the effect of imf lending on the probability of sovereign debt crises abstract this paper explores empirically how the adoption of imf programs affects sovereign risk over the medium term we find that imf programs significantly increase the probability of subsequent sovereign defaults by approximately 1 5 2 percentage points these results cannot be attributed to endogeneity bias as they are supported by specifications that explain sovereign defaults and program participation simultaneously furthermore imf programs turn out to be especially detrimental to fiscal solvency when the fund distributes its resources to countries whose economic fundamentals are already weak our evidence is therefore consistent with the hypothesis that debtor moral hazard is most likely to occur in these circumstances other explanations that point to the effects of debt dilution and the possibility of imf triggered debt runs however are also possible

network regulation and regulatory institutional reform revisiting the case of australia it is well understood that the success of liberalizing the electricity supply industry depends crucially on the quality and design of the regulatory and institutional framework this paper analyses the regulatory arrangements that underpin the work of the australian energy regulator aer these arrangements are contrasted with the regulatory structure of electricity provision in norway a key difference between the reform processes in the two countries relates to the lack of privatization in norway and the co existence of private and publicly owned generators and distributors in australia this comparative analysis allows us to make several recommendations to improve regulatory arrangements in australia these include greater independence for the aer better coordination among regulatory institutions greater use of benchmarking analysis greater customer involvement and improving market transparency and privatization of government owned corporations however the success of privatization will hinge upon the effectiveness of the regulatory environment

do r d tax credits work evidence from a panel of countries 1979 1997 this paper examines the impact of fiscal incentives on the level of r d investment an econometric model of r d investment is estimated using a new panel of data on tax changes and r d spending in nine oecd countries over a 19 year period 1979 1997 we find evidence that tax incentives are effective in increasing r d intensity this is true even after allowing for permanent country specific characteristics world macro shocks and other policy influences we estimate that a 10 fall in the cost of r d stimulates just over a 1 rise in the level of r d in the short run and just under a 10 rise in r d in the long run

internal and external effects of r d subsidies and fiscal incentives empirical evidence using spatial dynamic panel models abstract most studies evaluating the macroeconomic effects of financial support policies on business funded r d use econometric methods that do not consider the existence of spatial effects and generate biased estimates in this paper we discus and address this problem using spatial dynamic panel data methods this allow us to provide new insights on the internal in country and external out of country effects of both research and development r d subsidies and fiscal incentives we use a database of 25 oecd countries for the period 1990 2009 in relation to internal effects for both instruments we find a non linear relationship between their effect on private r d and their level suggesting the possibility of leveraging and crowding out effects we also find a substitution effect between the r d subsidies and fiscal incentives implemented within a country concerning the spatial component we find evidence of positive spatial spillovers among private r d investments however our results suggest the existence of competition substitution effects between national r d policies

the rule of law and economic growth where are we summary it is widely assumed that the rule of law is essential for economic growth however the rule of law is clearly a multidimensional concept encompassing a variety of discrete components from security of person and property rights to checks on government and control of corruption we review the theory underlying these different causal mechanisms linking the rule of law to economic growth and provide an introduction to some outstanding measurement issues we find that the correlation among different components of the rule of law concept are not tight among developing countries and that some inferences about the effects of property rights protection may not be warranted

external liabilities and crises abstract we examine the determinants of external crises focusing on the role of foreign liabilities and their composition using a variety of statistical tools and comprehensive data spanning 1970 2011 we find that the ratio of net foreign liabilities to gdp is a significant crisis predictor this is primarily due to the net position in debt instruments the effect of net equity liabilities is weaker and net fdi liabilities seem if anything an offset factor we also find that i breaking down net external debt into its gross asset and liability counterparts does not add significant explanatory power to crisis prediction ii the current account is a powerful predictor iii foreign exchange reserves reduce the likelihood of crisis more than other foreign asset holdings and iv a parsimonious probit containing those and a handful of other variables has good predictive performance in and out of sample the latter result stems largely from our focus on external crises sensu stricto

can multinational enterprises light up developing countries evidences from the access to electricity in sub saharan africa summary this paper examines the role that multinational enterprises mnes and foreign direct investments fdi can have in enhancing the access to electricity for local communities in developing countries based on the quality of home and host institutions access to electricity is a marker for development but it is far from being universal in developing countries the shortage of electricity is mainly the consequence of inability of governments in planning financing and developing necessary electricity infrastructure in this context investments from other actors can be essential particularly we focus on the role of fdi and mnes we claim that when mnes invest in developing countries they are incentivized to solve the lack of electricity infrastructure mainly for two reasons to guarantee their business activities and to gain legitimacy with their local stakeholders in addition we argue that mnes and fdi from institutionally underdeveloped countries will be more prone to develop infrastructure for the provision of electricity to local population as generally they suffer from a negative stereotype for this study we rely on 1 547 observations composed of pairs of 83 home countries and 15 host countries in sub saharan africa observed from 2005 to 2011 due to the nature of the database we adopt panel data techniques i e system gmm and corrected least square dummy variable estimators we find that fdi promotes access to electricity in developing countries with weak institutions and this is more likely true when fdi come from institutionally underdeveloped countries these results are far from obvious as they controvert common idea among institutional scholars that a regulatory authority is essential in the provision of infrastructure in conclusion with this paper we partially rehabilitate the image of mnes investing in developing countries by demonstrating that under certain conditions they could contribute to energy poverty alleviation of local population

time series forecasts of international travel demand for australia abstract this paper analyses stationary and non stationary international tourism time series data by formally testing for the presence of unit roots and seasonal unit roots prior to estimation model selection and forecasting various box jenkins autoregressive integrated moving average arima models are estimated over the period 1975 1 1989 4 for tourist arrivals to australia from hong kong malaysia and singapore the mean absolute percentage error and root mean squared error rmse are used as measures of forecast accuracy as the best fitting arima model is found to have the lowest rmse this model is used to obtain post sample forecasts tourist arrivals data for 1990 1 1996 4 are compared with the forecast performance of the arima model for each origin market the fitted arima model forecasts tourist arrivals from singapore for the period 1990 1 1996 4 very well although the arima model outperforms the seasonal arima models for hong kong and malaysia the forecasts of tourist arrivals are not as accurate as in the case of singapore

political competition and policy adoption market reforms in latin american public utilities on y docencia econ omicas this article shows that political competition generates incentives that affect the pace of adoption of market reforms in the context of policy convergence previous work shows the effect of financial and technological pressures in promoting policy convergence and the impact of institutional constraints on shaping the pace of policymaking controlling for these effects this article demonstrates the policy effects of political competition and ideological polarization even at a time when ideological policy differences seem to be fading due to policy convergence this article studies policy adoption using duration analysis for the 18 countries of latin america during the 1985 2000 period when most of the market reforms in public utilities were adopted s tudies of market reforms in latin america have typically emphasized the common financial and technological pressures that limited the ability of incumbents to impose their ideological preferences on policy adoption during the 1980s and 1990s this article shows that although it is true that the ideology of incumbents cannot fully explain policy adoption political competition and the relative ideology of challengers did shape the incentives of policymakers and thus played a significant role in the adoption of market reforms the article shows these effects on the market reforms of latin american public utilities which have been widely regarded as an example of policy convergence market oriented reforms in telecoms and electricity including the privatization of assets the liberalization of markets and the separation of regulatory authority from operations spread rapidly around the globe and especially through latin america

temporal aggregation in political budget cycles electoral cycles have been widely debated since the pioneering studies of the 1970s on monetary and fiscal policy 1 drazen sums up the evidence in terms of active fiscal policy and passive monetary policy while expansionary fiscal policy is the main impulse behind electoral cycles monetary policy has an accommodating role 2 recently there has been a flurry of empirical work on political budget cycles pbcs using cross country panels the most influential works concentrate on the budget surplus because it can capture both increases in expenditures and tax cuts before elections and is thus the most sensitive indicator of aggregate pbcs 3a drawback of these extant studies is their reliance on annual observations since elections take place between january and december annual data do not allow one to identify the election year precisely to get around this problem other schemes have been proposed for example by the rule of the semester the previous year is counted as the election year if elections take place before july 4 what are the consequences of temporal aggregation for the measurement of pbcs instead of being concentrated in the election year pre electoral effects may be spread out over the two years leading up to elections more important if the sign of policies is reversed after elections lower frequency data may mask pbcs because the effects in the election year cancel out as akhmedov and zhuravskaya point out in their country study of russia 5to illustrate the differences between using annual and quarterly data to identify the election year imagine that elections take place in june furthermore assume there is a pre electoral deterioration in the budget surplus surplus 1 during the four quarters running up to elections followed by an improvement surplus 1 the next four quarters in the calendar year in which elections take place the net effect on the budget surplus is zero elections are not always in june of course what happens if elections are evenly spread out over the year table 1 presents a simulation where y 0 is the calendar year of elections y 1 is the year before and y 1 is the year after for elections in the first quarter of the election year namely y 0 q 1 our textbook example of a pre electoral expansion in the deficit during the four quarters prior to elections followed by a contraction the next four quarters implies that the surplus equals 1 from y 1 q 2 to y 0 q 1 it equals 1 from y 0 q 2 to y 1 q 1 and it equals 0 otherwise when the budget surplus is at its average value normalized here at zero the same procedure is followed for elections in the other three quarters if we aggregate the effects by calendar year there is a serious underestimation of pbcs in the election year since pre electoral expansions are almost cancelled out by post electoral contractions leaving a net expansive effect that is only 25 percent of the total stimulus before elections the least affected by temporal aggregation are post electoral fiscal adjustments since 62 5 percent of the total effect is reflected the year after elections on the other hand if there were no post electoral fiscal adjustments the problem of temporal aggregation would be much less severe since 62 5 percent of the total expansive effect would be reflected the calendar year of elections and 37 5 percent the year before this paper tackles the issue of temporal aggregation in pbcs head on we build a cross country panel with annual and quarterly data from nineteen latin american countries and twenty member states of the organization for economic cooperation and development oecd over the 1980 2005 period 6 quarterly data allow us to identify the election year more precisely with annual data the election year is the calendar year in which elections take place with quarterly data the election year comprises the election quarter plus the three prior quarters we introduce two nonstandard features in our analysis

crises and exchange rate regimes time to break down the bipolar view we revisit the link between crises and exchange rate regimes err using a panel of 90 developed and developing countries over the period 1980 2009 we find that corner err are not more prone to crises compared to intermediate err this finding holds for different types of crises banking currency and debt and is robust to a wide set of alternative specifications consequently we clearly break down the traditional bipolar view countries that aim at preventing crisis episodes should focus less on the choice of the err and instead implement sound structural macroeconomic policies

remodeling international tourism demand old theory and new evidence abstract the purpose of this study is to advance the tourism demand theory by excluding simultaneous effects of exchange rates and prices in empirical models formulating an alternative pricing modus operandi consistent with recent research in the area and demonstrating the efficacy of the use of an industrial production index ipi as a proxy for income a panel fully modified ordinary least squares fmols method is employed to estimate the inbound tourism demand for turkey study findings suggest that the inclusion of exchange rates and prices as mutually exclusive components can be misleading the ipi is not a good proxy for income and country specific coefficients need to be analyzed to accurately explain determinants of tourism demand for countries in the panel

residual state ownership policy stability and financial performance following strategic decisions by privatizing telecoms we question previous research assuming that privatizing firm performance generally benefits from decreasing state ownership and the passage of time both of which purportedly align principal agent incentives promoting organizational decision making that increases shareholder value when state ownership shifts from majority and controlling to minority and non controlling the performance impact may be positive in the short run particularly where there is instability in the local investment policy environment consistent with this proposition we develop and test hypotheses derived from a minority and non controlling or residual state ownership framework grounded in credible privatization and institutional theory we propose that 1 residual state ownership positively affects shareholder returns after strategic decisions by privatizing firms because it signals state support for managerial initiatives 2 the passage of time since initial privatization negatively affects shareholder returns after strategic decisions by privatizing firms because initial undertakings in support of the privatizing firm are reversed and 3 home country investment policy stability moderates these two effects greater stability obviates the need for residual state ownership and slows policy reversals over time we find empirical support for our residual state ownership framework in event study analyses of cumulative abnormal returns cars associated with 196 major investments announced from 1986 to 2001 by 15 privatizing telecoms from around the world cars are positive at 5 25 state ownership levels but turn negative at higher state ownership levels cars turn sharply negative within 1 2 years from initial privatization dates increasing policy stability diminishes positive ownership and negative time effects on cars results confirm the potential supporting role that residual state ownership can play in enhancing strategic decision making and financial performance by privatizing firms particularly where there is instability in the home country investment policy environment

corruption and infrastructure at the country and regional level abstractthis paper examines the relationship between corruption and infrastructure at both the country and regional level using the world bank s enterprise surveys data a statistically significant and considerable relationship is established between the measure of corruption in the macro data and the measures of transportation and electricity infrastructure countries with more corruption tend to have worse infrastructure at the regional level the key result is unchanged the magnitude and significance of this result is shown to vary by global region two stage least squares results using distance from the equator as an instrument at the macro level support the simple ordinary least squares ols finally it is shown that within country variation in corruption has a significant effect on regional infrastructure

a piecewise linear approach to modeling and forecasting demand for macau tourism abstract in this paper we construct and use a piecewise linear method to model and forecast on a monthly basis the demand for macau tourism data over the period january 1991 december 2005 and a seasonally adjusted series for tourism demand are used the study examines 4 forecasting horizons ranging from 6 to 24 months in advance mean absolute percentage errors and root mean square errors are adopted as criteria for evaluating the accuracy of the forecasting exercises finally the forecasts of piecewise linear model are compared with those of autoregressive trend model seasonal autoregressive integrated moving average and its arch rival fractionally integrated autoregressive moving average models the piecewise linear model is more accurate than the three benchmark models tested and the improvement is practically significant

sovereign debt relief and its aftermath this paper studies sovereign debt relief in a long term perspective we quantify the relief achieved through default and restructuring in two distinct samples 1920 1939 focusing on the defaults on official government to government debt in advanced economies after world war i and 1978 2010 focusing on emerging market debt crises with private external creditors debt relief was substantial in both eras averaging 21 of gdp in the 1930s and 16 of gdp in recent decades we then analyze the aftermath of debt relief and conduct a difference in differences analysis around the synchronous war debt defaults of 1934 and the baker and brady initiatives of the 1980s 1990s the economic landscape of debtor countries improves signicantly after debt relief operations but only if these involve debt write offs softer forms of debt relief such as maturity extensions and interest rate reductions are not generally followed by higher economic growth or improved credit ratings jel e6 f3 n0 and h6

the dynamics of sovereign default risk and political turnover abstract this paper develops a stochastic dynamic politico economic model of sovereign debt to analyze the interaction of sovereign default risk and political turnover two parties differ in their preferred size of unproductive public spending which is financed by taxes and external debt electoral outcomes are characterized by the economic benefits from the incumbent s policies and stochastic idiosyncratic ideological aspects quantitative findings suggest that endogenous political turnover increases the discrepancies between the optimal borrowing and default policies of the two parties prior to a debt crisis the incumbent government accumulates external debt to foster the probability of remaining in power the dynamic interaction of electoral outcomes external debt and sovereign default supports arguments for imposing institutional constraints on incumbent governments

phasing the operation mode of foreign subsidiaries reaping the benefits of multinationality through internal capital markets the lifetime of foreign equity partnerships is often limited research suggests that mncs abandon their local partners when the need for sharing ownership in foreign subsidiaries has diminished this study shows that mncs may abandon their local equity partners to reap the benefits of multinationality as mncs gain a competitive advantage from leveraging resources across borders they will initially benefit from sharing ownership with a local firm to embed their foreign subsidiaries in the local environment and access local resources more effectively later they will benefit from taking over the local partner s equity share to better embed their subsidiaries in the parent organization and transfer locally accessed resources to the mnc s other locations moderated mediation regressions provide evidence of such practice in the context of cross border transfers of capital resources this strategy seems to work as a corollary of our model panel regressions suggest that sharing ownership with local firms in a host country with a capital resource advantage is associated with appropriating more capital resources from the local debt market while abandoning these partner firms later is associated with transferring more capital resources from this host country via internal capital markets to other parts of the mnc

forecasting u s tourist arrivals using optimal singular spectrum analysis this study examines the potential advantages of using singular spectrum analysis ssa for forecasting tourism demand to do this it examines the performance of ssa forecasts using monthly data for tourist arrivals into the unites states over the period 1996 to 2012 the ssa forecasts are compared to those from a range of other forecasting approaches previously used to forecast tourism demand these include arima exponential smoothing and neural networks the results presented show that the ssa approach produces forecasts which perform statistically significantly better than the alternative methods in forecasting total tourist arrivals into the u s forecasts using the ssa approach are also shown to offer a significantly better forecasting performance for arrivals into the u s from individual source countries of the alternative forecasting approaches exponential smoothing and feed forward neural networks in particular were found to perform poorly the key conclusion is that singular spectrum analysis ssa offers significant advantages in forecasting tourist arrivals into the us and is worthy of consideration for other forecasting studies of tourism demand

how effective are fiscal incentives for r d a review of the evidence this paper surveys the econometric evidence on the effectiveness of fiscal incentives for r d we describe the effects of tax systems in oecd countries on the user cost of r d the current position changes over time and across different firms in different countries we describe and criticize the methodologies used to evaluate the effect of the tax system on

the political economy of stabilization commitment capacity and public response abstract political pressures are generally recognized as important in determining success or failure of economic stabilization and adjustment programs but there has been little comparative analysis of the politics of stabilization this study examines the factors affecting i political leaders commitment to stabilization measures often called political will ii governmental ability to implement stabilization measures and iii the responses of key interest groups and the public at large to those measures the study also discusses political implications of the design of programs and the attempted speed of stabilization and sketches the tactics available to governments to manage political risk including partial compensation persuasion diversion or obfuscation and containment of protest the discussion is based on case studies of stabilization efforts in five fairly poor small highly trade dependent countries ghana in the late 1960s and early 1970s and zambia kenya sri lanka and jamaica in the late 1970s and early 1980s a subsidiary theme within the broader discussion is the ways in which the political economy of stabilization may differ in such countries as compared to larger semi industrialized economies

the politics of foreign direct investment into developing countries increasing fdi through international trade agreements the flow of foreign direct investment into developing countries varies greatly across countries and over time the political factors that affect these flows are not well understood focusing on the relationship between trade and investment we argue that international trade agreements gatt wto and preferential trade agreements ptas provide mechanisms for making commitments to foreign investors about the treatment of their assets thus reassuring investors and increasing investment these international commitments are more credible than domestic policy choices because reneging on them is more costly statistical analyses for 122 developing countries from 1970 to 2000 support this argument developing countries that belong to the wto and participate in more ptas experience greater fdi inflows than otherwise controlling for many factors including domestic policy preferences and taking into account possible endogeneity joining international trade agreements allows developing countries to attract more fdi and thus increase economic growth

tourism demand modelling and forecasting a review of recent research abstract this paper reviews the published studies on tourism demand modelling and forecasting since 2000 one of the key findings of this review is that the methods used in analysing and forecasting the demand for tourism have been more diverse than those identified by other review articles in addition to the most popular time series and econometric models a number of new techniques have emerged in the literature however as far as the forecasting accuracy is concerned the study shows that there is no single model that consistently outperforms other models in all situations furthermore this study identifies some new research directions which include improving the forecasting accuracy through forecast combination integrating both qualitative and quantitative forecasting approaches tourism cycles and seasonality analysis events impact assessment and risk forecasting

is public r d a complement or substitute for private r d a review of the econometric evidence is public r d spending complementary and thus additional to private r d spending or does it substitute for and tend to crowd out private r d conflicting answers are given to this question we survey the body of available econometric evidence accumulated over the past 35 years a framework for analysis of the problem is developed to help organize and summarize the findings of econometric studies based on time series and cross section data from various levels of aggregation laboratory firm industry country the findings overall are ambivalent and the existing literature as a whole is subject to the criticism that the nature of the experiment s that the investigators envisage is not adequately specified we conclude by offering suggestions for improving future empirical research on this issue

the politics of infrastructure a number of recent studies attempt to measure the productivity of public capital some estimates indicate that government investments are a potential well spring for economic progress while others indicate that public infrastructure has a negligible effect on private sector output this article investigates political institutions and processes underlying the decisions for public infrastructure spending we apply the framework of strategic models of fiscal policy and develop an empirical model to analyze the substantial differences in public capital across american states institutions such as term limits citizen initiative and budgeting procedures were significant determinants of state public capital stocks and the flow of new public investments during the 1980s the results further suggest that political conditions such as legislative stability and voter volatility are systematically related to infrastructure differences across states

princes and merchants european city growth before the industrial revolution as measured by the pace of city growth in western europe from 1000 to 1800 absolutist monarchs stunted the growth of commerce and industry a region ruled by an absolutist prince saw its total urban population shrink by one hundred thousand people per century relative to a region without absolutist government this might be explained by higher rates of taxation under revenue maximizing absolutist governments than under nonabsolutist governments which care more about general economic prosperity and less about state revenue

forecasting international tourist flows to macau abstract the vector autoregressive var modelling technique is used to forecast tourist flows to macau from eight major origin countries regions over the period 2003 2008 the existing literature shows that the var model is capable of producing accurate medium to long term forecasts and also separate forecasts of the explanatory variables are not required a further justification for using the var technique is that it permits an impulse response analysis to be performed in order to examine the ways in which the demand for macau tourism responds to the shocks in the economic variables within the var system the implications of this analysis are discussed the forecasts generated by the var models suggest that macau will face increasing tourism demand by residents from mainland china since the needs of chinese tourists tend to be different from those from other origin countries regions especially western countries the business sectors in macau need to pay considerable attention to catering for the needs of chinese tourists

how central banks prepare for financial crises an empirical analysis of the effects of crises and globalisation on international reserves central banks international reserve holdings have increased significantly in the recent past while traditional models fail to explain this accumulation of reserves the more recent literature argues that reserves are used as a lifejacket against currency crises however research so far has neglected the question whether and how central banks change their precautionary reserve holdings after the country was affected by a currency crisis this paper tests the hypothesis that central banks revise their reserve policy in the aftermath of currency crises a dynamic panel data model is estimated for developing and industrial countries covering the period from 1975 to 2003 the evidence suggests that currency crises induce a permanent increase of reserves this effect is particularly strong for recent currency crises since the asian financial crisis

does strengthening collective action clauses cacs help does improving creditor coordination by strengthening cacs lead to efficiency gains in the functioning of sovereign bond markets we address this question in a model featuring both debtor moral hazard and creditor coordination under incomplete information conditional on default we characterize the interim efficient cac threshold and show that strengthening cacs away from unanimity results in interim welfare gains however once the impact of strengthening cacs on debtor s incentives is taken into account we demonstrate the robust possibility of a conflict between ex ante and interim efficiency we calibrate our model to quantify such a welfare trade off and discuss the policy implications of our results

fdi waves waves of neglect of political risk studies of the impact of local political risk on foreign direct investment inflows overlook that worldwide fdi comes in waves using a simple model we show that the impact of political risk on fdi inflows is likely to be weaker the larger the worldwide amount of fdi which may question standard estimates and their policy implications using a large sample of developing and developed economies we estimate the sensitivity of the distribution of fdi inflows across countries to the local political risk we find that it is a decreasing function of the worldwide amount of fdi this finding has been upheld after many robustness checks

dynamics of pro market institutions and firm performance we analyze how pro market institutions affect firm performance in emerging markets integrating transaction costs and signaling theory we advance three arguments first we separate four dynamic components of pro market institutions intensifying and fading pro market reforms and intensifying and fading pro market reversals second we propose an asymmetric dynamic view whereby not only intensifying reforms but also fading reversals improve firm performance while not only fading reforms but also intensifying reversals reduce performance finally we argue that more efficient firms perform better under each of the dynamics we test these arguments on a sample of 1092 firms from 34 emerging markets during 1998 2011

the macroeconomics of specificity specific quasi rents arise in a variety of economic relationships and are exposed to opportunism unless fully protected by contract rent appropriation has important macroeconomic consequences resources are underutilized factor markets are segmented production suffers from technological sclerosis job creation and destruction are unbalanced recessions are excessively sharp and expansions run into bottlenecks while depending on the shock expansions may require reinforcement or stabilization recessions should typically be softened in the long run institutions may evolve to alleviate the problem by balancing appropriation technology choice will also be affected with the appropriated factor partially excluding the other from production to reduce appropriation

sovereign debt in emerging market countries not all of them are serial defaulters avoiding to assign emerging market countries a typical behaviour this article considers the heterogeneity across them and through time to predict their sovereign default episodes moreover it f

the private r d investment response to federal design and technical competitions it is the federal government s role to promote investment in research and development rd and 2 contracting with private firms and nonprofit organizations such as universities to perform rd the winning firm recovered its development costs in the form of profits on the sale of the airplanes and the losing firms did not recoup their r d investment mansfield 1971 p 122

economic crisis and policy choice the politics of adjustment in the third world the acute economic pressures of the 1980s have forced virtually all of latin america and africa and some countries in asia into painful austerity programs and difficult economic reforms scholars have intensively analyzed the economics of this situation but they have given much less attention to the political forces involved in this volume a number of eminent contributors analyze the politics of adjustment in thirteen countries and nineteen governments drawing comparisons not only across the full set of cases but also within clusters selected to clarify specific issues why do some governments respond promptly to signs of economic trouble while others muddle indecisively for years why do some confine their response to temporary macroeconomic measures while others adopt broader even sweeping programs of reform what leads some countries to experiment with heterodox approaches while most however reluctantly pursue orthodox courses why confronted with intense political protest have some governments persisted while others have altered or abandoned course the answers to these questions are political not economic and they are examined here by thomas m callaghy stephan haggard miles kahler robert r kauman joan m nelson and barbara stallings

institutions investment and growth new cross country and panel data evidence this paper outlines the alternative channels through which institutions affect growth and studies the empirical relationship between institutions investment and growth the empirical results indicate that i free market institutions have a positive effect on growth ii economic freedom affects growth through both a direct effect on total factor productivity and an indirect effect on investment iii political and civil liberties may stimulate investment iv an important interaction exists between freedom and human capital investment v milton friedman s conjectures on the relation between political and economic freedom are correct vi promoting economic freedom is an effective policy toward facilitating growth and other types of freedom jel o17 o40 p51

an early warning system for predicting systemic banking crises in the eurozone a logit regression approach abstract eurosystem macroprudential policies require shared action between national authorities and the european central bank ecb this has created the need for a common basis for macroprudential analysis and as result the macroprudential database mpdb was created by the ecb and the european systemic risk board esrb in 2015 in order to support the central bank s functions and esrb s needs this paper examines a multivariate binary logit early warning model ewm for systemic banking crises with the aim to evaluate the predictive validity of the risk indicators included in the mpdb as well as further variables not employed in previous relevant studies the main finding is that most of the risk indicators employed from mpdb are important for forecasting from 4 to 1 years before the onset of a systemic banking crisis specific banking variables that capture industry concentration assets funding and liquidity are more important on average than macroeconomic variables important financial stress indicators such as clifs and sovciss and economic expectations are also significant the model is robust to various specifications and has a better performance when post crisis observations are not included

why do more polarized countries run more procyclical fiscal policy abstract we study the cyclical behavior of fiscal policy to explain why some countries exhibit procyclical fiscal policy stances being expansionary in good times and contractionary in bad times we develop a model that links the polarization of preferences over fiscal spending to the procyclicality bias we then present evidence that social polarization as measured by income inequality and educational inequality is consistently and positively associated with fiscal procyclicality even after controlling for other determinants from existing theories we also find a strong negative impact of fiscal procyclicality on economic growth

the impact of government subsidies and enterprises r d investment a panel data study from renewable energy in china in this research we aim to understand the influence of government subsidies on enterprises research and development r d investment behavior particularly in china s renewable energy sector we are also interested in examining how the attributes of enterprise ownership act as a moderating variable for the relationship between government subsidies and r d investment behavior three classical panel data analysis models including the pooled ordinary least squares ols model the fixed effect model and the random effect model are employed we find that government subsidies have a significant crowding out influence on enterprises r d investment behavior and that the influence is further moderated by the attributes of enterprise ownership moreover a panel threshold regression model is used to demonstrate how the influence of government subsidies on enterprises r d investment behavior will change when government subsidies increase two thresholds 0 6 and 10 1 are identified we recommend that relevant government departments should motivate enterprise r d investment behavioral intention by increasing subsidies within a certain range different attributes of enterprise ownership should also be considered as part of policy reform and re structuring relating to government subsidies

what drives business research and development r d intensity across organisation for economic co operation and development oecd countries this paper empirically investigates the potential determinants of business sector r d intensity using a panel of oecd countries for the period of 1975 2002 with data measured as five year averages estimates using a system gmm estimator controlling for endogeneity show a high degree of persistence in business sector r d expenditures tax incentives for r d have a significant and positive impact on business r d spending regardless of the specification and estimation techniques furthermore we find that expenditures for r d performed by universities are significantly positively related to business enterprise sector expenditures on r d indicating that public sector r d and private r d are complements direct r d subsidies and the high tech export share are significantly positively related to business sector r d intensity but these effects are only significant using the first differenced gmm estimator the static fixed effects results show that countries characterised by strong patent rights appear to hav

a multiscale analysis for carbon price drivers abstract this study proposes a multiscale analysis model to explore and identify the carbon price drivers at different timescales by introducing the latest multivariate empirical mode decomposition carbon price and its potential drivers are decomposed into several groups of simple modes with specific economic meanings the cointegration techniques error correction model and newey west estimator are combined to capture the carbon price drivers at similar timescales illustrated by the samples of the european union emissions trading system from 2009 to 2016 a few interesting results can be found that at the original data level among the three most important drivers of carbon price electricity price and stock index show positive impacts while coal price shows a negative impact at different timescales the effects of electricity and stock index appear comparatively earlier which drive carbon price from the short timescales and continue to strengthen however the impacts of coal oil and gas prices are lagging behind which respectively drive the carbon price at the medium and long timescales

reduction stasis and expansion of budgets in advanced democracies this article investigates changes within national budget by examining actors behavioral predilections and the institutional constraints under which they operate the article presents three theoret

rules of thumb for sovereign debt crises abstract this paper investigates the economic and political conditions that are associated to the occurrence of a sovereign debt crisis we use a new statistical approach classification and regression tree that allows us to derive a collection of rules of thumb that help identify the typical characteristics of defaulters we find that not all crises are equal they differ depending on whether the government faces insolvency illiquidity or various macroeconomic risks we also characterize the set of fundamentals that can be associated with a relatively risk free zone this classification is important for discussing appropriate policy options to prevent crises and improve response time and prediction

forecasting tourism demand with arma based methods abstract the forecast of tourism volume in the form of arrivals is of special importance for tourism and other hospitality industries because it is an indicator of future demand thereby providing basic information for subsequent planning and policy making in this paper three univariate arma based models are applied to tourism demand as represented by the number of world wide visitors to hong kong japan korea taiwan singapore thailand the philippines australia and new zealand the study employs both monthly and quarterly time series generated from nine principal tourist destinations in asian pacific region in the forecasting exercise to ensure the reliability of the forecasting evaluation forecasting performance based on disaggregated arrival series in a particular destination is examined as well the general impression is that the arma based models perform very well and in some cases the magnitude of mean absolute percentage error is lower than 2 level

are firms that received r d subsidies more innovative this paper looks at the effectiveness of r d grants for canadian plants that already benefit from r d tax credits using a non parametric matching estimator we find that firms that benefited from both policy measures introduced more new products than their counterparts that only benefited from r d tax incentives they also made more world first product innovations and were more successful in commercializing their innovations

back propagation learning in improving the accuracy of neural network based tourism demand forecasting abstract traditional tourism demand forecasting techniques concentrate predominantly on multivariate regression models and univariate time series models these single mathematical function based forecasting techniques although they have achieved a certain degree of success in tourism forecasting are unable to represent the relationship of demand for tourism as accurate as a multiprocessing node based feed forward neural network previous research has demonstrated that using a feed forward neural network can accomplish a higher forecasting accuracy than the regression and time series techniques for a set of linearly separable tourism demand data this research extends the applicability of neural networks in tourism demand forecasting by incorporating the back propagation learning process into a non linearly separable tourism demand data empirical results indicate that utilizing a back propagation neural network outperforms regression models time series models and feed forward neural networks in terms of forecasting accuracy

gains from trade and the sovereign bond market abstract increasing international flows of goods services and financial assets have been shown to increase a country s welfare through various channels this paper studies how a country s access to a bond market affects its welfare gains from international trade we do so by incorporating a sovereign bond market into a simple armington 1969 s trade model while standard trade models suggest surprisingly small gains from trade our model implies that introducing channels through a sovereign bond market greatly magnifies the gains from trade key mechanisms in the model are confirmed by data and the results are found to be robust to a variety of considerations

the impact of iso 9000 diffusion on trade and fdi a new institutional analysis the effects of iso 9000 diffusion on trade and foreign direct investment fdi have gone understudied we employ panel data reported by oecd nations over the 1995 2002 period to estimate the impact of iso adoptions on country pair economic relations we find iso diffusion to have no effect in developed nations but to positively pull fdi i e enhancing inward fdi and positively push trade i e enhancing exports in developing nations

the institutional environment for infrastructure investment the empirical evidence that links political institutions to economic outcomes has grown dramatically in recent years however virtually all of this analysis is undertaken using data from the past three decades this paper extends this empirical framework by performing a two century long historical analysis of the determinants of infrastructure investment in a panel of over 100 countries the results demonstrate that political environments that limit the feasibility of policy change are an important determinant of investment in infrastructure copyright 2002 oxford university press

a comparison of three different approaches to tourist arrival forecasting abstract forecasting plays a major role in tourism planning the promotion of tourism projects involving substantial sums of money requires an estimate of future demand and market penetration the commitment to developing tourism would be much easier if it were possible to analyse current and past tourist traffic and predict the nature of changes in tourism demand these extrapolative approaches to forecasting require historical data this paper investigates the application of three time series forecasting techniques namely exponential smoothing univariate arima and elman s model of artificial neural networks ann to predict travel demand i e the number of arrivals from different countries to hong kong exponential smoothing and arima are two commonly used statistical time series forecasting techniques the third approach neural networks is an artificial intelligence technique derived from computer science according to the analysis presented in this paper neural networks seems to be the best method for forecasting visitor arrivals especially those series without obvious pattern

political sources of growth a critical note on measurement this note critically reviews the research on the link between political systems and economic growth empirical attempts to capture this patent relationship have been met with mixed success we conclude that the political variables used in these studies i e democracy and political instability do not adequately reflect the investors problem we suggest that a political variable that encompasses all kinds of potential discretionary state interventions would be more effective in explaining cross country differences in economic growth

extending the internationalization process model increases and decreases of mne commitment in emerging economies the internationalization process model suggests that firms internationalize by building positions in foreign markets and networks following iterative cycles of learning and changes in commitment however as subsidiaries evolve commitments may be decreased as well as increased a phenomenon that has rarely been studied moreover it remains an open question why strategic intentions at the outset of an investment project differ from the actual operations established we address these questions by extending the model and combining it with mintzberg and waters framework of strategy formation specifically we suggest that commitment decisions correspond to statements of intended strategy while network positions correspond to realized strategies the processes of learning opportunity creation and trust building triggered by commitment decisions are however moderated by institutional influences that lead to divergences between realized and intended strategies we test propositions derived from this framework on a survey data set of subsidiaries of multinational enterprises in hungary lithuania and poland and find that institutional voids and institutional uncertainty affect subsidiary strategy implementation but in opposing directions under high institutional uncertainty investors prefer low commitment but flexible modes that enable later commitment increases whereas institutional voids increase up front information search and adaptation costs that reduce the likelihood of early post entry adjustments our analysis reinforces the need for more differentiated theoretical analyses of how institutions affect business strategies over time

exploring the determinants of best practice benchmarking in electricity network regulation abstract in this paper we use a best practice index constructed from the survey responses of regulators in 40 countries to explore the determinants of the methods used in electricity network regulation drawing from the incentive regulation and institutional economics literature we construct an empirical model to investigate the impact of industry size political and economic institutions on the degree of best practice regulation our results suggest that the existence and experience of an independent regulator is the most important institutional determinant of best practice regulation in addition small numbers of network companies act as a constraint on the use of advanced benchmarking methods finally regional effects are also important these findings lead us to question whether one best practice model is in fact applicable to countries with very different political and economic contexts

the diffusion of new technology and the market for an innovation this article shows that the diffusion of a capital embodied process innovation results from a pattern of decreasing incremental benefits and adoption costs for later adoptions strategic behavior is inessential to this finding we develop a method for comparing diffusion rates for different market structures in the capital equipment market we consider cases with market power on the seller s side of the market and on the buyers side of the market a case with no market power and the welfare optimal case we find that a joint venture adopts an innovation more slowly than other market regimes to protect existing capital investments and that the adoption rate is slower than is socially optimal a monopoly supplier on the other hand adopts at a rate faster than is socially optimal this result is usually also the case when there is no market power finally we show that the monopoly supplier accelerates adoptions faster than in the case where there is no market power but retards later adoptions market power thus makes a difference in diffusion rates and on which side of the market that power lies makes a considerable difference

sovereign debt restructurings preemptive or post default sovereign debt restructurings can be implemented preemptively prior to a payment default we code a comprehensive new dataset and nd that preemptive restructurings i are frequent 38 of all deals 1978 2010 ii have lower haircuts iii are quicker to negotiate and iv see lower output losses to rationalize these stylized facts we build a quantitative sovereign debt model that incorporates preemptive and post default renegotiations the model improves the t with the data and explains the sovereign s optimal choice preemptive restructurings occur when default risk is high ex ante while defaults occur after unexpected bad shocks empirical evidence supports these predictions jel f34 f41 h63

the effect of government funding on private industrial research and development a re assessment a number of previous studies have attempted to determine the effect of federal support of research and development r d performed in industry on the rate of private investment in r d by estimating regressions of private r d expenditure on federal industrial r d expenditure controlling for total demand sales and in some cases other variables this paper presents arguments and econometric evidence in support of the hypothesis that due to misspecification of the private r d equation i e failure to distinguish government sales from other sales previous estimates of the effect of federal industrial r d on private r d funding are seriously upwardly biased

do r d tax incentives lead to higher wages for r d workers evidence from the netherlands this paper examines the impact of the dutch r d tax incentive scheme on the wages of r d workers we construct firm specific r d tax credit rates that vary over time following variations in the dutch r d tax incentive program using instrumental variables we estimate a wage sharing model with an unbalanced firm level panel data covering the period 1997 2004 the elasticity of the r d wage with respect to the fraction of the wage supported by the fiscal incentives scheme is estimated at 0 2 in the short run and 0 24 in the long run

estimating the benefits of targeted r d subsidies we study the expected welfare effects of targeted r d subsi dies using project level data from finland we model the application and r d investment decisions of firms and the subsidy granting decision of the public agency in charge of the program our model and institutional environment allow us to identify different benefits and costs of the r d subsidy program we find that expected effects of subsidies are very het erogeneous and estimated application costs low on average the social rate of return on targeted subsidies is 30 to 50 but spillover effects of subsidies are smaller than effects on firm profits

public debt and growth heterogeneity and non linearity we study the long run relationship between public debt and growth in a large panel of countries our analysis builds on theoretical arguments and data considerations in modelling the debt growth relationship as heterogeneous across countries we investigate the debt growth nexus adopting linear and non linear specifications employing novel methods and diagnostics from the time series literature adapted for use in the panel we find some support for a negative relationship between public debt and long run growth across countries but no evidence for a similar let alone common debt threshold within countries

heart of darkness modeling public private funding interactions inside the r d black box abstract this paper is a first step toward closing the analytical gap in the extensive literature on the results of interactions between public and private r d expenditures and their joint effects on the economy a survey focusing on econometric studies in this area reveals a plethora of sometimes confusing and frequently contradictory estimates of the response of company financed r d to changes in the level and nature of this category of public expenditures yet a theoretical framework seldom is provided within which the empirical results are to be interpreted some such structure is necessary in view of the multiple channels through which public research can affect private r d performance especially as not all the effects flow in the same direction a major cause of inconsistencies in the empirical literature is the failure to recognize key differences among the various policy experiments being considered depending upon the economy in which they are embedded and the type of public sector r d spending that is contemplated using a simple stylized structural model we identify the main channels of impact of public r d we thus can characterize the various effects distinguishing between short and long run impacts that would show up in simple regression analyses of nominal public and private r d expenditure variables within the context of our simple model it is possible to offer interpretations that shed light on recent cross section and panel data findings at both high i e national and low specific technology area levels of aggregation

beggar thy neighbor the in state out of state and aggregate effects of r d tax credits abstract the proliferation of r d tax incentives among u s states in recent decades raises two questions i are these tax incentives effective in increasing in state r d ii how much of any increase is due to r d being drawn away from other states this paper answers i yes and ii nearly all the paper estimates an augmented r d factor demand model using state panel data from 1981 to 2004 i estimate that the long run elasticity of in state r d with respect to the in state user cost is about 2 5 while its elasticity with respect to out of state user costs is about 2 5 suggesting a zero sum game among states

do research subsidies crowd out private r d of large firms evidence from european framework programmes abstract we evaluate whether public research subsidies are complements or substitutes to the private r d spending of large firms combining data on the ec s three most recent framework programmes fp6 fp7 and h2020 with data on the world s largest research companies we use matching and difference in difference estimation to compute the causal impact of subsidies on private r d spending while on average subsidies have not led to increased private research budgets we identify policy relevant heterogeneities finding that subsidies increased own r d for smaller firms and projects as well as more r d intensive firms we also find that horizon 2020 successfully stimulated firms private r d spending while its predecessors did not

estimating the impact of government r d abstract if we do not pay for an input it is important it is suggested that the r d literature by ignoring the fact that government r d is given away has confused zero value of marginal product with zero marginal physical product

uneven domestic knowledge bases and the success of foreign firms in the usa this paper investigates the effect of within country and across country inequalities on firms fdi performance and finds drivers of success in an advanced host economy the usa differ for firms from developed compared to developing countries returns to fdi for firms from developed countries are significantly correlated with home countries level of economic development in contrast successful developing country firms are from countries with lower within country inequality and reflect the industrial structure associated with developing countries they are concentrated in scale intensive industries and benefit especially from capital investment the findings suggest that fdi reflects rather than disrupts unevenness in knowledge bases globally