oil volatility and sovereign risk of brics abstract we study the dependence between oil implied volatility shocks and brics sovereign risk from july 2009 to march 2017 first we examine spillovers in value at risk using multivariate regression quantiles and reveal that oil volatility represents a common risk for oil exporting and oil importing brics countries we also employ a quantile impulse response function and reveal the presence of an asymmetry in the mechanisms of shock transmissions between oil exporters russia and brazil and oil importers china and india the former are more sensitive to positive oil shocks whereas the latter are more sensitive to negative oil shocks second we measure the directional predictability in the quantiles using the bivariate cross quantilogram approach and show that in most cases a low high volatility of oil market predicts low high sovereign risk at various quantiles and lags policy implications are discussed

do more jobs in the modern sector increase urban unemployment abstract this note considers the effect of an increase in the rate of urban job creation on migration and urban unemployment the different results obtained when the issue was previously analyzed are reconciled the period of time allowed for adjustment and the specification of the migration function are crucial in explaining the different results

understanding the behavior of bank spreads in latin america abstract over the last decade many countries in latin america have eliminated interest rate ceilings reduced reserve requirements and stopped direct credit controls these market oriented reforms have encouraged financial deepening thereby producing considerable economic benefits to the countries nevertheless the persistence of high interest rate spreads has been a disquieting outcome of the reforms this paper explores the determinants of bank spreads in a systematic way for argentina bolivia chile colombia mexico peru and uruguay during the mid 1990s the analysis shows that high operating costs raise spreads as do high levels of non performing loans although the size of these effects differs across the countries in addition reserve requirements in a number of countries still act as a tax on banks that gets translated into a higher spread beyond bank specific variables uncertainty in the macroeconomic environment facing banks appears to increase interest spreads the combination of these microeconomic and macroeconomic factors is a cause for concern in latin america as spreads widen the cost of using the financial system becomes prohibitive to some potential borrowers in addition the results suggest that bank capital requirements may not prevent excessive risk taking by banks when bank spreads are high

livelihoods and poverty the role of migration a critical review of the migration literature this review of the literature concludes that development studies have paid insufficient attention to labour migration and makes a plea to integrate analyses of migration within those of agricultural and rural development it emphasises that population mobility is much more common than is often assumed and that this has been so throughout human history in fact available material suggests that it is as likely that population mobility has decreased as that it has increased a review of empirical studies shows that it may not be possible to generalise about the characteristics of migrants or about the effects of migration on broader development inequality or poverty the review concludes that given the importance of migration for the rural livelihoods of many people policies should be supportive of population mobility and possibilities should be explored to enhance the positive effects of migration

internal migration and urban employment in the third world for more than a decade michael todaros model has provided a widely accepted theoretical framework for explaining the massive flows of rural urban migration that are observed in many third world countries this paper however presents data amassed from a wide range of countries to highlight a crucial shortcoming of that model it will be shown that far from being general in nature the todaro approach is limited to explaining the movement of persons possessed of sufficient human capital to qualify them for modern sector employment the present work utilizes the perspective of the urban subsistence sector to develop a model that serves as a useful complement to that of todaro excerpt

resource revenue management and wealth neutrality in norway abstract an important idea behind the norwegian oil fund mechanism and the fiscal spending rule is to protect the non oil economy from the adverse effects of excessive spending of resource revenues over the government budget a critical assumption in this respect is that public sector saving is not being offset by private sector dis saving which is at stake with the hypothesis of ricardian equivalence based on a framework of co integrating saving rates this model provides an empirical test of the ricardian equivalence hypothesis on norwegian time series data although the model rejects the strong form presence of ricardian equivalence results indicate that the norwegian approach does not fully succeed in separating spending of resource revenues from the accrual of the same revenues

cronyism a cross cultural analysis the devastating economic effects of the asian financial crisis and us corporate scandals have underscored the need to strengthen corporate governance provisions although cronyism has been suggested as a leading cause of the two crises it has received little attention from scholars in this paper we analyze the concept of cronyism and argue that it comes in various guises arising from different motivational bases and power dependence relations we distinguish cronyism from related constructs and posit that it is a form of corruption with different dynamics from other forms we advance propositions on its likelihood of occurrence across cultures and develop a typology of cronyist exchanges

urbanization informal sector and development abstract urbanization is a universal phenomenon in the postwar world but its qualitative nature is varied across countries some nations have experienced urbanization that accompanied skill upgrading industrialization and the expansion of the urban formal modern sector but others urbanized without such modernization and underwent the expansion of the urban informal traditional sector simultaneously the question that naturally arises is what are the underlying causes for the differences the purpose of the paper is to tackle this question analytically based on a dynamic model of urbanization and development

foreign investment in the presence of an informal sector in the context of a segmented economy in which the urban unemployed subsist in informalsector activities earl grinols has recently questioned conventional wisdom whereby foreign investment with repatriated earnings is necessarily immiserizing for the host country in this paper we extend grinols s analysis and place it in a broader context permitting richer conceptions of informal sector activities our principal finding is that the original insight is surprisingly robust once heckscher ohlin samuelson factor intensities are suitably modified and interpreted our models may also have independent interest for other work on the informal sector

shadow households and competing auspices migration behavior in the philippines abstract in this paper two concepts related to spatial mobility at the household level are introduced shadow households and competing auspices the shadow household consists of all individuals who are not presently living in a household but whose principal obligations and commitments are to that household according to the competing auspices concept intentions to move from point x to point y are ceteris paribus positively related to the presence of relatives or close friends at point y and negatively related to such links at any other point z the utility of these concepts is demostrated with data from a sample survey of over 1 700 individuals in ilocos norte the philippines

on the dynamic instability of induced migration unemployment in a dual economy abstract previous attempts to integrate the todarian analysis of rural urban migration with the dual economy growth model have relied upon an essentially static version of the migration hypothesis inappropriate in a growth context in this paper it is shown that when a dynamic version of the hypothesis is used the steady state growth equilibrium whilst characterised by a positive unemployment rate typical of todarian models is unstable these results have policy implications which differ from those presented in the previous literature

rural urban migation informal sector and development policies a theoretical analysis abstract a theoretical model of rural urban migration has been developed with special reference to the informal sector the wage rate and employment in the informal sector are determined endogenously the paper shows the simultaneous existence of open unemployment and informal sector in the urban area in migration equilibrium the effects of alternative subsidy policies on unemployment and welfare of the workers are studied

wage subsidies and distortionary taxes in a mobile capital harris todaro model in prescribing policy to eliminate or mitigate the effects of labour market distortions some form of wage subsidy is usually among the highest ranking options rarely is the source of revenues for these subsidies treated as an explicit issue this omission has special significance for the harris todaro h t model of the labour market since the policy most frequently recommended whether capital is sector specific or intersectorally mobile is an across the board wage subsidy 2 this effectively eliminates the possibility of taxing one subset of sectors rather than subsidizing its complement an option often favoured by those theorists who concern themselves with revenue considerations the next section of this paper sets forth the model of a small open h t economy with mobile capital that is the basis for this analysis section ii re examines three wage subsidies on manufacturing wages on agricultural wages or on both sectors assuming that resources for the subsidies are raised by an across the board tax on profits this is in the tradition of cordenfindlay and we replicate their results though stating them in more precise form so that we might have a standard for later comparison the subsequent sections examine the effects of these subsidies on unemployment and resource allocation if they are financed by a tax on profits in the manufacturing sector section iii or by import tariffs section iv owing to the second best nature of the h t model it will be demonstrated that taxes normally considered distortionary in their own right can be superior to an across the board tax if revenues are constrained and can be very useful instruments if it is the variety of policy tools that is limited section v concludes with a ranking of the various subsidy tax packages

asymmetric adjustment of commercial bank interest rates evidence from malaysia and singapore abstract this paper examines the rigidity of commercial bank interest rates using evidence from singapore and malaysia an asymmetric error correction technique is used to test whether mean adjustment lags are different when retail rates are above or below their equilibrium levels it is concluded in both countries that the mean adjustment lag is shorter when the deposit rate is above its equilibrium than when it is below its equilibrium using the framework of hannan and berger 1991 this finding implies that the hypothesis of collusion cannot be rejected

avoiding the resource curse the case norway in many countries natural resources have been detrimental to the economic development the literature on the resource curse shows a bleak relationship countries with large natural resources generally experience lower economic growth than other countries norway does not fit into this picture economic growth has much higher than in most other industrialized countries this paper describes the key features of the norwegian management of the petroleum resources the main focus is on the management of the revenues from the petroleum sector but the effects of the petroleum sector on the norwegian economy more generally are also discussed

informal sector and informal capital market in a small open less developed economy abstract a three sector static model of a small open economy has been developed with special consideration to the urban informal sector and the informal capital market informal capital is mobile between the rural sector and the urban informal sector policy effects in this model appear to be different from those analysed in other three sector models

migration trade unions and the informal sector a note on calvo tends to be very sticky a feature which renders some of the standard policies for reducing urban unemployment or underemployment totally ineffective in particular it is observed that in the calvo model a first best optimum cannot be obtained without the imposition of some migration barriers in this note we attempt to generalize the calvo model by incorporating the following new features first we distinguish between the two components of the urban sector the modern formal part and the traditional informal part secondly the individuals are assumed to migrate from the rural to the urban sector in response to a differential in expected utility rather than in expectedincome thereby highlighting the role of risk aversion in individual migration decisions finally following the new literature on trade union behavior 2 the present model posits a utilitarian objective function for the trade union a formulation which is considered an improvement over the one put forward by calvo an important conclusion of the present exercise which sharply contrasts calvo s conclusion is that the government by setting its policies correctly can achieve a first best optimum for the economy this difference in result is due obviously to the differences in specification in particular of the objective function of the trade union

stock market cycles financial liberalization and volatility in this paper we analyze the cycles of the stock markets in four latin american and two asian countries and we compare their characteristics we divide our sample in two subperiods in order to account for differences induced by the financial liberalization processes of the early 1990s we find that cycles in emerging countries tend to have shorter duration and larger amplitude and volatility than in developed countries however after financial liberalization latin american stock markets have behaved more similarly to stock markets in developed countries whereas asian countries have become more dissimilar concordance of cycles across markets has increased significantly over time especially for latin american countries after liberalization

institutions and the resource curse countries rich in natural resources constitute both growth losers and growth winners we claim that the main reason for these diverging experiences is differences in the quality of institutions more natural resources push aggregate income down when institutions are grabber friendly while more resources raise income when institutions are producer friendly we test this theory building on sachs and warner s influential works on the resource curse our main hypothesis that institutions are decisive for the resource curse is confirmed our results contrast the claims of sachs and warner that institutions do not play a role

booming sector and de industrialisation in a small open economy this paper presents a theoretical analysis of the dutch disease the phenomenon whereby a boom in one traded goods sector squeezes porfitability in other traded goods sectors both by directly bi

unemployment and foreign capital the relative opportunity costs of domestic labour and welfare the consequences of increased foreign capital for an economy with unemployment are analyzed under different assumptions that influence the relative oportunity costs of domestic labor the investigation suggests that the implications of the literature on the welfare effect of increased foreign capital are misleading the paper shows that welfare gains result from increased foreign capital if the opportunity costs of labor are sufficiently low relative to the wages earned by laborers employed by new foreign capital a number of cases where this occurs are presented the findings of the paper suggest that cases where increased foreign capital must be welfare harming represent extreme parameterizations in the set of possibilities copyright 1991 by the london school of economics and political science

on modelling the informal sector abstract a recent plea by robert hackenberg to develop new conceptual models in order to take full account of the new realities of the urban informal sector and rid the field from divergent connotations is questioned it seems that existing models easily lend themselves to analysis of the formal informal sector interactions and that divergent conditions necessarily lead to contradictions thus the existing arsenal of models cannot be held responsible for analysis paralysis new research on the informal sector rather than aiming at ultra generalizations should concentrate on issues such as identification of the determining factors of the urban production technologies and the nature of linkages and elasticity of substitution between formal and informal production

credit cronyism and control evidence from the americas abstract i examine the effects of corruption and government control of the banking system for 18 western hemisphere countries on the sensitivity of commercial lending rates to changes in international financial conditions and find that most countries lending rates are insensitive to these conditions only the least corrupt nations exhibit a significant positive relation between lending rates and international financial conditions the responsiveness of these lending rates is nonlinearly related to corruption and government control of the banking sector the findings suggest that both corruption and government control of banks need to be considered when analyzing international credit markets

rural urban migration in economic development abstract this paper provides a review of the theoretical literature on rural urban migration in contemporary ldcs the paper begins with a brief discussion of the lewis model before going on to discuss the todaro and the harris todaro models and the large literature which these models have spawned the question of job search in the context of migration and the role of family members in migration decisions are considered next the paper then takes a closer look at the informal sector and also sets out alternative migration functions to the ones usually employed in the literature the paper concludes with a brief note on some of the important implications arising from our study

implicit interest rates usury and isolation in backward agriculture the unusually high interest rates in many backward agricultural regions have been a source of some puzzlement to economists adding to this puzzle is the fact that these rates can take on a wide range of values often within the same region one important question is why arbitrage between sectors does not lead to more homogeneous and lower interest rates the traditional answer to this is in terms of lender s risk it is argued that moneylenders in backward regions face a great risk of default and once this is taken into account the effective interest rate turns out to be no higher than its counterpart in the organised sector consequently there is no real room for arbitrage and the high interest rates are equilibrium prices while this explanation may be of use in some situations it is in general inadequate and can even be misleading the reason which novelists describing rural india have repeatedly written about is that in these financial transactions the lender s risk frequently ranges from minimal to non existent because the personalised relation between the borrower and the lender enables the latter to extract the defaulted loan in the form of asset transfers from the borrower in a somewhat stylised manner these deals could be thought of as follows a peasant takes a loan from his employer keeping some of his assets like land a standing crop or even the promise of labour services as security or collateral a collateral price is then fixed this is the conversion price used to calculate the amount of collateral that has to be relinquished to the lender given a certain amount of default clearly the lower the collateral price the larger the quantity of collateral that the peasant has to forfeit hence the underpricing of collateral amounts to the charging of an implicit interest a widespread feature of rural credit markets reported in many diverse studies bardhan and rudra 1978 myint 1964 raj 1981 roth 1979 and sivakumar 1978 to mention just a few is the underpricing of collateral an interesting attempt to bring collateral explicitly into a model of usury was made by bhaduri 1977 see also 1983 who argued that one of the reasons why landlords raise interest rates is in fact to encourage default and to claim ownership of the asset kept as collateral a sharp contrast to the lender s risk model this hypothesis has deservedly received much attention 1

natural resource dependence human capital accumulation and economic growth a combined explanation for the resource curse and the resource blessing abstract in existing studies no consensus has been reached on the relationship between natural resource dependence and human capital accumulation to narrow the divergence this paper carries out a normative research to explain the co existence of the phenomena of the resource curse and the resource blessing based on an organic combination of conceptual and mathematical models it first establishes a conceptual model to analyse the potential effects of the government s policy preference and natural resource development activities on human capital accumulation and economic growth furthermore it develops an endogenous growth model to normatively illuminate the effects in the conceptual model and to explore the condition for the occurrence of the resource curse the conceptual model analysis indicates that the rate of return on education investment and government behaviours play the crucial role in promoting the formation of the economic virtuous circle at the micro level and macro level respectively while resource development activities exert dual impacts on the circle the main mechanisms in the conceptual model can be validated in the mathematical model the rise in the subjective discount rate the elasticity of intertemporal substitution and resource goods price are adverse to the economic virtuous circle while high quality education and the institutional environment giving priority to manufacturing can become the necessary condition and sufficient condition for forming the circle respectively the allocation efficiency of production factors plays a decisive role in whether the blessing occurs whereas sufficient human capital is an essential guarantee for evading the curse

migration unemployment and development a dynamic two sector analysis abstract a time minimizing problem of attaining a full employment state is solved in a dual economy model with harris todaro migration mechanism and with a positive level of urban unemployment in the starting period it appears that the optimum solution lies in the specialization of investment in the urban sector at least in the initial stage of development if the per capita capital stock in the urban sector is very small in the starting period

urban unemployment and non immiserizing growth abstract one purpose of this paper is to show that in the harris todaro economy economic expansion can not be immiserizing another purpose of this paper is to examine the implications of economic expansion for urban unemployment as well as sectoral outputs for the case of non neutral technical change finally it is shown that a damaging property of the harris todaro model that capital accumulation causes unemployment to rise whereas labor growth causes it to fall is at least partially rectified by the incorporation of land as a scarce factor in the agricultural sector

informality in the process of development and growth informality is a term used to describe the collection of firms workers and activities that operate outside the legal and regulatory systems it is widespread in the majority of developing countries in a typical developing economy the informal sector produces about 35 per cent of gdp and employs 70 per cent of the labour force this paper studies informality in the context of economic development by presenting a model and projections that link informality regulations migration and economic growth this analytical framework highlights the trade offs between formality and informality the relationship between the different types of informality and the connection between them and the forces of labour capital and productivity growth the paper models the behaviour of the informal sector based on the following fundamental asymmetry formal firms confront higher labour costs while informal firms face higher capital costs and lower productivity using mandated minimum wages as the policy induced distortion the model first studies the static allocation of formal and informal capital and labour in a modern economy second it opens the possibility of labour migration from a rudimentary economy with ample supply of labour e g rural areas or less advanced neighbouring countries third the model analyses the dynamic behaviour of the formal and informal sectors considering how they affect and are affected by economic growth and labour migration then the paper presents projections for the size of labour informality in the modern and rudimentary economies in the next two decades for a large group of countries representing all regions of the world the projections are based on the calibration and simulation of the model and serve to discuss its usefulness and limitations

sector specific minimum wages economic growth and some policy implications abstract economic growth is introduced in the urban unemployment model of harris and todaro it is shown that in the steady state the optimal savings ratio is greater than the golden rule savings ratio under full employment also the optimal proportion of total investment allocated to the urban sector is not necessarily higher than the optimal proportion under full employment

boom or gloom examining the dutch disease in two speed economies traditional studies of the dutch disease do not account for productivity spillovers between the booming resource sector and other domestic sectors we put forward a simple theory model that allows for such spillovers we then identify and quantify these spillovers using a bayesian dynamic factor model the model allows for resource movements and spending effects through a large panel of variables while also identifying disturbances to other shocks using australia and norway as representative cases studies we find that a booming resource sector has substantial productivity spillovers on non resource sectors effects that have not been captured in previous analysis

a theoretical analysis of the informal sector abstract in this paper we present a theoretical framework of an economy which has an informal sector the differences between the formal and the informal sector together with their linkages form the basis of our analysis we show that the informal sector can expand in terms of output and employment even when the formal sector contracts

exploratory assessment of the economic gains of a pre salt oil field in brazil abstract in recent years brazil has made public several oil discoveries located in deep waters below the salt layer discoveries are steadily enhancing national reserves and have brought the country into a new role in the global oil industry this paper aims at investigating the economic gains that could be expected from a brazilian oil field in the pre salt region analyses were conducted based on the libra field the largest oil discovery in brazil until now with approximately 10 billion barrels the results were calculated for different scenarios of oil prices companies arrangements and regulatory regimes the findings suggest that economic gains could be higher for the brazilian government if the oil production were conducted under a service contract scheme however considering the current production sharing regime in force for pre salt areas economic gains could be higher if a bidding process was conducted ensuring for the brazilian government a higher participation in the oil to be produced additionally the results demonstrate that under the current rules applied for the production sharing regime the government quota of oil has decreased over time putting at risk economic results

relationships between corruption political orientation and income inequality evidence from latin america abstractthis research sheds light on the analysis of the impact of corruption and political orientation on income distribution in latin america although it has been theoretically demonstrated that corruption worsens the income distribution the empirical evidence has yielded ambiguous results based on biased estimates not considering a measurement error in the estimation of inequality this article fills this gap by correcting the previous measurement error bias in the fixed effects estimation additionally political orientation and its relationship with income inequality are also investigated the sample covers 18 latin american countries between 1996 and 2012 results reveal that corruption increases income inequality