keywords: Trade liberalization , United States , Antidumping , Imports ,
    Date: 2005–02–25
  7. By: Pier Francesco Asso; Luca Fiorito
    Abstract: This paper critically examines Geoffrey Hodgson's recent provocative claim about Frank Knight as being a member of American institutionalism in the interwar years. In the first section of the paper the authors attempt to provide a definition of institutionalism and to emphasize its meaning from a historiographic point of view. The second and third sections analyze the two main methodological struggles between Knight and the institutionalists, namely, the debate during the early 1020s over the use of instinct theory as an explanation of economic behavior, and the subsequent campaign led by Knight in the late 1920s and early 1930s against the behaviorist wing of American institutionalism à la Copeland and Ayres. The fourth section deals with Knight's own brand of institutionalism. Our main conclusions are that, even if Knight's approach to the study of economic behavior shows some significant affinities with American institutionalism, he was not – both sociologically and in terms of his philosophical premises - an institutionalist.
    JEL: B15 B25 B41
    Date: 2005–09
  8. By: François Leroux; Roland Daumont; Françoise Le Gall
    Abstract: The purpose of this paper is to study the origins of banking crises in sub-Saharan Africa, drawing upon the experience of ten countries during the period 1985-95. It examines, in particular, which factors were the most important sources of these crises. The conclusions underscore that the banking crises examined did not represent an entirely special case-a number of factors identified in the general literature, including macroeconomic shocks, were highly relevant-but note that several of their features were nonetheless specific to this part of the world. These banking crises were the very prototype of endemic crises associated with heavy government intervention in the banking system. In this regard, the paper analyzes the complex role of the government in banking in sub-Saharan Africa, the many channels through which governments intervened, and the economic and institutional environment in which the banks operated.
    Keywords: Banking systems , Africa , Financial crisis , Intervention , Bank regulations ,
    Date: 2004–04–20
  9. By: William Brown
    Abstract: The Low Pay Commission is the institution created in 1997 to introduce Britain’s first National Minimum Wage. The paper places the Commission in historical perspective and provides a summary assessment of the initial impact of the Minimum Wage. It describes and analyses the development of the Commission and its concerns, conduct and advice. Central to its performance has been its independent, ‘social partnership’ constitution. The conclusion emphasises the centrality of the Commission’s use of widespread consultation and academic research, and the unique asset of firm enforcement of the National Minimum Wage by HM Revenue and Customs.
    Keywords: minimum wage; social partnership; labour market regulation
    JEL: I3 J3 J8 K3 L5
    Date: 2005–10
  10. By: Luca Fiorito; John F. Henry
    Abstract: The paper sheds new light on John Bates Clark’s mature position on the “trust” issue. Access to previously unpublished 1911 testimony before the Interstate Commerce Committee of the U.S. Senate, it is shown that, although Clark relied generally on competitive forces to keep monopoly power in check, following the Standard Oil and American Tobacco cases of that year, he lost considerable faith in the power of his concept of “potential competition,” or latent competition that may or may not be realized. What he advocates here is government promotion of actual competition, largely through the dissolution of the “perilous” trusts and the development of a common pricing policy where all producers face the same price regimes in both the output and input markets. What is desired as an outcome is the promotion of what Clark terms “tolerant competition.” Tolerant competition is not the perfect competition of the neoclassical model, nor the rough-andready competition of the pre-1870 era. Rather, it is a live-and-let-live form of competition where big firms and small firms face the same pricing conditions and only efficiency determines the profit outcome.
    JEL: B13 B31
    Date: 2005–09
  11. By: John Cady; Anthony J. Pellechio
    Abstract: Data published in IMF country staff reports and International Financial Statistics (IFS) may differ for identical variables and, at times, users may be unaware of the reasons for these differences and lack the information needed to permit reconciliation. Such discrepancies stem principally from differences in the objectives of IMF country staff reports and their data requirements, on the one hand, and IFS, on the other. This paper presents the results of a study of the consistency of annual data on core statistical indicators required for Fund surveillance presented in the IMF's IFS and a sample of recently published Article IV consultation reports. The paper finds a significant incidence of apparent discrepancies for similarly defined variables.
    Keywords: Staff Reports , International Financial Statistics , Publications ,
    Date: 2005–03–15
  12. By: Nikolay Gueorguiev; Christoph Duenwald; Andrea Schaechter
    Abstract: Rapid credit growth in Bulgaria, Romania, and Ukraine has been driven by successful macroeconomic stabilization, robust growth, and capital inflows. While financial deepening is both expected and welcome, the recent expansions appear to have been excessive, as evidenced by widening current account deficits in Bulgaria and Romania, and prudential concerns in Ukraine. Policy responses have included attempts to both moderate credit growth and offset its impact on domestic demand, with mixed success thus far.
    Keywords: Transition economies , Bulgaria , Romania , Ukraine , Credit ,
    Date: 2005–07–08
  13. By: Luis Ignacio Jácome
    Abstract: This paper stresses three factors that amplified the 1990s financial crisis in Ecuador, namely institutional weaknesses, rigidities in public finances, and high financial dollarization. Institutional factors restricted the government's ability to respond in a timely manner and efficiently enough to prevent the escalation of the banking crisis and spurred the adoption of suboptimal policy decisions. Public finance rigidities limited the government's capacity to correct existing imbalances and the deteriorating fiscal stance associated with the costs of the financial crisis. Financial dollarization increasingly reduced the effectiveness of financial safety nets, fostered foreign currency demand, and accelerated a currency crisis, thereby further worsening the solvency of banks. These three factors reinforced each other, exacerbating costs as the economy went through a triple banking, currency, and fiscal crisis.
    Keywords: Financial crisis , Ecuador , Fiscal policy , Dollarization ,
    Date: 2004–02–09
  14. By: Rafel Boix Domenech (Departament d'Economia Aplicada, Universitat Autonoma de Barcelona)
    Abstract: El objetivo de la presente investigación es la identificación en España de Sistemas Locales de Trabajo (SLT) y potenciales Distritos Industriales (DI) a partir de la utilización de la metodología italiana del ISTAT. A pesar de que la estructura urbana y el sistema industrial español e italiano muestran rasgos muy similares, esta metodología no había sido aplicada en España debido a la falta de un censo industrial y de datos de movilidad laboral entre municipios. La aplicación es ahora posible al disponer de datos de movilidad laboral intermunicipal en el Censo de 2001 y utilizarse datos del DIRCE (Directorio Central de Empresas) para aproximar la dimensión de los establecimientos por sector y Sistema Local de Trabajo. La identificación para España de los distritos industriales permite el impulso de una nueva línea de política industrial que reconoce en las pymes y el territorio dos de los pilares fundamentales para el crecimiento de la productividad, y cuya aplicación se ve reforzada por la extensa experiencia italiana en la gestión de distritos industriales.
    Keywords: distritos industriales marshallianos; sistemas locales de trabajo; pequeña y mediana empresa; política industrial
    JEL: L60 R12 R23
    Date: 2005–09
  15. By: Agustin Carstens; Luis Ignacio Jácome H.
    Abstract: This study takes stock of the institutional reform of monetary policy in Latin America since the early 1990s. It argues that strengthening the legal independence of central banks, together with macroeconomic policies, was instrumental in reducing inflation from three-digit annual rates in the 1990s to single-digit territory in 2004. The paper also discusses the main challenges of monetary policy today, namely, achieving price stability, restoring market confidence in domestic currencies, and sticking to policy consistency despite adverse effects of the volatility of capital flows. Finally, recurrent banking crises and lack of fiscal discipline are identified as the main risks for the success of monetary policy in Latin America.
    Keywords: Inflation , Latin America , Bank reforms , Monetary policy ,
    Date: 2005–06–16
  16. By: Adolfo Barajas; Ralph Chami; Thomas F. Cosimano
    Abstract: Drawing from a unique data set comprising 2,893 banks and 152 countries over the period 1987 to 2000, we test whether the adoption of the Basel Accord by Latin American and Caribbean countries was responsible for the serious slowdowns in credit growth experienced by these countries. We find that, on average, both bank capitalization and lending activities in Latin America increased after Basel. Consequently, Basel did not seem to lead to an overall credit decline. However, we do find evidence that loan growth became more sensitive to some risk factors. Our study suggests that the upcoming adoption of Basel II might cause greater procyclicality of credit.
    Keywords: Bank supervision , Latin America , Capital markets , Basel Core Principles , Credit ,
    Date: 2005–03–04
  17. By: Arvind Panagariya
    Abstract: Bradford DeLong and Dani Rodrik have argued that reforms in India cannot be credited with higher growth because the growth rate crossed the 5 percent mark in the 1980s, well before the launch of the July 1991 reforms. This is a wrong reading of the Indian experience for two reasons. First, liberalization was already under way during the 1980s and played a crucial role in stimulating growth during that decade. Second, growth in the 1980s was fragile and unsustainable. The more systematic and systemic reforms of the 1990s, discussed here in detail, gave rise to more sustainable growth. The paper concludes by explaining why the growth rate in India nevertheless continues to trail that of China.
    Keywords: Economic reforms , India , China , Economic growth ,
    Date: 2004–03–24
  18. By: Priyadarshani Joshi; Jeromin Zettelmeyer
    Abstract: We compute realized transfers implicit in IMF lending from 1973-2003, based on 2003 IMF repayment projections and promised debt relief. IMF lending rates to high-and middleincome countries fell short of industrial country borrowing rates by 30-150 basis points over the period as a whole, but exhibited a small premium after 1987. The subsidy received by low-income and HIPC countries was much higher (400-600 basis points, respectively). In 2002 NPV terms, cumulative transfers were 12-15 percent of 2002 GDP for the HIPCs, 2-3 percent for low income countries, and less than ¾ percent for the emerging market countries.
    Keywords: Fund , Subsidies , HIPC Initiative , Heavily indebted poor countries ,
    Date: 2005–01–27
  19. By: Kivanç Ulusoy
    Abstract: This article aims to develop a coherent explanation of the impact of the EU on Turkey’s politics between 1987 (the year Turkey applied for EU membership) and 2004, providing a more profound analysis of Turkish political transformation within the framework of its relations with the EU. It integrates Moravcsiks’ work on the human rights regime in post-war Europe with Risse’s theory on communicative action in world politics to provide an alternative explanatory framework for recent political transformation in Turkey. It will be argued that the main dynamics driving recent democratisation in Turkey were its newfound location within the European human rights regime—a result of having been granted the right to individual petition to the European Court of Human Rights just before its 1987 membership application—and the increasing power of European argument as an alternative way of resolving domestic political conflicts in Turkey.
    Keywords: democratization; Europeanization; fundamental/human rights
    Date: 2005–10–15
  20. By: Massimiliano Bratti (University of Milan); Robin Naylor (University of Warwick); Jeremy Smith (University of Warwick)
    Abstract: As in many other countries, government policy in the UK has the objective of raising the participation rate of young people in higher education, while increasing the share of the costs of higher education paid by students themselves. A rationale for the latter element comes from evidence of a high private return to university undergraduate degrees. However, much of this evidence pre-dates the rapid expansion in the graduate population. In the current paper, we use evidence from a cohort of young people born in Britain in 1970 to update influential evidence on returns to a first degree based on a previous 1958 birth cohort. We also analyse variations in returns by degree subject and by class of degree. Our analysis incorporates proxying and matching, control function and propensity score matching methods. Among other results, we find (i) that the returns to a first degree for men changed very little across the two cohorts while the return for women declined substantially and (ii) evidence of differences in returns to a first degree according to subject area of study and class of degree awarded.
    Keywords: degree, return, subject, UK, university,
    Date: 2005–06–20
  21. By: Sebastian Krapohl
    Abstract: ""
    Date: 2005–03–01
  22. By: Alain Béraud (THÉMA - Théorie économique, Modélisation et Applications - CNRS : UMR7536 - Université de Cergy Pontoise)
    Abstract: Ricardo pensait que les coûts de production de l'or déterminent la valeur des lingots. Say soutient, contre lui, que l'offre et la demande déterminent le prix de l'or et de l'argent aussi bien que la valeur des monnaies. Il construit ainsi une théorie monétire qui est plus proche que celle de Ricardo des interprétations que l'on donne aujourd'hui de la théorie quantitative de la monnaie
    Keywords: Say; Ricardo; théorie quantitative de la monnaie; loi des débouchés; billets de banque
    Date: 2005–10–06
  23. By: J. C. Odling-Smee
    Abstract: This paper explains the IMF's impact on economic policies in Russia, focusing on where the IMF made a difference. The Russian economic and political leadership essentially determined economic policies. The IMF's influence was modest: it had only a limited impact on overall fiscal policy and the major structural reforms, but it had a positive impact on monetary policy. A tougher position on fiscal policy in 1996-98 might have produced a better outcome. The G-7's concerns weakened the IMF. However, the IMF played a major role in transferring knowledge about macroeconomic policymaking and implementation.
    Keywords: Transition economies , Russian Federation , Fund , Fiscal policy , Structural adjustment ,
    Date: 2004–09–02
  24. By: Charalambos G. Tsangarides; Pierre van den Boogaerde
    Abstract: This paper takes stock of the achievements toward integration in the West African Economic and Monetary Union (WAEMU) 10 years after the 1994 devaluation of the CFA franc. It investigates the lessons learned and evaluates progress toward economic convergence, examines the evolution of trade and competitiveness, and points to ways to remove impediments to greater integration. The paper concludes that a continued political commitment will be needed to overcome the important dissimilarities between WAEMU member countries that have limited the degree of convergence achieved to date, and to advance toward a full-fledged economic union.
    Keywords: CFA franc , West African Economic and Monetary Union , Trade Integration Mechanism ,
    Date: 2005–08–04
  25. By: Petia Topalova
    Abstract: This paper uses firm-level data to examine the performance of India's nonfinancial corporate sector since 1989 and evaluate its financial vulnerabilities. While promising trends in liquidity, profitability, and leverage of the sector emerged in the early 1990s, they experienced a reversal after 1996. Nonetheless, most indicators were still at comfortable levels, and there is evidence of improvement in 2002, the last year in our sample. However, a number of firms still face problems servicing their debt obligations, posing a risk to lenders. In particular, the aggregate interest coverage of the corporate sector indicates that potential nonperforming loans of the corporate sector remain high. This underscores the need for close monitoring of the corporate sector in the future.
    Keywords: Financial sector , India , Liquidity , Financial crisis ,
    Date: 2004–04–26
  26. By: Christoph Klingen; Jeromin Zettelmeyer; Beatrice Weder
    Abstract: We estimate ex post returns to emerging market debt by combining secondary-market prices with observed flows based on World Bank data. From 1970-2000, returns averaged 9 percent per annum, about the same as returns on a ten-year U.S. treasury bond. This reflects the combined effect of the 1980s debt crisis and much higher returns during 1989-2000. Annual returns since 1986 have been less volatile than emerging market equity returns but more volatile than returns on U.S. corporate or high-yield bonds. However, unlike returns on these bonds, emerging market debt returns do not seem significantly correlated with U.S. or world stock markets.
    Keywords: Debt , Capital flows , emerging markets ,
    Date: 2004–02–09
  27. By: M. Ayhan Kose; Guy Meredith; Christopher M. Towe
    Abstract: This paper provides a comprehensive assessment of the impact of NAFTA on growth and business cycles in Mexico. The effect of the agreement in spurring a dramatic increase in trade and financial flows between Mexico and its NAFTA partners, and its impact on Mexican economic growth and business cycle dynamics, are documented with reference both to stylized facts and recent empirical research. The paper concludes by drawing lessons from Mexico's NAFTA experience for policymakers in developing countries. The foremost of these is that in an increasingly globalized trading system, bilateral and regional free trade arrangements should be used to accelerate, rather than postpone, needed structural reform.
    Keywords: International trade agreements , Mexico , Economic growth , Business cycles ,
    Date: 2004–04–22
  28. By: Hristos Doucouliagos; Martin Paldam (Department of Economics, University of Aarhus, Denmark)
    Abstract: The AEL consists of empirical macro studies of the effects of development aid. At the end of 2004 it had reached 97 studies of three families, which we have summarized in one study each using meta-analysis. Studies of the effect on investments show that they rise by 1/3 of the aid – the rest is crowded out by a fall in savings. Studies of the effect on growth show an insignificant positive effect. Studies of the effect on growth, conditional on something else, have till now shown weak results. The Dutch Disease effect of aid has been ignored. The best aggregate estimate is that since its start in the early 1960s aid has increased the standard of living in the poor countries by 20%.
    Keywords: Aid effectiveness, meta study, accumulation, growth
    JEL: B2 E21 E22 F35
    Date: 2005–07–21
  29. By: Ari Aisen; Francisco José Veiga
    Abstract: While most economists agree that seigniorage is one way governments finance deficits, there is less agreement about the political, institutional, and economic reasons for relying on it. This paper investigates the main determinants of seigniorage using panel data on about 100 countries, for the period 1960-1999. Estimates show that greater political instability leads to higher seigniorage, especially in developing, less democratic, and socially polarized countries, with high inflation, low access to domestic and external debt financing and with higher turnover of central bank presidents. One important policy implication of this study is the need to develop institutions conducive to greater economic freedom as a means to lower the reliance on seigniorage financing of public deficits.
    Keywords: Political economy , Currency issuance , Money supply , Economic models ,
    Date: 2005–09–20

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