the effect of financial repression and enforcement on entrepreneurship and economic development abstract a general equilibrium model with heterogeneous agents with respect to wealth and ability shows that differences across countries in intermediation costs and enforcement generate differences in occupational choice firm size credit output and income inequality counterfactual experiments are performed for latin american european transition and high growth asian countries with empirical estimates of each country s financial frictions and united states values for all other parameters the results isolate the quantitative effect of these financial frictions in explaining the performance gap between each country and the united states and depend critically on whether a general equilibrium factor price effect is operative

defining chronic poverty comparing different approaches in this study we discuss two methods commonly used in the literature to measure chronic poverty the permanent income approach where the chronically poor are those whose mean income over time is below the poverty line and the spells approach where the chronically poor are those households who are below the poverty line half of the time or more we check the differences between these two methods considering also several household characteristics the index we use is that of foster greer and thorbecke fgt with and when each method identifies the chronically poor which could be different individuals by each method and shows the percentage of the chronically poor while when the methods also take into account the depth of poverty our main goal is to show the differences between the two methods so that policymakers would have different perspectives on the problem of chronic poverty and could make decisions on this basis the results show that in the data used the permanent method and the spells

modelling long run scenarios this paper intends to draw overall lessons from a long term study on co2 emission in france a country with a rather low energy gdp ration and in which transition to non fossil based production of electricity has been achieved more generally it points out the importance of possible bifurcation effects and draws methodological and policy implications from these statements it discusses modelling approaches to the linkages between energy and the rest of economy and addresses the issue of difficulties in cost assessment analysis in the presence of several baseline scenarios finally it proposes a more encompassing definition of no regrets policies

economic mobility and poverty dynamics in developing countries this study provides an introduction to this special issue of the journal of development studies on economic mobility and poverty dynamics in developing countries in addition to providing a conceptual framework it outlines how the contributions fit into the extant literature a series of regularities emerge across these studies the poor consist of those who are always poor poor at all dates and those who move in and out of poverty with the latter group tending to be strikingly large such movements in and out of poverty are apparent when looking at poverty in either absolute or relative terms changes in returns to endowments can be a potent source of increased incomes finally seemingly transitory shocks can have long term consequences the study concludes by drawing out the policy implications of these regularities

the role of energy in productivity growth the objective of this paper is to analyze the role of energy in the growth of productivity the special significance of energy in economic growth was first established in the classic study energy and the american economy 1850 1975 by sam schurr and his associates 1960 at resources for the future for the period from 1920 to 1955 schurr noted that energy intensity of production had fallen while both labor and total factor productivity were rising the simultaneous decline in energy intensity and labor intensity of production ruled out the possibility of explaining the growth of productivity solely on the basis of substitution of less expensive energy for more expensive labor since the quantity of both energy and labor inputs required for a given level of output had been reduced technical change is also a critical explanatory factor an alternative explanation for growth of output with declining energy and labor intensity required an examination of the character of technical change this examination was motivated by the fact that from 1920 to 1955 the utilization of electricity had expanded by a factor of more than ten while consumption of all other forms of energy only doubled the two key features of technical change during this period were that the thermal efficiency of conversion of fuels into electricity increased by a factor of three and that the unusual characteristics of electricity had made it possible to perform tasks in altogether different ways than if the fuels had to be used directly schurr 1983 p 3 schurr 1982 has recently extended the analysis of energy and the american economy through 1981 for the period through 1969 his conclusions are as follows although the inverse relationship between total factor productivity and energy intensity virtually disappeared during the 1953 1969 period it is still noteworthy that high rates of improvement in total factor productivity were essentially not associated with increases in energy intensity 1982 p 6 schurr 1982 has analyzed the experience of the u s economy in the aftermath of the oil embargo of 1973 he points out that energy intensity of production has fallen steadily since 1973 and that the rate of decline accelerated sharply after the second oil price shock in 1979 following the iranian revolution he goes on to point out that

financial intermediary coalitions abstract in this article an environment in which the investment opportunities of agents are private information is studied and it is shown that financial intermediaries arise endogenously within that environment it is established that financial intermediaries are part of an efficient arrangement in the sense that they are needed to support the authors private information core allocations these intermediaries which are coalitions of agents exhibit the following characteristics in equilibrium they borrow from and lend to large groups of agents they produce information about investment projects and they issue claims that have different state contingent payoffs than claims issued by ultimate borrowers

measuring and assessing capacity utilization in the manufacturing sectors of nine oecd countries following a tradition established by cassels klein and hickman we employ the economic theory of cost and production and define economic capacity output as that output at which short and long run average total cost curves are tangent to one another capacity utilization cu rates are then computed as the ratio of actual to capacity output we implement this framework empirically by specifying and estimating a translog variable cost function for the manufacturing sectors of nine oecd countries we find that by the end of the historical sample the early 1980s pervasive and chronic excess capacity exists while the average cost consequence of excess capacity was relatively modest in the 1960s the burden increased considerably after opec i and after opec ii the premium was as large as 15 of average total costs we also find that electricity and fuel price increases had small impacts on capacity output relative to that from labor or capital finally we adjust conventional measures of multifactor productivity growth for changes in cu and find that the adjusted growth is larger after 1973 than that based on traditional procedures

is there an inflation productivity trade off some evidence from the manufacturing sector in greece this paper examines the effect of inflation on total factor productivity growth tfp using time series data for every two digit greek manufacturing industries in order to do the above a translog flexible cost function is estimated and used to decompose tfp growth into scale economies inflation and technical change the advantage of estimating a very general and flexible cost function is that it allows us for the first time to examine empirically a large number of significant relationships between tfp growth and economies of scale inflation and technical change the main conclusion drawn from this analysis is that inflation reduces tfp growth in a way which is sizeable furthermore using standard causality test the direction of causality between inflation and tfp growth was tested at the manufacturing level

financial intermediation and endogenous growth an endogenous growth model with multiple assets is developed agents who face random future liquidity needs accumulate capital and a liquid but unproductive asset the effects of introducing financial intermediation into this environment are considered conditions are provided under which the introduction of intermediaries shifts the composition of savings toward capital causing intermediation to be growth promoting in addition intermediaries generally reduce socially unnecessary capital liquidation again tending to promote growth

persistent expected and innate poverty estimates for semi arid rural south india 1975 1984 this paper uses nine years of panel data on 170 rural households in southern india to calculate intertemporal measures of poverty these include measures of 1 expected poverty that identify households likely to remain poor on average during any year 2 innate poverty that identify households that are poor owning to deep rooted characteristics that cannot easily be changed in the short run and 3 persistent poverty that identify households whose incomes fall below a fixed poverty line over a number of years the poverty rates estimated for the sample with the three measures are 61 percent 48 percent and 22 percent respectively c 1993 academic press inc copyright 1993 by oxford university press

inflation and social consensus in the seventies it is widely believed that the two oil price shocks of the i 970s played a major role in the increase in inflation in industrial countries while this hypothesis is consistent with the timing of changes in inflation at the global level it seems to break down when applied to individual countries cross sectionally for example over the period i973 9 switzerland had an average inflation rate of 4 7 while in neighbouring italy inflation averaged i5 6 over the same period furthermore inflation in the pre opec period i97i 2 was actually higher in switzerland than in italy it seems that a supply shock explanation of inflation in the seventies also requires an explanation of why different countries responded so differently to a similar set of shocks at the world level the purpose of this paper is to offer such an explanation and to test the hypothesis with a cross sectional equation accounting for differences in average inflation rates over the period i973 9 in eighteen oecd countries this time period includes the year of the first opec shock i 973 and the following six years up to the time of the second opec shock the hypothesis to be tested is set in the framework of a model similar to that of brunner et al i 980 the key features of the brunner model are that the adjustment of real wage expectations is subject to lags and that labour supply is positively related to the difference between the perceived real wage and the expected or target real wage given these two assumptions a negative supply shock gives rise to a period of stagflation whose intensity will be greater the slower is the speed of adjustment of real wage expectations the model of this paper extends the brunner model in three ways first across countries the speed of adjustment of real wage expectations or targets is assumed to depend positively on the degree of social consensus as proxied negatively by an indicator of average long run strike activity second the model allows for the possibility of inflation inertia or systematically incorrect inflation expectations as well as a sluggish adjustment of real wage expectations third the model incorporates the hypothesis that money supply growth will vary across countries according to variations in inflationary pressures as perceived by governments the first section of the paper provides a discussion of the rationale for the key proposition regarding strikes and social consensus as well as a brief discussion of the role of wage bargaining institutions section ii develops a theoretical model which yields a reduced form cross sectional equation relating the average i 973 9

chronic poverty in the united states this paper proposes a method of measuring chronic and transitory poverty using an axiomatically sound additively decomposable index of aggregate poverty our approach is contrasted with alternative methods of measuring poverty persistence we use our method to measure chronic and transitory poverty in the united states during the 1980s and late 1970s and find that chronic poverty is a more serious problem than previously thought between the late 1970s and mid 1980s poverty not only increased it became more chronic and less transitory in nature this is true for the population as a whole and for some but not all of the subpopulations we considered the latter were defined according to race type of social unit and educational qualifications of the head of the social unit all empirical analyses are based on data from the panel study of income dynamics

world product and income international comparisons of real gross product the volume reports on the third phase of the united nations international comparison project icp the main results provide comparisons of real gross domestic product gdp per capita for thirty four countries in 1975 quantity and price comparisons are given also for personal consumption capital formation and public consumption and further subdivisions of final expenditures on gdp are estimated

relative prices and investment rates abstract we construct a panel for the price of aggregate investment over consumption and report the following observations 1 relative price differences across countries are large over the entire sample period and this conclusion is not affected by excluding non tradable consumption goods 2 relative price dispersion has decreased during the sample period 3 relative price changes are not persistent across periods while average price levels are moreover the persistence in relative price levels is higher for countries at low relative prices we show that the relative price of investment is negatively correlated with investment rates in a cross section of countries the standard one sector growth model is a natural framework to study quantitatively the effects of barriers to capital accumulation since there is a very simple mapping between barriers to investment and relative prices in this environment we simulate a calibrated version of the model in which barriers follow a stochastic process common to all countries and estimated using relative price data and obtain statistics for investment rates that closely resemble what we observe in the data in particular the model accounts for 90 of the 1985 gini index of relative investment rates and the decline in investment rate dispersion over time the model has two limitations as a theory of development first it cannot account for the income disparity in the data unless we assume unmeasured capital with barriers affecting the broad measure of capital second even under these extreme assumptions the model cannot account for the evolution of income disparity over time

growth accounting with intermediate inputs and the transmission of technical change abstract the aggregate rate of total factor productivity growth tfpg when there are intermediate inputs can be expressed either as a weighted average or as a weighted sum of the sectoral rates depending on the choice of sectoral rates being weighted the agrument that there is a magnification effect due to the transmission of tfpg through the intersectoral flows among sectors is therefore to be more illusory than real

poverty persistence and transitions in uganda a combined qualitative and quantitative analysis despite uganda s impressive reduction in income poverty during the 1990s recent evidence has shown there to be substantial mobility into and out of poverty this paper represents one of the first attempts to combine qualitative and quantitative information to understand the factors and processes underlying poverty transitions and persistence in some instances similar factors are identified by both qualitative and quantitative approaches including lack of key physical assets high dependency ratios and increased household size in other instances though one approach identifies additional factors not so easily identified by the other for example the impacts of excessive alcohol consumption in many cases the paper argues that there is considerable value added in combining the two approaches allowing us to provide a much richer understanding of many of the processes underlying poverty and poverty transitions

comparative studies of national incomes and prices income comparisons between persons or groups of persons in different countries are a special field of inquiry mainly because there are different currency units for the most part the other theoretical and empirical problems encountered in international income comparisons are similar to those of within nation comparisons between different persons at the same time or different groups of persons either interspatially or what is more common intertemporally e g constant price series of national income the qualifications mainly and for the most part are included because some writers hold that international comparisons are complicated or even invalidated by differences in consumption patterns sometimes differences in tastes are held to underlie these variations in consumption patterns variations that are often much larger between countries than those found between regions within a country or between different periods in the same country this essay focuses in its methodological aspects on these special problems the basic problems that are common to international and within nation comparisons are left to the standard literature on national accounts 2 we turn now to the currency unit problems and reserve the question of tastes for a later section

do overarching mitigation objectives dominate transport specific targets in the eu this research investigates if the stringent 2020 and 2050 overarching co2 mitigation objectives set out by the european union dominate its 2010 to 2020 targets specific to the transportation arena specifically its biofuel penetration objectives and gram co2per kilometre emission caps using a dynamic recursive general equilibrium model imaclim r we demonstrate that these overarching targets do not dominate the interim transportation targets when the carbon policy triggering compliance with the mitigation objectives boils down to the theoretical least cost option of uniform carbon pricing ground transportation is confirmed as quite insensitive to high carbon prices even when such prices are applied over a long term it is tempting to conclude that pursuing the mitigation objectives specific to transportation will impose unnecessary costs however because of the second best conditions prevailing in actual economies and of the risk of lock in in carbon intensive trajectories we conclude with the urgent need for some ambitious transport specific policy design research agenda

vulnerability and poverty dynamics in vietnam drawing upon the vietnam household living standards survey vhlss data that cover the whole of vietnam in 2002 and 2004 ex ante measures of vulnerability are constructed these are then compared with static indicators of poverty i e the headcount ratio in a particular year detailed analyses of the panel data show that i in general vulnerability in 2002 translates into poverty in 2004 ii vulnerability of the poor tends to perpetuate their poverty and iii sections of the nonpoor but vulnerable slip into poverty durable reduction in poverty is conditional on i accurate identification of the vulnerable ii their sources of vulnerability and iii design of social safety nets that would enable the vulnerable to reduce risks and cope better with rapid integration of markets with the larger global economy

financial frictions occupational choice and economic inequality we develop a quantitative theory of entrepreneurship income inequality and nancial frictions disciplined with household data from brazil the theory extends lucas 1978 by modeling heterogeneity in two skills working and managerial skills consistently with the evidence the theory implies three occupational categories workers employers and self employed entrepreneurs we nd that the correlation between working and managerial skills matters importantly for the distribution of earnings across occupations and for the quantitative implications of nancial frictions we also nd

the impact of electric power on productivity according to the historical record the increased use of energy in general and electric power in particular stands as one of the key factors in productivity growth growth accountants however find little support for this view rejecting claims that the productivity slowdown can be attributed to the lower rate of growth of the energy input in us manufacturing in this study an attempt at reconciling the historical record with the empirical facts is made specifically the commonly used factor income shares in the relevant divisia input growth index are replaced by the estimated output input elasticities the latter attribute a considerably larger role to electric power than previous studies indicated these are then used to reevaluate the sources of growth in us manufacturing

three decades of industrialization this article reviews the experience of growth and industrialization in the postwar period in more than 100 economies drawing on time series data over a three decade period economies are classified according to their population size the share of primary or manufactured goods in their exports and the weight of exports in gross domestic product gdp the authors examine the composition of demand trade output manufacturing type and factor use overall and between sectors as they relate to income growth higher income growth and more marked transformation are found among the groups with large populations a predominance of manufactures in exports and a larger role of exports the authors also found that the patterns suggested by cross country analysis are robust when tested using the time series data now available although development experiences may vary over time and across countries there is sufficient uniformity within them for the main features of structural transformation to emerge as clear and consistent patterns of modern economic growth

the debate about the revived bretton woods regime a survey and extension of the literature this paper surveys the literature dealing with the thesis put forward by dooley folkerts landau and garber dfg that the present constellation of global exchange rate arrangements constitutes a revived bretton woods regime dfg also argue that the revived regime will be sustainable despite its large global imbalances while much of the literature generated by dfg s thesis points to specific differences between the earlier regime and revived regime that render the latter unstable we argue that an underlying similarity between the two regimes renders the revived regime unstable specifically to the extent that the present system constitutes a revived bretton woods system it is vulnerable to the same set of destabilizing forces including asset price bubbles and global financial crises that marked the latter years of the earlier regime leading to its breakdown we extend the markov switching model to examine the relation between global liquidity and commodity prices we find evidence of commodity price bubbles in both the latter stages of the earlier bretton woods regime and the revived regime

review of economic growth and energy consumption a panel cointegration analysis for eu countries abstract this paper examines the long run relationship between energy consumption and real gdp including fixed capital and total employment for 18 eu countries from 1995 to 2012 the analysis was based on the panel unit root tests panel cointegration test and fully modified ordinary least squares fmols estimator and dynamic ordinary least squares dols estimator data were analyzed in three groups all sample visegrad countries v4 and old 14 eu countries indeed the results demonstrate that economic growth and the variables energy consumption gross fixed capital are cointegrated for the whole panel of countries as well as for the two selected groups of countries furthermore the panel fmols and dols estimators reveal that the relationship between energy consumption gross fixed capital and economic growth is positive

estimation of poverty transition matrices with noisy data summary this paper investigates measurement error biases in estimated poverty transition matrices we compare transition matrices based on survey expenditure data to transition matrices based on measurement error free simulated expenditure the simulation model uses estimates that correct for measurement error in expenditure we find that time varying measurement error in expenditure data magnifies economic mobility roughly 45 of households initially in poverty at time t 1 are found to be out of poverty at time t using data from the korean labor and income panel study when measurement error is removed this drops to between 26 and 31 of households initially in poverty copyright 2016 john wiley sons ltd

the recent slowdown of productivity growth the slowdown of productivity growth in the developed countries during the seventies will in this paper be viewed as a combined effect of three closely interacting forces i a long term deterioration in the efficiency and flexibility of some basic mechanisms of the economic and political systems of these countries ii the fading away of a number of uniquely favourable circumstances for productivity growth during the fifties and sixties and iii the exposure of these economies to unusually severe macroeconomic disturbances in the seventies careful inspection of time series with attempted modifications for cyclical factors suggests that there was hardly any general slowdown of productivity growth among developed countries before approximately i972 4 1 as we know the situation is radically different since then labour productivity growth per year for the entire national economy gdp per man hour seems to have fallen between the periods i960 73 and i973 9 by about i 2 percentage points in the united states 45 by about 24 percentage points in western europe2 45 and by about 5 9 percentage points in japan 6o table i see also fig i the slowdown was of about the same size in the business and manufacturing sectors see table i to calculate the extent of the slowdown of total factor productivity growth is of course a much more hazardous matter to which i will return later if just the various system changes and the fading away of the uniquely favourable factors had been the dominating forces behind the productivity growth slowdown we would expect the slowdown to have been gradual rather than abrupt as it turned out to be this abruptness as well as its timing makes the dramatic macroeconomic disturbances around i972 4 a prime suspect when looking for the villain behind the productivity growth slowdown indeed it is a basic hypothesis of the paper that these macroeconomic disturbances were not only by themselves strongly unfavourable for productivity growth but that they also revealed and accentuated the gradual deterioration of the

energy price shocks and productivity growth in us and uk manufacturing because sustained changes in the trend of productivity growth are so very important for people s long run economic welfare the dramatic productivity growth slowdown of the 1970 s and early 1980 s has been the focus of much analysis and discussion for some observers it was much more than coincidence that the oil price shocks of 1973 74 accompanied the sharp slowdowns in traditionally measured productivity growth not only in the united states and the united kingdom but throughout the industrialised world however establishing quantifying and explaining sig nificant linkages between energy price shocks and productivity growth has proved to be most difficult traditional and time honoured relationships involving productivity growth have all seemed incapable of explaining this slowdown for example edward denison author of several widely cited productivity studies has concluded that energy had essentially no role in explaining the productivity growth slowdown and that moreover what happened is to be blunt a mystery 1979 p 4

the assessment productivity and competitiveness in british manufacturing this issue of the oxford review examines productivity and competitiveness in british manufac turing the simplest and most widely used measure of productivity is output per head from this definition sprout at once the horns of a dilemma for an economy facing unemployment on the present scale for a given rate of expansion of output the higher the rate of productivity growth the greater the decline in employment or at least the smaller its growth on the other hand in an economy open to international competition a high rate of productivity growth relative to that of other countries is the long term key to achieving the favourable international competitive po sition necessary to sustain growth and a low level of unemployment

energy prices and productivity growth the sharp decline in economic growth since 1973 presents a problem comparable in scientific interest and social importance to the problem of unemployment in the great depression of the 1930s conventional methods of economic analysis have been tried and have been found to be inadequate this paper outlines a new framework for understanding the slowdown in economic growth we find that the fall in u s economic growth since 1973 has been due to the dramatic decline in productivity growth within the new framework we identify higher energy prices as an important determinant of the productivity slowdown

firm productivity innovation and financial development acknowledgment we are grateful to christopher kilby saul lizondo chris papageorgiou the strategy policy and review departments low income countries group the africa department s macro modeling debt and growth network and two anonymous referees for useful comments and suggestions kersting gratefully acknowledges financial support by the center for global leadership at the villanova school of business 1 introductioneconomists still struggle to explain the large differences in output per worker across countries the view that these differences are mostly the result of variations in investment rates has now largely been abandoned as cross country evidence suggests that total factor productivity tfp rather than capital accumulation accounts for observed per capita income differences hall and jones 1999 the largely unexplained cross country differences in tfp led to prescott s 1998 call for a theory of tfp in response barriers to innovation imitation and adoption e g parente and prescott 2000 and institutions e g acemoglu and johnson 2005 have often been offered as explanations for low tfp in poorer countries the global crisis and the resulting uncertainty have reinforced concerns about growth prospects in many low income countries after a decade of almost universally solid growth performance the medium term outlook for many low income countries appears increasingly uncertain at the same time the growth potential in many countries with low tfp remains dim even beyond the full conclusion of this crisis if tfp drives growth its determinants are the key to development prospects in low income countries some country specific direct determinants of tfp geography history or institutions such as the prevalent legal system are fixed or slow moving and the degree to which policy can influence these conditions is limited others such as innovation or the level of financial development can respond to both foreign and domestic forces external shocks globalization or government policy in this view tfp is not primarily the result of the endowment of a country but instead a direct result of purposeful actions by economic agents and as such can be influenced by policy innovation activity leads to technological progress in two distinct ways purposeful research and development can result in the invention of completely new products and processes this kind of innovative activity moves the global technological frontier and still mainly occurs in developed countries however innovation also consists of the adoption and adaptation of existing technology which can close the gap between countries converging toward the global technological frontier and those on the leading edge pushing the world frontier innovation shares a strong connection with the provision of financial services invention and adoption of technology are costly and risky activities which require financing it is therefore natural to study the impact of a country s financial development on tfp via the innovation channel 1in this article we follow that agenda in two separate steps i how do firm specific actions in particular innovation affect firm productivity ii what is the role of a country s level of development both financial and general in facilitating higher productivity using firm level data taken from the enterprise surveys covering over 14 000 firms in 63 countries we first establish a connection between a firm s innovative activities and its productivity we control for country industry and firm specific factors the countries in our data include low middle and high income countries while the firms span all sizes with a focus on small and medium sized enterprises sme innovation is defined broadly as the introduction of new production processes or product lines so that it includes the adaptation of existing technology we find that other things being equal firms that have introduced a new process or product are more productive

which sectors make poor countries so unproductive which sectors are most responsible for the low total factor productivities of developing countries to answer this question we develop a new framework for sectoral development accounting applying this framework to the penn world table we find that in equipment construction and food the sectoral tfp differences between developing countries and the united states are much larger than in the aggregate however in manufactured consumption the sectoral tfp differences are about equal to the aggregate tfp differences and in services they are much smaller we show that our level of disaggregation allows us to reconcile the results of existing studies of sectoral productivity differences which have focused on noncomparable two sector decompositions of the aggregate data we also show that our results help shed light on existing theories of aggregate tfp differences

assessing the extent and nature of chronic poverty in low income countries issues and evidence discussions of chronic poverty have mostly considered its monetary dimensions with current evidence suggesting that such poverty is much more transient than chronic but chronic poverty is a real and important phenomenon potentially more important quantitatively than it first appears once account is taken of different methodological approaches and inevitable measurement difficulties the chronic poor have distinctive characteristics such as lack of assets or high dependency rates which may account for their persistent poverty the paper argues that it is also necessary to develop concepts of chronic poverty further covering relevant nonmonetary dimensions and not just relying on panel data

the demand for capital labor and energy in european manufacturing industry before and after the oil price shocks the price and substitution elasticities for factor inputs capital labor fuels and electricity are estimated for total manufacturing industry on the basis of a pooled crosscountry time series analysis for nine west european countries the impact of the economic disturbances in the 1970s on the price sensitivity of demand is analyzed by estimating a translog cost function for two separate periods 1960 72 and 1973 80 hicks neutral technical change is rejected for both periods the results indicate some quite significant changes in the elasticities over the two periods

international price discrimination the pharmaceutical industry abstract it is generally asserted that price discrimination is a common feature of the international pharmaceutical market resulting in unnecessarily high medical costs to developing countries since it is pharmaceuticals that are the largest component of their health care expenditures however little comprehensive empirical research has been carried out to test this hypothesis this article compares the prices of identical packages of pharmaceutical products for 32 countries for the year 1975 and examines which factors contribute to thehuge price differences a strong positive relationship between price level and per capita gdp is found a 10 increase in per capita income being associated with on average 8 higher drug prices the implementation of direct price control measures by the government results on average in a 20 price reduction while government policies such as bulk purchasing through a centralized government agency promotion of the use of generics and to a lesser extent excluding patent protection seem to be sucessful in lowering the general price level of pharmaceuticals these results suggest that the pharmaceutical industry charges what the market will bear

why are services cheaper in the poor countries in their important work on international comparisons of national incomes and of comparative price structure kravis heston and summers i982 p 8 have noted that services are much cheaper in the relative price structure of a typical poor country than in that of a rich country this phenonomen has been documented now fairly systematically by the data gathered under their guiding hand of the united nations international comparison icp which covers 34 countries table i reproduced from their work i982 and fig i based on rows 3 and ii 13 indeed show this tendencyfor the relationship between relative service prices and real per capita gdp in this kravis heston summers 34 country 6 group sample the tendency is strongly evident except for the intermediate groups iii and iv

a restricted domain multilateral test approach to the theory of international comparisons this article develops a novel multilateral test approach to the problem of international comparisons many of the associated tests are justified as reasonable using the fact that they are direct analogues to properties of the cost of living index further support is bestowed upon the new approach by showing that it is equivalent to an extended version of diewert s 1986 multilateral test approach finally a number of alternative multilateral comparison formulas are evaluated and the relative superiority of two of them is established

from institutions to financial development and growth what are the links this paper presents an integrated overview of the literature linking institutions financial development and economic growth from the large body of research on institutional development the paper first selects those contributions that make it possible to study the role of institutional arrangements in ameliorating worsening the information frictions and transaction costs that characterize the development of financial markets the paper then investigates the theoretical mechanisms by which these specific frictions affect economic growth and presents the stock of empirical evidence quantifying the impact of institutions on growth through financial development

government expenditure and economic growth in the developed countries 1952 76 in the past decade or more the pace of economic growth has slowed considerably and the share of government expenditure in national product has increased considerably the average annual growth rate of per capita gdp for the 16 most important developed market economies was 6 3 from 1955 73 and 2 0 from 1973 79 the average share of government in gdp went from 27 in 1955 to 34 in 1970 to 43 in 1979 2 the simple correlation proves nothing but it suggests the growth of government might be one of the causes of the slowdown many economists have theorized that government production is staticly less efficient than private sector production with competitive markets see

financing development the role of information costs to address how technological progress in nancial intermediation aects the economy a costly state veri cation framework is embedded into the standard growth model the framework has two novel ingredients first rms dier in the risk return combinations that they oer second the e cacy of monitoring depends upon the amount of resources invested in the activity a nancial theory of rm size results undeserving rms are over nanced deserving ones under funded technological advance in intermediation leads to more capital accumulation and a redirection of funds away from unproductive rms toward productive ones quantitative analysis suggests that nance is important for growth

productivity and economic growth in japan and the united states during the period from 1960 to 1973 the economic growth rate in japan was at the rate of 10 or 11 percent per year japan was not the only country that grew rapidly during that period france and germany grew at 5 9 and 5 4 percent per year between 1960 and 1973 and italy grew at 4 8 percent per year even the united kingdom grew at a respectable 3 8 percent per year the united states grew at 4 3 percent per year during this period to fill out the roster of the seven major industrialized countries canada grew at 5 1 percent per year after the first oil crisis in 1973 and even more so after the second oil crisis in 197879 there was a dramatic decline of economic growth among industrialized countries growth in the oecd countries dipped to 2 6 percent per year between 1973 and 1979 japanese growth dropped from the doubledigit levels of the 1960 s and the early 1970 s to 3 8 percent per year from 1973 to 1979 in the united states the growth rate dropped to slightly above the oecd average at 2 8 percent per year the rate of economic growth in germany dropped to 2 4 percent and in france to 3 1 percent in every major industrialized country there was a precipitous fall in the rate of economic growth the sources of economic growth in japan and the united states over the whole period from 1960 to 1979 are given in table 1 if we compare japan and the united states during the period 1960 79 we see that the growth of output over the whole period was 8 3 percent in japan and only 3 5 percent in the united states we can allocate this growth in output in the two countries among its three sources namely the contribution of capital input the contribution of labor input and the rate of technical change by far the most important contributor to economic growth in both countries is the growth of capital input this growth source accounts for about 5 percentage points of the japanese economic growth rate and about 1 5 percentage points of the u s economic growth rate this amounts to 60 percent of japanese growth and 40 percent of u s growth labor input in the two countries is a major contributor to economic growth accounting for 1 5 percent of the japanese growth rate and 1 2 percent of the u s growth rate the rate of technical change is an important contributor as well at nearly 2 percent in japan and 0 7 percent in the united states i conclude that by far the most important contributor to economic growth in the two countries is the growth of capital input the relative importance of capital input is much greater in japan than in the united states focusing attention on the period from 1973 to 1979 after the energy crisis we can see that capital input retained its lead as a source of economic growth in both countries however the decline in the growth of tdiscussants john w kendrick george washington university j randolph norsworthy rensselaer polytechnic institute rolf r piekarz national science foundation

limited enforcement financial intermediation and economic development a quantitative assessment we present a model of economic development where the importance of financial differences caused by limited enforcement can be measured economies where enforcement is poor direct less capital to the production sector and employ less efficient technologies calibrated simulations reveal that the resulting effect on output is large furthermore the model correctly predicts that the average scale of production should rise with the quality of enforcement finally we find that the importance of limited enforcement rises with the importance of capital in production

history lessons institutions factor endowments and paths of development in the new world the explanations offered for the contrasting records of long run growth and development among the societies of north and south america most often focus on institutions the traditional explanations for the sources of these differences in institutions typically highlight the significance of national heritage or religion we in contrast argue that a hemispheric perspective across the wide range of colonies established in the new world by the europeans suggests that although there were many influences factor endowments or initial conditions had profound and enduring effects on the long run paths of institutional and economic development followed by the respective economies

financial development growth and the distribution of income a paradigm is presented in which both the extent of financial intermediation and the rate of economic growth are endogenously determined financial intermediation promotes growth because it allows a higher rate of return to be earned on capital and growth in turn provides the means to implement costly financial structures thus financial intermediation and economic growth are inextricably linked in accord with the goldsmith mckinnon shaw view on economic development the model also generates a development cycle reminiscent of the kuznet hypothesis in particular in the transition from a primitive slow growing economy to a developed fast growing one a nation passes through a stage in which the distribution of wealth across the rich and poor widens

the impact of disaggregated energy on productivity abstract the issue of the productivity slowdown of the 1970s and 1980s has received considerable analysis in the literature however the issue of the impact of energy on productivity is still debated this study contributes to the debate with the hope that some sight could be provided through disaggregating the factor input energy into two components a petroleum component and a non petroleum component by analysing labour productivity growth total factor productivity growth and labour intensity ratios the disaggregated energy component can be viewed as a major influence in explaining the productivity decline

international technological knowledge differences and economic growth comparisons usa versus west germany and sweden versus norway 1963 1988 the main interest in this paper is governed by the methodology for making evolutive growth comparisons in the international context the paper analysis differences in levels and changes of these levels of aggregate output between the above mentioned countries in terms of differences in factors input and levels of technological knowledge for the period 1963 1988 sources of economic growth in each country are also examined on an annual and average annual basis th conclusion is that technological knowledge differences between countries hold a central role in explaining output differences between them a slight overtake of the technological lead is observed in comparing sweden and norway between 1977 and 1985 when a recovery by sweden begining in 1986 is detected a certain part of the output differences between the us and west germany is explaining by the differences in technology between these two countries however capital intensity in the us is found to be almost double in 1988 and this accounts fo

purchasing power parities and phase iv of the international comparison project do they lead to real estimates of gdp and its components abstract this paper analyzes results from phase iv of the united nations international comparison project icp it examines the icp s estimates of real gdp and per capita gdp for 60 countries along with the estimates of detailed components of gdp for india and sri lanka as compared with some industrial countries we conclude that although detailed results are often illuminating levels of per capita gdp tend to be incorrect a systematic bias seems to be present in the icp leading to a strong overvaluation of developing countries gdp icp results therefore as judged also by the statistical commission of the united nations cannot be accepted for policy purposes at the world level

causes of the current stagflation since 1975 labour slack has been unusually high in the oecd countries and yet inflation has not diminished the less favourable mix of unemployment and rate of change of inflation which we call stagflation is explained by a fall in the feasible rate of growth of real wages unmatched by a reduction in the constant term in phillips curve to investigate this mechanism conventional wage and price equations are estimated for 19 countries and then used for simulation stagflation has been caused in roughly equal amounts by rising relative import prices and by the fall in the rate of productivity growth in the basic model the phillips curve is assumed not to adapt to falls in feasible real wage growth but in a final section an adaptive wage equation is estimated which confirms that the process of adaptation is slow

pareto optima and competitive equilibria with adverse selection and moral hazard this paper explores the extent to which standard general equilibrium analysis of pareto optima and of competitive equilibria can be applied to environments with moral hazard and adverse selection problems allowing for lotteries contracts with random components we first establish that an adverse selection insurance economy a moral hazard insurance economy a signaling economy and a private information labor market economy are all special cases of a simple general structure we then show that techniques for characterizing pareto optimal contracts as solutions to concave programming problems are useful and nice and appear to be broadly applicable allowing for lotteries we show how to characterize the optimal allocations for the adverse selection insurance and labor market economies we then show that standard existence and optimality theorems for competitive equilibria apply in the linear space containing lotteries if agents with characteristics which are distinct and privately observed at the time of initial trading enter the economy wide resource constraints in a homogeneous way other kinds of diversity are not critical for economies with moral hazard which satisfy the homogeneity condition competitive contract markets single out a subset of the optima and thus can be consistent with apparent unemployment and with a random allocation of labor supplied though all households are averse to risk the adverse selection insurance and signaling economies however do not satisfy the homogeneity condition and are difficult to decentralize efficiently with a price system

quantifying the evolution of world trade 1870 1949 abstract the typical narrative regarding the evolution of world trade prior to world war ii refers to a secular rise starting around 1870 and a subsequent collapse beginning in 1914 this narrative however is based on measures of trade openness that do not fully take into account purchasing power differences across countries due to lack of alternative data the measures employed in the existing literature are typically based on non ppp adjusted trade data denominated by ppp adjusted gdp data the present paper seeks to resolve this inconsistency by constructing new trade share estimates for 62 countries representing 90 of world gdp for the period from 1870 to 1949 our estimates combine historical import and export figures with non ppp adjusted gdp values that we estimate via the short cut method our estimates confirm qualitatively the narrative of a dramatic rise and fall of world trade over this period yet they indicate that this rise and fall was quantitatively much more pronounced we find that trade shares were on average 38 higher than previously documented and the world s level of trade openness in 1913 was comparable to that in 1974

barriers to entry and development we ask whether barriers to entry are a quantitatively important reason for the income gap between developing countries and the united states we develop a tractable general equilibrium model that captures the effects of barriers to entry and the other main distortions typically considered in the development literature we carry our model to the data and ask it to match the main development facts from the penn world table we find that this requires large barriers to entry in developing countries which account for about half of the income gap with the united states

raw materials profits and the productivity slowdown a factor price frontier framework is used to clarify the analogy of an increase decrease in raw material prices with autonomous technological regress progress factor price profiles are estimated for the manufacturing sector of the united states the united kingdom germany and japan the production model in conjunction with estimates obtained from the factor price frontier attributes much of the slowdown in manufacturing productivity to the rise in relative raw material prices part of the apparent productivity riddle may have to do with the use of double deflated national accounting measures of value added which have an inherent measurement bias

how dependent are the rural poor on the employment guarantee scheme in india an analysis of the icrisat data for two villages in the indian state of maharashtra points to mistargeting of the employment guarantee scheme egs there was a marked deterioration in it over the period 1979 89 reflected in not just a larger concentration of the more affluent among the egs participants but also their much larger gains from participating in this scheme nevertheless a large subset of the chronically poor depended heavily on egs as an additional source of income with significant welfare gains during 1979 84 but a large subset especially of relatively low income participants also withdrew from egs when overall economic conditions improved besides egs earnings varied consistently with economic conditions although the present analysis raises some concerns about the mistargeting of egs and in this context about the design and implementation of this scheme the presumption that such public support makes the poor perpetually dependent on it seems somewhat exaggerated if not mistaken

modeling production for general equilibrium analysis the purpose of this paper is to present econometric models of producer behavior suitable for incorporation into a general equilibrium model implementation of these models requires a time series of inter industry transactions tables second implementation requires methods for estimation of parameters in systems of nonlinear simultaneous equations finally the economic theory of producer behavior implies equality and inequality restrictions on the parameters that must be incorporated into the estimation we discuss an empirical application to modeling producer behavior in thirty six industrial sectors of the u s economy

one kind of freedom poverty dynamics in post apartheid south africa abstract a 1993 south african living standards survey documented the legacy of apartheid in the form high levels of inequality and human insecurity drawing on a 1998 re survey of households in the 1993 study this paper explores whether this legacy has been superseded or whether apartheid s end has been only one kind of freedom that has left households in a poverty trap from which they cannot escape after proposing a theoretically grounded dynamic poverty typology that distinguishes stochastic from structural poverty transitions the paper goes on to estimate that significant numbers of the south african poor are potentially trapped in a structural poverty trap and lack the means to escape poverty over time

towards an explanation of the productivity slowdown an acceleration deceleration hypothesis after two and a half decades of prosperous post war development western industrialised countries recently experienced a slowdown of economic growth and productivity advance together with an increase in the rates of inflation and unemployment in trying to explain this malaise we are looking at a diagnosis that could help us to identify early indicators of a future turnaround or some policy variables which deserve to be included in a therapeutic programme although we shall focus on what can be measured complying with the standards of the guild we shall not refrain from considering complex relationships which can be grasped only intuitively even if they include phenomena which lie beyond the limits of official statistics 2 the outcome may be soft economics but we find some consolation in the dictum that it is better to be vaguely right than to be precisely wrong

wage gaps factor shares and real wages the relationships which link real wages capital intensity and factor shares are tested as a prelude to tests of the relationship between wage rigidities and labour market institutions evidence from seven countries indicates that the evolution of factor shares is well explained by changes in capital intensity which is itself well explained by product wages and technical progress a key implication is that changes in full employment capital labour ratios have been the dominant reason for the longer run decline of profit shares in europe and japan relative to the united states it follows that changes in cyclically adjusted factor shares provide little or no information regarding the gap between the actual real wage and its full employment value

vulnerability seasonality and poverty in ethiopia most studies examining the dynamics of welfare have found large fluctuations in consumption over relatively short periods suggesting substantial short run movements in and out of poverty the consequence is that cross section poverty research may not be able to identify the poor in this study we explore this short run variability further we use a data set on a panel of 1450 households in different communities in rural ethiopia surveyed thrice over 18 months on average year to year poverty is very similar however we find high variability in consumption and poverty over the seasons and year by year econometric analysis suggests that consumption is affected by idiosyncratic and common shocks including rainfall and household specific crop failure while households respond to seasonal incentives related to changing labour demand and prices the results imply that a larger number of households are vulnerable to shocks than implied by the standard poverty statistics while some of the non poor in the

nontradable goods prices and per caita income an application to regional korean data pooled time series cross sectional regional data for korea over the period 1985 1991 are used to investigate points which emerged from the united nations international comparison project the results based on a regional analysis are opposite to those of the icp the prices of services do not increase more rapidly in fast growing than in slow growing regions this regional analysis provides constradictory evidence to the widely recognized stylized fact that the prices of nontradables increase with real per capital income by a larger margin than the prices of tradables increase

vested interests in a positive theory of stagnation and growth we study a positive theory of stagnation and growth aimed at understanding the large variations in growth outcomes across actual economies the theory points to the fundamental role played by vested interests in determining policies which are key to the growth process some agents seek to prevent the adoption of new technologies we develop a model of technology adoption and show how technological innovation may sow the seeds of its own destruction in particular we find that the equilibrium is characterized by a long cycle of stagnation and growth over this cycle incumbents are phased out of the economy will new innovation occur in formalizing our theory we make a methodological contribution by characterizing dynamic voting equilibria when voters must forecast the effects of different current policies on future prices and policy outcomes

on finance as a theory of tfp cross industry productivity differences and economic rents we develop a theory of capital market imperfections to study how the ability to enforce contracts affects resource allocation across entrepreneurs of different productivities and across industries with different needs for external financing the theory implies that countries with a poor ability to enforce contracts are characterized by the use of inefficient technologies low aggregate tfp large differences in labor productivity across industries and large employment shares in industries with low productivity these implications are supported by the empirical evidence the theory also suggests that entrepreneurs have a vested interest in maintaining a status quo with low enforcement

contribution of productivity and firm size to value added evidence from vietnam abstract a new indexing method is developed to decompose the contributions of productivity prices and firm size to a firm s value added the method introduces an error term into the decomposition equation to capture measurement biases which are caused by using the deflator instead of the observed price and all other sorts of measurement error an application of the method is given using private small and medium manufacturing firm level data in vietnam from 1996 and 2001 the error index decomposition method provides a comparison of performance of all firms to the hypothetical representative firm the analysis allows firms and policy makers to realize the key factors contributing to the success or failure of a firm and suggest strategies to improve firm economic performance

pathways out of rural poverty a case study in socio economic mobility in the rural philippines exploiting unique household panel data covering a 30 year period this paper attempts to analyse the patterns of poverty exits by examining socio economic mobility in a philippines village macroeconomic growth was a major factor explaining poverty exit probabilities until the early 1980s after the 1980s poverty exit paths through agricultural ladder narrowed schooling and growth became equally important factors owing to the increased returns to schooling and labour endowments also became important for the lower but not upper social strata providing an economic incentive to have more children for the poor surprisingly we find no evidence of state dependence in poverty spells once observable factors are taken into account copyright 2007 oxford university press

investor protection optimal incentives and economic growth does investor protection foster economic growth to assess the widely held affirmative view we introduce investor protection into a standard overlapping generations model of capital accumulation better investor protection implies better risk sharing because of entrepreneurs risk aversion this results in a larger demand for capital this is the demand effect a second effect the supply effect follows from general equilibrium restrictions better protection i e higher demand increases the interest rate and lowers the income of entrepreneurs decreasing current savings and next period s supply of capital the supply effect is stronger the tighter are the restrictions on capital flows our model thus predicts that the positive effect of investor protection on growth is stronger for countries with lower restrictions cross country data provide support for this prediction as does the detailed examination of the growth experiences of south korea and india

the relative efficiencies of market and planned economies are planned economies systematically more or less productive than market economies this question provoked heated intellectual debate since the time of hayek 11 keynes 16 lange 19 lange and taylor 20 and lerner 22 the collapse of the communist systems of east europe since 1989 closed the debate planned economies were without doubt less efficient in utilizing economic resources than market economies but how much less efficient this question is of obvious scientific interest but it has not been answered some work addressing the broad question of comparative efficiency has been done by bergson 4 5 6 marer 25 26 moroney 28 and others all indicate comparatively lower efficiency in planned economies but none addresses the question by how much our contribution here is to answer this question using a novel methodology we estimate aggregate frontier production functions for two groups of countries 7 centrally planned economies in east europe and 17 predominantly market economies in west europe estimating frontier production functions enables two types of comparisons that have not

productivity and cost gaps in manufacturing industries in u s japan and germany abstract the objective of this paper is to measure and explain the development of differences in productivity for five manufacturing industries of the u s japan and germany changes in total factor productivities and differences in technologies and the sources of those changes will be analyzed we extend the framework developed by jorgenson and nishimizu 1978 to the dual cost approach to reflect the efficiency aspect of productivity gaps in terms of cost disadvantages we employ translog cost functions for a description of productivity and cost efficiency gaps and for an econometric analysis of sources of catching up processes

the productivity slowdown the oil shocks and the real cycle f ive facts stand out about economic performance in the united states since world war ii the first is that for most of the postwar period the u s has had a slower rate of economic growth than the other major developed democracies except great britain and much lower rates of growth than germany japan and italy the gap between the growth of per capita income of the united states and comparable countries has however tended to diminish over time and the united states has lately grown at about the same rate as most other developed countries the second outstanding fact is that the united states has fallen far behind in many mass production industries in which it used to lead the world whereas it is ahead of other nations in many new and especially high technology industries in automobiles steel tires household appliances and earth moving and farm equipment for example u s production has fallen dramatically in relation to output in most comparable countries and the country has become a net importer of most such products by contrast in newer industries such as computers jet aircraft sophisticated weaponry and high technology in general the united states is often dominant both as producer and exporter the third outstanding fact is that most of the older heartland of american industry roughly the area north and east of an arc drawn from baltimore to st louis to milwaukee has declined dramatically in comparison with the south and the west this change in regional fortunes has been due in large part to migration motivated by differences in economic prospects from the declining to the advancing