adoption of an imf programme and debt rescheduling an empirical analysis the existence of an empirical relationship between the adoption of an imf programme and the concession of a debt rescheduling by commercial and official creditors is tested using a bivariate probit model if countries who have arrangements with the imf are more likely than others to obtain a rescheduling of their external debt we could conclude that the adoption of an imf programme could work as a sort of signal of a country s good willingness which is thus rewarded with the debt relief the results confirm the existence of a significant effect of the adoption of an imf programme on the subsequent concession of a debt rescheduling by creditors

growth and income distribution in a credit money economy introducing the banking sector into the linear production model this paper attempts to incorporate the post keynesian view of the endogenous money supply into the sraffian linear production model the framework presented here unifies some key contributions made by sraffa the price equations kaldor and kalecki the endogenous nature of money in the industrial economy and the framework of the institutional theory of income distribution and keynes liquidity preference and the concept of the own rates of interest with its implication for the long period position two different positions in the endogeneity view the accommodationist and the structuralist are classified in terms of method of selecting exogenous and endogenous variables in this way we hope to show that credit and money can play an essential role from the demand and or the supply side by having a permanent impact on the growth path and the state of income distribution of an economy copyright 2002 oxford university press

cost of living clauses in union contracts determinants and effects this study investigates for the period 1969 81 the determinants of the incidence and strength of cost of living adjustment cola clauses in u s manufacturing and the effect of those clauses on wage inflation the sample includes approximately 5 570 union contracts in over 2 600 bargaining relationships the authors find that both union bargaining power and inflation uncertainty positively affected the probability that a cola clause was adopted as well as the strength of the clause adopted negatively influencing the incidence and strength of cola clauses during the period studied were unanticipated changes in an industry s prices the authors also find evidence that wage inflation was greater under contracts with uncapped colas than under all other contracts a result that also was positively influenced by the amount of unanticipated inflation from these results the authors suggest a number of possible trends in the use and effects of cola clauses

technological development in a dual economy alternative policy levers for economic development abstract although technological development is widely recognized as a function of human ingenuity and innovation and seen by many development scientists as an important means for achieving economic development its actual use as a policy lever remains largely underutilized since the process of its implementation is unclear this paper attempts to identify operational instruments for supporting technological development so it can be incorporated easily into the development plans a system dynamics model of a dual economic system incorporating both the behavioral responses of the economic actors to competition and their ability to innovate is developed this model is used as an experimental apparatus to search for appropriate technological development policies to support economic growth and change income distribution policies to promote competition among the monopolistic formal firms while simultaneously providing positive assistance to the competitive informal firms appear to offer promising alternatives to the traditional fiscal policy levers mainly affecting prices and factor costs

the imf a bird s eye view of its role and operations the international monetary fund imf is the world s premier international financial institution with 184 member countries and active programmes in a significant number of them at any one time the fund attracts a great deal of attention much of it critical but the discussion is often polemic in style strongly held but frequently opposing views are expressed this survey attempts to examine in an objective way the theory and evidence relating to the fund s operations many aspects of the empirical research are relatively recent and a universal consensus is yet to emerge as a consequence there is scope for disagreement to persist however the research is also gradually clarifying many important issues the format for the survey is to examine the life cycle of imf arrangements what makes a country turn to the fund for assistance should the imf be lending what influences the outcome of negotiations and the design of programmes are imf programmes effective and why do some countries make prolonged use of imf resources for completeness there is also some discussion of the history of the imf the extent to which fund policies have been influenced by advances in economic theory and the fund s systemic role important organisational and governance issues are also covered briefly although primarily adopting an economist s perspective the survey reflects the growing recognition that in order to understand the imf s operations economics has to be combined with politics examining the imf is an exercise in applied political economy copyright 2007 the author journal compilation 2007 blackwell publishing ltd

geopolitics and international organizations an empirical study on imf facilities there is growing awareness that the distribution of imf facilities may not be influenced only by the economic needs of borrowers this paper focuses on the fact that the imf may favour geopolitically important countries in the distribution of imf loans differentiating between concessional and non concessional facilities to carry out the empirical analysis we construct a new database that compiles a wide array of proxies for geopolitical importance for 107 imf countries over 1990 2003 focusing on emerging and developing economies we use a factor analysis to capture the common underlying characteristic of countries geopolitical importance as well as a potential analysis since we also want to account for the geographical situation of the loan recipients while controlling for economic and political determinants our results show that geopolitical factors influence notably lending decisions when loans are non concessional whereas results are less robust and in opposite direction for concessional loans this study provides empirical support to the view that geopolitical considerations are an important factor in shaping imf lending decisions potentially affecting the institution s effectiveness and credibility

inside debt aggregate demand and the cambridge theory of distribution this paper presents a kaleckian model of aggregate demand with inside debt and a generational structure the model shows how worker borrowing and population growth affect the level of aggregate demand it also reexamines the cambridge theorem and shows that the introduction of inside debt arising from worker borrowing means that the rate of profit and profit share are no longer independent of worker consumption behavior because increased worker borrowing increases capitalists debt service income this necessitates a decline in profits to maintain the balance between capitalists savings and their investment funding requirement c 1996 academic press limited copyright 1996 by oxford university press

cross sectional versus panel estimates of union wage effects abstract the main objective of this paper is to compare and reconcile the cross sectional and the panel estimates of union wage effects it uses panel survey of income dynamics psid data for a period of 6 years 1979 1984 unlike what freeman 1984 predicted i e panel union wage estimates would be smaller than pure cross sectional estimates due to the cumulative nature of the errors in reporting union status in the former both the cross sectional and panel estimates of union wage effects are very similar ranging from 11 to 13 unions seem to have flattering effect on the age earnings profiles not surprisingly the rate of return to schooling of non union members is larger than that of the union members

a true test do imf programs hurt the poor this article analyses the effect of imf programs on poverty with data from 82 countries during 1985 2000 two indicators of poverty infant mortality rates and the human development index hdi are utilized and the effects of the imf s concessionary and nonconcessionary programs are investigated as well as economic and institutional factors the results show that the imf s programs have no significant direct impact on poverty growth and good institutions however both have significant impacts lowering infant mortality and increasing the hdi the fund s concessionary programs increase the impact of growth on lowering infant mortality while the nonconcessionary programs lower the impact of growth on the hdi where a great proportion of the people are suffered to languish in helpless misery that country must be ill policed and wretchedly governed a decent provision for the poor is the true test of civilization samuel johnson 1791 once a country was in crisis imf funds and programs not onl

the effect of imf programmes on economic growth in low income countries an empirical analysis using an lic specific participation model we adopt a propensity score matching psm methodology to compare economic growth performance in countries with and without imf programmes over the period

monopolistic competition credibility and the output costs of disinflation programs an analysis of price controls abstract brazil argentina and israel all used price controls as part of disinflation programs in 1985 1986 in each case they were intended to break an inertial component of inflation this paper focuses on the interaction between lack of credibility of government monetary policy announcements and the price setting behavior of forward looking firms we show that this interaction can lead to inertia extending well beyond the price setting period lack of credibility is then shown to lead to output losses during a disinflation program the paper analyses asset price behavior during disinflation programs with and without price controls and the influence of credibility problems finally we show that if past government policy has any information content about future government policy cheating on current announcements of tight policy buys current employment gains during the price control period at the cost of higher inflation afterwards sustaining low inflation after the price control period thus requires restrictive monetary policy during the price control period

effectiveness of imf supported stabilization programs in developing countries abstract this paper examines the effectiveness of fund supported stabilization programs by investigating whether the imf achieves its own objectives in such programs even though the fund s conditionality prescribes fiscal and monetary discipline in program countries the results of the empirical analysis show that the imf cannot impose its conditionality even during program years furthermore when successive interprogram periods are considered program countries enter a new program in a worse macroeconomic condition than they entered the previous program these results and the fact that stabilization programs have a revolving nature are inconsistent with the effectiveness of imf supported stabilization programs and may signal the existence of moral hazard

union vs nonunion wage norm shifts empirical investigations of wage determination have often produced autocorrelated residuals from time series wage equations runs of overor underprediction have usually been regarded as weaknesses in specification to be corrected or explained away in 1980 however george perry suggested that such runs represent an important if neglected characteristic of american wage setting he argued that norms of wage change develop in the labor market these norms according to perry change discretely there are periods of more or less wage pushiness aggregate wage indexes can be influenced even if norm shifts are not fully reflected everywhere providing those sectors that are affected have sufficient weight in the indexes an obvious division in the labor market is between the union and nonunion sectors there is reason to believe that while there has been a downward shift in wage norms recently the impact has been concentrated in the union sector see my 1985 article indeed the union sector is probably inherently more prone to norm shifts than the nonunion

the financial system and the pasinetti theorem palley inside debt aggregate demand and the cambridge theory of distribution cambridge journal of economics vol 20 no 4 465 74 1996 financial institutions and the cambridge theory of distribution cambridge journal of economics vol 26 no 2 275 7 2002 considers the pasinetti theorem in the context of the credit money system where banks generate debts endogenously and claims that the theorem ceases to hold in such a system being valid only in the loanable funds system this paper traces the root of palley s claim to his assumption regarding the ownership of banks sets out an alternative more realistic ownership arrangement and thereby restores the pasinetti theorem unscathed in the credit money system at least in the kind palley must have considered the paper however uncovers the case where the theorem indeed collapses and discusses the reason for it the hoarding of a non interest bearing asset copyright 2006 oxford university press

the existence of a two class economy in a general cambridge model of growth and distribution the existence of a two class economy in the kaldor 1956 model of economic growth and income distribution has been investigated by a number of economists the most recent contributions include maneschi 1974 gupta 1977 miickl 1978 fazi and salvadori 1981 recently pasinetti 1983 has taken on this issue once again in an article in which the kaldor model is analysed as a special case of a more general model in which three different savings ratios are envisaged this model was also studied by chiang 1973 maneschi 1974 and moore 1974 however hitherto the analysis has been carried out assuming a linear relationship between savings and income in this paper we explore a general model in which no parti cular assumption is made about the capitalists and workers savings functions some novel results emerge a cambridge theory of income distribution is built without having to resort to oversimplified functional forms and the famous 1962 pasinetti equation whereby the economy s rate of profit is determined only by the natural rate of growth and the savings habits of capitalists can be reached independently of any assumption on savings formation provided that the rate of interest is equal to the rate of profit the paper also provides a graphic presentation of the analysis this clarifies the geometric argument behind the properties of the kaldor model and makes obvious once again that recent criticisms of this model are unfounded in the case of the threefold savings ratio model our algebraic and geometric analysis yields results which are not completely in line with those reached by pasinetti 1983 some remarks on these differences are made

the effect of imf programs on economic growth abstract using a bivariate dynamic version of the heckman selection model we estimate the effect of participation in international monetary fund imf programs on economic growth we find evidence that governments enter into agreements with the imf under the pressures of a foreign reserves crisis but they also bring in the fund to shield themselves from the political costs of adjustment policies program participation lowers growth rates for as long as countries remain under a program once countries leave the program they grow faster than if they had remained but not faster than they would have without participation

the intra unit wage structure and unions a median voter model this study adopts the median voter model to analyze the influence of unions on wage structures within collective bargaining units the model predicts that the intra unit wage structure will be changed to increase the share of the total wage bill received by the median members of the bargaining unit this prediction is examined through a case study of a collective bargaining unit the faculty of the state university system in minnesota the changes in the wage structure of the unit proposed by the union and those ultimately implemented are both consistent with the median voter model

unionism and wages a longitudinal analysis the impact of unionism on relative wage rates is a topic of long standing interest in labor economics over the years researchers have used a variety of approaches to estimate the wage advantage associated with union membership initially researchers compared the average wages of union and nonunion workers in specific sectors such as an industry this approach has the obvious limitation of not accounting very well for the various quality or productivity differences that exist among workers differences that command compensating wage payments more recent studies have used cross section wage regressions to control for these other determinants of wages and thereby improve estimates of the union wage effect using large microeconomic data files containing detailed information on characteristics of individual workers numerous studies have estimated wage regressions that include controls for worker characteristics education experience etc and a dichotomous variable indicating union membership status as explanatory variables 2 the coefficient of the union membership variable in these regressions is taken as an estimate of the average impact that unionism has on wage rates controlling for measured differences in characteristics among workers unfortunately the wage regression approach does not completely resolve the problem of standardizing the union nonunion wage comparison for differences in worker quality even with detailed microdata on the characteristics of individual workers it is simply not possible to specify a set of variables that completely captures all worker specific differences in productive ability some aspects of human capital are too subtle to be operationally specified and included in a wage regression although they are recognized and paid for by employers to the extent that these unmeasured worker specific differences are correlated with union membership the wage regression will incorrectly attribute a relative wage impact to unionism 3 an alternative measurement approach that has several advantages over the wage regression is to compare the wage received by the same worker as a union and nonunion member in the past data limitations have prevented researchers from making such a comparison since only a small portion of workers change union status in a given period an unusually large longitudinal file is needed to yield a sufficient number of observed changes for a meaningful analysis 4 recently however large longitudinal data files on individuals participating in the current population survey have become available this paper uses these data to estimate the impact a change in union status has on the worker s wage the

macroeconomic effects of imf sponsored programs in latin america output costs program recidivism and the vicious cycle of failed stabilizations we investigate the effects of imf stabilization programs and the reasons behind the unusually high imf activity and relatively low program completion rates in latin america we base our tests on a panel and distinguish between imf program approvals and completion we find that latin america has higher output costs of imf programs especially when completed no improvement in the current account and a much higher likelihood of program failure and recidivism than other regions the common finding that entering into an imf supported program incurs real short run costs on the economy is entirely driven by the experiences in latin america

how bad are twins output costs of currency and banking crises we investigate the output effects of banking and currency crises in emerging markets focusing on whether twin crises entail especially large losses recent literature emphasizes the costs of financial crises and suggests that twin crises are particularly damaging to the real economy using a panel data set for 1975 97 we find that currency banking crises are very costly reducing output by about 5 8 8 10 over a 2 4 year period the cumulative loss of both types of crises is therefore very large we do not find however additional feedbacks or interactive effects associated with twin crises further damaging the economy

many happy returns recidivism and the imf abstract imf programs are designed to provide a temporary source of finance for countries with balance of payments disequilibria consequently borrowing from the imf should occur infrequently and be widely distributed among member countries however some countries are recurrent users of fund resources this paper investigates which variables account for multiple borrowings from the imf we use models of count data to examine the impact of the need for financing domestic policies external shocks and structural and institutional factors on borrowings between 1980 and 1996 we find that recidivist borrowers have lower reserve holdings larger current account deficits and capital outflows lower but less volatile terms of trade larger debt service and external debt ratios lower investment rates and per capita income and weak governance

the interindustry structure of unionism earnings and earnings dispersion this study examines the relationship between unionism and earnings dispersion within u s manufacturing and nonmanufacturing industries the author hypothesizes not only that unionism narrows earnings dispersion as others have shown but also that the dispersion in earnings reflecting the degree of worker homogeneity influences the level of unionism estimation of a three equation model using 1970 three digit industry data provides evidence regarding the simultaneous determination of unionism earnings and earnings dispersion within u s industries the estimated equalizing effects of unionism on within industry earnings distributions are found to be significant both in the manufacturing and nonmanufacturing sectors the size of these estimates increasing after accounting for simultaneity in addition the dispersion in earnings does appear to affect the level of unionism although the evidence on this point is ambiguous

disinflation and fiscal reform a neoclassical perspective abstract many latin american countries engaged in disinflation programs based on both exchange rate management and fiscal reforms in most of the cases part of the fiscal reform was not implemented and the program had to be abandoned the aftermath of these programs is not encouraging in this paper we show that if the reform process is uncertain and inflation has welfare costs the optimal exchange rate policy indeed implies the initiation of a disinflation program at the announcement of the fiscal reform even if it implies the possibility of a balance of payments crisis finally we show that it is optimal to engage in a sequence of stabilization programs until one of them is successful

the effects of imf programs in the third world debate and evidence from latin america abstract this article reviews the debate about the effects of imf sponsored stabilization programs in the third world after examining recent studies by fund economists results of a new study on a latin american country set are presented in this research imf programs are associated with insignificant changes in the current account significant improvements in the overall balance of payments increases in inflation mixed effects on growth and a strong and consistent pattern of reduction in labor share of income the latter result is incorporated into a distribution oriented critique of fund policy

demand driven inequality endogenous saving rate and macroeconomic instability this article examines consumption dynamics in a cambridge model of growth and distribution the model endogenises the workers saving rate and incorporates out of equilibrium dynamics explicitly the analysis identifies a new mechanism of macroeconomic instability that emerges from the interaction between the kaldorian process of demand driven inequality and the workers saving behaviour the mechanism can generate perpetual cycles where the upwards phase is characterised by a prolonged period of falling saving rate and increasing income inequality the article discusses the empirical relevance of the formal analysis the article discusses the empirical relevance of the analytic results

economic determinants of imf financial arrangements abstract we analyze factors that lead to imf approval of financial arrangements we account for both economic variables that induce a country to seek an imf arrangement demand side factors and macroeconomic policy commitments that the imf considers when deciding whether to approve it supply side factors using a pooled sample of annual observations for 91 developing countries over 1973 1991 we obtain maximum likelihood bivariate and univariate probit estimates of the approval of an imf arrangement for a given country in a given year a number of demand side and supply side variables are statistically significant determinants of the approval of an imf arrangement

evaluating effective income tax progression abstract an algorithm to compute effective income tax progression is devised for use when taxes are a function of both money income and other socioeconomic attributes and the data is in grouped summary form suppressing non income information effective progression can be evaluated at percentiles in the distribution of either money or equivalent income the normative significance of the new measures is explained in both cases the methodology is illustrated by application to u s individual income tax annual data for 1950 1987 yielding contour plots which show how effective progression has varied across the income distribution and with the passage of time

imf lending programs participation and impact abstract participation in imf programs has been an option that more and more developing countries have exercised in recent years in this paper a detailed analysis of such participation over the period 1976 1986 provides a number of insights into the motivations for and the macroeconomic effects of such participation participation is driven by a combination of past performance present external influences and sluggish adjustment of developing countries the ability to predict which countries will participate in the imf program is quite good with nearly 90 percent of variation in such choices accounted for by the explanatory variables employed increased participation has as contemporaneous effects a reduction in economic growth and domestic investment and an improvement in the current account lagged effects of increased participation on economic growth and domestic investment are positive and in most estimates quantitatively greater than the contemporaneous effects there is also evidence of significantly lower public investment an increased budget surplus and real depreciation of the exchange rate with increased participation results for domestic credit creation and government current expenditure although they have a sign consistent with more austere policy cannot be shown to be significantly different from those not participating

fiscal discipline and the choice of a nominal anchor in stabilization abstract the conventional wisdom is that exchange rate based stabilizations induce more fiscal discipline than money based programs the latin american experience does not support this view among the major stabilization programs implemented since 1960 the mean increase in the primary balance to gdp ratio was 3 2 percentage points under money based programs as opposed to only 0 2 percentage points under exchange rate based programs we present a model where fiscal policy is set by an optimizing but non benevolent government that replicates this stylized fact if the policy maker is impatient a money based stabilization provides more discipline and higher welfare for the representative agent than does an exchange rate based stabilization

financial institutions and the cambridge theory of distribution this paper shows how the cambridge theory of distribution is affected by the nature of financial intermediation when credit markets are akin to loanable funds markets in which lenders transfer resources to borrowers the cambridge theory holds and steady state income distribution is independent of workers saving behaviour however when credit markets embody endogenously generated bank money the cambridge theory does not hold financial institutions and endogenous money therefore matter for long run steady state outcomes just as they do for short run macroeconomic outcomes copyright 2002 oxford university press

a retrospective on the bretton woods system lessons for international monetary reform at the close of the second world war when industrialized nations faced serious trade and financial imbalances delegates from forty four countries met in bretton woods new hampshire in order to reconstruct the international monetary system over the next 25 years with currencies fixed to the american dollar world trade expanded vigorously inflation remained moderate and national income in industrialized countries rose faster than during any other period in this volume three generations of scholars and policy makers some of whom participated in the 1944 conference consider how the bretton woods system contributed to economic stability and rapid growth between 1945 and 1971 and discuss the future of the international monetary system in light of the bretton woods experience since president richard m nixon ended the bretton woods system in 1971 exchange rates have exhibited increasing flexibility after twenty years of floating rates however there is considerable interest in once again limiting exchange rate flexibility the apparent success of the european monetary system a fixed rate arrangement loosely based on the postwar system and the prospect of european monetary unification increase interest in a new internationally stable exchange rate moreover some academics and government officials see fixed rates as a way to help eastern europe and the former soviet union cope with pressing economic and political problems the economists historians political scientists and policy makers who contribute to this volume relate the bretton woods system to earlier fixed rate schemes and consider the political background of the original new hampshire meeting using recenteconomic theory for example work on time consistency and credibility they explore adjustment liquidity and transmission under the system the way it affected developing countries and the role of the international monetary fund in maintaining a stable rate the authors examine th

inside debt aggregate demand and the cambridge theory of distribution a note palley 1996 inside debt aggregate demand and the cambridge theory of distribution cambridge journal of economics vol 20 465 74 argues that when inside debt is taken into account the pasinetti theorem does not apply palley s conclusion however derives from a mis specification of the steady growth equilibrium condition according to which capitalists accumulation of wealth equals their saving in this note palley s mis specification is corrected and it is shown that when the rate of profits is equal to the rate of return on debt obligations the pasinetti theorem still holds furthermore the range of validity of the dual theorem of meade 1963 the rate of profit in a growing economy economic journal vol 73 no 292 665 74 and samuelson and modigliani 1966 the pasinetti paradox in neoclassical and more general models review of economic studies vol 33 no 4 269 302 is severely reduced copyright 2002 oxford university press

unionism oligopoly and rigid wages t he proposition that imperfections in product and labor markets lead to wage rigidity has been stressed by many authors in their analysis of wage inflation the most commonly held view is that wage differentials which result from these imperfections behave countercyclically that is periods of rapid inflation and or low unemployment are believed to be associated with reduction of the wage premium attributed to both unionization and oligopolistic structure on the labor market side it is argued that wage rigidity is primarily due to lags introduced by collective bargaining 7 in periods of low demand union wage levels are maintained through long term agreements on the upswing these same long term agreements do not allow the union wage to react as quickly as the nonunion wage to increases in demand cross sectional estimates of economy wide union nonunion differentials are often used to support this hypothesis 3 on the product market side it is often argued that concentrated industries have the ability to raise prices in periods of economic slack this market power is a permissive factor which may allow workers in these industries to demand a share of the excess profits 4 of course the work force must have some method of demanding this share it is usually assumed that union power is relatively great in these concentrated industries thus this argument is really conditioned on imperfections in both the labor and product market and is therefore much closer to an interaction hypothesis than a pure oligopolistic structure hypothesis proponents of this argument further hypothesize that concentrated industries do not increase prices as fast as competitive industries in an economic upturn wage differentials between concentrated and unconcentrated industries are therefore expected to narrow in periods of rapidly increasing prices with one exception 5 the support for this hypothesis comes from studies of wage changes in concentrated versus unconcentrated industries 6 this paper is a reexamination of the wage rigidity hypotheses the impacts of unionization and concentration on average wage levels are first estimated for a series of cross sectional observations in manufacturing between 1947 and 1976 the differences in these cross sectional impacts across time are then analyzed using rates of inflation and unemployment levels as explanatory variables

a double hurdle model of cigarette consumption this paper shows the importance of the double hurdle approach for modelling individuals cigarette consumption using data from the uk general household survey and argues that participation and consumption should be treated as separate individual choices the likelihood function for the full double hurdle is derived and it is shown how restrictions on the stochastic specification of the model and auxillary information which identifies ex smokers allow it to be decomposed the empirical results highlight the value of the sample separation information and the need to model starting and quitting as separate decisions

longitudinal analyses of the effects of trade unions but union members are different from nonmembers in unobserved ways biasing your estimates y ou should make a selectivity bias correction simultaneously determine union status and economic outcomes develop an unobservables model use longitudinal data archetypical comment on virtually any study of the economic effects of umomsm or suitably modified on any other empirical subject

over optimism and the imf one way of assessing the impact of imf programmes is to see whether performance and policy targets are achieved however does a failure to hit targets mean that the programmes have been unsuccessful or could it be that targets have been too ambitious this paper analyses political economy factors impinging on governments and on the imf that may lead to serial over optimism it goes on to examine the empirical evidence that is consistent with over optimism having considered whether over optimism is a cause for concern and concluded that it is the paper considers reforms that would allow realism to replace it by eliminating over optimism it is argued that the psychology of failure surrounding imf programmes could be significantly reduced or even broken

is africa different abstract africa s macroeconomic response to external shocks was significantly differrent from that of other developing countries during 1976 1986 nonparametric tests that correct for differing initial conditions indicate significantly lower economic growth in african economies average inflation was also significantly lower while current account deficits were larger economic policies in african countries are characterized by significantly larger budget deficits and government current expenditure as a share of gross domestic product and by greater inward orientation african economies in the cfa franc zones are distinguished by relatively lower inflation budget deficits and less reduction in investment gnp ratios

evaluating the effect of imf lending to low income countries the purpose of this paper is twofold to apply to a group of low income borrowers from the imf the most commonly used technique for measuring the independent effects on economic developments of imf support and to develop a minimum set of diagnostic tests for determining whether necessary conditions for using the methodology exist the modified control group methodology is used to measure the effect of imf support on three key variables output growth inflation and the external debt rservice ratio the sample comprises adjustment programs begun during 1986 1991 supported by the imf s enhanced structural adjustment facility esaf the distinguishing feature of the modified control group approach is the estimation of a policy counterfactual policies that would have been followed in the absence of imf support against which to compare actual policies and resulting outcomes using this approach for the esaf the sample reveals statistically significant beneficial effects of imf support on output growth and the debtrservice ratio but no effects on inflation diagnostic tests of these results rarely if ever reported in the literature are shown to be critical in interpreting the validity of the results of assessments of adjustment lending for this sample at least the diagnostic tests cast doubt on the reliability of estimates of the effects of imf supported programs using panel data in a modified control group model the most obvious and manageable modifications to the

the imf forever an analysis of the prolonged use of fund resources considerable concern has been expressed about the prolonged use made of international monetary fund imf resources by a number of member countries some commentators have seen this as being fundamentally at odds with the role of the imf as a source of temporary balance of payments support and as one aspect of mission creep by the fund the perceived importance of the issue is reflected by the fact that the first report of the fund s independent evaluation office focused on it this article provides a detailed analysis of the prolonged use of fund resources it assesses the extent to which it is a problem and draws on available empirical evidence both qualitative and quantitative to isolate the causes of prolonged use it concludes by examining the policy questions to which prolonged use gives rise

social security in a classical growth model this paper develops a growth model with overlapping generations of workers who save for life cycle reasons and ricardian capitalists who save from a bequest motive the population of workers accommodates growth so that the rate of capital accumulation is endogenous and determines the growth of employment two regimes are possible one in which workers saving dominates the long run and a second in which the long run equilibrium growth rate is determined completely by the capitalist saving function sometimes called the cambridge equation the second regime exhibits a version of the pasinetti paradox changes in workers saving affect the level but not the growth rate of capital in the long run applied to social security this result implies that an unfunded system relying on payroll taxes reduces workers lifetime wealth and saving creating level effects on the capital stock without affecting its long run growth rate these effects are mitigated by the presence of a reserve fund various levels of which are examined calibrating the model to realistic parameter values for the us facilitates an interpretation of the controversies over the percentage of the national wealth originating in life cycle saving and the effects of social security on saving the model is offered as an analytical framework for the review of current topics in fiscal policy in particular identifying the social security reserve fund as a potential vehicle for generating capital accumulation and effecting a progressive redistribution of wealth copyright 2004 oxford university press

an atheoretic evaluation of success in structural adjustment successful structural adjustment programs are a stated goal of many developing country governments international financial institutions such as the world bank and the international monetary fund have made structural adjustment a major target of lending policy the u s government enshrined structural adjustment as the centerpiece of its recommendations to indebted countries in the baker and brady plans despite its importance however there is not yet a consensus on a definition of structural adjustment or on an appropriate measure of success in structural adjustment in this study i propose a definition and measurement of structural adjustment suggest a methodology for identifying those policies conducive to successful structural adjustment and implement these measures and methodologies for a panel of 74 developing countries over an 11 year period structural adjustment is often put forward in the rhetoric of free markets however as with its predecessor the stabilization program its roots are more likely found in the integration of developing countries in the world economy stabilization programs arose because of inconsistency between internal policies and external balance in developing countries in external balance current account deficits are offset by sustainable private and official capital flows as documented by w cline and s weintraub and by j williamson stabilization programs were implemented in countries characterized by nonsustainable capital flows and were designed to reestablish external balance in the short run through demand management even at the cost of economic growth 2 structural adjustment programs by contrast are based on the mediumand long run need to maintain external balance and in addition to achieve positive economic growth and development 3 structural adjustment is thus a reallocation of resources to compete best in and take

financial liberalisation in emerging markets how does bank lending change financial liberalisation has often failed in the past due to underestimated problems of structural change we analyse such changes in lending behaviour of thai commercial banks during a liberalisation phase by way of unique micro data liberalisation has expected positive effects such as lowering the interest rate spread and collateral requirements liberalisation causes structural change such as a decline in collateral based and relationship banking however the liberal isation evidence is consistent with more risk taking such as lending to more risky projects and less protection against default the thai experience suggests obvious policy lessons

shifting wage norms and their implications at least since the early 1970 s it has been apparent that the cyclical variations in inflation summarized by the short run phillips curve are only one part of the inflation problem that confronts modern industrial economies another part is the relative persistence of an established rate of inflation there is a good deal that we do not understand about this persistence but i find the most useful way to model it is to start with the concept of a relatively stable wage norm by which i mean a norm for the rate of wage increase the model distinguishes sharply between the cycle and the trend in inflation with the wage norm determining the trend the variations in inflation of the typical business cycle take place around the existing wage norm and generate the empirical short run phillips curve the wage norm itself is affected little if at all by the typical business cycle historically the wage norm has been shifted by prolonged departures from typical business cycles or by other extreme economic developments figuring out more precisely what it takes to shift wage norms or what might keep them from shifting is a central challenge for understanding inflation better before turning to its implications let me sketch the behavioral underpinnings of the wage norm model and the empirical evidence about wage norms the norm rate of wage increase has no allocational significance and describes the trend of nominal wages independent of real aggregate demand or relative demand effects in this respect it is like the anticipated rate of inflation in many familiar models wages are not determined in an auction like labor market that clears over any reasonable interval of time rather they are established by wage setting firms with a profit maximizing interest in their long run relation with their employees in some cases in a bargaining situation with unions under both the implicit and explicit contracts that thus dominate wage setting keeping up with the norm is the neutral standard for firms an individual firm that raises wages in line with the norm neither improves nor worsens its relative position as an employer a firm that wants to expand employment will typically offer a higher wage than would be required just to keep up with the norm relative wages and relative employment levels are thus codetermined in this process when most firms want to expand employment as in a cyclical upturn the same behavior is part of the process producing the modest cyclical rise in inflation that we observe as the short run phillips curve thus the onset of cyclical inflation is not a sign that capital and labor resources are being overutilized nor is it a sign that inflation is on an accelerating path or even that wage norms are shifting up in analyzing u s postwar data i have found the wage norm shifted up substantially by the end of the 1960 s and down again though not by as much by the end of the 1980 82 recession see my 1983 paper the first episode was a period with a historic expansion that ended with several years of very low unemployment rates the second was a recession of unusual length and severity that ended with the highest unemployment rates since the 1930 s there is also evidence of a small shift down in the wage norm after the weak economic performance of 1957 61 which featured two recessions with only an aborted recovery in between i also found evidence for germany the united kingdom and japan of upward shifts in wage norms in manufacturing industries after the 1960 s and downward shifts in the early 1980 s see my 1986 paper all these episodes suggest the kinds of extreme cyclical developments that have shifted wage norms in the postwar period the brookings institution 1775 massachusetts avenue nw washington d c 20036 in preparing this paper i benefited from discussions with charles schnl t7 e

the union nonunion wage differential over the business cycle evidence from psid abstract there is some prior evidence lewis 1963 mellow 1981 freeman 1984 to support the notion that union wage premium is counter cyclical this phenomenon may be a product of union wage rigidity which results from a long term union contracts and b union reliance on layoffs due to seniority dominance rather than work share practices in response to worsening economic conditions and efficiency wage considerations this paper within a pooled cross section time series framework empirically tests for the presence of perceived counter cyclical nature of the union nonunion wage differential using the psid data from 1979 1984 results from this study do support the presence of counter cyclical union wage premium during the time period studied