the federal funds rate and the channels of monetary transmission the authors show that the interest rate on federal funds is extremely informative about future movements of real macroeconomic variables then they argue that the reason for this forecasting success is that the funds rate sensitively records shocks to the supply of bank reserves that is the funds rate is a good indicator of monetary policy actions finally using innovations to the funds rate as a measure of changes in policy the authors present evidence consistent with the view that monetary policy works at least in part through credit i e bank loans as well as through money i e bank deposits copyright 1992 by american economic association

tax innovations and public revenues in sub saharan africa we study the effect of two tax innovations value added taxes vat and autonomous revenue authorities ara on tax revenues in sub saharan africa the dataset consists of 47 countries over 1980 2010 we find that vats have no effect on total tax revenues neither in the short nor in the long run aras lead to higher tax revenues in the short and medium run but the effect dissipates over time the main conclusion is that tax innovations are not a panacea to overcome the revenue shortages in african countries but they are helpful in the short and medium run

public private political cleavage what happens after retirement political preferences of public employees differ from those of workers in the private sector the former are more likely to vote for left wing parties and orient themselves ideologically towards the left this political cleavage can be understood as the result of occupational incentives or alternatively as ideological self selection whereby individuals favoring government solutions seek employment in the public sector we test the selection hypothesis by estimating the effects of public versus private occupational sector on political preferences before and after retirement the data are from the norwegian election surveys and cover nine national elections between 1977 and 2009 the research design addresses a series of cross sectional data and the key challenge of endogenous retirement is handled with instrumental variables party choice ideological orientation and public spending preferences are shown to change following retirement and former private and public employees converge the results reject selection based on hard wired political preferences

consequences of bank distress during the great depression the consequences of bank distress for the economy during the depression remain an area of unresolved controversy since john m keynes 1931 and irving fisher 1933 macroeconomists have argued that bank distress magnified the extent of the economic decline during the depression as the intermediaries controlling money and credit banks were in a special position to transmit their distress to other sectors but the mechanism through which banking distress mattered for the economy has been hotly contested milton friedman and anna j schwartz 1963 saw the contraction in the money multiplier driven in their view by panicked depositors withdrawals of deposits as the primary mechanism through which banking distress affected the real economy they described the mechanism transmitting banking distress to the real sector as operating at the national level through changes in the aggregate supply of money and interest rates bank distress reduced the money supply available to the public either through the closure of banks and the consequent freezing of bank deposits or the withdrawals of deposits by depositors that feared bank failure ben s bernanke 1983 building on fisher 1933 emphasized the transmission of monetary shocks via their effects on the balance sheets of borrowers and on the supply of credit by banks borrowers balance sheets were worsened by debt deflation as the result of fixed dollar debt obligations borrowers net worth and cash flow declined with the rising value of debt service costs relative to income borrowers with positive net present value projects but weak balance sheets had less internally generated retained earnings to invest and could not qualify for credit furthermore bernanke argued that the contraction of the money supply produced contraction of nominal income and prices relative to fixed debt service which weakened borrowers balance sheets and in turn weakened banks not only did firms financial distress reduce the number of qualified borrowers the contraction in banks net worth forced a reduction in the supply of bank loans to qualified borrowers many firms and individuals relied on banks for credit and as those banks suffered losses of capital due to asset value declines and contractions in deposits as depositors reacted to bank weakness by withdrawing their funds even borrowers with viable projects and strong balance sheets experienced a decrease in the effective supply of loanable funds bernanke termed the combined weakening of borrowers balance sheets and the contraction in bank credit supply a rise in the cost of credit intermediation the scarcity of perfect substitutes for the positive net present value investments of firms with weak balance sheets and for the credit supplied by existing banks implies that the weakening of firms and banks balance sheets the disappearance of banks and the contraction in surviving banks lending made it more difficult for the economy to channel funds to their best use thus what began as a contraction in aggregate demand became a contraction in aggregate supply which magnified adverse economic shocks and prolonged and deepened the depression the financial distress of firms and banks and the decline in bank lending were not only symptoms of the depression but means for magnifying the shocks that caused the depression bernanke s statistical evidence in support of this story is derived from time series analysis at the national level in calomiris graduate school of business 601 uris hall columbia university 3022 broadway new york ny 10027 and national bureau of economic research e mail cc374 columbia edu mason department of finance drexel university 3141 chestnut street philadelphia pa 19104 e mail joe mason drexel edu we thank valerie ramey david wheelock charles himmelberg steve zeldes gary gorton two referees and seminar participants at columbia university wharton northwestern university and the 2001 economic history association meetings for helpful comments on an earlier draft we gratefully acknowledge support from the national science foundation the university of illinois and the federal reserve bank of st louis

using maimonides rule to estimate the effect of class size on scholastic achievement the twelfth century rabbinic scholar maimonides proposed a maximum class size of 40 this same maximum induces a nonlinear and nonmonotonic relationship between grade enrollment and class size in israeli public schools today maimonides rule of 40 is used here to construct instrumental variables estimates of effects of class size on test scores the resulting identiecation strategy can be viewed as an application of donald campbell s regression discontinuity design to the class size question the estimates show that reducing class size induces a signiecant and substantial increase in test scores for fourth and efth graders although not for third graders when asked about their views on class size in surveys parents and teachers generally report that they prefer smaller classes this may be because those involved with teaching believe that smaller classes promote student learning or simply because smaller classes offer a more pleasant environment for the pupils and teachers who are in them mueller chase and walden 1988 social scientists and school administrators also have a longstanding interest in the class size question class size is often thought to be easier to manipulate than other school inputs and it is a variable at the heart of policy debates on school quality and the allocation of school resources in many countries see e g robinson 1990 for the united states ofsted 1995 for the united kingdom and moshel ravid 1995 for israel this broad interest in the consequences of changing class size

the value added tax its causes and consequences almost unknown in 1960 the value added tax vat is now found in more than 130 countries raises around 20 percent of the world s tax revenue and has been the centerpiece of tax reform in many developing countries this paper explores the causes and consequences of the remarkable rise of the vat a key question is whether it has indeed proved as its proponents claim an especially effective form of taxation to address this it is first shown that a tax innovation such as the introduction of a vat reduces the marginal cost of public funds if and only if it also leads an optimizing government to increase the tax ratio this observation leads to the estimation on a panel of 143 countries for 25 years of a system of equations describing both the probability of vat adoption and the revenue impact of the vat the results point to a rich set of determinants of vat adoption this being more likely for example if a country has a program with the imf and the less open it is to international trade in the revenue equation the presence of a vat does indeed have a significant impact but also a complex one with a negative intercept effect counteracted by positive effects that are greater the higher are per capita income and more tentatively openness while the sign of the revenue impact of the vat is thus in general ambiguous most countries that have adopted a vat seem to have gained a more effective tax instrument in doing so though this is less apparent in subsaharan africa and most without it seem likely to gain from its adoption

designing vat systems some efficiency considerations this paper undertakes a cross country analysis of the determinants of vat compliance using data from a sample of 17 oecd countries for 1987 an index of compliance is constructed and regressed against variables which represent characteristics of the countries and their vat rates it is found that a a higher vat rate is associated with lower compliance and this tradeoff limits the revenue maximizing vat rate to under 25 b compliance is substantially lower with multiple vat rates and c an extra dollar spent on administration raises revenue by 12 and longer experience with administering a vat also raises compliance several oecd countries are ranged along a frontier collecting about 8 of gdp through a vat but with rates of 14 to 22 on bases between 60 and 40 of gdp for these the base could only be broadened if the tax rate were lowered copyright 1996 by mit press

the logic of political violence this paper offers a unified approach for studying political violence whether it emerges as repression or civil war we formulate a model where an incumbent or opposition can use violence to maintain or acquire power to study which political and economic factors drive one sided or two sided violence repression or civil war the model predicts a hierarchy of violence states from peace via repression to civil war and suggests a natural empirical approach exploiting only within country variation in the data we show that violence is associated with shocks that can affect wages and aid as in the theory these effects are only present where political institutions are non cohesive

retirement effect on health status and health behaviors in urban china abstract this paper analyzes the causal impact of retirement in china on body mass index bmi and weight which are a good gauge of the risk for some diseases many middle income developing countries are aging very rapidly and may have to adjust the retirement age to have financially feasible government budgets it is important to know and understand any plausible health consequences of raising the retirement age in developing countries and which sub populations within these countries may be most affected by using 2011 2013 and 2015 waves of the china health and retirement longitudinal study charls our identification strategy uses variation in china s mandatory retirement age with a fuzzy discontinuity design to examine an exogenous shock to retirement behavior our study finds that retirement will increase weight and bmi among men this effect is much larger for men with low education the channel may be that men with low education drink more and take less vigorous exercises after they get retired retirement does not affect weight and bmi for women these effects are robust with different definitions of retirement narrow retirement bandwidth for samples as well as dropping samples with rural hukou

retirement effects on health in europe what are the health impacts of retirement as talk of raising retirement ages in pensions and social security schemes continues around the world it is important to know both the costs and benefits for the individual as well as the governments budgets in this paper we use the survey of health ageing and retirement in europe share dataset to address this question in a multi country setting we use country specific early and full retirement ages as instruments for retirement behavior these statutory retirement ages clearly induce retirement but are not related to an individual s health exploiting the discontinuities in retirement behavior across countries we find significant evidence that retirement has a health preserving effect on overall general health our estimates indicate that retirement leads to a 35 percent decrease in the probability of reporting to be in fair bad or very bad health and an almost one standard deviation improvement in the health index while the self reported health seems to be a temporary impact the health index indicates there are long lasting health differences

symbiosis vs crowding out the interaction of formal and informal credit markets in developing countries abstract it is a common observation in many developing countries that enterprises are active borrowers in both formal and informal credit markets we propose a model in which the formal sector s superior ability in deposit mobilization is traded off against the informational advantage that lenders in the informal sector enjoy the formal sector can screen borrowers by providing only partial financing for projects thereby forcing borrowers to resort to the informal sector for the remainder of the loan we use the model to predict how the market structure responds to changes in the environment and we consider the policy implications of various forms of government intervention

healthier when retiring earlier evidence from france this paper contributes to the literature on the health retirement relationship by looking at the effect of retiring before legal age on health in later life in france to account for the endogeneit

no taxation without information deterrence and self enforcement in the value added tax abstract claims that the vat facilitates tax enforcement by generating paper trails on transactions between firms contributed to widespread vat adoption worldwide but there is surprisingly little evidence this paper analyzes the role of third party information for vat enforcement through two randomized experiments among over 400 000 chilean firms announcing additional monitoring has less impact on transactions that are subject to a paper trail indicating the paper trail s preventive deterrence effect this leads to strong enforcement spillovers up the vat chain these findings confirm that when taking evasion into account significant differences emerge between otherwise equivalent forms of taxation jel d83 h25 h26 k34 o17

what explains the difference in the effect of retirement on health evidence from global aging data this paper analyzes the reasons for differences in the effect of retirement on health estimated results in previous studies we investigate these differences by focusing on the analysis methods used by these studies using various health indexes numerous researchers have examined the effects of retirement on health however there are no unified views on the impact of retirement on various health indexes consequently we show that the choice of analysis method is one of the key factors in explaining why the estimated results of the effect of retirement on health differ moreover we re estimate the effect of retirement on health by using a fixed analysis method controlling for individual heterogeneity and endogeneity of the retirement behavior we analyze the effect of retirement on health parameters such as cognitive function self report of health activities of daily living adl depression and body mass index in eight countries we find that the effects of retirement on self report of health depression and adl are positive in many of these countries

does retirement age impact mortality the relationship between retirement and mortality is studied with a unique administrative data set covering the full population of norway a series of retirement policy changes in norway reduced the retirement age for a group of workers but not for others difference in differences estimation based on monthly birth cohorts and treatment group status show that the early retirement programme significantly reduced the retirement age this holds true also when we account for programme substitution for example into the disability pension instrumental variables estimation results show no effect on mortality of retirement age neither do estimation results from a hazard rate model

early retirement and economic incentives in norway early retirement programmes have gradually reduced the retirement age from 67 to 62 for a majority of the labour force based on micro data for 1990 and 1992 we estimate a competing risk model with three states full retirement partial retirement part time work and full time work we then use the estimated model in simulations to study how financial incentives can be strengthened to extend working life financial incentives educational background and industry affiliation are found to influence retirement behaviour for low and medium incomes the tax system shifts the incentives heavily towards early retirement and in particular towards partial retirement combined with part time work

new evidence on pensions social security and the timing of retirement using a unique dataset that links the economic and demographic information of households with the details of their pension formulas i estimate the combined effect of social security and pension benefits on the probability of retirement in a cross section of the population near retirement age the accrual rate of retirement wealth is shown to be a significant determinant of the probability of retirement simulations of extensions in pension coverage comparable to those that occurred in the early postwar period can account for one fourth of the contemporaneous decline in labor force participation rates 1998 elsevier science s a all rights reserved

foreign banks and foreign currency lending in emerging europe based on survey data from 193 banks in 20 countries we provide the first bank level analysis of the relationship between bank ownership bank funding and foreign currency fx lending across emerging europe our results contradict the widespread view that foreign banks have been driving fx lending to retail clients as a result of easier access to foreign wholesale funding our cross sectional analysis shows that foreign banks do lend more in fx to corporate clients but not to households moreover we find no evidence that wholesale funding had a strong causal effect on fx lending for either foreign or domestic banks panel estimations show that the foreign acquisition of a domestic bank does lead to faster growth in fx lending to households however this is driven by faster growth in household lending in general not by a shift towards fx lending

the effect of a wife s retirement on her husband s mental health this article examines the effect of wives retirement on their husband s mental health in australia by exploiting the exogenous variations in women s retirement induced by the age pension qualifyi

access to capital in rural thailand an estimated model of formal versus informal credit the aim of this paper is to understand the mechanism underlying access to credit the author focuses on two important aspects of rural credit markets in thailand first moneylenders and other informal lenders coexist with formal lending institutions such as government or commercial banks and more recently micro lending institutions second potential borrowers presumably face sizable transaction costs obtaining external credit the author develops and estimates a model based on limited enforcement and transaction costs that provides a unified view of those facts the results show that the limited ability of banks to enforce contracts more than transaction costs is crucial in understanding the observed diversity of lenders

retirement and healthcare utilization abstract pension systems and reforms thereof are often discussed in the context of financial viability in industrialized countries these debates grow in intensity with the aging of the population however an increase in the retirement age may create unintended side effects with regard to retirees health or healthcare costs this study empirically analyzes the effect of early retirement on individual inpatient and outpatient healthcare utilization in austria we use comprehensive labor market and retirement data from the austrian social security database together with detailed information about individual inpatient and outpatient healthcare service utilization in the province of upper austria to account for endogeneity in retirement decisions we exploit exogenous variation in the early retirement age as induced by two austrian pension reforms i e those in 2000 and 2003 we find a significant negative effect of retirement on service utilization for both genders retirement reduces subsequent doctor visits and expenditure for outpatient medical attendance and hospitalization based on the analysis of disaggregated components of services and expenditure we interpret the results as evidence for positive health effects and behavioral changes in the utilization of healthcare services after retirement

your retirement and my health behavior evidence on retirement externalities from a fuzzy regression discontinuity design this paper presents evidence on intra household retirement externalities by assessing the causal effect of partner s retirement on own health behaviour in europe we identify partner s retirement effects by applying a fuzzy regression discontinuity rd framework using retirement eligibility as an exogenous instrument for partner s retirement status using data from the survey of health ageing and retirement in europe share we find that while partner s retirement increases own physical activity it also increases smoking by up to 7 cigarettes a day and increases alcohol intake by 1 2 drinks per day furthermore we find that physical activity increases only for individuals that are themselves retired pointing toward compensated effects that arise due to husband s and wife s retirement being complements similarly an increase in alcohol intake is observed only if the individuals are themselves retired and an increase in smoking is only observed if the partner is a smoker suggesting mutual positive externalities and leisure complementarities

commodity prices and bank lending we analyze the transmission of changes in commodity prices to bank lending in a large sample of developing countries a bank level analysis shows that a fall in commodity net export prices is associated with a reduction of bank lending particularly for commodity exporters and during episodes of terms of trade decline we complement this analysis with loan level data from a credit register which allows us to identify the effect of a commodity price shock on the supply of credit controlling for unobserved factors that could drive borrowers credit demand results show that banks with relatively lower deposits and poor asset quality transmit the changes in commodity prices to lending more aggressively jel f30 f34 g21 q02

the mortality effects of retirement evidence from social security eligibility at age 62 abstract social security eligibility begins at age 62 and approximately one third of americans immediately claim at that age we examine whether age 62 is associated with a discontinuous change in aggregate mortality a key measure of population health using mortality data that covers the entire u s population and includes exact dates of birth and death we document a robust two percent increase in male mortality immediately after age 62 the change in female mortality is smaller and imprecisely estimated additional analysis suggests that the increase in male mortality is connected to retirement from the labor force and associated lifestyle changes

does job loss shorten life this paper examines the impact of job loss on overall and cause specific mortality using linked employer employee data we identified the workers displaced due to all establishment closures in sweden in 1987 and 1988 hence we have extended the case study approach which has dominated the plant closure literature the overall mortality risk among men increased by 44 percent during the first four years following job loss while there was no impact on either female overall mortality or in the longer run for both sexes however there was an about twofold short run increase in suicides and alcohol related mortality

a general framework for measuring vat compliance rates summary measures of value added tax vat compliance rates are valuable for identifying problem areas in vat implementation they are also essential for meaningful crosscountry and crosstime comparisons of vat compliance we present a comprehensive and general framework for calculating vat compliance rates at both the economy wide and detailed sectoral levels unlike existing measures of vat compliance our framework isolates a compliance measure from the effects on vat receipts of detailed features of vat systems as actually implemented by tax authorities these features include multiple vat rates exemptions registration rates refund limitations informal activity taxation of domestic nonresidents and undeclared imports we implement our comprehensive vat compliance measure for vietnam a country with a complex vat system our estimate of vietnam s vat compliance rate is about 13 percentage points higher than that calculated by the most popular measure of compliance collection efficiency ce our m

finance and the sources of growth the authors evaluate whether the level of development in the banking sector exerts a causal impact on economic growth and its sources total factor productivity growth physical capital accumulation and private saving they use 1 a pure cross country instrumental variable estimator to extract the exogenous component of banking development and 2 a new panel technique that controls for country specific effects and endogeneity they find that banks do exert a large causal impact on total factor productivity growth which feeds through to overall gdp gross domestic product growth the long run links between banking development and both capital growth and private savings are more tenuous

cheating ourselves the economics of tax evasion no government can announce a tax system and then rely on taxpayers sense of duty to remit what is owed some dutiful people will undoubtedly pay what they owe but many others will not over time the ranks of the dutiful will shrink as they see how they are being taken advantage of by the others thus paying taxes must be made a legal responsibility of citizens with penalties attendant on noncompliance but even in the face of those penalties substantial tax evasion exists and always has the history of taxation is replete with episodes of evasion often notable for their inventiveness during the third century many wealthy romans buried their jewelry or stocks of gold coin to evade the luxury tax and homeowners in eighteenth century england temporarily bricked up their fireplaces to escape notice of the hearth tax collector webber and wildavsky 1986 p 141 this essay reviews what is known about the magnitude nature and determinants of tax evasion with an emphasis on the u s income tax alm 1999 andreoni erard and feinstein 1998 and slemrod and yitzhaki 2002 offer more comprehensive recent reviews of the literature it then places this information into a conceptual and policy context

the effect of a fiscal squeeze on tax enforcement evidence from a natural experiment in china abstract this paper investigates the impact of the abolition of the agricultural taxes in 2005 across china on county governments incentives for tax enforcement i show that the revenue loss of county governments was largely offset by tougher tax enforcement the incentive for vat enforcement can be weakened however if the county 1 receives a lower share of total vat revenues 2 has a broader vat tax base or 3 has more abundant sources of revenue from land sales these findings suggest that incentives of local governments can be vital to tax enforcement and to the tax capacity of a country

why did the west extend the franchise democracy inequality and growth in historical perspective during the nineteenth century most western societies extended voting rights a decision that led to unprecedented redistributive programs we argue that these political reforms can be viewed as strategic decisions by the political elite to prevent widespread social unrest and revolution political transition rather than redistribution under existing political institutions occurs because current transfers do not ensure future transfers while the extension of the franchise changes future political equilibria and acts as a commitment to redistribution our theory also offers a novel explanation for the kuznets curve in many western economies during this period with the fall in inequality following redistribution due to democratization i introduction the nineteenth century was a period of fundamental political reform and unprecedented changes in taxation and redistribution britain for example was transformed from an oligarchy run by an elite to a democracy the franchise was extended in 1832 and then again in 1867 and 1884 transferring voting rights to portions of the society with no previous political representation the decades after the political reforms witnessed radical social reforms increased taxation and the extension of education to the masses moreover as noted by kuznets inequality which was previously increasing started to decline during this period the gini coefficient for income inequality in england and wales had risen from 0 400 in 1823 to 0 627 in 1871 but fell to 0 443 in 1901 two key factors in the reduction in inequality were the increase in the proportion of skilled workers williamson 1985 and the redistribution of income toward the poorer segments of the society for example taxes rose from 8 12 percent of national product in 1867 to 18 8 percent by 1927 and the progressivity of the tax system increased substantially see lindert 1989

trends in male labor force participation and retirement some evidence on the role of pensions and social security in the 1970 s and 1980 s this article estimates the effects of changes in pension plans and social security in the 1970s and 1980s on the steady state retirement of men work incentives associated with pension coverage and plan characteristics are calculated primarily from the 1969 79 retirement history study and the 1983 and 1989 surveys of consumer finances simulations with a structural retirement model suggest that the long run effects of changes in pension plans and social security account for about a quarter of the reduction in full time work by men in their early sixties but cannot explain the reduction by those age 65

estimating the effect of financial aid offers on college enrollment a regression discontinuity approach an important problem faced by colleges and universities that of evaluating the effect of their financial aid offers on student enrollment decisions is complicated by the likely endogeneity of the aid offer variable in a student enrollment equation this article shows how discontinuities in an east coast college s aid assignment rule can be exploited to obtain credible estimates of the aid effect without having to rely on arbitrary exclusion restrictions and functional form assumptions semiparametric estimates based on a regression discontinuity rd approach affirm the importance of financial aid as an effective instrument in competing with other colleges for students

bank firm relationships and contagious banking crises this paper argues that in an open economy a banking system with close bank firm relationships may be easily subject to contagious banking crises because it is difficult to distinguish between crony capitalism and good main bank relationships 1 show that if international investors cannot distinguish the bank type the distinction between crony capitalism and good main bank relationships becomes very fuzzy in particular the model can explain sequences of bank defaults within a country even if the insolvent banks are very few ex ante as well as sequences of banking crises among countries that are equally rated by international investors but indeed differ in the ex ante solvency of their banking system

what s different about monetary policy transmission in remittance dependent countries abstract despite welfare and poverty reducing benefits for recipient households remittance inflows have been shown to entail macroeconomic challenges producing dutch disease type effects reducing the quality of institutions delaying fiscal adjustment and having an indeterminate effect on long run growth this paper explores an additional challenge for monetary policy although remittances expand bank balance sheets providing a stable flow of interest insensitive funding they tend to increase banks holdings of liquid assets this both reduces the need for an interbank market and severs the link between policy rate and banks marginal cost of funds thus shutting down a major transmission channel we develop a stylized model based on asymmetric information and a lack of transparent borrowers and undertake econometric analysis providing evidence that increased remittance inflows are associated with weaker transmission as independent monetary policy becomes impaired this result is consistent with earlier findings that recipient countries tend to favor fixed exchange rate regimes

life cycle earnings education premiums and internal rates of return using norwegian population panel data with nearly career long earnings histories we provide a detailed picture of the causal relationship between schooling and earnings over the life cycle to address selection bias we apply three commonly used identification strategies we find that additional schooling gives higher lifetime earnings and a steeper age earnings profile in line with predictions from human capital theory our preferred estimates imply an internal rate of return of around 11 suggesting that it was highly profitable to acquire additional schooling our analysis reveals that mincer regressions dramatically understate the returns to schooling because key assumptions are violated

does raising the early retirement age increase employment of older workers two pension reforms in austria increased the early retirement age era from 60 to 62 for men and from 55 to 58 25 for women we find that raising the era increased employment by 9 75 percentage points among affected men and by 11 percentage points among affected women the reforms had large spillover effects on the unemployment insurance program but negligible effects on disability insurance claims specifically unemployment increased by 12 5 percentage points among men and by 11 8 percentage points among women the employment response was largest among high wage and healthy workers while low wage and less healthy workers either continued to retire early via disability benefits or bridged the gap to the era via unemployment benefits taking spillover effects and additional tax revenues into account we find that for a typical birth year cohort a one year increase in the era resulted in a reduction of net government expenditures of 107 million euros for men and of 122 million euros for women

monetary policy and bank lending in developing countries loan applications rates and real effects abstract recent studies of monetary policy in developing countries document a weak bank lending channel based on aggregate data in this paper we bring new evidence using uganda s supervisory credit register with microdata on loan applications volumes and rates coupled with unanticipated variation in monetary policy we show that a monetary contraction reduces bank credit supply increasing loan application rejections and tightening loan volume and rates especially for banks with more leverage and sovereign debt exposure there are associated spillovers on inflation and economic activity including construction permits and trade and even social unrest

public debt and financial development abstract we examine the role of public debt in financial development the literature has highlighted its supportive role through providing collateral and benchmark we contrast this safe asset view to a lazy banks view developing banking sectors that lend mainly to the public sector may develop more slowly because it could make banks profitable but inefficient results from country level and bank level regressions are more supportive of the lazy banks view but the safe asset view seems to play a role at moderate levels of public debt held by banks there is also evidence of a harmful interaction between public debt and financial repression