booms busts and babies health we study the relationship between the unemployment rate at the time of a baby s conception and parental characteristics parental behaviors and babies health babies conceived in times of high unemployment have a reduced incidence of low and very low birth weight fewer congenital malformations and lower post neonatal mortality these health improvements are attributable both to selection changes in the type of mothers that conceive during recessions and to improvements in health behavior during recessions black mothers tend to be higher socio economic status as measured by education and marital status in times of high unemployment whereas white mothers are less educated

indirect effects of an aid program how do cash transfers affect ineligibles consumption cash transfers to eligible households indirectly increase the consumption of ineligible households living in the same villages this effect operates through insurance and credit markets ineligible households benefit from the transfers by receiving more gifts and loans and by reducing their savings thus the transfers benefit the local economy at large looking only at the effect on the treated underestimates the impact one should analyze the effects of this class of programs on the entire local economy rather than on the treated only and use a village level randomization rather than selecting treatment and control subjects from the same community

aggregate income shocks and infant mortality in the developing world health and income are strongly correlated both within and across countries yet the extent to which improvements in income have a causal effect on health status remains controversial the authors investigate whether short term fluctuations in aggregate income affect infant mortality using an unusually large data set of 1 7 million births in 59 developing countries the authors show a large negative association between per capita gdp and infant mortality female infant mortality is more sensitive than male infant mortality to negative economic shocks suggesting that policies that protect the health status of female infants may be especially important during economic downturns

early life circumstance and adult mental health we show that psychological well being in adulthood varies with circumstance in early life combining a time series of real producer prices of cocoa with a nationally representative household survey

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

the short term impact of unconditional cash transfers to the poor experimental evidence from kenya we use a randomized controlled trial to study the response of poor households in rural kenya to unconditional cash transfers from the ngo givedirectly the transfers differ from other programs in that they are explicitly unconditional large and concentrated in time we randomized at both the village and household levels furthermore within the treatment group we randomized recipient gender wife versus husband transfer timing lump sum transfer versus monthly installments and transfer magnitude us 404 ppp versus us 1 525 ppp we find a strong consumption response to transfers with an increase in household monthly consumption from 158 ppp to 193 ppp nine months after the transfer began transfer recipients experience large increases in psychological well being we find no overall effect on levels of the stress hormone cortisol although there are differences across some subgroups monthly transfers are more likely than lump sum transfers to improve food security whereas lump sum transfers are more likely to be spent on durables suggesting that households face savings and credit constraints together these results suggest that unconditional cash transfers have significant impacts on economic outcomes and psychological well being

a pragmatic approach to capital account liberalization in the mid 1990s mainstream economists of nearly all stripes commonly recommended capital account liberalization that is allowing a free flow of funds in and out of a country s economy as an essential step in the process of economic development but then came the east asian financial crisis of 1997 98 in which even seemingly healthy and well managed economies like those of south korea were engulfed by massive capital outflows and tremendous currency volatility and capital account liberalization became quite controversial in the economics profession a decade later now that time has quelled passions and intervening research can shed more light on the debate it appears that both the costs and benefits of capital account liberalization may have been misunderstood in that earlier debate now it appears that the main benefits of capital account liberalization for emerging markets are indirect more related to their role in building other institutions than to the increased financing provided by capital inflows and these indirect benefits are important enough that countries should look for creative approaches to capital account liberalization that would help attain these benefits while reducing the risks countries don t have much choice but to plan for capital account liberalization because capital accounts are de facto becoming more open over time whatever governments may do to try to control them

cyclicality mortality and the value of time the case of coffee price fluctuations and child survival in colombia recent studies demonstrate procyclical mortality in wealthy countries but there are reasons to expect a countercyclical relationship in developing nations we investigate how child survival in colombia responds to fluctuations in world arabica coffee prices and document starkly procyclical child deaths in studying this result s behavioral underpinnings we highlight that 1 the leading determinants of child health are inexpensive but require considerable time and 2 as the value of time declines with falling coffee prices so does the relative price of health we find a variety of direct evidence consistent with the primacy of time in child health production

integracao financeira e reformas institucionais this article intends to analyze the collateral impacts of financial integration process emphasizing its eects on the incentives to the promotion of countries institutional reforms the study tests the hypothesis that capital account openness can stimulate institutional reforms to increase economic freedom and reduce the political and the economic transaction risks given that it represents a channel for punishment to the adoption of policies considered not appropriate by the market the result of our sample with 39 developing and developed countries are favorable evidences of this hypothesis the study also indicates that the index capturing the institutions quality has significant changes for three periods after the year the country is considered financially integrated

instruments randomization and learning about development there is currently much debate about the effectiveness of foreign aid and about what kind of projects can engender economic development there is skepticism about the ability of econometric analysis to resolve these issues or of development agencies to learn from their own experience in response there is increasing use in development economics of randomized controlled trials rcts to accumulate credible knowledge of what works without overreliance on questionable theory or statistical methods when rcts are not possible the proponents of these methods advocate quasirandomization through instrumental variable iv techniques or natural experiments i argue that many of these applications are unlikely to recover quantities that are useful for policy or understanding two key issues are the misunderstanding of exogeneity and the handling of heterogeneity i illustrate from the literature on aid and growth actual randomization faces similar problems as does quasi randomization notwithstanding rhetoric to the contrary i argue that experiments have no special ability to produce more credible knowledge than other methods and that actual experiments are frequently subject to practical problems that undermine any claims to statistical or epistemic superiority i illustrate using prominent experiments in development and elsewhere as with iv methods rct based evaluation of projects without guidance from an understanding of underlying mechanisms is unlikely to lead to scientific progress in the understanding of economic development i welcome recent trends in development experimentation away from the evaluation of projects and toward the evaluation of theoretical mechanisms jel c21 f35 o19

financial liberalization insurance market and the likelihood of financial crises this paper provides empirical evidence to investigate the direct impact of financial liberalization on the likelihood of currency systemic banking crises and examines the roles of insurance market country risk and economic conditional variables on the relationship between financial liberalization and financial crises in 39 countries our empirical results support that financial liberalization does have a significantly negative impact on the likelihood of currency systemic banking crises and that the indirect effects of insurance development and lower country risk decrease the probability of crises but the indirect effect of economic conditional proxies is enhanced with the likelihood of a financial crisis the policy implication is that the government or authority should strengthen the positive role of the insurance sector in order to combat financial crises

endowments at birth and parents investments in children do parents invest more in higher quality children or do they compensate for lower quality by giving more to children with lower endowments we answer this question in the context of a large scale iodine supplementation programme in tanzania we find that children with higher programme exposure were more likely to receive necessary vaccines and were breastfed for longer siblings of treated children were also more likely to be immunised fertility behavior and investments at the time of birth were unaffected

sudden stops are global and local investors alike the main goal of this paper is to characterize the determinants of sudden stops caused by domestic vis a vis foreign residents are the decisions of domestic investors to invest abroad or of foreign investors to cut off funds from the domestic economy governed by the same set of determinants given the distribution of different types of sudden stop episodes over time and its different macroeconomic consequences the authors argue that the determinants may not be alike using an effective sample of 82 countries with annual information over the period 1970 2007 the analysis finds that global investors are less likely to stop bringing their capital when their economy is growing and the world interest rate is lower domestic agents are more willing to invest abroad if the macroeconomic performance of the domestic economy is poor high inflation the financial system is weak and there are high external savings current account surpluses increasing financial openness makes the domestic country more vulnerable to sudden stops caused by either local or global investors finally countries with higher shares of foreign direct investment are less prone to inflow driven sudden stops whereas the opposite holds for outflow driven sudden stops

international financial crises causes prevention and cures dale jorgenson has bestowed a great honor and no small challenge by inviting me to give this lecture a great honor because of the distinguished list of economists who have preceded me a challenge because of the standard they have set and because there is no greater challenge for any economist than providing a coherent account of significant events to his scientific peers i am sometimes asked by friends about the differences between academic life and life as a public official there are many two stand out first as an academic the gravest sin one can commit is to sign one s name to something one did not write as a public official it is a mark of effectiveness to do so as often as possible second as an academic if a problem is too hard and does not admit of a satisfactory solution there is an obvious response work on a different problem that is not a luxury that one has in government i have been reminded of this often in recent years as we have grappled with financial crises in a number of what had previously been considered emerging markets with unrestrained futures anyone who doubts the social importance of what economists do should consider the debates surrounding these crises hundreds of millions of people who expected rapidly rising standards of living have seen their living standards fall hundreds of thousands if not millions of children have been forced to drop out of school and go to work hundreds of billions of dollars of apparent wealth has been lost the stability of large nations as nations has been called into question and the united states has made its largest nonmilitary foreign policyrelated financial commitments since the marshall plan almost all the issues involved in understanding preventing and mitigating these crises are the stuff of economics courses and research fixed versus flexible exchange rates moral hazard and multiple equilibria speculation and liquidity fiscal and monetary policies regulation and competition what economists think say and do has profound implications for the lives of literally billions of their fellow citizens whether it is discussing the role of derivatives in signaling exchange rate commitments with chinese premier zhu rongji or discussing an nber working paper on inflation targeting with the brazilian central bank governor arminio fraga or discussing alternative approaches to bankruptcy law with indonesia s economic team or optimal debt durations with the mexican authorities i am consistently struck by the impact of the kind of research discussed at the aea meetings the future well being of the world s people in large part will depend on how the ongoing process of global integration works out this is a strong statement but one that is supported by the global economy s post world war i failure and its post world war ii success central to global integration is financial integration the flow of funds and of capital across international borders and as the events of the late 1920 s and early 1930 s remind us central to global disintegration can be international financial breakdowns today i want to reflect on the issue of global financial integration in light of the dramatic and largely unpredicted events of recent years it is perhaps a good time for reflection there has been enough repair that priority can shift from u s department of the treasury 1500 pennsylvania avenue washington dc 20005 this lecture reflects many things i have learned from experiences i have shared with colleagues in the united states government and governments around the world i thank brad delong marty feldstein stephanie flanders ken rogoff andrei shleifer and ted truman for useful comments and suggestions i am especially grateful to nouriel roubini and stephanie flanders for valuable discussions and assistance in the preparation of this lecture the usual disclaimer applies

the importance of noncognitive skills lessons from the ged testing program it is common knowledge outside of academic journals that motivation tenacity trustworthiness and perseverance are important traits for success in life thomas edison wrote that genius is 1 percent inspiration and 99 percent perspiration most parents read the aesop fable of the tortoise and the hare to their young children at about the same time they read them the story of the little train that could numerous instances can be cited of high iq people who failed to achieve success in life because they lacked self discipline and low iq people who succeeded by virtue of persistence reliability and self discipline the value of trustworthiness has recently been demonstrated when market systems were extended to eastern european societies with traditions of corruption and deceit it is thus surprising that academic discussions of skill and skill formation almost exclusively focus on measures of cognitive ability and ignore noncognitive skills the early literature on human capital e g gary becker 1964 contrasted cognitive ability models of earnings with human capital models ignoring noncognitive traits entirely the signaling literature e g michael spence 1974 emphasized that education was a signal of a one dimensional ability usually interpreted as a cognitive skill most discussions of ability bias in the estimated return to education treat omitted ability as cognitive ability and attempt to proxy the missing ability by cognitive tests most assessments of school reforms stress the gain from reforms as measured by the ability of students to perform on a standardized achievement test widespread use of standardized achievement and ability tests for admissions and educational evaluation are premised on the belief that the skills that can be tested are essential for success in schooling a central premise of the educational testing movement since its inception much of the neglect of noncognitive skills in analyses of earnings schooling and other lifetime outcomes is due to the lack of any reliable measure of them many different personality and motivational traits are lumped into the category of noncognitive skills psychologists have developed batteries of tests to measure noncognitive skills e g robert sternberg 1985 these tests are used by companies to screen workers but are not yet used to ascertain college readiness or to evaluate the effectiveness of schools or reforms of schools the literature on cognitive tests ascertains that one dominant factor g summarizes cognitive tests and their effects on outcomes no single factor has yet emerged to date in the literature on noncognitive skills and it is unlikely that one will ever be found given the diversity of traits subsumed under the category of noncognitive skills studies by samuel bowles and herbert gintis 1976 rick edwards 1976 and roger klein et al 1991 demonstrate that job stability and dependability are traits most valued by employers as ascertained by supervisor ratings and questions of employers although they present no direct evidence on wages and educational t discussants susan mayer university of chicago cecilia rouse princeton university nan maxwell california state university hayward janet currie university of california los angeles

mobilidade de capitais e crescimento economico uma analise empirica dinâmica com dados em painel this paper aims at analyzing empirically the relationship between economic growth and openness of the financial account of the balance of payments it takes into consideration the balance of payments constrained growth as well as the difficulties in the empirical literature in measuring capital mobility departing from capital mobility index we estimate a panel across 80 countries both developed and developing ones between 1997 2003 results suggest that more capital mobility in developing countries affects negatively growth whereas it possibly stimulates growth in developed countries

country characteristics and the effects of government consumption shocks on the current account and real exchange rate abstract this paper examines the effects of government consumption shocks on the current account and the real exchange rate as well as the influence of various country characteristics on these effects a dataset of 18 industrial countries is used for the analysis panel var models are estimated for the groups of countries classified by country characteristics the primary empirical findings are as follows first positive government consumption shocks lead if anything to real exchange rate depreciation but the direction of the current account response varies across samples in particular positive government consumption shocks lead to real exchange rate depreciation under a floating exchange rate regime second international capital mobility has a significant impact on the effects of government consumption shocks the depreciation of the real exchange rate and the improvement of current account are larger in countries with low international capital mobility than those with high capital mobility third albeit less robust the depreciation of the real exchange rate and the improvement of the current account are larger in countries under more flexible exchange rate regimes than those under less flexible exchange rate regimes in addition the current account improves more in countries with high trade openness than those with low trade openness standard theories do not fully explain these empirical patterns thus these findings suggest a need for further theoretical development

bargaining in the shadow of the law divorce laws and family distress this paper exploits the variation occurring from the different timing of divorce law reforms across the united states to evaluate how unilateral divorce changed family violence and whether the option provided by unilateral divorce reduced suicide and spousal homicide unilateral divorce both potentially increases the likelihood that a domestic violence relationship ends and acts to transfer bargaining power toward the abused thereby potentially stopping the abuse in extant relationships in states that introduced unilateral divorce we find a 8 16 percent decline in female suicide roughly a 30 percent decline in domestic violence for both men and women and a 10 percent decline in females murdered by their partners

is financial globalization beneficial this lecture examines whether financial globalization is beneficial to developing countries by first examining the evidence on financial development and economic growth and concludes that financial development is indeed a key element in promoting economic growth it then asks why if financial development is so beneficial it often does not occur it then goes on to examine whether globalization particularly of the financial kind can help encourage financial and economic development and argues that it can however financial globalization does not always work to encourage economic development because it often leads to devastating financial crises the issue is thus not whether financial globalization is inherently good or bad but whether it can be done right

private sector share of external debt and financial stability evidence from bank loans abstract in the last two decades the private sector has contracted a substantially larger share in the total amount of foreign currency international debt private sector share of external debt especially in developing countries in this paper i empirically examine the effect of this phenomenon on bank loan prices i find that the private sector share of external debt negatively and significantly impacts the price of bank loans this result supports the hypothesis that private sector debt contributes to international financial stability to a greater degree than sovereign debt nevertheless this impact is canceled out in the presence of fixed exchange regimes that are unsuitable with respect to fundamentals in such circumstances the private sector may take advantage of capital market distortions that are maintained by official authorities and thus exposes the country to further financial instability additional results corroborate the observation that the gain in financial stability stems from more efficient use of funds and reduced monitoring costs

disease and development evidence from hookworm eradication in the american south this study evaluates the economic consequences of the successful eradication of hookworm disease from the american south the hookworm eradication campaign c 1910 began soon after i the discovery that a variety of health problems among southerners could be attributed to the disease and ii the donation by john d rockefeller of a substantial sum to the effort the rockefeller sanitary commission rsc surveyed infection rates in the affected areas eleven southern states and found that an average of forty percent of school aged children were infected with hookworm the rsc then sponsored treatment and education campaigns across the region follow up studies indicate that this campaign substantially reduced hookworm disease almost immediately the sudden introduction of this treatment combines with the cross area differences in pre treatment infection rates to form the basis of the identification strategy areas with higher levels of hookworm infection prior to the rsc experienced greater increases in school enrollment attendance and literacy after the intervention this result is robust to controlling for a variety of alternative factors including differential trends across areas changing crop prices shifts in certain educational and health policies and the effect of malaria eradication no significant contemporaneous results are found for adults who should have benefited less from the intervention owing to their substantially lower prior infection rates a long term follow up of affected cohorts indicates a substantial gain in income that coincided with exposure to hookworm eradication i also find evidence that eradication increased the return to schooling

early life health interventions and academic achievement this paper studies the effect of improved early life health care on mortality and long run academic achievement in school we use the idea that medical treatments often follow rules of thumb for assigning care to patients such as the classification of very low birth weight vlbw which assigns infants special care at a specific birth weight cutoff using detailed administrative data on schooling and birth records from chile and norway we establish that children who receive extra medical care at birth have lower mortality rates and higher test scores and grades in school these gains are in the order of 0 15 0 22 standard deviations

the effects of lottery prizes on winners and their neighbors evidence from the dutch postcode lottery each week the dutch postcode lottery pcl randomly selects a postal code and distributes cash and a new bmw to lottery participants in that code we study the effects of these shocks on lottery winners and their neighbors consistent with the life cycle hypothesis the effects on winners consumption are largely confined to cars and other durables consistent with the theory of in kind transfers the vast majority of bmw winners liquidate their bmws we do however detect substantial social effects of lottery winnings pcl nonparticipants who live next door to winners have significantly higher levels of car consumption than other nonparticipants

studying the effects of household and firm credit on the trade balance the composition of funds matters i introduction the implications of higher levels of financial development have been investigated in a large number of studies both in the empirical growth and in the financial crisis literatures 1 a widely used indicator of financial development is the relative importance of loans issued by commercial banks and other financial intermediaries to the entire private sector that is the private credit to gross domestic product gdp ratio following the definition by king and levine 1993a 1993b a higher level of private credit indicates better developed financial markets and easier credit access for businesses and households yet these two types of borrowers vary in terms of the use of credit and might have different effects on macroeconomic performance in this article we study the link between the components of private credit and the trade balance we focus on the distinction between household and corporate sector credit and investigate whether these two types of credit have adverse effects on the trade balance of goods and services this article builds on a theoretical framework by backus kehoe and kydland 1994 who study the dynamics of the trade balance we extend their work by assuming two types of households one being credit constrained due to enforcement problems we then ease the credit constraints on households and firms and study the hypothesized effects by comparative statics analysis more specifically we argue that an increase in household credit raises the demand for consumption goods whereas firm credit growth raises the demand for investment goods while both can have a negative impact on the trade balance the difference is important because borrowing to finance consumption does not add to the productive capacity of an economy and to greater export earnings frankel and rose 1996 firm credit on the other hand has the potential to increase investment by relaxing the credit constraints on firms thus increasing exports and trade balance exploring the decomposition of private credit in emerging countries is relevant for several reasons first the effects of the increased level of household credit in emerging economies are still ambiguous on the one hand better access to credit helps credit constrained households to smooth out their consumption on the other hand it boosts spending and hence decreases savings in an influential paper japelli and pagano 1994 show that liquidity constraints on households raise the saving rates they also find empirical evidence that an increase in household credit decreases saving rates for a sample of organization for economic cooperation and development oecd countries yet the effects of household credit in emerging economies have not been explored second if we find that household and firm credit have different impacts on the trade balance of goods and services this underlines the importance of the decomposition of private credit which will also have key implications for the financial development growth link the level of private credit in emerging economies has been rising steadily after the financial liberalization process that took place in early 1990s however higher levels of total private credit do not necessarily imply higher levels of firm credit in fact data for emerging economies show that household credit rather than firm credit has been rapidly increasing in the past decade the higher share of household credit in the total private credit can crowd out investment especially in countries where stock and bond markets are not well developed to finance investment finally a possible negative link between household credit and trade balance has important policy implications for emerging economies as argued by wood 1997 the international monetary fund continues to place most emphasis within its programmes on the stabilisation objective and therefore the core of imf programmes continues to be based upon the restriction of domestic credit creation

selection on observed and unobserved variables assessing the effectiveness of catholic schools in this paper we measure the effect of catholic high school attendance on educational attainment and test scores because we do not have a good instrumental variable for catholic school attendance we develop new estimation methods based on the idea that the amount of selection on the observed explanatory variables in a model provides a guide to the amount of selection on the unobservables we also propose an informal way to assess selectivity bias based on measuring the ratio of selection on unobservables to selection on observables that would be required if one is to attribute the entire effect of catholic school attendance to selection bias we use our methods to estimate the effect of attending a catholic high school on a variety of outcomes our main conclusion is that catholic high schools substantially increase the probability of graduating from high school and more tentatively attending college we find little evidence of an effect on test scores

income shocks and suicides causal evidence from indonesia we examine how income shocks affect the suicide rate in indonesia we use a difference in differences approach exploiting the cash transfer s nationwide rollout and corroborate the findings using

inflation responses to commodity price shocks how and why do countries differ this paper relates the inflationary impact of commodity price shocks across countries to a broad range of structural characteristics and policy frameworks over the period 2001 2010 using several approaches the analysis suggests that economies with higher food shares in cpi baskets fuel intensities and pre existing inflation levels were more prone to experience sustained inflationary effects from commodity price shocks countries with more independent central banks and higher governance scores seem to have contained the impact of these shocks better the effect of the presence of inflation targeting regimes however appears modest and not evident during the 2008 food price shock the evidence suggests that trade openness financial development dollarization and labor market flexibility do not significantly influence the way in which domestic inflation responds to international commodity price shocks

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

thresholds in the process of international financial integration abstract the financial crisis has re ignited the fierce debate about the merits of financial globalization and its implications for growth especially for developing countries the empirical literature has not been able to conclusively establish the presumed growth benefits of financial integration indeed a new literature proposes that the indirect benefits of financial integration may be more important than the traditional financing channel emphasized in previous analyses a major complication however is that there seem to be certain threshold levels of financial and institutional development that an economy needs to attain before it can derive the indirect benefits and reduce the risks of financial openness in this paper we develop a unified empirical framework for characterizing such threshold conditions we find that there are clearly identifiable thresholds in variables such as financial depth and institutional quality the cost benefit trade off from financial openness improves significantly once these threshold conditions are satisfied we also find that the thresholds are lower for foreign direct investment and portfolio equity liabilities compared to those for debt liabilities

wealth health and child development evidence from administrative data on swedish lottery players we use administrative data on swedish lottery players to estimate the causal impact of substantial wealth shocks on players own health and their children s health and developmental outcomes our estimation sample is large virtually free of attrition and allows us to control for the factors conditional on which the prizes were randomly assigned in adults we find no evidence that wealth impacts mortality or health care utilization with the possible exception of a small reduction in the consumption of mental health drugs our estimates allow us to rule out effects on 10 year mortality one sixth as large as the crosssectional wealth mortality gradient in our intergenerational analyses we find that wealth increases children s health care utilization in the years following the lottery and may also reduce obesity risk the effects on most other child outcomes including drug consumption scholastic performance and skills can usually be bounded to a tight interval around zero overall our findings suggest that in affluent countries with extensive social safety nets causal effects of wealth are not a major source of the wealth mortality gradients nor of the observed relationships between child developmental outcomes and household income jel codes i10 i14 j24

site selection bias in program evaluation site selection bias can occur when the probability that a program is adopted or evaluated is correlated with its impacts i test for site selection bias in the context of the opower energy conservation programs using 111 randomized control trials involving 8 6 million households across the united states predictions based on rich microdata from the first 10 replications substantially overstate efficacy in the next 101 sites several mechanisms caused this positive selection for example utilities in more environmentalist areas are more likely to adopt the program and their customers are more responsive to the treatment also because utilities initially target treatment at higher usage consumer subpopulations efficacy drops as the program is later expanded the results illustrate how program evaluations can still give systematically biased out of sample predictions even after many replications jel codes c93 d12 l94 o12 q41

under the weather health schooling and economic consequences of early life rainfall life in rural areas of developing countries is prone to many kinds of risk such as illness or mortality of household members crop or other income loss due to natural phenomena weather insect infestations or fire for example and civil conflict in addition to their contemporaneous effects the effects of certain types of shocks may still be felt many years or even decades later from a public policy standpoint it is particularly important to identify shocks that have large long run effects moreover the mechanics underlying the persistence of shocks may be of con siderable interest for example a health shock may have a long run effect simply because the health shock itself persists over time alternately the health shock may not directly affect long run outcomes but it could affect some other outcome such as educational attainment that helps determine long run well being in this paper we focus on shocks that occur at the very beginning of life we ask how sensi tive long run individual well being is to environmental conditions around the time of birth in particular we examine the effect of weather shocks around the time of birth on the adult health education and socioeconomic outcomes of indonesian women and men born between 1953 and 1974 in addition we attempt to shed light on the intervening pathways connecting early life rainfall to adult outcomes illuminating the roles of health and educational attainment in deter mining adult socioeconomic status this investigation has considerable data requirements it necessitates information on weather shocks experienced by individuals several decades earlier as well as detailed current informa tion on adult outcomes we use information in the indonesian family life surveys ifls on an individual s year and location of birth and link each individual in that survey to locality specific rainfall data for their birth year for individuals born in rural areas on whom we focus rainfall variation across space and time should generate corresponding variation in agricultural output and thus household income to deal with measurement error in the rainfall data we run instrumental variables regressions where variables for rainfall measured at slightly more distant rainfall stations serve as instruments for rainfall in the individual s birthplace and birth year we examine the impact of early life rainfall on a range of adult outcomes observed in 2000 we find that higher early life rainfall leads to improved health schooling and socioeconomic status for women women with 20 percent higher rainfall relative to normal local rainfall in their year and location of birth are 3 8 percentage points less likely to self report poor or very poor health they attain 0 57 centimeters greater height attain 0 22 more completed grades of

non linear growth effects of financial development does financial integration matter using both macro and industry level data this paper analyses the non linear effects of financial development and international financial integration on economic growth in europe special attention is devoted to modeling threshold effects with respect to the depth of financial markets as a measure of economies absorption capacity results reveal evidence of significant non linear effects with less developed european countries gaining more from financial development in contrast benefits of international financial integration become significant at higher levels of financial development the data show that monetary integration in europe significantly contributed to a higher degree of financial integration entry of new eu members to the european monetary union may thus be the mechanism ensuring a virtuous development circle as the adoption of the euro may allow the development of domestic financial markets and financial integration to go hand in hand

financial development financial liberalization and social capital abstractthe relationship between financial liberalization policies and financial development is controversial the impact of these policies differs greatly across countries in the literature the quality of formal institutions has been identified as an important source of this heterogeneity as countries with a weak institutional environment generally fail to benefit from financial liberalization using panel data covering 82 countries for the period 1973 2008 we find evidence that social capital may substitute for formal institutions as a prerequisite for effective financial liberalization policies in particular we find that during the post washington consensus period countries with a high prevailing level of social capital can ensure that financial liberalization positively influences financial development despite the poor quality of their formal institutions

the psychological lives of the poor abstract all individuals rely on a fundamental set of mental capacities and functions or bandwidth in their economic and non economic lives yet many factors associated with poverty such as mal

fdi and financial market development in africa the literature on the relationship between foreign direct investment fdi financial market development fmd and economic growth focuses mainly on two aspects the relationship between fdi and economic growth and the role played by fmd in that linkage the literature is almost silent on the relationship and the direction of causality between fdi and fmd although it has been established that fdi contributes more to growth in countries with a more developed financial market it is not clear how fdi and fmd interact with each other the aim of this paper is to fill this gap in the african context particularly in africa where stock markets experience low liquidity and less transparency fdi can be an impetus for financial market reforms and serve as a mechanism to improve the transparency and the depth of the financial markets also well functioning financial markets can help channel foreign investments more efficiently into productive sectors and therefore create more value for investors hence making the countries more attractive to fdi in short both fdi and fmd will impact each other simultaneously which is confirmed by our findings we document a bidirectional causality between fdi and fmd furthermore the multivariate regression results of the system of simultaneous equations also confirm the positive relationship between fdi and fmd in africa we also find that fdi contributes to economic growth in africa after controlling for endogeneity between fdi fmd and economic growth

cash or condition evidence from a cash transfer experiment this brief summarizes the results of a gender impact evaluation study entitled cash or condition evidence from a cash transfer experiment conducted from 2008 to the end of 2009 in malawi the study observed the impact of conditionality in cash transfer programs with two distinct interventions unconditional transfers uct arm and transfers conditional on school attendance cct arm targeted at adolescent girls in malawi on individual level dropout rates declined in both treatment arms however the uct arm is 43 percent as large as the cct arm the fraction of days attended in the cct arm is significantly higher than the uct cognitive ability math and english scores significantly improve for the cct but not for the uct probability of pregnancy and marriage were much lower in the uct arm the delays in marriage and fertility in the uct arm are found entirely among adolescent girls who dropped out of school after the start of the intervention improvements in human capital for the recipients of the cct are achieved at the cost of worse outcomes for people who drop out of school funding for the study derived from the global development network bill and melinda gates foundation national bureau of economic research nber africa project world bank research support budget grant world bank knowledge for change trust fund world development report 2007 small grants fund spanish impact evaluation fund and gender action plan trust fund

capital account liberalization financial depth and economic growth abstract we show a statistically significant and economically relevant effect of open capital accounts on financial depth and economic growth in a cross section of countries over the periods 1986 1995 and 1976 1995 countries having open capital accounts had a significantly greater increase in financial depth and over the 20 year period greater economic growth these results however are largely driven by the developed countries included in the sample the observed failure of capital account liberalization to promote financial deepening among developing countries suggests potentially important policy implications concerning the desirability of opening up the capital account

labour market responses to immigration evidence from internal migration driven by weather shocks we study the labour market impact of internal migration in indonesia by instrumenting migrant flows with rainfall shocks at the origin area estimates reveal that a one percentage point increase in the share of migrants decreases income by 0 97 and reduces employment by 0 24 percentage points these effects are different across sectors employment reductions are concentrated in the formal sector while income reduction occurs in the informal sector negative consequences are most pronounced for low skilled natives even though migrants are systematically highly skilled we suggest that the two sector nature of the labour market may explain this pattern

does international integration matter for financial development in africa this article analyses the links between international financial and trade integration and financial development in sub saharan african ssa countries it is based on a panel data set using methods that tackle slope heterogeneity cross sectional dependence and nonstationarity the results do not point to a general direct robust link between trade and financial integration and financial development in ssa once we control for other factors such as gdp per capita and inflation the findings may be due to a number of factors including distortions in domestic financial markets relatively weak institutions and or poor financial sector supervision we find some indication that financial integration is more important for financial development in countries with better institutional quality stronger scores in some measures of the quality of banking regulation and supervision are also linked to a positive association between integration and financial development in some of our results thus african policy maker

portfolio flows volatility and growth abstract we study the realized openness to portfolio flows of economically more developed and less developed countries as it affects future gdp growth outflows of a country s funds into u s securities are predictive of gdp growth suggesting that the benefits of openness outweigh local capital flight both inflows and outflows of funds via local equity securities are predictive of growth which is the evidence of the benefits of openness for less developed countries the effect of inflows is especially strong country specific volatility in flows does not detract from growth and volatility in world wide flows precedes growth overall the evidence is consistent with strong benefits of realized financial integration where the availability of u s markets for local portfolio investment along with equity investment from the outside enhances economic growth

commodity prices and growth in africa a frican economies export primary commodities and most export little else policymakers as well as economists and historians of african economic development have seen these exports as both a hope and a curse the following parable tells the story once upon a time a servant of the ruler discovered a miraculous plant which grew readily in that country and whose seeds could be woven into fine cloth so desirable was this fabric that it became prized all over the world and fetched a high price after two score years the plant accounted for most of the country s trade with the world the ruler ordered the peasants to grow the plant paid them only a fraction of its price and he and his nobles became fabulously wealthy because the ruler wished to be remembered as a great ruler and as the father of his country he used his wealth to build a great army and brought machines from foreign countries to make the fine goods that previously could only be obtained from foreign merchants but the machines often broke down and the goods that they made were of poor quality and after the ruler died they were left to rust under the ruler s successor there was a war in a foreign land where the plant also grew so that there was a great shortage and its price increased threefold in only three seasons the new ruler spent his newfound riches on fantastic extravagance while immense sums were expended on public works after the manner of the east and on productive works carried out in the wrong way or too soon not even the threefold increase in prices could support these expenditures and the country soon found itself deeply in debt when the war ended and the price fell the country could no longer pay the interest on its debt or borrow more money even after it had sold its only useful public work to a foreign power so that power sent a mission to the country the publication of whose report from which the above

recession depression mental health effects of the 2008 stock market crash do sudden large wealth losses affect mental health we use exogenous variation in the interview dates of the 2008 health and retirement study to assess the impact of large wealth losses on mental health among older u s adults we compare cross wave changes in wealth and mental health for respondents interviewed before and after the october 2008 stock market crash we find that the crash reduced wealth and increased feelings of depression and use of antidepressant drugs and that these effects were largest among respondents with high levels of stock holdings prior to the crash these results suggest that sudden wealth losses cause immediate declines in subjective measures of mental health however we find no evidence that wealth losses lead to increases in clinically validated measures of depressive symptoms or indicators of depression

financial integration productivity and capital accumulation understanding the mechanism through which nancial globalization aects eco nomic performance is crucial for evaluating the costs and bene ts of opening nancial markets this paper is a rst attempt at disentangling the eects of nancial inte gration on the two main determinants of economic performance productivity tfp and investment i provide empirical evidence from a sample of 70 countries observed between 1975 and 1999 the results for both de jure and de facto indicators suggest that nancial integration has a positive direct eect on productivity while it does not directly aect capital accumulation i also control for indirect eects of nancial globalization through nancial development and banking and currency crises while nancial integration does not systematically increase domestic nancial depth it may raise the likelyhood of banking crises though only to a minor extent yet the overall eect of nancial liberalization remains positive for productivity and negligible for investment

commodity price shocks and child outcomes the 1990 cocoa crisis in cote d ivoire abstract we look at the drastic cut of the administered cocoa producer price in 1990 cote d ivoire and study to which extent cocoa producers children suffered from this severe aggregate shock in terms of school enrollment labor height stature and morbidity using precrisis 1985 88 and postcrisis 1993 data we propose a difference in difference strategy to identify the causal effect of the cocoa shock on child outcomes whereby we compare children of cocoa producing households and children of other farmers living in the same district or the same village this causal effect is shown to be rather strong for the four child outcomes we examine hence human capital investments are definitely procyclical in this context we also provide evidence of gender bias against young girls with respect to education and health care we finally argue that the difference in difference variations can be interpreted as private income effects likely to derive from tight liquidity constraints

financial development and economic growth views and agenda this critique argues that the preponderance of theoretical reasoning and empirical evidence suggests a positive first order relationship between financial development and economic growth the body of work would push even most skeptics toward the belief that the development of financial markets and institutions is a critical and inextricable part of the growth process and away from the view that the financial system is an inconsequential sideshow responding passively to economic growth many gaps remain however and the paper highlights areas in acute need of additional research

financial development and financial openness nexus the precondition of banking competition abstractwe examine the dynamic relationship between financial development and financial openness using the pooled mean group estimator developed by pesaran et al 1999 our results show that financial openness has a positive effect on financial development in the long run but may have a negative effect in the short run using estimates of country specific short run coefficients we also find that the adverse short run effects of financial openness are associated with a lower degree of banking competition the system gmm estimator also supports these findings suggesting that the financial development and financial openness nexus is contingent on the degree of banking competition a key policy implication is that a higher degree of banking competition is a precondition for financial openness to promote financial development

financial development and openness evidence from panel data abstract this paper addresses the empirical question of whether trade and financial openness can help explain the recent pace in financial development as well as its variation across countries in recent years utilising annual data from developing and industrialised countries and dynamic panel estimation techniques we provide evidence which suggests that both types of openness are statistically significant determinants of banking sector development our findings reveal that the marginal effects of trade financial openness are negatively related to the degree of financial trade openness indicating that relatively closed economies stand to benefit most from opening up their trade and or capital accounts although these economies may be able to accomplish more by taking steps to open both their trade and capital accounts opening up one without the other could still generate gains in terms of banking sector development thus our findings provide only partial support to the well known rajan and zingales hypothesis which stipulates that both types of openness are necessary for financial development to take place