how can safety nets contribute to economic growth the paper provides an up to date and selective review of the literature on how social safety nets contribute to growth the evidence is carefully chosen to show how safety nets have the potential to overcome constraints on growth linked to market failures and is organized into 4 distinct pathways i encouraging asset accumulation by changing incentives and by addressing imperfections in financial markets caused by constraints in obtaining credit and from information asymmetries overcoming such failures helps households to invest into their human capital or productive assets ii failures in insurance markets especially in low income setting safety nets are assisting in managing risk both ex post and ex ante iii safety nets are overcoming failure to create assets and other local economy complementary factors to household level investments iv safety nets are shown to relax political constraints on policy safety nets have a dual objective of directly alleviating poverty through transfers to the poor and of triggering higher growth for the poor however the trade off between the dual objectives of equity and growth is not eliminated by the potential for productive safety nets this remains critical for designing social policies

child labor and schooling responses to anticipated income in south africa abstract forward looking unconstrained households make child labor and schooling decisions considering their permanent income and weighing the relative returns to child time in various potential activities the timing of anticipated changes in income should have no effect on child labor and schooling in a setting where households can borrow against permanent income however this study documents large increases in schooling attendance and declines in total hours worked when black south african families become eligible for fully anticipatable social pension income as an explanation the data are most consistent with liquidity constraints for black elder males forcing rural families into less schooling for boys than they would choose absent the constraint perhaps because of schooling costs

does industrial composition matter for wages a test of search and bargaining theory does switching the composition of jobs between low paying and high paying industries have important effects on wages in other sectors in this paper we build on search and bargaining theory to clarify a key general equilibrium channel through which changes in industrial composition could have substantial effects on wages in all sectors in this class of models wage determination takes the form of a social interaction problem and we illustrate how the implied sectoral linkages can be empirically explored using u s census data we find that sector level wages interact as implied by the model and that the predicted general equilibrium effects are present and substantial we interpret our results as highlighting the relevance of search and bargaining theory for understanding the determination of wages and we argue that the results provide support for the view that industrial composition is important for understanding wage outcomes

financial innovation the discovery of risk and the u s credit crisis abstract financial innovation and overconfidence about the risk of new financial products were key factors behind the 2008 u s credit crisis we show that a model with a collateral constraint in which learning about the risk of a new financial environment interacts with fisherian amplification produces a boom bust cycle in debt asset prices and consumption early realizations of a high borrowing ability regime turn agents optimistic about the persistence probability of this regime conversely the first realization of a low borrowing ability regime turns agents unduly pessimistic the model predicts large increases in household debt land prices and excess returns during 1998 2006 followed by a collapse

examining the reliability of self reported data on school participation abstract many studies evaluate the impacts of conditional cash transfer cct programs on schooling using self reports on enrollment and attendance even though there are reasons to doubt the reliability of these data in this paper we examine the extent to which school age girls overstate their school participation using administrative data from a cash transfer experiment in malawi and school attendance ledgers collected as part of the impact evaluation we find that while all study participants overstate their enrollment and attendance rates the extent to which this happens is significantly higher in the control group than the cct arm this finding implies that exclusive reliance on self reported school participation data can lead to a serious underestimation of actual program impacts we recommend that self reports be supplemented using alternative sources of data on school participation that are appropriate to the experiment at hand even if such efforts are likely to increase evaluation costs

news noise and fluctuations an empirical exploration a common view of the business cycle gives a central role to anticipations consumers and firms continuously receive information about the future which is sometimes news and sometimes just noise based on this information consumers and firms choose spending and because of nominal rigidities spending affects output in the short run if ex post the information turns out to be news the economy adjusts gradually to a new level of activity if it turns out to be just noise the economy returns to its initial state therefore the dynamics of news and noise generate both short run and long run changes in aggregate activity this view appears to capture many of the aspects often ascribed to fluctuations the role of animal spirits in affecting demand spirits coming here from a rational reaction to information about the future the role of demand in affecting output in the short run together with the notion that in the long run output follows a natural path determined by fundamentals in this paper we examine whether this view is consistent with the data we reach three main conclusions the first two methodological the third substantive structural vars typically cannot recover news and noise shocks the reason is straightforward if agents face a signal extraction problem and are unable to separate news from noise then the econometrician faced with either the same data as the agents or a subset of these data cannot do it either while structural estimation methods cannot recover the actual time series for news and noise shocks either they can recover underlying structural parameters and thus the relative role and dynamic effects of news and noise shocks estimation of both a simple model and then of a more elaborate dsge model suggest that agents indeed solve such a signal extraction problem and that noise shocks play an important role in determining short run dynamics recent efforts to estimate business cycle models in which expectations about the future play an important role include christiano et al 2010 and schmitt grohe and uribe 2012 those papers follow the approach of jaimovich and rebelo 2009 and model news as perfectly anticipated productivity changes that will occur at

the medium term effects of scholarships in a low income country despite progress in recent decades a substantial fraction of children in developing countries attain little schooling and many adults lack skills that are valued in the labor market we evaluate the medium term effects of a program that provided scholarships for three years to poor children upon graduation from elementary school in cambodia a low income country to do this we use a sharp regression discontinuity design we show that scholarships have substantial effects on school attainment by the time children would have been in grade 11 had they remained in school two years after they stopped being eligible for scholarships those who were offered scholarships have attained 0 6 more grades of completed schooling nevertheless we find no evidence that scholarships had significant effects on test scores employment earnings or the probability of getting married or having a child in adolescence

recent technological and economic change among industrialized countries insights from population growth cross country observations on the effects of population growth are used to show why differences in rates of growth in working age population may be a key to understanding differences in economic performance across industrialized countries over the period 1975 1997 versus 1960 1974 in particular we argue that countries with lower rates of adult population growth adopted new capital intensive technologies more quickly than their high population growth counterparts therefore allowing them to reduce their work time without deterioration of growth in output per adult

quantitative implications of a debt deflation theory of sudden stops and asset prices abstract this paper shows that the quantitative predictions of an equilibrium asset pricing model with financial frictions are consistent with key features of the sudden stop phenomenon foreign traders incur costs in trading assets with domestic agents and a collateral constraint limits external debt to a fraction of the market value of domestic equity holdings when this constraint does not bind standard productivity shocks cause typical real business cycle effects when it binds the same shocks cause strikingly different effects depending on the leverage ratio and asset market liquidity with high leverage and a liquid market the shocks force fire sales of assets and fisher s debt deflation mechanism amplifies the responses of asset prices consumption and the current account precautionary saving makes these sudden stops infrequent in the long run

conditional cash transfers and female schooling the impact of the female school stipend program on public school enrollments in punjab pakistan instead of mean tested conditional cash transfer cct programs some countries have implemented gender targeted ccts to explicitly address intra household disparities in human capital investments this study focuses on addressing the direct impact of a female school stipend program in punjab pakistan did the intervention increase female enrollment in public schools to address this question the authors draw on data from the provincial school censuses of 2003 and 2005 they estimate the net growth in female enrollments in grades 6 8 in stipend eligible schools impact evaluation analysis including difference and difference dd triple differencing ddd and regression discontinuity design rdd indicate a modest but statistically significant impact of the intervention the preferred estimator derived from a combination of ddd and rdd empirical strategies suggests that the average program impact between 2003 and 2005 was an increase of six female students per school in terms of absolute change and an increase of 9 percent in female enrollment in terms of relative change a triangulation effort is also undertaken using two rounds of a nationally representative household survey before and after the intervention even though the surveys are not representative at the subprovincial level the results corroborate evidence of the impact using school census data

does more cash in conditional cash transfer programs always lead to larger impacts on school attendance abstract there is considerable evidence that conditional cash transfer cct programs can have large impacts on school enrollment including in very poor countries however little is known about what features of program design account for the observed outcomes in this paper we analyze the impact of a program in cambodia that made payments of varying magnitude to otherwise comparable households the identification is based on a sharp regression discontinuity design we find that a modest cash transfer equivalent to approximately 2 of the consumption of the median recipient household had a substantial impact on school attendance approximately 25 percentage points a somewhat larger transfer did not raise attendance rates above this level

can miracles lead to crises the role of optimism in emerging markets crises emerging market financial crises are abrupt and dramatic usually occurring after a precrisis bonanza this paper develops an equilibrium asset pricing model with informational frictions in which crisis itself is a consequence of the investor optimism in the period preceding the crisis if preceded by a sequence of positive signals a small negative noise shock can trigger a downward adjustment in investors beliefs asset prices and consumption the magnitude of this downward adjustment increases with the level of optimism attained prior to the negative signal moreover with informational frictions asset prices display persistent effects in response to transitory shocks

school subsidies for the poor evaluating the mexican progresa poverty program abstract this paper evaluates how the progresa program which provides poor mothers in rural mexico with education grants has affected enrollment poor children who reside in communities randomly selected to participate in the initial phase of the progresa are compared to those who reside in other control communities pre program comparisons check the randomized design and double difference estimators of the program s effect on the treated are calculated by grade and sex probit models are also estimated for the probability that a child is enrolled controlling for additional characteristics of the child their parents local schools and community and for sample attrition to evaluate the sensitivity of the program estimates these estimates of program short run effects on enrollment are extrapolated to the lifetime schooling and the earnings of adults to approximate the internal rate of return on the public schooling subsidies as they increase expected private wages

making conditional cash transfer programs more efficient designing for maximum effect of the conditionality conditional cash transfer programs are now used extensively to encourage poor parents to increase investments in their children s human capital these programs can be large and expensive motivating a quest for greater efficiency through increased impact of the programs imposed conditions on human capital formation this requires designing the programs targeting and calibration rules specifically to achieve this result using data from the progresa randomized experiment in mexico this article shows that large efficiency gains can be achieved by taking into account how much the probability of a child s enrollment is affected by a conditional transfer rules for targeting and calibration can be made easy to implement by selecting indicators that are simple observable and verifiable and that cannot be manipulated by beneficiaries the mexico case shows that these efficiency gains can be achieved without increasing inequality among poor households

a little help may be no help at all size of scholarships and child labour in nepal in the empirical literature on child labour and income transfer programmes evidence has been lacking on whether and how the size of transfer influences the impact on child labour this paper fin

innis lecture explorations in medium run macroeconomics medium run macroeconomics refers to aggregate economic phenomena that manifest over periods of 10 to 25 years this area of research has emerged over the last decade as a new and distinct field of enquiry in this paper i overview a set of personal attempts aimed at understanding certain medium run phenomena such as changes in the wage structure changes in the world distribution of income per capita and changes in growth patterns across oecd countries the goal of the paper is to extract general lessons from these experiences in particular i will discuss why models of endogenous technological choice may be a good starting point for studying medium run phenomena jel classification e00 o00 explorations du monde macroeconomique a moyen terme la macroeconomie a moyen terme s attache aux phenomenes economiques agreges qui se manifestent sur des periodes de 10 a 25 ans ce champ de recherche a emerge au cours de la derniere decennie en tant que chantier nouveau et distinct dans ce texte je fais le tour d un ensemble de tentatives personnelles pour comprendre certains phenomenes de moyen terme comme les changements dans les structures de salaires les changements dans la distribution des revenus per capita dans le monde et les changements dans les patterns de croissance a travers les pays de l ocde l objectif de ce memoire est d extraire certaines lecons generales de ces experiences en particulier on discute des raisons pour lesquelles les modeles de choix technologiques endogenes constituent un bon point de depart pour l etude des phenomenes de moyen terme

demographics and recent productivity performance insights from cross country comparisons over the last few decades countries have experienced quite different patterns of productivity growth in this paper we emphasize the role of country level demographics in explaining these differences in particular looking over the period 1960 2002 we show that cross country data support the notion that starting in the late 1970s countries went through a period of technological transition that lasted at least until the mid 1990s for the fastest adjusting countries and is still proceeding for the slower adjusting countries the main claim of the paper is that the country level rate of labour growth was a key factor driving the speed of adjustment to the new technological paradigm implying that much of the cross country difference in economic performance over recent decades can be explained by demographic differences across countries as opposed to the many other factors emphasized in the literature jel classification o33 o41 demographie et productivite eclaircissements et conjectures derives de comparaisons entre pays au cours des quelques dernieres decennies divers pays ont fait l experience de patterns differents dans la croissance de la productivite dans ce memoire les auteurs presentent une interpretation des patterns recents de productivite du travail qui met l accent sur la demographie du pays comme facteur explicatif de ces differences en particulier pour la periode 1960 2002 on montre que les donnees comparatives entre pays supportent l hypothese que a partir de la fin des annees 1970 les pays ont vecu une periode de transition technologique qui a dure jusqu au milieu des annees 1990 pour les pays qui se sont ajustes le plus vite et qui est encore en cours pour ceux qui se sont ajustes plus lentement la proposition principale mise de l avant dans le memoire est que la croissance de la main d oeuvre d un pays a ete un facteur cle dans la definition de la vitesse d ajustement au nouveau paradigme technologique ceci suggere qu une bonne partie des differences de performance economique entre pays au cours des dernieres decennies est attribuable aux differences dans la demographie de ces pays plutot qu aux multiples facteurs mentionnes habituellement dans la litterature compte tenu du fait que la transition technologique met du temps a s accomplir 20 a 30 ans cette perspective suggere que qu il faut etre extremement prudent quand on se fonde sur des comparaisons de croissance de productivite entre pays et sur des periodes courtes de 5 a 10 ans pour tirer des conclusions quant aux politiques economiques a mettre en place

assessing the impact of a school subsidy program in mexico using a social experiment to validate a dynamic behavioral model of child schooling and fertility this paper uses data from a randomized social experiment in mexico to estimate and validate a dynamic behavioral model of parental decisions about fertility and child schooling to evaluate the effects of the progresa school subsidy program and to perform a variety of counterfactual experiments of policy alternatives our method of validation estimates the model without using post program data and then compares the model s predictions about program impacts to the experimental impact estimates the results show that the model s predicted program impacts track the experimental results our analysis of counterfactual policies reveals an alternative subsidy schedule that would induce a greater impact on average school attainment at similar cost to the existing program

do education and health conditions matter in a large cash transfer evidence from a honduran experiment the paper analyzes a new honduran conditional cash transfer experiment bono 10 000 in which 150 poor villages of 300 were treated the transfers were much larger in size than an earlier experiment galiani mcewan 2013 but yielded smaller full sample effects on school enrollment child labor participation and measures of health service use one explanation is that bono 10 000 did not apply conditions to children only one child in eligible households was subject to the education condition and young children and mothers were only subject to health conditions in the absence of older children consistent with this we find a large effect on enrollment and a nearly off setting one on child labor among only children and smaller and insignificant effects on children in larger households we only find significant effects on health service use among children and mothers in the absence of older children despite a much smaller household transfer the heterogeneity does not appear to be driven by correlated variables such as household size child age or poverty

agricultural spillover effects of cash transfers what does lewie have to say lewie simulations suggest that there are positive production spillovers fromsctprograms in nominal terms total production multipliers are always significantly greater than zero and income multipliers are always greater than one however real impacts depend on supply elasticities and market closure assumptions to date studies do not point to inflationary impacts of scts opm 2012a opm 2012b although the evidence on price effects is very limited this suggests that simulation 2 best characterizes the production impacts of scts which target poor economies with under utilized factors this simulation reveals a minimal inflationary impact and real production value added multipliers of 1 58 ksh per shilling transferred a key finding of lewie is that the production impacts are concentrated in nonbeneficiary households this is not surprising given the program s eligibility criteria which target the most asset and labor constrained households rcts focusing on treated households are likely to miss many or most of the productive impacts of social cash transfer programs this finding reaffirms the importance of a local economy wide approach if we wish to capture the transfers full impact finally our findings underline the importance of local supply constraints in shaping the impacts of transfer programs in the high unemployment environment characterizing rural kenya we believe it unlikely that there are significant labor constraints on production nevertheless production constraints limit program benefits particularly in nonbeneficiary households which are far and away the main source of new supply when production bottlenecks generate inflation transfers may even negatively affect some households interventions focusing on local production constraints in nonbeneficiary as well as beneficiary households may be needed to unlock the productive potential of scts

preferences for community based targeting field experimental evidence from zambia summary community based targeting is frequently used in low income countries to identify the poor yet evidence about its performance is inconclusive and factors of success are understudied drawing on controlled field experiments this paper studies how individual targeting preferences translate into group outcomes and which determinants of progressiveness prevail in rural zambia it finds that individuals pursue poverty motives but act selfishly if not restrained egalitarianism and favoritism are not as pronounced as critics suggest even if individual and group allocations vary considerably this does not result in individuals dissatisfaction better access to information and greater trust make targeting outcomes more progressive

learning and shifts in long run productivity growth abstract an extensive literature has analyzed the macroeconomic effects of shocks to the level of aggregate productivity however there has been little corresponding research on sustained shifts in the growth rate of productivity in this paper we examine the effects of shocks to productivity growth in a dynamic general equilibrium model where agents do not directly observe whether shocks are transitory or persistent we show that an estimated kalman filter model using real time data describes economists long run productivity growth forecasts in the united states extremely well and that filtering has profound implications for the macroeconomic effects of shifts in productivity growth

a theory of demand shocks this paper presents a model of business cycles driven by shocks to consumer expectations regarding aggregate productivity agents are hit by heterogeneous productivity shocks they observe their own productivity and a noisy public signal regarding aggregate productivity the public signal gives rise to noise shocks which have the features of aggregate demand shocks they increase output employment and inflation in the short run and have no effects in the long run numerical examples suggest that the model can generate sizable equilibrium dsge models of the business cycle include a large number of shocks to technol ogy monetary policy preferences etc but typically do not include expectational shocks as independent drivers of short run fluctuations 1 this paper explores the idea of expectation driven cycles looking at a model where technology determines equilibrium output in the long run and consumers receive noisy signals about technology in the short run the presence of noisy signals produces expectational errors this paper studies the role of these expectational errors in gener ating volatility at business cycle frequencies the model is based on two ingredients first consumers take time to recognize permanent changes in aggregate fundamentals although they may have good information on the current state of the individual firm or sector where they operate they have only limited information regarding the long run determinants of aggregate activity second consumers have access to public information that is relevant to estimate long run productivity this includes news about technological innovations publicly released macroeconomic and sectoral statistics financial market prices and public statements by policy makers however these signals provide only a noisy forecast of the long run effects of technological innovations this opens the door to noise shocks which induce consumers to temporarily overestimate or underestimate the productive capacity of the economy

cash or condition evidence from a cash transfer experiment this brief summarizes the results of a gender impact evaluation study entitled cash or condition evidence from a cash transfer experiment conducted from 2008 to the end of 2009 in malawi the study observed the impact of conditionality in cash transfer programs with two distinct interventions unconditional transfers uct arm and transfers conditional on school attendance cct arm targeted at adolescent girls in malawi on individual level dropout rates declined in both treatment arms however the uct arm is 43 percent as large as the cct arm the fraction of days attended in the cct arm is significantly higher than the uct cognitive ability math and english scores significantly improve for the cct but not for the uct probability of pregnancy and marriage were much lower in the uct arm the delays in marriage and fertility in the uct arm are found entirely among adolescent girls who dropped out of school after the start of the intervention improvements in human capital for the recipients of the cct are achieved at the cost of worse outcomes for people who drop out of school funding for the study derived from the global development network bill and melinda gates foundation national bureau of economic research nber africa project world bank research support budget grant world bank knowledge for change trust fund world development report 2007 small grants fund spanish impact evaluation fund and gender action plan trust fund

conditional cash transfers the case of progresa oportunidades conditional cash transfer cct programs innovate by conditioning transfers to poor families on investments in the human capital of children and other family members the mexican cct program progresa oportunidades began in 1997 and has served as a model for many of the now over sixty countries with ccts around the world in large part due to its initial evaluation with an experimental design and numerous follow up studies this article reviews the literature on the development evaluation and findings of progresa oportunidades summarizing what is known about program effects taking into account corrections for multiple hypothesis testing

a credible approach for measuring inframarginal participation in energy efficiency programs abstract economists have long argued that many recipients of energy efficiency subsidies may be non additional getting paid to do what they would have done anyway demonstrating this empirically has been difficult however because of endogeneity concerns and other challenges in this paper we use a regression discontinuity analysis to examine participation in a large scale residential energy efficiency program comparing behavior just on either side of several eligibility thresholds we find that program participation increases with larger subsidy amounts but that most households would have participated even with much lower subsidy amounts the large fraction of inframarginal participants means that the larger subsidy amounts are almost certainly not cost effective moreover the results imply that about half of all participants would have adopted the energy efficient technology even with no subsidy whatsoever

emerging market business cycles learning about the trend abstract emerging market business cycles feature a higher variability of consumption relative to output and a strongly countercyclical trade balance an equilibrium business cycle model in which agents learn to distinguish between the permanent and transitory components of total factor productivity shocks using the kalman filter accounts for these features calibrated to mexico the model accounts for the behavior of consumption and the trade balance for a wide range of variability and persistence of permanent shocks relative to transitory shocks estimation for mexico and canada suggests more severe informational frictions in emerging markets than in developed economies