has india s economic growth become more pro poor in the wake of economic reforms the extent to which india s poor have benefited from the country s economic growth has long been debated a new series of consumption based poverty measures spanning 50 years including a 15 year period after economic reforms began in earnest in the early 1990s is used to examine that issue growth has tended to reduce poverty including in the post reform period there is no robust evidence of more or less poverty responsiveness to growth since the reforms began although there are signs of rising inequality the impact of growth is higher when using poverty measures that reflects distribution below the poverty line and when using growth rates calculated from household surveys rather than national accounts the urban rural pattern of growth matters for the pace of poverty reduction however in marked contrast to the period before the reforms urban economic growth in the period after the reforms has brought significant gains to the rural poor as well as the urban poor

rural poverty and agricultural performance in india in earlier articles in this journal ahluwalia and saith came to opposite conclusions about the effect of agricultural growth on rural poverty in india our general model shows that the main reason for the difference in the conclusions is the different specification used for the estimating equation using the general model and the same data as ahluwalia and saith we are able to verify ahluwalia s result that agricultural growth reduces rural poverty our analysis also supports saith s conclusion that inflationary pressures increase rural poverty

can fao s measure of chronic undernourishment be strengthened abstract in its sixth world food survey released at the 1996 world food summit the food and agriculture organization of the united nations fao reported that 841 million people in developing countries are chronically undernourished this number and its country and regional level disaggregations have proved tremendously useful to countless development aid agencies and researchers in the context of a recent wave of new nationally representative household food consumption and expenditure surveys this paper examines the estimation methodology underlying the food insecurity measure which relies on national aggregate measures of food availability and distribution the paper finds that the measure largely reflects national food availabilities and does not adequately capture people s ability to gain access to food the ultimate key to food security the implications for the indicator s use by policy makers in geographical targeting and tracking changes in food insecurity over time are drawn out the paper concludes by arguing that the time has come to review the potential for employing the new household survey data along with new methods to strengthen the empirical foundations of fao s measure

methods of household consumption measurement through surveys experimental results from tanzania consumption expenditure has long been the preferred measure of household living standards however accurate measurement is a challenge and household expenditure surveys vary widely across many dimensions including the level of reporting the length of the reference period and the degree of commodity detail these variations occur both across countries and also over time within countries there is little current understanding of the implications of such changes for spatially and temporally consistent measurement of household consumption and poverty a field experiment in tanzania tests eight alternative methods to measure household consumption on a sample of 4 000 households there are significant differences between consumption reported by the benchmark personal diary and other diary and recall formats under reporting is particularly relevant in illiterate households and for urban respondents completing household diaries recall modules measure lower consumption than a personal diary with larger gaps among poorer households and households with more adult members variations in reporting accuracy by household characteristics are also discussed and differences in measured poverty as a result of survey design are explored the study concludes with recommendations for methods of survey based consumption measurement in low income countries

can diaries help in improving agricultural production statistics evidence from uganda abstract although good and timely information on agricultural production is critical for policy decisions the quality of underlying data is often low and improving data quality could have high payoff we use data from a production diary administered concurrently with a standard household survey in uganda to analyze the nature and incidence of responses the magnitude of differences in reported outcomes and factors that systematically affect these despite limited central supervision diaries elicited a strong response complemented standard surveys in a number of respects and were less affected by problems of respondent fatigue than expected the diary based estimates of output value consistently exceed that from the recall based production survey in line with reported disposition implications for policy and practical administration of surveys are drawn out

consumption in developing countries tests for liquidity constraints and finite horizons adjustment programs in developing countries emphasize the importance of reducing fiscal deficits in order to improve aggregate saving and investment performance recent theoretical analyses associated with the ricardian equivalence proposition however suggest that changes in the level of public sector saving may be offset by a change in private saving the empirical relevance of this proposition depends among other things on the length of consumers horizons and on the extent to which households are liquidity constrained empirical tests of a consumption model for a sample of developing economies do not support the equivalence propositions owing to the prevalence of liquidity constraints copyright 1989 by mit press

household welfare effects of agricultural productivity a multidimensional perspective from ghana abstractalthough poverty reduction policies in developing countries hinge on the link between smallholder productivity and welfare micro level empirical evidence on this is limited in sub saharan africa and neglects the multidimensionality of welfare this article contributes through investigating the productivity poverty relationship using a number of welfare measures with a three period panel dataset for ghana the findings are that welfare is increasing with labour productivity irrespective of the measure used but that dramatic increases in productivity would be required to achieve meaningful poverty reduction

farm productivity and rural poverty in india armed with new data we return to an old question from the pages of this journal to what extent do india s rural poor share in agricultural growth combining data from 24 household sample surveys spanning 35 years with other sources we estimate a model of the joint determination of consumption poverty measures agricultural wages and food prices we find that higher farm productivity brought both absolute and relative gains to poor rural households a large share of the gains was via wages and prices though these effects took time the benefits to the poor were not confined to those near the poverty line

finance and employment evidence from u s banking reforms abstract economic theory offers competing hypotheses about how the cost and availability of finance influence labor market outcomes making use of the u s banking reforms between the 1970s and the 1990s as a quasi natural experiment this paper studies the impact of credit market development on employment this paper documents the significant effects of these reforms on employment growth potential channels between finance and employment are also investigated changes in the growth of the number of self employed individuals the entry and exit of firms and investment growth do not explain most of the employment growth following the reforms the reforms had a substantially higher impact in industries with higher labor intensity which is consistent with the idea that labor has fixed costs that need to be financed

the role of games in security design we contend that security design should be approached as a problem of game design that is contracts should specify the procedures that govern the behavior of contract participants in determining outcomes as well as the allocations resulting from those outcomes we characterize optimal contracts in two nested classes all contracts including those that depend on the state and state independent contracts we demonstrate that in situations in which the dependence of contracts on the state is limited contracts designed as games can improve the allocation of resources relative to nonstrategic allocation rules article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

the impact of research led agricultural productivity growth on poverty reduction in africa asia and latin america abstract twenty percent of the world s population or 1 2 billion live on less than 1 per day 70 of these are rural and 90 are in asia and sub saharan africa research led technological change in agriculture generates sufficient productivity growth to give high rates of return in africa and asia and has a substantial impact on poverty currently reducing this number by 27 million per annum whereas productivity growth in industry and services has no impact the per capita cost of poverty reduction by means of agricultural research expenditures in africa is 144 and in asia 180 or 50 cents per day but this is covered by output growth by contrast the per capita cost for the richer countries of latin america is over 11 000

the decentralization of information processing in the presence of interactions we propose a model of organizational decision making in which information processing is decentralized our model incorporates two features of many actual organizations aggregation entails a loss of useful information and the decision problems of different agents interact we assume that an organization forms a portfolio of risky assets following a hierarchical procedure agents decision rules and the organization s hierarchical structure are derived endogenously typically in the optimal hierarchical structure all agents have one subordinate and returns to ability are at least as high at the bottom as at the top however these results can be reversed in the presence of returns to specialization

china s uneven progress against poverty while the incidence of extreme poverty in china fell dramatically over 1980 2001 progress was uneven over time and across provinces rural areas accounted for the bulk of the gains to the poor though migration to urban areas helped the pattern of growth mattered rural economic growth was far more important to national poverty reduction than urban economic growth agriculture played a far more important role than the secondary or tertiary sources of gross domestic product gdp rising inequality within the rural sector greatly slowed poverty reduction provinces starting with relatively high inequality saw slower progress against poverty due both to lower growth and a lower growth elasticity of poverty reduction taxation of farmers and inflation hurt the poor external trade had little short term impact

why did japan s household savings rate fall in the 1990s this study investigates empirically why japan s household savings rate fell in the 1990s we constructed an economic model consisting of two types of household unconstrained life cycle households and liquidity constrained households unconstrained households generally save but liquidity constrained households consume all of their disposable income we found that the proportion of liquidity constrained households increased sharply in the late 1990s which led to a decline in japan s household savings rate our simulation analysis demonstrates that if the proportion of liquidity constrained households in the 1990s had stayed at the level as that of the late 1980s the household savings rate would have increased by four points in 2001 and 2002

environmental and gender impacts of land tenure regularization in africa pilot evidence from rwanda although increased global demand for land has led to renewed interest in african land tenure few models to address these issues quickly and at the required scale have been identified or evaluated the case of rwanda s nation wide and relatively low cost land tenure regularization program is thus of great interest this paper evaluates the short term impact some 2 5 years after completion of the pilots undertaken to fine tune the approach using a geographic discontinuity design with spatial fixed effects three key findings emerge from the analysis first the program improved land access for legally married women about 76 percent of married couples and prompted better recordation of inheritance rights without gender bias second the analysis finds a very large impact on investment and maintenance of soil conservation measures this effect was particularly pronounced for female headed households suggesting that this group had suffered from high levels of tenure insecurity which the program managed to reduce third land market activity declined allowing rejection of the hypothesis that the program caused a wave of distress sales or widespread landlessness by vulnerable people implications for program design and policy are discussed

impact of water scarcity in australia on global food security in an era of climate change abstract australia is a major food exporting country recent droughts reduced dryland farming production and the volume of water allocated to irrigated agriculture with a resulting decline in aggregate agricultural production and exports this paper analyses the possible impact of increased water scarcity on australian agricultural production and the magnitude of subsequent impacts on global food security using the australian bureau of statistics abs data on land and water use coupled with a hydro economic stochastic modelling approach the impacts of reduced agricultural production in the southern murray darling basin and more generally for australia are analysed changes in agricultural activity reduction in agricultural exports and altered composition of products exported attributed to the severe 2000 2009 drought are also analysed to highlight the implications for global food security the impact of climate change on food production is examined the analysis shows that climate change when modelled as the extreme case along with other factors such as land use will impact australian food exports despite its relatively small contribution to total global food supply australia s contribution to international trade in wheat meat and dairy products is substantial and could affect global food prices furthermore australia s agricultural exports are of disproportionate importance within the south and south east asian and oceania region both in terms of volume and for strategic reasons adaptation along with investment in agriculture production is needed to maintain australian agricultural production and enhance global food security

do credit constraints favor dirty production theory and plant level evidence abstract this paper explores the effect of credit constraints on production generated pollution emissions i develop a theoretical model wherein polluting firms borrow externally to finance investment in various assets subject to a credit constraint the main insight of the model is that credit constraints distort the composition of assets towards over investment in tangible assets which can be pledged as collateral thereby increasing the intensity of emissions the predictions of the model are tested using a unique dataset consisting of plant level measures of pollution emissions and creditworthiness the empirical results indicate that credit constraints significantly increase pollution emissions even after accounting for the scale effect and the results withstand multiple robustness checks moreover the effect of credit constraints is particularly acute in industries with greater reliance on external credit finally i demonstrate that firm level credit constraints distort the composition of assets and that the composition of assets influences pollution emissions

food prices wages and welfare in rural india this paper considers the welfare and distributional consequences of higher relative food prices in rural india through the lens of a specific factors general equilibrium trade model applied at the district level the evidence shows that nominal wages for manual labor both within and outside agriculture respond elastically to increases in producer prices that is wages rose faster in rural districts growing more of those crops with large price run ups over 2004 09 accounting for such wage gains the analysis finds that rural households across the income spectrum benefit from higher agricultural commodity prices indeed rural wage adjustment appears to play a much greater role in protecting the welfare of the poor than the public distribution system india s giant food rationing scheme moreover policies like agricultural export bans which insulate producers as well as consumers from international price increases are particularly harmful to the poor of rural india conventional welfare analyses that assume fixed wages and focus on households net sales position lead to radically different conclusions

policies for agricultural productivity growth and poverty reduction in rural ethiopia summary increasing the productivity of smallholder agriculture holds the key to poverty reduction the empirical literature is limited to ascertain the linkages and the implications for policy uptake in ethiopia we examine the impact of growth in agricultural productivity on household poverty dynamics in rural ethiopia using a panel dataset 1994 2009 findings suggest that government policies aimed at reducing poverty should adopt a growth plus approach designing policy interventions to support agricultural productivity growth plus to protect assets and enhance market access for rural households in the country

aggregate consumption interest rates and inflation in ldcs an error correction model this article explores the relationship between the real interest rate and the consumption saving decisions in ldcs following the error correction methodology the model also includes an income term the inflation rate and a term for inflation uncertainty the main conclusion drawn from this exercise is that for low inflation countries there is a positive and stronger interest rate effect on saving while this effect is less clear and not significant for most high inflation countries also the results show that for at least half of the countries in the sample an ec model with a unit elasticity restriction seems to be an adequate representation of the data

the effect of capital market characteristics on the value of start up firms we develop an equilibrium model of contracting bargaining and search in which the relative scarcity of venture capital affects the bargaining power of entrepreneurs and venture capitalists this in turn affects the pricing contracting and value creation in start ups the relative scarcity of venture capital is endogenous and depends on the profitability of venture capital investments entry costs and transparency of the venture capital market supply and demand conditions also affect the incentives of venture capitalists to screen projects ex ante we characterize both the short and long run dynamics of the venture capital industry which provides us with a stylized picture of the internet boom and bust periods our model is consistent with existing evidence and provides a number of new empirical predictions

population growth and poverty another look at the indian time series data previous studies of the time trend of rural poverty in india agree in assuming that population size does not influence poverty independently of per capita agricultural output the article examines this assumption for the 1959 160 to 1970 71 period using a pooled model with variable slope coefficients to avoid the problem of collinearity between population estimates and time the results suggest that poverty in india during 1960s was a function of both agricultural production and population but that the properties of this function are significantly different from those generally posited

the political economy of bad data evidence from african survey and administrative statistics abstractacross multiple african countries discrepancies between administrative data and independent household surveys suggest official statistics systematically exaggerate development progress we provide evidence for two distinct explanations of these discrepancies first governments misreport to foreign donors as in the case of a results based aid programme rewarding reported vaccination rates second national governments are themselves misled by frontline service providers as in the case of primary education where official enrolment numbers diverged from survey estimates after funding shifted from user fees to per pupil government grants both syndromes highlight the need for incentive compatibility between data systems and funding rules

statistical tragedy in africa evaluating the data base for african economic development measurement is increasingly at the centre of debates in african economic development some remarkable upward revisions of gdp which are signs of statistical systems improving caused the declaration of a statistical tragedy in africa this special issue evaluates the database for african economic development with articles on the quality of the data on gdp health and education poverty labour agriculture and income distribution

reliability of recall in agricultural data despite the importance of agriculture to economic development and a vast accompanying literature on the subject little research has been done on the quality of the underlying data due to survey logistics agricultural data are usually collected by asking respondents to recall the details of events occurring during past agricultural seasons that took place a number of months prior to the interview this gap can lead to recall bias in reported data on agricultural activities the problem is further complicated when interviews are conducted over the course of several months thus leading to recall of variable length to test for such recall bias the length of time between harvest and interview is examined for three african countries with respect to several common agricultural input and harvest measures the analysis shows little evidence of recall bias impacting data quality there is some indication that more salient events are less subject to recall decay overall the results allay some concerns about the quality of some types of agricultural data collected through recall over lengthy periods

troubled banks impaired foreign direct investment the role of relative access to credit during the 1980 s theories were developed to explain the striking correlation between real exchange rates and foreign direct investment fdi however this relationship broke down for japanese fdi in the 1990 s as the real exchange rate appreciated while fdi plummeted we propose the relative access to credit hypothesis and show that unequal access to credit by japanese firms contributes to the explanation of declining japanese fdi using bank level and firm level data sets we find that financial difficulties at banks were economically and statistically important in reducing the number of fdi projects by japanese firms into the united states jel g21 f36

the economic and poverty impacts of maize research in west and central africa this article assembles the results of three multicountry surveys on variety performance and adoption patterns to measure the impacts of maize research in west and central africa from 1981 to 2005 and uses cost data since 1971 to compute social rates of return on public investments in maize research in the region adoption of modern varieties increased from less than 5 of the maize area in the 1970s to about 60 in 2005 yielding an aggregate rate of return on research and development r d investment of 43 the estimated number of people moved out of poverty through adoption of new maize varieties rose gradually in the 1980s to more than one million people per year since the mid 1990s over half of these impacts can be attributed to international maize research at iita and cimmyt the article concludes with a discussion of strategic options to enhance the impacts of maize research in the region

prices wages and poverty in rural india what lessons do the time series data hold for policy abstract looking back over 40 years or so one finds that higher relative prices of food in india have typically been associated with higher poverty incidence and lower real agricultural wages this has not gone unnoticed by critics of agricultural policy reform in india who have argued that reform could permanently increase poverty by permanently raising food prices relative to non food prices however a number of other observations about the time series evidence cast doubt on this interpretation the correlation with poverty as it is being measured is not a distributional effect yet it is very unlikely that the rural sector as a whole could be worse off from a higher relative price of food instead the correlation with poverty can be explained by shocks to aggregate food output the correlation between food prices and real wages can be explained by changes in farm yields and inflation critics of reform appear to have misread the lessons for policy but these data cannot be used to support the view that higher food prices due to policy reform will on their own reduce rural poverty

workfare versus transfers in rural india abstract prevailing methods for evaluating workfare schemes are inconsistent with the arguments made for workfare in poor rural economies those arguments emphasize the existence of higher involuntary underemployment among the poor and the fact that the type of work provided by these schemes gives disutility deterring non poor households from participating to include these features the consumption based welfare metric used in past assessments of workfare schemes in underemployed developing countries is generalized to incorporate a welfare loss from casual manual work while allowing the government to independently value the work done for other reasons using data for india s national rural employment guarantee scheme nregs the paper shows that the policy ranking switches in favor of a basic income guarantee big over workfare allowing for a welfare loss from casual manual labor implies a more poor poor targeting performance but this is not sufficient to compensate for the direct welfare loss from the work requirement for plausible parameter values a big dominates nregs for a given total outlay on workfare wages

is india s economic growth leaving the poor behind there has been much debate about how much india s poor have shared in the economic growth unleashed by economic reforms in the 1990s the authors argue that india has probably maintained its 1980s rate of poverty reduction in the 1990s however there is considerable diversity in performance across states this holds some important clues for understanding why economic growth has not done more for india s poor india s economic growth in the 1990s has not been occurring in the states where it would have the most impact on poverty nationally if not for the sectoral and geographic imbalance of growth the national rate of growth would have generated a rate of poverty reduction that was double india s historical trend rate states with relatively low levels of initial rural development and human capital development were not well suited to reduce poverty in response to economic growth the study s results are consistent with the view that achieving higher aggregate economic growth is only one element of an effective strategy for poverty reduction in india the sectoral and geographic composition of growth is also important as is the need to redress existing inequalities in human resource development and between rural and urban areas

financial markets and wages we study a labor market equilibrium model in which flrms sign optimal long term contracts with workers firms that are flnancially constrained ofier an increasing wage proflle they pay lower wages today in exchange of higher wages once they become unconstrained and operate at a larger scale in equilibrium constrained flrms are on average smaller and pay lower wages in this way the model generates a positive relation between flrm size and wages using data from the national longitudinal survey of youth nlsy we show that the key dynamic properties of the model are supported by the data jel classiflcation g31 j31 e24

law finance and firm growth we investigate how differences in legal and financial systems affect firms use of external financing to fund growth we show that in countries whose legal systems score high on an efficiency index a greater proportion of firms use long term external financing an active though not necessarily large stock market and a large banking sector are also associated with externally financed firm growth the increased reliance on external financing occurs in part because established firms in countries with well functioning institutions have lower profit rates government subsidies to industry do not increase the proportion of firms relying on external financing the corporate finance literature suggests that market imperfections caused by conflicts of interest and informational asymmetries between corporate insiders and investors constrain firms in their ability to fund investment projects the magnitude of these imperfections depends in part on the effectiveness of the legal and financial systems because these systems differ across countries the literature implies that there should exist systematic cross country differences in firms ability to obtain external capital to finance investment in this paper we examine whether the underdevelopment of legal and financial systems does prevent firms in some countries from investing in potentially profitable growth opportunities in particular we focus on the use of long term debt or external equity to fund growth see our earlier work demirgut kunt and maksimovic 1996a which compares firms financial structures in developed and developing countries and finds the greatest difference to be in the provision of long term credit we estimate a financial planning model to obtain the maximum growth rate that each firm in our thirty country sample could attain without access to long term financing we then compare these predicted growth rates to growth rates realized by firms in countries with differing degrees of development in their legal and financial systems our approach enables us to identify specific characteristics of the legal and financial systems that are associated with long term financing of firm growth thus we provide a micro level test of the hypoth

looking beyond averages in the trade and poverty debate there has been much debate about how much poor people in developing countries gain from trade openness as one aspect of globalization the paper views the issue through both macro and micro empirical lenses the macro lens uses cross country comparisons and aggregate time series data the micro lens uses household level data combined with structural modeling of the impacts of specific trade reforms case studies are presented for china and morocco both the macro and micro approaches cast doubt on some widely heard generalizations from both sides of the globalization debate additionally the micro lens indicates considerable heterogeneity in the welfare impacts of trade openness with both gainers and losers among the poor a number of covariates of the individual gains are identified the results point to the importance of combining trade reforms with well designed social protection policies

growth inequality and poverty looking beyond averages the evidence is compelling that the poor in developing countries do typically share in the gains from rising aggregate affluence and in the losses from aggregate contraction but how much do poor people share in growth do they gain more in some settings than others do some gain while others lose does pro poor growth mean more or less aggregate growth recent theories and evidence suggest some answers but deeper microeconomic empirical work is needed on growth and distributed change only then will we have a firm basis for identifying the specific policies and programs needed to complement and possibly modify growth oriented policies

production prices and poverty in rural india this paper challenges the view that increases in agricultural production have reduced poverty in rural india rural poverty is related directly to the consumer price index number for agricultural labourers and inversely to agricultural production the underlying time trend term indicates a residual rising trend in rural poverty after accounting for the influence of these two factors there are plausible though conjectural reasons for believing that to a significant extent the price factor as well as the variables implicit in the time trend term both derive their strength if not their existence from the nature of the growth processes which have generated the observed growth in agricultural production these results contradict ahluwalia s earlier conclusions even though they are themselves based on essentially the same data set

micro level welfare impacts of agricultural productivity evidence from rural malawi this article analyses the micro level welfare impacts of agricultural productivity using a two wave nationally representative panel data from rural malawi welfare is measured by various dimension

from tragedy to renaissance improving agricultural data for better policies abstractagricultural development is an essential engine of growth and poverty reduction yet agricultural data suffer from poor quality and narrow sectoral focus there are several reasons for this 1 difficult to measure smallholder agriculture is prevalent in poor countries 2 agricultural data are collected with little coordination across sectors and 3 poor analysis undermines the demand for high quality data this article argues that initiatives like the global strategy to improve agricultural and rural statistics bode well for the future moving from devarajan s statistical tragedy to kiregyera s statistical renaissance will take a continued long term effort by individual countries and development partners

poverty agricultural production and prices in rural india a reformulation the empirical analysis at the all india level demonstrates that while the level of agricultural production and rural poverty were inversely related unanticipated consumer price increases aggravated rural poverty whether the advent of the new agricultural technology in the late 1960s altered the relationships in question is also considered during the new technology phase the coefficient of agricultural production ceased to be significant while that of unanticipated price changes continued to be significant rationalization of the absence of a significant inverse relationship between rural poverty and agricultural production at the state level in terms of distress migration between neighboring states is questioned and an alternative explanation is provided copyright 1989 by oxford university press

why has economic growth been more pro poor in some states of india than others abstract we use 20 household surveys for india s 15 major states spanning 1960 1994 to study how the sectoral composition of economic growth and initial conditions interact to influence how much growth reduced consumption poverty the elasticities of measured poverty to farm yields and development spending did not differ significantly across states but the elasticities of poverty to urban and rural non farm output varied appreciably and the differences were quantitatively important to the overall rate of poverty reduction states with higher elasticities did not experience higher rates of non farm growth the non farm growth process was more pro poor in states with initially higher literacy higher farm productivity higher rural living standards relative to urban areas lower landlessness and lower infant mortality

who benefits most from employee involvement firms or workers employee involvement ei programs are the leading edge form of personnel and labor relations in the united states while many managers believe that these programs raise productivity and profits the statistical evidence that ei improves the performance of firms is equivocal the coefficients on measures of ei in production functions are usually positive but often insignificant or small commission on the future of worker management relations 1994 ch 2 peter cappelli and david neumark 1999 or contingent on other factors sandra e black and lisa m lynch 1997 casey ichniowski et al 1997 a detailed case study of ei has further confirmed these small effects that were found in large data sets kleiner et al 1999 if ei programs do not greatly affect productivity why does business think so highly of them in this study we argue that the main beneficiaries of ei are workers and managers we estimate the effects of ei on productivity using panel data on firms and the effects of ei on workers using a survey of employees and find that ei barely affects firm productivity but substantially improves worker well being we offer two explanations for this result

estimation of limited dependent variable models with dummy endogenous regressors applied economists have long struggled with the question of how to accommodate binary endogenous regressors in models with binary and nonnegative outcomes i argue here that much of the difculty with limited dependent variables comes from a focus on structural parameters such as index coefcients instead of causal effects once the object of estimation is taken to be the causal effect of treatment several simple strategies are available these include conventional two stage least squares multiplicative models for conditional means linear approximation of nonlinear causal models models for distribution effects and quantile regression with an endogenous binary regressor the estimation strategies discussed in the article are illustrated by using multiple births to estimate the effect of childbearing on employment status and hours of work

economic liberalization and indian economic growth what s the evidence india s growth and poverty performance over the last three decades has been a subject of great curiosity unlike the east asian countries india s growth spurt is not associated with exceptionally high domestic savings or foreign capital inflows or manufacturing exports so what triggered the change in the growth trajectory did the market liberalization policies of the 1990s help how have the initial conditions shaped the process and how has the indian model impinged on india s central problem of mass poverty this paper surveys the literature and offers its own assessment of the drivers of change jel i32 o13 o14 o15 o21 o47

output prices and the distribution of consumption in rural india this article analyzes the relation among agricultural output inflation and the distribution of consumption in rural india using both the singh maddala and dagum families to model the entire distribution parametrically employing a benchmark case in which growth is distributionally neutral and idiosyncratic shocks are completely smoothed and using a gmm estimator to deal with potential simultaneity between output and consumption we conclude that i growth was not distributionally neutral ii good harvests relative to trend yielded improvements according to first order stochastic dominance iii slow growth before 1980 went with decreasing inequality iv accelerated growth thereafter tended to increase inequality though yielding improvements according to first order stochastic dominance v consumption smoothing was incomplete

further evidence of excess sensitivity of consumption nonseparability among goods and heterogeneity across households the standard theoretical framework for analysing households intertemporal decisions is the life cycle permanent income model among its implications testing the model allows to analyse the response of consumption to fiscal policy however the empirical literature with microdata has yielded mixed results this article examines the sensitivity of the results to the assumption of separability among goods and of homogeneity across households for that purpose we test a rational expectations permanent income model with household data drawn from the spanish family expenditure survey this survey contains detailed information on total expenditure and the income presents large exogenous quarterly changes due to an institutional feature the article shows that assuming separability among commodities biases the test against the model when separability is not imposed we show that the rejection of the model depends on heterogeneity across households in terms of their members being unemployed or not for those

determinants of consumption and savings behavior in developing countries the determinants of savings generally and the specific effects of government policies on savings and consumption are pivotal forces in investment and economic growth the hall hypothesis states that consumption is a function of lifetime permanent income rather than income in each period independently changes in interest and tax rates money supply or government expenditure will affect permanent income and hence consumption and savings only if they are unexpected and thus not already incorporated in the estimation of permanent income we are unable to reject the hall hypothesis in tests for developing countries when we allow for varying interest rates we do find evidence of a negative effect of inflation on consumption and a positive relationship between the real interest rate and consumption the evidence for the hall hypothesis also suggests that ricardian equivalence may be valid this is barro s hypothesis that the effect on savings is the same whether government deficits are financed through taxation or debt our preliminary testing however does not support ricardian equivalence savings is the part of one s current income that is not spent on current consumption and it constitutes a large part of a nation s aggregate savings and investment and thus is a major determinant of the growth of future income and consumption households balance the tradeoffs between current and future consumption possibilities when making their individual consumption decisions understanding the determinants of households consumption behavior has been central to macroeconomics the three main theoretical approaches to this issue are keynesian consumption theory the life cycle permanent income hypothesis under rational expectations and the theory of the infinitely lived agent or altruistically linked consumers the theories differ in the extent to which they explain the observed consumer behavior and in their predictions regarding the effects of government policies on individual savings behavior for instance increased taxes higher nominal interest rates or an increase in the money

disinflation inequality and welfare in a tank model we investigate the redistributive and welfare effects of disinflation in a two agent new keynesian tank model characterized by limited asset market participation lamp and wealth inequality we highlight two key mechanisms driving our long run results i the cash in advance constraint on firms working capital cia ii dividends endogeneity these two channels point in opposite directions lower inflation softens the cia and by raising labor demand lowers inequality but the disinflation also raises dividends and this increases inequality the disinflation is always welfare improving for asset holders we obtain ambiguous results for non asset holders who suffer substantial consumption losses during the transition

why have some indian states done better than others at reducing rural poverty the unevenness of the rise in rural living standards in the various states of india since the 1950s allowed the authors to study the causes of poverty they modeled the evolution of average consumption and various poverty measures using pooled state level data for 1957 91 they found that poverty was reduced by higher agricultural yields above trend growth in nonfarm output and lower inflation rates but these factors only partly explain relative success and failure in reducing poverty initial conditions also mattered states that started the period with better infrastructure and human resources with more intense irrigation greater literacy and lower infant mortality rates had significantly greater long term rates of consumption growth and poverty reduction by and large the same variables that promoted growth in average consumption also helped reduce poverty the effects on poverty measures were partly redistributive in nature after controlling for inflation the authors found that some of the factors that helped reduce absolute poverty also improved distribution and none of the factors that reduced absolute poverty had adverse impacts on distribution in other words there was no sign of tradeoffs between growth and pro poor distribution

wages and involuntary unemployment in the slack season of a village economy abstract we model slack season wages in a village economy in the presence of involuntary unemployment our model draws its inspiration from sociological notions of everyday peasant resistance in particular labourers can react to employers who pay low slack wages by refusing to work for them in the relatively tight peak season such refusals however are not automatic and are modelled endogenously a continuum of equilibrium wage configurations is obtained these configurations barring one involve wages exceeding reservation wages despite the presence of involuntary unemployment several qualitative observations follow these are examined with respect to available empirical data in particular the village survey of palanpur

new or used investment with credit constraints abstract used capital is cheap up front but requires higher maintenance payments later on we argue that the timing of these investment cash outflows makes used capital attractive to financially constrained firms since it is cheap when evaluated using their discount factor in contrast it may be expensive from the vantage point of an unconstrained agent we provide an overlapping generations model and determine the price of used capital in equilibrium agents with less internal funds are more credit constrained invest in used capital and start smaller firms empirically we find that the fraction of investment in used capital is substantially higher for small firms and varies significantly with measures of financial constraints

lending by example direct and indirect effects of foreign banks in emerging markets using a novel dataset that allows us to trace the bank relationships of a sample of mostly unlisted firms we explore which borrowers are able to benefit from foreign bank presence in emerging markets our results suggest that the limits to financial integration are less tight than the static picture of firm bank relationships implies even though foreign banks are more likely to engage large and foreign owned firms after an acquisition a bank is 20 less likely to terminate a relationship with a firm if the acquirer is foreign rather than domestic most importantly within a credit market firms appear to have the same access to financial loans and ability to invest whether they borrow from a foreign bank or not while foreign banks benefit all firms by indirectly enhancing credit access

production in entrepreneurial firms the effects of financial constraints on labor and capital i model the contrasting capital labor decisions of financially constrained and unconstrained firms i show that financially restricted firms use relatively more labor than physical capital because informed employees provide more efficient financing than uninformed capital suppliers i demonstrate that constrained firms cannot easily attract new employees to replace existing staff their greater employee retention aligns owner worker incentives and encourages workers to make firm specific investments constrained firms however gradually suffer from their inability to replace low quality workers such that their relative labor productivity decreases over time empirical tests utilizing instrumental variables confirm several implications of the theory

saving in developing countries theory and review in the literature on economic development much of the interest in saving has been focused on the relation between saving and growth but saving is not only about accumulation it is about smoothing consumption in the face of volatile and unpredictable income and helping to ensure the living standards of poor people whose lives are difficult and uncertain this paper develops a model of households which cannot borrow but which accumulate assets as a buffer stock to protect consumption when incomes are low such households dissave as often as they save do not accumulate assets over the long term and have on average very small asset holdings but their consumption is markedly smoother than their income much of the evidence is as consistent with this view of saving as it is incosistent with standard views of smoothing over the life cycle and with explanations of the link between saving and growth in terms of life cycle saving behavior consumption smoothing is also a useful way of thinking about government policy where volatility in the world prices of taxed commodities can generate sharp fluctuations in government revenues as well as reallocations of revenue between the private and public sectors many important policy issues in developing countries hinge on issues of consumption and smoothing and research on these issues is currently likely to be more productive than work on the relation between saving and growth

are there lessons for africa from china s success against poverty at the outset of china s reform period the country had a far higher poverty rate than for africa as a whole within five years that was no longer true this paper tries to explain how china escaped from a situation in which extreme poverty persisted due to failed and unpopular policies while acknowledging that africa faces constraints that china did not and that context matters two lessons stand out the first is the importance of productivity growth in smallholder agriculture which will require both market based incentives and public support the second is the role played by strong leadership and a capable public administration at all levels of government

economic development and the role of agricultural technology in earlier debates on economic development the agricultural sector s role was somewhat controversial while dualistic models highlighted the importance of agriculture the mainstream literature placed a greater emphasis on the creation of a modern industrial sector soon agriculture disappeared from the mainstream development literature to re emerge recently with a variety of multiple sector growth models emphasizing the key role of agriculture and specifically technology in agriculture this article is an empirical cross country analysis of agricultural technology s role in economic development specifically the hypothesis being tested is whether improvements in agricultural technology have a significant impact on long run economic growth the results indicate that agricultural modernization has a positive effect on both measures of economic growth and human development

when the data source writes the conclusion evaluating agricultural policies statistics describe realities but they also shape them since they are used to design or support policies as such accurate statistics are important using the agricultural sector in rwanda as a case study we demonstrate that dubious statistics can spread quickly according to data from the food and agricultural organization fao yields have increased by 60 per cent since the implementation of large scale agricultural reforms while other datasets point towards more modest gains yet estimates in line with those of the fao dominate the official discourse we suggest that the discrepancies between datasets may be explained by the difficulties of collecting accurate agricultural statistics combined with an incentive to overestimate yields to show that the reforms have worked

heterogeneous firms and the organization of production firms in the same industry exhibit systematic differences in the organization of production and the structure of employment entrepreneurial ability is the specific scarce input that limits the size of a firm this input must be allocated to two activities coordinating production and monitoring workers able entrepreneurs can convert calendar time into larger supplies of coordinating effort that enable them to assemble large firms greater ability implies a higher shadow price of time which increases the implicit costs of monitoring a dispersion of entrepreneurial abilities generates an equilibrium size distribution of firms differences in monitoring costs affect the choice of worker productivities the design of products and the organization of production the monitoring cost hypothesis advanced in this paper goes a long way in explaining the equilibrium of an industry containing heterogeneous firms that differ in size and behavior

wage determination in rural labour markets the theory of implicit co operation abstract this paper argues that the process of determination of daily wage rate in rural labour markets is best seen as an act of implicit co operation among workers using the framework of repeated non cooperative game it is argued that this hypothesis can explain better than existing theories several known features of a typical south asian rural labour market e g the co existence of involuntary unemployment with responsiveness to supply and demand plasticity of wage rate in some cases co existing with rigidity in others etc

do rural banks matter evidence from the indian social banking experiment lack of access to finance is often cited as a key reason why poor people remain poor this paper uses data on the indian rural branch expansion program to provide empirial evidence on this issue between 1977 and 1990 the indian central bank mandated that a commercial bank can open a branch in a location with one or more bank branches only if it opens four in locations with no bank branches we show that between 1977 and 1990 this rule caused banks to open relatively more rural branches in indian states with lower initial financial development the reverse is true outside this period we exploit this fact to identify the impact of opening a rural bank on poverty and output our estimates suggest that the indian rural branch expansion program significantly lowered rural poverty and increased non agricultural output

agricultural growth and poverty in an archetypical middle income country chile 1987 2003 is a reduced share of agriculture in the economy an obstacle for the agricultural sector to play an important role in poverty alleviation what is the key channel if any by which agriculture is benefiting the poor in chile that would be worthwhile to promote in other countries by answering these questions we expand the literature on poverty and composition of growth by proposing a methodology that allows to disentangle the mechanisms by which agricultural growth can be poverty reducing we find that in chile agriculture plays a large role in reducing poverty and most of this effect is channeled through the labor market

private saving interest rates and liquidity constraints in ldcs recent evidence there is still considerable controversy about the interest rate responsiveness of private saving in developing countries this paper provides recent evidence based on individual country estimations for a sample of 16 countries the model used here follows the uler equation approach and includes rational and forward looking permanent income consumers together with liquidity constrained consumers overall for this sample of countries the results obtained in this paper offer new evidence of a low responsiveness of saving to changes in the interest rate my results also support a strong role of liquidity constraints in these countries