can foreign aid reduce income inequality and poverty this paper s goal is to examine the effect of foreign aid on income inequality and poverty reduction for the period 1971 2002 since simple cross country regressions cannot be taken as true time series findings we focus on dynamic panel data techniques which allow accounting for potential simultaneity and heterogeneity problems we find some weak evidence that foreign aid is conducive to the improvement of the distribution of income when the quality of institutions is taken into account however this result is not robust this finding is consistent with recent empirical research on aid ineffectiveness in achieving economic growth or promoting democratic institutions

reducing bureaucratic corruption interdisciplinary perspectives on what works abstract this article offers the first comprehensive review of the interdisciplinary state of knowledge regarding anti corruption policies with a particular focus on reducing corruption among civil servants drawing on the work of economists political scientists sociologists and anthropologists we examine seven policy categories 1 rewards and penalties 2 monitoring 3 restructuring bureaucracies 4 screening and recruiting 5 anti corruption agencies 6 educational campaigns and 7 international agreements notably rigorous empirical evaluation is lacking for the majority of commonly prescribed anti corruption policies nevertheless we find growing evidence of the effectiveness of policies based on monitoring including anti corruption audits and e governance in addition adequate civil service wages seem to be a necessary but insufficient condition for control of corruption an emerging skepticism regarding the effectiveness of anti corruption agencies also is apparent in the literature we conclude with broader lessons drawn from our review such as the recognition that when corruption is a systemic problem it cannot be treated in the long term with individual level solutions

pitfalls in the use of systemic risk measures we examine pitfalls in the use of return based measures of systemic risk contributions srcs for both linear and nonlinear return frameworks assuming normal and heavy tailed distributions we identify nonexotic cases in which a change in a bank s systematic risk idiosyncratic risk size or contagiousness increases the risk of the system but lowers the measured src of the bank assessments based on estimated srcs could thus produce false interpretations and incentives we also identify potentially adverse side effects a change in a bank s risk structure can make the measured src of its competitors increase more strongly than its own

the effect of foreign aid on corruption a quantile regression approach abstract this paper investigates the effect of foreign aid on corruption using a quantile regression method we show that foreign aid generally reduces corruption and its reduction effect is greater in less corrupt countries moreover this effect is different by different donor countries

srisk a conditional capital shortfall measure of systemic risk we introduce srisk to measure the systemic risk contribution of a financial firm srisk measures the capital shortfall of a firm conditional on a severe market decline and is a function of its size leverage and risk we use the measure to study top financial institutions in the recent financial crisis srisk delivers useful rankings of systemic institutions at various stages of the crisis and identifies fannie mae freddie mac morgan stanley bear stearns and lehman brothers as top contributors as early as 2005 q1 moreover aggregate srisk provides early warning signals of distress in indicators of real activity received june 7 2011 accepted april 18 2016 by editor geert bekaert

productivity and employment dynamics of us manufacturing plants abstract this study estimates the plant level dynamics of productivity and employment in the united states we use the annual survey of manufactures from the us census bureau for the period 1972 1997 applying the system generalized method of moments estimation developed by blundell and bond 1998 we find that productivity and employment processes are both strongly persistent

hidden effects of bank recapitalizations abstract given the importance of capital regulation in the banking industry how and why a bank s behavior reacts to a recapitalization has profound consequences to this end we investigate the effects of 306 seasoned equity offerings seos conducted by listed european banks between 2002 and 2014 we use propensity score matching and find that seos lead to asset expansion as opposed to any deleveraging further we find a decrease in lending in the short term followed by a subsequent increase a reduction in profitability and an increase in systemic risk regulators might not have fully considered this last negative externality when they imposed the tougher basel iii capital requirements the effects of seos strongly depend on the reasons behind the recapitalizations

are foreign owned firms more likely to pay bribes than domestic ones evidence from emerging markets summary an extensive literature exists on the adverse effects of corruption on inward fdi and the impact this may have on economic development but the reverse causality has not been fully explored legislation in the us and the eu prohibits firms from engaging in corrupt practices in foreign countries and this suggests that foreign owned firms might be less likely to pay bribes however such legislation may be ineffective because foreign firms have to adapt to local market conditions or risk being uncompetitive using firm level data for 41 emerging countries a probit model estimates the probability that a firm pays bribes to allow for possible endogeneity this probit analysis is repeated with an instrument to proxy for endogenous foreign ownership then a propensity score matching technique tests for differences in the propensity to pay bribes by domestic and foreign firms the paper finds no difference in the behavior of foreign owned and domestic firms with respect to corrupt practices results are robust to different levels of foreign ownership and support the view that foreign owned firms adapt to local practices and are neither more nor less likely to pay bribes than comparable domestic firms the paper finds that other variables including bureaucracy government contracts and perceived difficulties with civil society legal and political do have statistically significant effects on increasing bribery and that some others such as per capita gdp tend to reduce bribery the study concludes that there is no evidence that foreign ownership after investment has occurred tends to reduce bribery but it does support the view that foreign owned firms adopt local behavioral norms

cross sectoral variation in the volatility of plant level idiosyncratic shocks we estimate the volatility of plant level idiosyncratic shocks in u s manufacturing we measure the variation in revenue total factor productivity not explained by either industry or economy wide factors or by establishments characteristics we find that idiosyncratic shocks are much larger than aggregate shocks accounting for about 80 of the overall uncertainty faced by plants plants in the most volatile sector are subject to about six times as much idiosyncratic uncertainty as plants in the least volatile we provide evidence suggesting that idiosyncratic risk is higher in industries where the extent of creative destruction is likely to be greater

the mobile phone in the diffusion of knowledge for institutional quality in sub saharan africa this study assesses the mobile phone in the diffusion of knowledge for better governance in sub saharan africa from 2000 to 2012 for this purpose we employ generalised method of moments with forward orthogonal deviations the empirical evidence is based on three complementary knowledge diffusion variables innovation internet penetration and educational quality and 10 governance indicators that are bundled and unbundled the following are the main findings first there is an unconditional positive effect of mobile phone penetration on good governance second the net effects on political economic and institutional governances that are associated with the interaction of the mobile phone with knowledge diffusion variables are positive for the most part third countries with low levels of governance are catching up their counterparts with higher levels of governance the above findings are broadly consistent with theoretical underpinnings on the relevance of mobile phones in mitigating bad governance in africa the evidence of some insignificant net effects and decreasing marginal impacts may be an indication that the mobile phone could also be employed to decrease government quality overall this study has established net positive effects for the most part five rationales could elicit the positive net effects on good governance from the interaction between mobile phones and knowledge diffusion among others the knowledge variables enhance reach access adoption cost effectiveness and interaction in a nut shell the positive net effects are apparent because the knowledge diffusion variables complement mobile phones in reducing information asymmetry and monopoly that create conducive conditions for bad governance the contribution of the findings to existing theories and justifications of the underlying positive net effects are discussed

empirical determinants of corruption a sensitivity analysis many variables have been proposed by past studies as significant determinants of corruption this paper asks if their estimated impact on corruption is robust to alteration of the information set a global sensitivity analysis based on the leamer s extreme bounds analysis gives a clear answer five variables are robustly related to corruption corruption is lower in richer countries where democratic institutions have been preserved for a long continuous period and the population is mainly protestant corruption is instead higher where political instability is a major problem finally a country s colonial heritage appears to be a significant determinant of present corruption

systemic risk and bank business models textabstractin this paper we decompose banks systemic risk into two dimensions the risk of a bank bank tail risk and the link of the bank to the system in financial distress systemic linkage based on extreme value theory we estimate a systemic risk measure that can be decomposed into two subcomponents reflecting these dimensions empirically we assess the relationships of bank business models to the two dimensions of systemic risk the observed differences in these relationships partly explain why micro and macroprudential perspectives sometimes have different implications for banking regulation

m press creditrisk microprudential and macroprudential capital requirements for credit risk under systemic stress m press creditrisk is a novel stress testing approach that can help authorities gauge banks capital adequacy related to credit risk for the first time it combines the assessment of microprudential capital requirements under pillars 1 and 2 and macroprudential buffers in a unified coherent framework its core element is an advanced credit portfolio model systemiccreditrisk built upon a rich nonlinear dependence structure for correlated bank portfolios the model is applied to a sample of 12 systemically important german banking groups and delivers measures for systemic credit risk and the banks contributions to it in both baseline and stress scenarios

can we prove a bank guilty of creating systemic risk a minority report because increasing a bank s capital requirement to improve the stability of the financial system imposes costs upon the bank a regulator should ideally be able to prove beyond a reasonable doubt that banks classified as systemically risky really do create systemic risk before subjecting them to this capital punishment evaluating the performance of two leading systemic risk models we show that estimation error alone prevents the reliable identification of the most systemically risky banks we conclude that it will be a considerable challenge to develop a riskometer that is sound and reliable enough to provide an adequate foundation for macroprudential policy

aid dependence and the quality of governance cross country empirical tests aid dependence can potentially undermine the quality of governance and public sector institutions by weakening accountability encouraging rent seeking and corruption fomenting conflict over control of aid funds siphoning off scarce talent from the bureaucracy and alleviating pressures to reform inefficient policies and institutions analyses of cross country data in this paper provide evidence that higher aid levels erode the quality of governance as measured by indices of bureaucratic quality corruption and the rule of law these findings support the need for donors to develop less costly and less intrusive ways of disseminating state of the art knowledge on public sector reform in developing countries

capital shortfall a new approach to ranking and regulating systemic risks the financial crisis of 2007 2009 has given way to the sovereign debt crisis of 2010 2012 yet many of the banking issues remain the same we discuss a method to estimate the capital that a financial firm would need to raise if we have another financial crisis this measure of capital shortfall is based on publicly available information but is conceptually similar to the stress tests conducted by us and european regulators we argue that this measure summarizes the major characteristics of systemic risk and provides a reliable interpretation of the past and current financial crises

are market based measures of global systemic importance of financial institutions useful to regulators and supervisors we analyze whether four market based measures of the global systemic importance of financial institutions offer early warning signals during three financial crises the tests based on the 2007 2008 crisis show that only one measure covar consistently adds predictive power to conventional early warning models however the additional predictive power remains small and it is not normally confirmed for the asian and the 1998 crises we conclude that it is problematic to identify a market based measure of systemic importance that remains valid across crises with different features the same criticism also applies to several conventional proxies of systemic importance of which size is the most consistent performer

does foreign aid corrupt abstract we estimate the impact of foreign aid on corruption using geographical and cultural distance to the donor countries as instrumental variables to assess causality aid decreases corruption our results are statistically and economically significant and robust to different controls

systemic risk and bank size abstract in this paper we analyse firm level systemic risk for us and european banks from 2004 to 2012 we observe that common systemic risk indicators are primarily driven by firm size which implies an overriding concern for too big to fail institutions however smaller banks may still pose considerable systemic threats as exemplified by the northern rock debacle in 2007 by introducing a simple standardisation we obtain new risk measures that often prove to be superior predictors of financial distress during the 2007 2009 subprime crisis we conclude that the new measures could be a valuable addition to the existing indicators employed in basel iii to identify systemically important banks

the role of governance in determining foreign aid flow composition summary we hypothesize that selective donors will use types of aid over which they have more control when providing assistance to poorly governed countries we use an original classification of project purpose codes in the aiddata dataset to categorize aid flows from the period 2004 to 2010 results from fixed effect and compositional data models provide evidence of selectivity in terms of overall aid flows a tradeoff between technical assistance and programmatic lending and a tradeoff between social sector and infrastructure projects

roads out of poverty assessing the links between aid public investment growth and poverty reduction the authors develop a macroeconomic framework that captures links between aid public investment growth and poverty public investment is disaggregated into education infrastructure and health and affects both aggregate supply and demand dutch disease effects are captured by accounting for changes in the relative price of domestic goods the authors assess the impact of policy shocks on poverty by linking the model to a household survey they calibrate the model for ethiopia and simulate the changes in the allocation of aid and public investment the authors also calculate the amount by which foreign aid should increase to reach the poverty targets of the millennium development goals

the emperor has no clothes limits to risk modelling abstract this paper considers the properties of risk measures primarily value at risk var from both internal and external regulatory points of view it is argued that since market data is endogenous to market behavior statistical analysis made in times of stability does not provide much guidance in times of crisis in an extensive survey across data classes and risk models the empirical properties of current risk forecasting models are found to be lacking in robustness while being excessively volatile for regulatory use the var measure may give misleading information about risk and in some cases may actually increase both idiosyncratic and systemic risk

cross sectoral variation in the volatility of plant level idiosyncratic shocks the volatility of plant level idiosyncratic shocks we estimate the volatility of plant level idiosyncratic shocks in u s manufacturing we measure the variation in revenue total factor productivity not explained by either industry or economy wide factors or by establishments characteristics we find that idiosyncratic shocks are much larger than aggregate shocks accounting for about 80 of the overall uncertainty faced by plants plants in the most volatile sector are subject to about six times as much idiosyncratic uncertainty as plants in the least volatile we provide evidence suggesting that idiosyncratic risk is higher in industries where the extent of creative destruction is likely to be greater

aid government expenditure and aggregate welfare summary this paper tests the hypothesis that aid contributes to increasing aggregate welfare measured by infant mortality and the human development index hdi in recipient countries estimation is based on data for 104 countries over the period 1980 2000 and for subsamples of low income and middle income countries fixed effect estimates provide robust evidence that aid is associated with improved values of the welfare indicators and this effect appears to be greater in low income countries aid appears to increase welfare either directly or through the effect on growth and there is no evidence that aid operates through public spending

do corrupt governments receive less foreign aid critics of foreign aid programs argue that these funds often support corrupt governments and inefficient bureaucracies supporters argue that foreign aid can be used to reward good governments this paper documents that there is no evidence that less corrupt governments receive more foreign aid on the contrary according to some measures of corruption more corrupt governments receive more aid also we could not find any evidence that an increase in foreign aid reduces corruption in summary the answer to the question posed in the title is no

do existing corruption levels matter in controlling corruption cross country quantile regression estimates abstract we examine the determinants of corruption using recent cross sectional data for nearly one hundred countries while the causes of corruption have drawn economists interest in recent years our main contribution is to examine the corruption determinants throughout the conditional distribution of corruption across nations are there different causes of corruption in highly corrupt nations compared to the least corrupt countries for instance we examine whether greater democracy and more economic freedom consistently reduce corruption among the most and the least corrupt our results for the significant determinants support some findings in the literature but also provide new conclusions in many cases quantile regression estimates are quite different from those from ols regressions among the most corrupt nations larger governments and greater economic freedom do not appear to reduce corruption but greater democracy seems to alleviate it our results suggest that some current corruption control policies may be reconsidered especially among the most corrupt and least corrupt nations