entrepreneurship and income inequality in southern ethiopia this article uses inequality decomposition techniques in order to analyze the consequences of entrepreneurial activities to household income inequality in southern ethiopia a uniform increase in entrepreneurial income reduces per capita household income inequality this implies that encouraging rural entrepreneurship may be favorable for both income growth and income distribution such policies could be particularly successful if directed at the low income low wealth and relatively uneducated segments of the society

the value of corporate voting rights and control a cross country analysis this paper measures the value of corporate voting rights specifically of the control block of votes in a sample of 661 dual class firms in 18 countries in 1997 a consistent measure across countries is proposed the measure is adjusted for takeover probability block holding costs and dividend and liquidity differences between the share classes the value of controlblock votes varies widely across countries it is close to half of firm market value in south korea andclose to zero in finland the value of control block votes is interpretedas a lower bound for actual private benefits of the controlling shareholder the legal environment law enforcement investor protection takeover regulations andpower concentrating corporate charter provisions explain 68 of the cross country variation in the value of control block votes

international portfolio choice and political instability risk a multi objective approach abstract the benefits derived from international portfolio diversification into foreign nations including the less developed countries are well documented yet this practice is discouraged due to market imperfections such as political instability in practice nations may be differentiated further by many aspects such as border controls or political and social trends which constrain private transactions and financial decisions this paper attempts to examine 1 whether the home asset bias in a portfolio holding is associated with higher political instability risk and 2 to what extent international diversification among stocks in the presence of such risk outperforms domestic stock portfolios using alternative instability risk proxies in the context of a discrete time version of mean variance framework we corroborate the impact of this type of risk on international portfolio investment decisions

growth and poverty reduction in ethiopia evidence from household panel surveys abstract the paper investigates the impact of growth on poverty in ethiopia by analysing panel data covering 1994 97 a period of economic recovery driven by peace good weather and much improved macroeconomic management the analysis of poverty shows land ownership education type of crops planted occupations in urban areas dependency ratios and location to be important determinants the characteristics of households that fell into or escaped from poverty are examined in addition the profile of those that remained poor during the period the chronic poor is looked at in rural areas the cultivation of a nontraditional export crop chat has significantly improved the welfare of households primary education plays a more important role in improving welfare in urban than in rural areas decomposition of changes in poverty into growth and redistribution components indicates that potential poverty reduction due to the increase in real per capita income was to some extent counteracted by worsening income distribution the implications of the results for a propoor policy are discussed

why do foreigners invest in the united states abstract why are foreigners willing to invest over 2 trillion per year in the united states this paper tests various hypotheses and finds that standard portfolio allocation models and diversification motives are poor predictors of foreign holdings of u s liabilities instead foreigners hold greater shares of their investment portfolios in the united states if they have less developed financial markets the magnitude of this effect decreases with income per capita countries that trade more with the united states also have greater portfolio shares in u s equity and bond markets these results support recent theoretical work on the role of financial development in sustaining global imbalances and have important implications for whether the united states can continue to attract sufficient financing from abroad without major changes in asset prices and returns especially in bond markets

the modern history of exchange rate arrangements a reinterpretation we develop a novel system of reclassifying historical exchange rate regimes one key difference between our study and previous classifications is that we employ monthly data on market determined parallel exchange rates going back to 1946 for 153 countries our approach differs from the imf official classification which we show to be only a little better than random it also differs radically from all previous attempts at historical reclassification our classification points to a rethinking of economic performance under alternative exchange rate regimes indeed the breakup of bretton woods had less impact on exchange rate regimes than is popularly believed

the role of education on the adoption of chemical fertiliser under different socioeconomic environments in ethiopia studies on input adoption consider education as one of the most important factors that affect adoption decisions however very little is known about the spill over effect of intra household education on the adoption process and about the impact of education on adoption decisions under different socioeconomic conditions we investigate these two issues using a discrete choice model the results indicate that the decision making process is a decentralised one in which educated adult members of the household actively participate in the decision making process this casts doubt on the traditional assumption that the household head is the sole decision maker the results reveal that there is a substantial and statistically significant intra household spill over effect of education on the adoption decision of households the results of the study also show that the coefficient of the education and the environment interaction variable is negative and statistically significant this demonstrates that education and socioeconomic environments could be substitutes in modern environments and complementary in traditional ones this implies that the expansion of education in traditional areas may be more attractive than in modern areas since education is usually the only means to enhance the ability of farmers to acquire synthesise and respond to innovations such as chemical fertiliser

trends in poverty and destitution in wollo ethiopia 1 abstract according to several studies poverty in rural ethiopia has fallen significantly since the early 1990s thanks to improved governance and economic liberalisation policies this paper presents several arguments that challenge this view the first questions the methodological foundations of the data from which these positive trends are derived we argue that the original sampling frame was too small and unrepresentative to provide a basis for extrapolating national poverty levels or trends the second argument questions the conceptual underpinnings of these studies poverty estimates based on levels of current consumption fail to allow for non income dimensions of wellbeing nor for confounding factors such as seasonality annual rainfall and food aid receipts the third strand considers alternative sources of data on changes in wellbeing in ethiopia recent qualitative studies report that the poor perceive themselves as poorer and more vulnerable than poverty headcount figures suggest finally we

the effect of prime age adult mortality on household composition and consumption in rural ethiopia abstract using panel data from ethiopia covering 1994 1997 we estimate the impact of prime age adult mortality on household composition household expenditures and dietary diversity we employed propensity score matching with a difference in difference estimator to control for endogeneity of mortality to the outcomes of interest households losing a productive adult did not replenish the lost labor regardless of economic status sex or status of the deceased adult with the exception of non poor households adult mortality resulted in increased dependency ratios but did not adversely affect households expenditure patterns total food and non food expenditures regardless of the sex and position of the deceased and the economic status of the households although food expenditures were protected a decline in dietary diversity especially among the poorest households reflected increased nutrition insecurity associated with adult mortality

equivalence scale relativities and the extent of inequality and poverty most inequality and poverty theory analyzes equivalent income distributions for homogeneous populations incomes are assumed to be deflated by an equivalence scale that accounts for differences in needs between households yet in practice there is no consensus about what the appropriate equivalence scale is the authors analyze how the choice of equivalence scale affects inequality and poverty measures and show that there is a systematic relationship between equivalence scale generosity and the extent of inequality and poverty they consider most of the measures in common use and provide some empirical illustrations copyright 1992 by royal economic society

new ways of looking at old issues inequality and growth abstract the paper uses new cross country data on income and asset land distribution to show that i there is a strong negative relationship between initial inequality in the asset distribution and long term growth ii inequality reduces income growth for the poor but not for the rich and iii available longitudinal data provide little support for the kuznets hypothesis policies that increase aggregate investment and facilitate acquisition of assets by the poor might thus be doubly beneficial for growth and poverty reduction

daily cross border equity flows pushed or pulled we investigate the conditions under which an intertemporal equilibrium model based on investors portfolio decisions can explain the dynamics of high frequency equity flows our model shows that w

the rationality of asset allocation recommendations the popular finance literature describes the asset allocation decision as one of the most important factors in determining investment performance this article reviews the implications of modern portfolio theory for the asset allocation decision and then examinesthe recommendations of some leading financial experts to see if they are consistent with theory

discussion of financial globalization governance and the evolution of home bias kets generally referred to as home bias is a well established empirical reg ularity french and poterba 1991 cooper and kaplanis 1994 tesar and werner 1995 lewis 1999 and many others the original findings have been replicated across a wide spectrum of countries and investor types var ious explanations have been examined over the years beginning with trans action costs and frictions then moving into informational costs kang and stulz 1997 suh 2001 ahearne griever and warnock 2004 doidge karolyi and stulz 2004 despite this long and persistent history of empir ical investigation the literature in the area has difficulty providing a robust explanation for this pervasive phenomenon financial globalization governance and the evolution of home bias by kho stulz and warnock 2008 henceforth ksw provides a potential explanation for the home bias and investigates that explanation with tests based on two different data sets they suggest that the observed home bias is a result of an optimal corporate ownership theory where firms in poor governance countries are heavily owned by insiders or large shareholders with the ability to monitor both types of shareholdings reduce the float

portfolio preferences of foreign institutional investors the authors examine the relationship between foreign investment and the attributes of emerging market countries and firms in which investment is made their findings indicate that countries with higher levels of economic development and floating exchange rate regimes tend to have greater ability to obtain foreign capital after controlling for the country s level of economic development they find that firms in countries with stronger shareholder rights and legal framework attract more foreign capital the authors also find that foreign institutions allocate more of their assets to firms with better corporate governance after controlling for other country and firm attributes the main firm level measures of corporate governance are derived from accounting quality variables their results imply that steps can be taken both at the country and the firm level to create an environment conducive to foreign portfolio investment the analysis is based on a unique dataset consisting of equity positions of u s mutual funds in emerging markets

cultural influences on home bias and international diversification by institutional investors abstract we investigate determinants of international diversification in institutionally managed portfolios from more than 60 countries survey based country specific variables on cross cultural behaviors help to explain both home bias and diversification among foreign equities in particular investment funds from countries characterized by higher uncertainty avoidance behavior display greater home bias and are less diversified in their foreign holdings portfolios from countries with higher levels of masculinity and long term orientation display lower levels of home bias and portfolios from countries with higher levels of masculinity are more diversified abroad portfolios from culturally distant countries invest less abroad and underweight culturally distant target markets the economic significance of cultural variables is high and comparable in magnitude to geographical distance a consistent influence on foreign diversification in prior studies culture impacts investor behavior directly and not merely though indirect channels such as legal and regulatory framework

poverty in african households the limits of survey and census representations african poverty statistics depend on household level measurements from survey data making the definition of household of critical importance detailed case studies from tanzania and burkina faso explore 1 understandings of household membership and ambiguities and 2 how well survey definitions capture households as economic units and the implications for household size and responses to and mitigation of poverty we develop an analytic framework of open and closed households open households cope with poverty using flexibility movement and extra household networks but are poorly represented by survey data closed households are likely to be better described by survey data

is local bias a cross border phenomenon evidence from individual investors international asset allocation abstract extant literature consistently documents that investors tilt their domestic equity portfolios towards regionally close stocks local bias we hypothesize that individual investors local bias is not limited to the domestic sphere but instead also determines their international investment decisions our results confirm the presence of a cross border local bias specifically we show i that the stockholdings of individual investors living within regional proximity to a foreign country display a significantly lower foreign investment bias towards investment opportunities in that country and ii that this drop in foreign investment bias levels is disproportionately driven by investments in regionally close neighbor country companies the impact of cross border local bias on investors bilateral foreign equity investments is economically significant and holds even after controlling for previously identified explanations of international asset allocation

stress testing the equity home bias a turnover analysis of eurozone markets abstract shifts in equity turnover happen on and around holidays because rationally bounded investors become distracted their pattern reveals a persistent equity home bias even in the eurozone a stress test case for the survival of this bias given the high level of economic and financial development and integration in this area the bias is greater for small caps because investors are reluctant to hold this class of foreign asset our study corroborates calendar anomalies in trading volumes but refutes the hypothesis regarding turnover sensitivity to stock returns common in the empirical and theoretical literature based on investor heterogeneity and short sale constraints our results reveal vanishing cost asymmetries in taking long rather than short positions

equity home bias and corporate disclosure abstract i show that more comprehensive corporate disclosure reduces investors uncertainty about domestic companies payoffs at no cost thereby decreasing investors equity home bias toward a country since investors should base their investment decisions on valid and easily interpretable company information only more comprehensive disclosure will reduce the home bias only if domestic securities law is sufficiently stratified and domestic companies use international accounting standards using panel data for 38 countries from 2003 to 2008 i find that more comprehensive disclosure reduces investors home bias though significantly only for countries that sufficiently enforce their securities law and implement international accounting standards

financial education investor protection and international portfolio diversification abstract this paper investigates the effect of financial education on foreign portfolio investment we show that higher investor financial education fosters international diversification and that its role is particularly pronounced where information problems and monitoring costs are likely to be more severe that is in countries where protection of minority shareholders rights is weaker we interpret this evidence as supportive of the conjecture that financial education lessens the informational constraints binding foreign investors

foreign institutional investment is governance quality at home important abstract this paper examines the investment preferences of foreign institutional investors investing in the u s market we analyse both firm and country level determinants that influence the foreign institutional investors allocation choices at the country level we find that the governance quality in a foreign institutional investor s home country is a determinant of their decision to invest in the u s market our findings indicate that investors who come from countries with governance setups similar to that of the u s invest more in the united states the investment levels though are more pronounced for countries with governance setups just below that of the u s our results are consistent with both the flight to quality and familiarity arguments and help reconcile prior contradictory empirical evidence at the firm level we present unequivocal evidence in favour of the familiarity argument foreign institutional investors domiciled in countries with high governance quality prefer to invest in u s firms with high corporate governance quality this effect is primarily driven by grey non monitoring institutional investors

disentangling the incentive and entrenchment effects of large shareholdings this article disentangles the incentive and entrenchment effects of large ownership using data for 1 301 publicly traded corporations in eight east asian economies we find that firm value increases with the cash flow ownership of the largest shareholder consistent with a positive incentive effect but firm value falls when the control rights of the largest shareholder exceed its cash flow ownership consistent with an entrenchment effect given that concentrated corporate ownership is predominant in most countries these findings have relevance for corporate governance across the world

economic development legality and the transplant effect abstract we analyze the determinants of effective legal institutions legality using data from 49 countries we show that the way the law was initially transplanted and received is a more important determinant than the supply of law from a particular legal family countries that have developed legal orders internally adapted the transplanted law and or had a population that was already familiar with basic principles of the transplanted law have more effective legality than countries that received foreign law without any similar predispositions the transplanting process has a strong indirect effect on economic development via its impact on legality while the impact of particular legal families is weaker and not robust to alternative legality measures

work contracts and earnings inequality the case of chile great social inequality has been one of the worrisome features of economic development in latin america this study focuses on chile one of latin america s fastest growing economies with one of the highest levels of income inequality during the 1990s using micro level data from the 1994 and 2000 encuestas de caracterizacion socio economica this article examines the role of work contracts in explaining male and female earnings and earnings inequality among wage and salary workers over the second half of the 1990s the analysis distinguishes between wage and salary work without a work contract referred to as informal work and wage and salary work with a work contract within the latter group the study further differentiates by the type of work contract held such as permanent and a variety of contingent work contracts the findings reveal that the majority of employees in informal and contingent wage and salary work arrangements earned significantly less than their permanent counterparts additiona

investor protection and corporate governance recent research has documented large differences among countries in ownership concentration in publicly traded firms in the breadth and depth of capital markets in dividend policies and in the access of firms to external finance a common element to the explanations of these differences is how well investors both shareholders and creditors are protected by law from expropriation by the managers and controlling shareholders of firms we describe the differences in laws and the effectiveness of their enforcement across countries discuss the possible origins of these differences summarize their consequences and assess potential strategies of corporate governance reform we argue that the legal approach is a more fruitful way to understand corporate governance and its reform than the conventional distinction between bank centered and market centered financial systems

how robust is a poverty profile comparison of poverty such as when poverty is greatest typically matter far more for policy choices than do aggregate measures of poverty such as how many people are deemed poor the authors examine alternative methods for constructing poverty profiles focusing on their internal consistency and appropriateness for guiding policy none is perfect but some methods appear to be preferable to others when the aim is to inform policies for fighting absolute consumption poverty a case study on indonesia reveals that the country s regional and sectoral poverty profile is highly sensitive to some aspects of measurement but quite robust to others

direct foreign ownership institutional investors and firm characteristics in this paper we characterize foreign ownership using a dataset of ownership and attributes of swedish rms the analysis reveals that foreigners show a preference for large rms rms paying low dividends and rms with large cash positions on their balance sheets when we further analyze the preference for large rms we nd that market liquidity and presence in international markets measured through export sales or listings on other exchanges seem to characterize foreign holdings better than rm size alone foreigners also tend to underweight rms with a dominant owner importantly we demonstrate that most of the features associated with foreign ownership are driven by the fact that foreign investors typically are mutual funds or other institutional investors hence we identify an institutional investor bias rather than a foreign investor bias finally using ownership data on a country level we conclude that the results are particularly strong among u s investors who comprise the largest institutions among foreign investors 2001 elsevier science s a all rights reserved jel classixcation g1 g15

do countries matter for voluntary disclosure evidence from cross listed firms in the us this paper explores the likelihood and consequences of voluntary disclosure proxied by management earnings forecasts for a sample of 1005 cross listed firms in the us from 40 countries over the period 1996 2005 our study is grounded in a three tiered conceptual framework that relies on insights from and implications of institutional theory agency theory and bonding theory to explain the costs and benefits associated with voluntary disclosure consistent with institutional theory and agency theory our results indicate that disclosure likelihood increases with the strength of cross listed firms home country legal institutions and is also influenced by us listing type product market internationalization and ownership structure further our results show that voluntarily committing to us disclosure practice is associated with lower information asymmetry which supports reputational bonding theory overall our study provides a costs and benefits framework to understand voluntary disclosure practices in an international context our work also presents evidence that home country institutions still matter when foreign firms migrate into the us financial market which highlights the importance of country level institution development

does corporate governance risk at home affect investment choices abroad abstract disparity between control and ownership rights gives rise to the risk of tunneling by the controlling shareholder and is prevalent in many emerging market economies and present in some developed countries at the same time international investors come from different countries whose home markets are characterized by varying degrees of control ownership disparity this paper studies whether this difference in investors home countries affects their portfolio choice in an emerging market it combines two unique data sets on ownership and control in business groups and investor stock level foreign investment in korea a key finding is that investors from low disparity countries disfavor high disparity stocks in korea but investors from high disparity countries are indifferent moreover investors from low disparity countries became averse to disparity only after the asian financial crisis these results suggest that the nature of corporate governance in international investors home countries affects their portfolio choice abroad and therefore these investors should not be lumped together in the analyses of their portfolio choice

macro and micro perspectives of growth and poverty in africa this article reviews trends in poverty economic policies and growth in a sample of african countries during the 1990s drawing on the better household data now available experiences have varied some countries have seen sharp drops in income poverty whereas others have witnessed marked increases in some countries overall economic growth has been pro poor and in others not but the aggregate numbers hide systematic distributional effects taking both macro and micro perspectives of growth and poverty in africa the article draws four key conclusions first economic policy reforms improving macroeconomic balances and liberalizing markets appear conducive to reducing poverty second market connectedness is crucial to enable participation in the gains from economic growth some regions and households by virtue of their remoteness were left behind when growth picked up third education and access to land emerge as key private endowments to help households benefit from new economic opportunities finally rainfall variations and ill health have profound effects on poverty outcomes underscoring the significance of social risk management in poverty reduction strategies in africa

roads out of poverty assessing the links between aid public investment growth and poverty reduction the authors develop a macroeconomic framework that captures links between aid public investment growth and poverty public investment is disaggregated into education infrastructure and health and affects both aggregate supply and demand dutch disease effects are captured by accounting for changes in the relative price of domestic goods the authors assess the impact of policy shocks on poverty by linking the model to a household survey they calibrate the model for ethiopia and simulate the changes in the allocation of aid and public investment the authors also calculate the amount by which foreign aid should increase to reach the poverty targets of the millennium development goals

poverty transition and persistence in ethiopia 1994 2004 summary this study analyzes the persistence of poverty in both rural and urban areas in ethiopia during 1994 2004 the key finding is that households move frequently in and out of poverty but the difficulty of exiting from poverty like the chance of avoiding slipping back increases with the time spent in that state and varies considerably between male and female headed households our results imply that it is important to design anti poverty policies both to hinder households from slipping into extreme poverty and to minimize the length of the poverty spell for households once they have fallen into it

a cultural explanation of the foreign bias in international asset allocation abstract this paper examines the foreign bias in international asset allocation following extant literature in behavioral finance we argue that a society s culture and the cultural distance between two markets play an important role in explaining the foreign bias in particular we hypothesize that the degree of a nation s uncertainty avoidance affects the foreign bias more uncertainty avoiding countries allocate less to foreign markets as does the degree of a country s individualism in individualistic countries performance is more directly attributed to a person and less to teams causing these individuals to be more aggressive in their foreign asset allocations we further expect that the degree of cultural distance between two countries affects the amount of money allocated to that market based on extensive robustness analyses we find support for our hypotheses on the role of culture in international asset allocation

the effects of market segmentation and investor recognition on asset prices evidence from foreign stocks listing in the united states non u s firms cross listing shares on u s exchanges as american depositary receipts earn cumulative abnormal returns of 19 percent during the year before listing and an additional 1 20 percent during the listing week but incur a loss of 14 percent during the year following listing we show how these unusual share price changes are robust to changing market risk exposures and are related to an expansion of the shareholder base and to the amount of capital raised at the time of listing our tests provide support for the market segmentation hypothesis and merton s 1987 investor recognition hypothesis the globalization of u s capital markets has accelerated dramatically in the past decade increasing numbers of companies from overseas have chosen to either raise capital through global equity issues or prepare for future capital raising by way of cross listings on u s exchanges as of 1997 about 1 300 non u s companies have listed their shares for trading on the new york stock exchange nyse the american exchange amex the national association of securities dealers automation quotation nasdaq system or

combining income and assets measures to include the transitory nature of poverty in assessments of forest dependence evidence from the democratic republic of congo abstract a considerable amount of research on poverty environment relations in developing countries under the cifor pen initiative focuses on household income generation from forests using total annual income as a measure of poverty however income alone produces a static picture in a snapshot of time while poverty is a dynamic state that can be a transitory phenomenon using income only also fails to consider that households can liquidate asset to overcome income shocks here we show that using asset quintiles measured by value of assets produce a distinctly different pattern than the commonly observed negative relation between income and forest dependence we then present an approach enabling categorization of households as chronic or transient poor transient rich and rich providing a more nuanced picture than that provided by cifor pen studies so far the validity of groupings is tested by comparing household characteristics and exposure to shocks we then show that the chronic poor are most reliant on forest income while the transient poor consume a higher share of harvested forest products the transient rich have higher agricultural productivity and absolute forest income rich households relies more on business based on the results we suggest recommendations for improving future studies on poverty environment relations

investor protection and convertible debt design abstract an important issue that firms consider when designing convertible debt is to specify security features such as conversion ratio maturity date and call period following lewis et al lewis m rogalski r seward j 2003 industry conditions growth opportunities and market reactions to convertible debt financing decisions journal of banking and finance 27 153 181 we employ a single measure that simultaneously considers all of these features the expected probability measured at issue date that the convertible will be converted to equity at maturity we find that firms in countries with stronger shareholder rights issue convertible debt with a higher expected probability of converting to equity the positive association between the expected probability of conversion and shareholder rights is less pronounced in firms for which ownership structures create potentially high managerial agency costs specifically in countries with stronger shareholder rights firms with higher separation of control rights and cash flow rights tend to issue convertibles with lower probability of conversion furthermore we find that large non management block ownership strengthens the likelihood of issuing convertible debt with higher probability of conversion in countries with stronger shareholder rights in contrast firms in countries with stronger creditor rights issue convertibles with lower probability of conversion we also document that the negative association between creditor rights and probability of conversion is more pronounced in firms with higher separation of control rights and cash flow rights

investor base and corporate borrowing evidence from international bonds abstract we examine international bond issues by us firms to study the benefits of investor taste for cross border security issuances we proxy for firms international investor taste with the fraction of prior international bond holding in firms domestic and international bonds and find that international investor demand increases with such taste moreover the offering yield spreads on international bonds are lower than domestic offering yield spreads for these internationally recognized firms and they have higher probability of issuing internationally such international recognition may occur for instance if the diversification benefits of adding the security to investor s portfolio outweigh the negative effects of higher renegotiation costs for international compared to domestic investors

the kuznets process and the inequality development relationship abstract in his classic paper on economic growth and income inequality kuznets discussed the process of population shift from traditional to modern activities as the basis for a theory of distributional change during the course of development in this paper we present a formalization of the kuznets process conduct a general analysis of distributional change under this process and derive the functional forms of and conditions for a turning point in the inequality development relationship for six commonly used indices of inequality the functional form appropriate to each index is then estimated using cross section data on 60 developing and developed countries finally some extensions to the initial formalization of the kuznets process are considered

law finance and the international mobility of corporate governance we introduce the topic of this special issue on the role of financial and legal institutions in international governance with a particular emphasis on a notion of international mobility of corporate governance our discussion places the special issue at the intersection of law finance and international business with a focus on the contexts of foreign investors and directors country level legal and regulatory institutions facilitate foreign ownership foreign directors raising external financial capital and international m a activity the interplay between the impact of foreign ownership and foreign directors on firm governance and performance depends on international differences in formal regulatory institutions in addition to legal conditions informal institutions such as political connections also shape the economic value of foreign ownership and foreign directors we highlight key papers in the literature provide an overview of the new papers in this special issue and offer suggestions for future research

what can new survey data tell us about recent changes in distribution and poverty it has been claimed that in recent times the poor have lost ground both relatively and absolutely even when average levels of living have risen this article tests that claim using household surveys for 67 developing and transitional economies over 1981 94 it finds that changes in inequality and polarization were uncorrelated with changes in average living standards distribution improved as often as it worsened in growing economies and negative growth was often more detrimental to distribution than positive growth overall there was a small decrease in absolute poverty although with diverse experiences across regions and countries almost always poverty fell with growth in average living standards and rose with contraction

adaptive control in the presence of time varying parameters in the previous chapters two strands of literature have been brought together the first strand is the research on time varying parameters following a return to normality model viz harvey and phillips 1982 and swamy and tinsley 1980 1 the second strand is the work on adaptive control in the tradition of tse and bar shalom 1973 and kendrick 1981 as indicated in chapter 2 given a time horizon of t periods the goal was to find the values of control variables for period 0 period 1 and so on until period t 1 which minimized the objective functional or cost to go in an adaptive control framework for each period in the time horizon say period t several trial or search values of the controls were tried 2 the optimal cost to go associated with each search control was then calculated following kendrick 1981 ch 10 the computations performed at time t were organized in three steps first the nominal value for the parameters for period t through t was computed using their estimates for time t 1 and their expected law of motion the first search control was also selected then the search for the optimal control was carried out this step included a use the search control and the nominal value for the parameters to get the projected states and covariances in period t 1 b get the nominal path for the states and controls for the period t 1 through t by solving the certainty equivalence ce problem with the projected states as the initial condition c compute the riccati matrices for periods t 1 t d update and project the covariances from period t 1 given t i e the covariance seen at point a above to t 1 e calculate the approximate cost to go for the period t through t f choose a new search control and repeat a f until all search points are evaluated g select the control which yields the minimum cost after the selected control was applied to the system and the process moved one step forward in time the estimates of the states and parameters were updated

the effects of legal reforms on the ownership structure of listed companies a general view in the corporate governance literature is that corporate ownership structures are rather stable in time and change slowly however even if changes in ownership structures are difficult due to path dependence anecdotal evidence indicates that some sort of transition towards the us style corporate ownership could be occurring in civil law countries the aim of this article is to test the so called law and finance view which predicts that this convergence will only happen if the appropriate regulatory framework is in place we test this prediction using longitudinal data from italian listed companies assessing the effects of recent legal reforms our results show that an increase in the protection of investors rights is associated with a lower use of control enhancing mechanisms and a lower separation of control and cash flow rights while it is less evident if it is associated with a more dispersed ownership these findings carry important implications for theory and practice

not by growth alone the role of the distribution of income in regional diversity in poverty reduction this study examines the role of the distribution of income in determining the responsiveness of poverty to income growth and changes in income inequality using panel data of 58 developing countries for the period 1980 1998 we show that the large cross regional variation in the capacity of income growth to reduce poverty i e the income elasticity is largely explained by differences in the initial distribution of income and present region and time specific estimates of the income and gini elasticities of poverty we find that the income elasticity of poverty in the mid 1990s equals 1 31 on average and ranges from 0 71 for sub saharan africa to 2 27 for the middle east and north africa and that the gini elasticity of poverty equals 0 80 on average and ranges from 0 01 in south asia to 1 73 in latin america furthermore we show that while differing income growth rates account for most of the regional diversity in poverty trends the additional impact of differences across regions in rates of inequality change and income and inequality elasticities of poverty is almost always significant and far too large to be ignored most notably so in eastern europe and central asia

explaining ethiopia s growth acceleration the role of infrastructure and macroeconomic policy summary ethiopia has experienced an impressive growth acceleration over the past decade this was achieved on the back of an economic strategy emphasizing public infrastructure investment supported by heterodox macro financial policies this paper identifies the drivers of ethiopia s recent growth episode and examines the extent to which they were typical or unique it combines country specific information with the results of a cross country panel regression model we find that ethiopia s growth is explained well by factors correlating with growth in a broad range of countries in recent decades including public infrastructure investment restrained government consumption and a conducive external environment on the other hand we argue that the policy mix that supported very high levels of public investment in ethiopia was to some extent unique interestingly macroeconomic imbalances due to this heterodox policy mix only moderately held back growth which helps explain why ethiopia was able to grow so fast in spite of their presence their negative effects were quantitatively much less important than the positive growth drivers they helped to achieve the results suggest that getting infrastructure right may outweigh moderate shortcoming in the macro framework at early stages of development we further relate this country specific finding to the recent growth literature

active learning monte carlo results abstract the revival of interest in learning in stochastic control models invites the examination of some unanswered issues from earlier work following in the tradition of prescott and macrae we consider active learning to examine the question of when these methods are superior to passive learning in the earlier literature it was not possible to address this question because computer speeds were not great enough however modern supercomputers make it possible to reopen this issue in this paper we will examine two well known stochastic control models the macrae model and the abel model although no general conclusions can be drawn the results from the macrae model and the abel model indicate that in certain cases active learning may be superior to passive learning and certainty equivalence in the almost all cases we have analyzed so far active learning is superior to passive learning which in turn is superior to certainty equivalence