natural resources national income and economic growth in africa abstract because standard measures of aggregate income such as gross domestic product gdp do not account for natural resource depletion their use as gauges of economic performance tends to exaggerate the benefits of resource extraction accounting for natural resource depletion in 18 african countries indicates different patterns of growth than those suggested by gdp figures use of the revised measures in analyses of the link between exports and growth suggests that export expansion may generate increases in measured gdp without stimulating increased production in contrast real exchange rate alignment is correlated with growth in both conventional gdp and the revised accounts

the effects of real exchange rate depreciation on stochastic producer prices in low income agriculture abstract this paper considers the effects of real exchange rate depreciation on stochastic agricultural producer prices in low income agriculture conventional wisdom that real depreciation achieved through nominal currency devaluation stimulates tradables production does not universally hold in the presence of stochastic prices in fact real depreciation is only stimulative in two cases importables that remain importable and nontradables that become exportable garch estimation of time series price data on several commodities from madagascar support the hypotheses generated by the analytical model

currency misalignments and growth a new look using nonlinear panel data methods the aim of this article is to investigate the link between currency misalignments and economic growth relying on panel cointegration techniques we calculate real exchange rate rer misalignments as deviations of actual rers from their equilibrium values for a set of advanced and emerging economies estimating panel smooth transition regression pstr models we show that rer misalignments have a differentiated impact on economic growth depending on their sign whereas overvaluations negatively affect economic growth rer undervaluations significantly enhance it this result indicates that undervaluations may drive the exchange rate to a level that encourages exports and promotes growth

exchange rate management and manufactured exports in sub saharan africa this paper presents an overview of the evolution of exchange rate regimes in africa and then attempts to assess empirically the impact of exchange rate policy on manufactured export performance on a panel of major sub saharan africa countries over the 1970 92 period we examine the impact of three exchange rate policy indicators real effective exchangerate changes real exchange rate volatility and model based measures of real exchange rate misalignment export supply functions are estimated for three manufacturing industries textile chemicals and metals and two exchange rate regimes a fixed rates regime including six cfa franc countries and a more flexible regime represented by five non cfa countries our findings show that exchange rate management matters for export performance this is evidenced both by the significant impact of changes in the real effective exchange rate and by the negative influence exerted independently by real exchange rate misalignment on the

sources of stagnation in sub saharan africa abstract this paper investigates the sources of economic stagnation in sub saharan africa during the 1970s several policy variables are considered as well as a set of environmental variables which include climate violence export prices and other exogenous factors the paper uses statistical analysis in an attempt to identify the relative importance of the policy variables and the environmental variables taken as groups it also seeks to identify particular policy variables which seem to have been most significant in determining growth outcomes the technique employed for investigation is reduced form econometric estimation in a preliminary analysis the impact of the international trade environment on average economic performance in africa during the period since independence is investigated the results suggest an extremely close relationship between movements in export prices and average performance throughout the 20 year period a second econometric exercise investigates the joint impacts of environmental and policy variables on growth in a cross section of african states since 1970 the spirit of the approach is exploratory and a relatively large number of variables are constructed and tested through multivariate analysis a primary finding is that the environmental variables seem to have had more impact on growth as a group than the policy variables this finding must be qualified however by the continuing lack of some important policy variables agricultural price data have not yet become available in sufficient quantity for cross section analysis nor have several important human resource variables and indices of the use of resources in the public domain among the policy variables which have been used for the analysis those identified with retrenchment during periods of declining commodity prices seem most significant primary among these are the real effective exchange rate and some measures of effectiveness in foreign exchange reallocation during periods when imports must contract severely in the final section of the paper the cross section results are used for a counterfactual analysis of the growth experiences of individual african states measures of growth opportunity cost are constructed which suggest the degree to which errors in management and uncontrollable circumstances have held states below their potential growth paths the results suggest that some success stories may owe much to good luck while some failures may well be due less to bad management than to adverse circumstances

political institutions and financial development an empirical study summary this paper examines whether political institutional improvement promotes financial development using a panel dataset of 90 developed and developing countries over 1960 99 the empirical evidence reveals a positive effect of institutional improvement on financial development at least in the short run particularly for lower income countries the preliminary evidence by a before after event study indicates that a democratic transformation is typically followed by an increase in financial development

globalisation growth and convergence this paper devoted to the study of globalisation analyses two distinct but closely related issues first it aims at evaluating disparities in the degree of globalisation observed in a sample of 101 countries over the period 1970 2005 second the paper tries to shed some light to the much debated issue of whether globalisation affects economic growth and in so doing whether convergence in globalisation brings about convergence in per capita income the results obtained are both encouraging on the one side as it is shown that there has been a clear process of globalisation convergence on the other the paper concludes that globalisation has been one of the main drivers of economic growth thus fostering convergence in per capita income

real and monetary determinants of real exchange rate behavior theory and evidence from developing countries abstract this paper develops a dynamic model of real exchange rate rer behavior in developing countries a three goods economy exportables importables and non tradables is considered residents of this country hold domestic and foreign assets and there is a dual exchange rate regime there is a government that consumes importables and non tradables a distinction is made between equilibrium and disequilibrium movements of the rer the determinants of real exchange rate misalignment are studied with emphasis placed on the role of devaluations and balance of payments crises the implications of the model are tested using data for 12 developing countries the results obtained are generally favorable for the model the issue of rer stationarity is also analyzed

why don t poor countries catch up a cross national test of an institutional explanation early neoclassical analyses predicted that poor countries would grow faster than wealthy countries because of technological advances and diminishing returns to capital in the latter the reverse has occurred poor countries are falling back rather than catching up we suggest here that deficient institutions underlie this divergence employing various indicators of institutional quality including the rule of law the pervasiveness of corruption and the risk of expropriation and contract repudiation we show that the ability of poor countries to catch up is determined in large part by the institutional environment in which economic activity in these countries takes place jel o00 o10

confronting the coffee crisis can fair trade organic and specialty coffees reduce small scale farmer vulnerability in northern nicaragua summary this paper links changing global coffee markets to opportunities and vulnerabilities for sustaining small scale farmer livelihoods in northern nicaragua changing governance structures corporate concentration oversupply interchangeable commodity grade beans and low farm gate prices characterize the crisis in conventional coffee markets in contrast certified fair trade and organic are two alternative forms of specialty coffee trade and production that may offer opportunities for small scale producers a research team surveyed 228 farmers to measure the impact of sales on organic and fair trade markets the results suggest that participation in organic and fair trade networks reduces farmers livelihood vulnerability 2004 elsevier ltd all rights reserved

how does exchange rate policy affect manufactured exports in mena countries this paper shows that during the 1970s and 1980s mena economies were characterized by a significant overvaluation of their currency this overvaluation has had a cost in terms of competitiveness to determine the degree of overvaluation of the mena currencies an indicator of misalignment was developed based on the estimation of an equilibrium exchange rate edwards exchange rate misalignment in developing countries the johns hopkins university press baltimore 1988 the empirical work was based on a panel of 53 developing countries ten of which are mena economies although overvaluation decreased in the 1990s probably due to flexibilization of the exchange rate regime in some mena countries and to better macroeconomic management in others misalignment remained higher than in other regions this may be explained by the mena countries delay in adopting more flexible exchange rates as well as in reforming their economies in terms of competitiveness the estimation of an export equation has shown

spatial spillovers in the development of institutions abstract we examine spatial spillovers in institutional development dependent variables are institutional measures reflecting politics law and governmental administration the explanatory variable of interest is the level of institutions in bordering countries a spatial lag of the dependent variable our spatial model directly leads to the identification strategy for the endogenous spatial lag we implement new results in spatial econometrics to counter missing data problems usually rife in spatial empirics spatial institutional spillovers are statistically significant and economically important a counter factual exercise the non existence of the ussr reveals large direct and indirect spillovers numerous robustness exercises bolster conclusions including yearly cross section regressions fixed effects estimates and adding many extra explanatory variables moreover we provide a new theoretical result showing the robustness of estimates in the presence of omitted variables we extend the core model allowing different effects for better and worse neighbors using inverse distance weights estimating the spatial durbin model and using polity s institutional measure

the impact of terms of trade and real exchange rate volatility on investment and growth in sub saharan africa abstract specialization in primary product exports reduces growth but why adverse trends in and the high variance of primary product prices are possible explanations the impact on investment and growth of the level and volatility of the terms of trade and the real effective exchange rate is estimated for a panel of 14 sub saharan african countries over 1980 1995 growth is negatively affected by terms of trade instability and investment by real exchange rate instability both growth and investment increase when the terms of trade improve and real exchange rate overvaluation is eliminated

does institutional change spread across countries explaining spatial patterns in human rights if a country improves its human rights record will neighbouring countries benefit beneficial spillovers could justify intervention by the un or one of the many other organisations that internationally fight human rights violations we document that countries human rights performances often resemble the human rights situation of their neighbours however exploiting time variation in a spatial panel we find that much of that resemblance is simply determined by the shared geographical location changes in neighbouring countries have little influence on local human rights suggesting that contemporaneous spillovers and interactions are limited

the effects of exchange rate volatility on exports some new estimates investigations of the impact of exchange rate volatility on exports have not allowed for the integrated non stationary of the variables employed in estimation the results reported in this note are suggestive that in the context of an error correction framework real exchange rate volatility has a significant impact on exports

does globalization affect growth evidence from a new index of globalization the study develops an index of globalization covering its three main dimensions economic integration social integration and political integration using panel data for 123 countries in 1970 2000 it is analysed empirically whether the overall index of globalization as well as sub indexes constructed to measure the single dimensions affect economic growth as the results show globalization indeed promotes growth the dimensions most robustly related with growth refer to actual economic flows and restrictions in developed countries although less robustly information flows also promote growth whereas political integration has no effect

fiscal illusion and political accountability theory and evidence from two local tax regimes in britain local tax reform in britain in 1993 reinstating a propertytax may have reversed some intended fiscal illusion reducing and accountability improving features of the poll tax itself a reform introduced in 1990 with the specific aim ofpromoting accountability we formalize these features withina median voter model of the demand for local publicexpenditure that distinguishes between accountability andfiscal illusion effects the model shows that a prioriaccountability effects on expenditures are ambiguous available data for england and wales are used to test themodel we find strong evidence of grant illusion the flypapereffect similar across tax regimes with evidence of renterillusion and of less accountability under the property tax the degree of local income inequality appears to affectexpenditure levels only with the property tax

foreign aid the real exchange rate and economic growth in the aftermath of civil wars foreign aid the real exchange rate rer and economic growth are three key variables that shape the aftermath of civil wars in many developing countries panel estimations drawn from a sample of 39 conflict and 44 non conflict countries between 1970 and 2004 indicate that although post conflict countries receive larger aid flows and exhibit moderate rer overvaluation after peace is attained overvaluation cannot be traced to aid yet foreign aid is among the significant determinants of the equilibrium rer an id is also an important determinant of economic growth particularly after peace is reached aid exhibits decreasing returns however and interacts negatively with rer overvaluation rer overvaluation reduces growth but this effect is ameliorated by financial development post conflict policies should therefore aim to use aid prudently avoid rer misalignment and support financial and capital market development to achi eve high and stable growth in the aftermath of war and beyond

ethnic fractionalization in an african labour market abstract we find evidence of ethnic fractionalization and its consequences in an african labour market we consider earnings differentials between members of different ethnic groups and between employers relatives unrelated co ethnics and other workers in the ghanaian manufacturing sector variations in a standard set of observed workers characteristics explain a large proportion of the earnings differentials between ethnic groups however the greatest proportion is explained by the ethnic fractionalization of the labour market combined with variations in employers characteristics workers who are related to their employers earn a premium and there is statistical discrimination in favour of inexperienced co ethnic workers

globalisation and corruption revisited this paper presents new empirical evidence on the determinants of corruption focussing on the role of globalization and inequality the estimates for a panel of 102 countries over the period 1995 2005 point to three main results i detection technologies reflected in a high level of development human capital and political rights reduce corruption whereas natural resource rents increase corruption ii globalization in terms of both trade and financial openness has a negative eect on corruption which is more pronounced in developing countries iii inequality increases corruption and once the role of inequality is accounted for the impact of globalization on corruption is halved in line with recent theory this suggests that globalization besides reducing corruption through enhanced competition aects corruption also by reducing inequality

wheat policy and economy wide reform in brazil abstract in recent years the wheat sector in brazil has moved from governmental protection and public intervention to a free market and privatization in this study those changes are analyzed through measures of governmental intervention on nominal rates of protection and on welfare of producers and consumers elasticities of demand and supply of wheat are estimated and the effects of changes in policies are analyzed under official and shadow exchange rates welfare measures indicate that almost us 8 billion were spent from 1970 until 1989 with policies to subsidize producers and consumers the policy induced stimulus to consumer demand exceeded the stimulus to domestic production and self sufficiency in wheat declined the reduction in wheat subsidies since 1989 was more than an isolated sector specific policy it was part of macroeconomic anti inflation policy and it coincided with other economy wide changes such as real appreciation and a decline in international commodity prices

trade based diffusion of labor rights a panel study 1986 2002 this article investigates the nature of the linkages between trade and labor rights in developing countries specifically we hypothesize that a california effect serves to transmit superior labor standards from importing to exporting countries in a manner similar to the transmission of environmental standards we maintain that all else being equal the labor standards of a given country are influenced not by its overall level of trade openness but by the labor standards of its trading partners we evaluate our hypothesis using a panel of 90 developing countries over the period 1986 2002 and we separately examine the extent to which the labor laws and the actual labor practices of the countries are influenced by those of their export destinations we find that strong legal protections of collective labor rights in a country s export destinations are associated with more stringent labor laws in the exporting country this california effect finding is however weaker in the context of labor rights practices highlighting the importance of distinguishing between formal legislation and actual implementation of labor rights

import compression and export performance in developing countries the debt crisis that began in 1982 forced a number of developing countries that had relied on external financing into rapid adjustment of their current account positions in many of these countries external adjustment mainly took the form of import reduction or what has been termed import compression to generate trade balance surpluses necessary to service the existing stock of foreign debt while the effects of import compression on consumption and growth have been discussed in the literature there has been little concern expressed with regard to the direct effects such a policy can have on export performance this paper develops a model that takes explicit account of the feedbacks between imports and exports that arise through the effects of imported inputs on exports and the availability of foreign exchange on imports empirical tests of this model for 34 developing countries tend to confirm both these hypotheses these results point clearly for additional foreign financing to reduce the need for import compression and its attendant negative effects on the supply of exports

the direction of causality between financial development and economic growth abstract this paper employs the geweke decomposition test on pooled data of 109 developing and industrial countries from 1960 to 1994 to examine the direction of causality between financial development and economic growth the paper finds that 1 financial development generally leads to economic growth 2 the granger causality from financial development to economic growth and the granger causality from economic growth to financial development coexist 3 financial deepening contributes more to the causal relationships in the developing countries than in the industrial countries 4 the longer the sampling interval the larger the effect of financial development on economic growth 5 financial deepening propels economic growth through both a more rapid capital accumulation and productivity growth with the latter channel being the strongest

economic fluctuations and growth in sub saharan africa the importance of import instability the traditional thesis that export instability xi is deleterious to economic growth in developing economies has received mixed empirical results for african countries recent research suggests that the effect of xi is weak but that capital investment instability ki adversely influences economic growth the current study argues that in many of these nations imports are likely to be critical to the growth process while exports represent only one of the various sources of investment resources hence import instability mi may pose a more serious problem than xi in hindering economic growth employing 1968 1986 world bank data for 33 sub saharan african countries xi ki and mi variables are calculated for each country as the standard errors around the respective best fitted trends over the sample period these instability measures and additional world bank data are then used to estimate an augmented production function that controls for the effects of labour capital and exports the study fin

the anticipated and concurring effects of the emu exchange rate volatility institutions and growth abstract reduced exchange rate volatility and higher and less heterogeneous quality of institutional rules and macroeconomic policies are two of the main anticipated and concurring effects expected from a currency union in this paper we measure the magnitude of these two effects for the eurozone countries looking at real effective exchange rates reer and at different indicators of quality of institutional rules and macroeconomic policies qirmp we find that the first effect is much stronger than the second when we compare relative changes for eurozone countries and the rest of the world in the relevant period we further evaluate the impact of both effects on economic growth on a larger sample of countries our findings show that both have significant impact on levels more robust and on rates of growth weaker of per capita gdp

financial development and economic growth convergence or divergence abstract this study tests for convergence in financial development and economic growth by incorporating the interaction between the real and financial sectors into an otherwise traditional test for convergence the results show strong evidence for conditional convergence middle and high income countries conditionally converge to parallel growth paths not only in per capita gdp but also in financial development the mutually reinforcing relationship between financial development and economic growth is stronger in the early stage of economic development and this relationship diminishes as sustained economic growth gets under way as such low income countries with a relatively well developed financial sector are more likely to catch up to their middle and high income counterparts and those with a relatively under developed financial sector are more likely to be trapped in poverty this finding explains the observed great divergence between poor and rich countries another finding is that while human capital is more important to growth in the early stage of economic development economic freedom becomes more important in the later stage

the short run relation between growth and inflation in latin america reply sebastian edwards uses a new unexpected money variable based on the addition of the contemporaneous fiscal deficit to my autoregressive money growth equations to argue that 1 in brazil and chile there is no significant relationship between unexpected money growth and output growth 2 unexpected money growth has different estimated effects on output in colombia peru and mexico and these effects substantially exceed those estimated in brazil and chile and 3 thus my 10 percent rule for the effect of unexpected money growth on output growth does not hold in addition edwards incorporates the terms of trade in his output equations and finds they are important in the case of chile and mexico finally edwards takes issue with my use of lagged inflation to explain output edwards and i use somewhat different data not only in terms of sources but also edwards often uses m2 rather than ml in reporting his best results however edwards and my basic results are broadly similar compare his table 1 and my original tables 1 and 4 this is encouraging and in general makes it seem not worth quibbling over the differences in data however there is one difference which affects the results that i will discuss later the inclusion of the fiscal deficit in the money growth equation is a key difference in our work as i pointed out in my earlier article fiscal and monetary policy often are closely related in latin america thus it is not surprising that edwards finds the deficit divided by lagged money is a significant factor in explaining money growth however the point is not to explain money growth but to estimate a relationship which the public could have been using to predict how much money and thus nominal aggregate demand has grown since the last observation on the money stock 2 it strains credulity to assume that in latin america the budget deficit could be used by the public to estimate money growth contemporaneously data on the cash deficit usually are available publicly only with a long lag moreover many alternative versions of a deficit involving creative accounting methods are reported for example for many years in colombia the reported deficit which is available with about a one quarter lag treated both the unspent portion of the budget and the accounting profits from the revaluation of the local currency value of exchange reserves as income procedures which caused great confusion inside as well as outside the government despite such problems the cash deficit still might be useful as a monetary growth predictor for example it may be correlated with some other easily available contemporaneous indicator of money growth however its usefulness can best be judged from a comparison of the results when the deficit is used only as the money growth predictor to determine unexpected money a constrained equation with those obtained when it is used as an additional independent variable an unconstrained equation a test robert barro has suggested in another context world bank the views and interpretations expressed in this article are my own and should not be attributed to the world bank its affiliated organizations or to any individual acting in their behalf edwards also uses the seemingly unrelated regression technique to take into account possible interrelationships in the error terms across countries judging from the reported t statistics this procedure did not improve the fits greatly 2surprisingly the deficit is not significant in explaining domestic credit in mexico this result and the estimated negative relationship between edwards domestic credit series and output suggest a problem in the domestic credit variable

trading human rights how preferential trade agreements influence government repression a growing number of preferential trade agreements ptas have come to play a significant role in governing state compliance with human rights when they supply hard standards that tie material benefits of integration to compliance with human rights principles ptas are more effective than softer human rights agreements hras in changing repressive behaviors ptas improve members human rights through coercion by supplying the instruments and resources to change actors incentives to promote reforms that would not otherwise be implemented i develop three hypotheses 1 state commitment to hras and 2 ptas supplying soft human rights standards not tied to market benefits do not systematically produce improvement in human rights behaviors while 3 state commitment to ptas supplying hard human rights standards does often produce better practices i draw on several cases to illustrate the processes of influence and test the argument on the experience of 177 states during the period 1972 to 2002 i would like to thank mike colaresi dan drezner david lake lisa martin walter mattli john meyer mark pollack erik voeten jim vreeland and two anonymous reviewers for their detailed and thoughtful comments on various drafts of this manuscript as well as the many other people who have helped me by asking hard questions along the way i would also like to thank michael barnett charles franklin and jon pevehouse for advice during the dissertation research that supports this article and alexander h montgomery for assistance in data management all faults are my own for generous assistance in the collection of data i thank the national science foundation ses 2cdz414 and ses 0135422 john meyer and francisco ramirez for support during the writing of the article i thank nuffield college at oxford university and most importantly lynn eden and stanford s center for international security and cooperation

markets for risk and openness to trade how are they related if protectionist trade policies aim to insure domestic industries against swings in world market prices the development of financial markets could lead to trade liberalization likewise trade lib

growth and exchange rate volatility a panel data analysis the aim of this article is to assess the role of real exchange rate rer volatility on long run economic growth for a set of 82 advanced and emerging economies using a panel data set ranging from 1970 to 2009 with an accurate measure for exchange rate volatility the results for the two step system generalized method of moments gmm panel growth models show that a more less volatile rer has a significant negative positive impact on economic growth the results are also robust for different model specifications

exchange rate dynamics in south africa abstractthe structure of the nominal exchange rates in south africa is examined by using fractional integration we investigate the levels and the volatilities against the us dollar the british po

exchange rate fiscal and agricultural policies in africa does adjustment hurt the poor abstract trade exchange rate fiscal and agricultural sector policy reforms are the pillars of structural adjustment programs in africa results indicate that trade and exchange rate reforms are associated with a large decline in economic rents and a shift in relative prices that favor the rural and urban poor fiscal reforms have not brought about draconian belt tightening measures although the incidence of public spending particularly in the social sectors and in terms of public sector employment remains far from progressive reduction of export crop taxation contributes to higher incomes for the poor and domestic food crop liberalization has not led to increases in purchase prices of staple commodities for most low income households

size effects on the transmission mechanism from finance to development a study of large emerging economies arge developing countries and emerging economies typically brazil india china and south africa bics demonstrate a strong upward trendin many aspects of their macroeconomic performance in recent decades thisdevelopmental surge has been sometimes attributed to size effects wherebyeconomies of scale and scope and agglomeration impact create productivityimprovements most of the literature studying large countries emphasises thereal economy trade and growth alesina and spolaore 1997 2003 but sayslittle about the interrelationship of real and nancial sectors on development our empirical work is based on and closely linked with the conceptual ideasabout the transmission channel from nance to growth levine 2005 butemphasising that large economies behave in a distinctive fashion we demon strate that real sector variables domestic and foreign have more in uence onaggregate output and its growth compared to nancial sector development animplication of the paper is that the ef cient approach to deal with economicrecession for these countries is to strengthen real sectors instead of helping nancial sectors directly we analyse the interconnections among aggregate output capital formation external trade and developmental nance for these four large developing coun tries in terms of two speci c real sector indicators one internal and one exter nal domestic investment and foreign trade as well as an indicator for

impacts of monetary and macroeconomic factors on food prices in eastern and southern africa eastern and southern africa has been experiencing relatively large increases in real food prices since the early 1980s real food prices in some african countries grew as much as 11 per year during the 1980 1996 period the huge volatility in food prices coincided with the implementation of structural adjustment programmes in several african countries this study examines the impacts of monetary and macroeconomic factors on real food prices in eastern and southern africa using the technique of cointegration and error correction modelling to test the long run relationship between real food prices and the factors that influence their behaviour in selected african countries demand elasticities for food are estimated for selected countries the empirical results show that changes in domestic food production coupled with income trade exchange rate and monetary policies have significant impacts on real food prices with wide implications for food availability and food security in the region

the real exchange rate and macroeconomic performance in sub saharan africa abstract pooled time series and cross section data for 33 countries in sub saharan africa ssa confirm the negative relationship between the real exchange rate rer misalignment and economic performance economic growth imports exports saving and investment macroeconomic instability also slows growth and other indicators of performance higher levels of misalignment are accompanied by higher levels of macroeconomic instability both lower levels of rer misalignment and instability lead to better economic performance the edwards model of rer determination performs well for the region black market premia tend to show a greater degree of misalignment in rer than alternative measures

exchange rate misalignment and growth old and new econometric evidence several studies have tried to identify the relationship between growth and misaligned or overvalued currencies many works easterly 2001 and fajnzylber et alii 2002 find negative correlations between exchange rate misalignment and growth for a long list of developing countries since the seventies the more overvalued the currency the smaller the per capita growth rates even after controlling the regressions for several types of variables the studies cannot reject the statistical significance of overvalued exchange rates in explaining growth this paper presents new econometric evidence for the exchange rate levels and growth relation based on a panel data study for 58 developing countries from 1960 until 1999 using ppp deviation measures our main contribution here is to estimate growth regressions with a real exchange rate index that deals with changes in real gdp per capita levels we use a new overvaluation index that takes into account variations in real per capita incomes adjusting thus our exchange rate estimates for the so called balassa samuelson effect by correcting traditional real exchange rate annual estimates for gdp per capita increases we intend to control our whole series for appreciations due to productivity increases as many authors do for some specific years

the dynamics of aid and political rights using cross country panel data we explore the extent to which the variation over time in measures of democracy and political rights can be explained by changes in aid inflows thus providing direct evidence on the impact of innovations in donor policy on the quality of recipient governance we distinguish between the short run and long run effects of changes in aid our results are very different from those based on cross country variation in aid inflows we find evidence of large differences between the effect of aid for political reform and the effect of other types of aid in aggregate these effects also depend on the recipient country s initial level of political development there is no evidence that aid intended for political reform has achieved its objective and in some countries it may be counterproductive however aggregate aid can have a beneficial effect on political rights

does china really lose from rmb revaluation evidence from some export industries this study attempts to examine the impacts of real exchange rate rer misalignment on china s export performance using the sur methodology coupled with disaggregate panel export data it shows that china s export sector may not necessarily lose from the central government s decision to revalue its rmb against the us dollar because the negative impact of the rer appreciation on chinese exports may be diluted by the positive impacts attributing to a reduction in the rer misalignment

on the accuracy of economic observations do sub saharan trade statistics mean anything matching exporters freight on board fob trade statistics with the corresponding importers cost inventory and freight cif data this paper studies the quality of official information on trade between 36 african countries the author found the disparities in data so great as to make the official trade statistics almost useless for most empirical and policy studies he concluded that a statistics on matching exports and imports vary so much that the data cannot be used to assess the level of trade between african countries b the data are probably equally useless for assessing the direction of trade since the countries that exporters report as the destination of trade often fail to report corresponding imports c the data are inadequate for determining the composition of trade because countries report on different levels of detail and d large persistent apparent differences in trends in intra african trade may simply reflect different degrees of accuracy in country trade data finally the fact that reported fob exports often exceed the corresponding reported imports suggests either that smuggling is widespread or that importers are intentionally underinvoicing because of high african tariffs or quotas

adjustment policies and economic development the principal objective of the international monetary fund imf as defined by its articles of agreement is the correction of balance of payments disequilibrium in member countries the policies the imf recommends to reduce the degree and duration of external and internal imbalances that give rise to balance of payments difficulties must however be set within the context of achieving and maintaining price stability and satisfactory rates of economic growth in analyzing imf policies designed to achieve these multiple objectives it is useful first to consider the circumstances in which the imf is

structural determinants of real exchange rates and national price levels some empirical evidence contrary to the long held notion of purchasing power parity ppp economists have found systematic evidence that the general level of prices across countries at a point in time varies dramatically irving b kravis alan w heston and robert summers 1982 for example report that some countries national price levels are no more than one third the u s price level extensions of this work show that such departures from ppp have persisted for decades recently efforts have been made to explain systematically these persistent or structural departures from ppp pioneering work by kravis and robert e lipsey 1983 1987 1988 has demonstrated that a positive correlation between the price level and real per capita gross domestic product is robust across numerous cross sectional specifications for instance using data from kravis et al 1982 table 6 12 87 percent of the variation in national price levels pl of 21 countries in 1975 is explained by per capita gdp y and a constant

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

oil price and usd naira exchange rate crash can economic diversification save the naira abstract naira lost half of its foreign exchange value in less than two years following 2014 oil price crash and has not recovered despite numerous government s attempts this study thus evaluated the potential of economic diversification proxied by non oil export performance in saving the naira by analysing a nexus between oil price exchange rate and nonoil export estimation of a rearranged current account equation within autoregressive distributed lag ardl and vector autoregressive var models using monthly data from january 2008 to december 2015 yielded the following results there is a direct relationship between oil price and exchange rate and this affirms that sharp decline in the former induced the latter s deterioration increase in non oil exports led to appreciation of usd naira exchange rate both in the short run and the long run import on the other hand induced depreciation of the exchange rate in the long run diversification by increasing export revenue and reducing import bills therefore has a great potential to improve the value of naira

real exchange rate behavior and economic performance in ldcs in recent years policy discussions have included increasing references to real exchange rate rer stability and correct exchange rate alignment as crucial conditions to improve economic performance in less developed countries ldcs 1 evidence from latin american asian and african countries is often quoted to support the view that the link between rer behavior and economic performance is strong it is argued that while unstable rers inhibited export growth in some of latin america their stability was fundamental in promoting east asian expansion in many african countries on the other hand persistently misaligned local currencies harmed the development of agriculture reducing domestic food supply 2 but in spite of its importance no empirical work has been attempted either to test the relationship between rer behavior and performance indicators at a broad multicountry level or to investigate the sources of rer variability and misalignment in ldcs the theoretical literature on rer determinants has been recently surveyed by sebastian edwards 3 he distinguishes between equilibrium and disequilibrium rers and between external and domestic rer determinants although domestic policies are often said to account for significant rer variations empirical work has only concentrated on the effect of nominal devaluations4 or speculative crises arising from expansionary monetary policies in a system of fixed ex

an incremental budgeting model of local public expenditure setting in the presence of piecewise linear budget constraints this paper develops and tests an incremental budgeting model of local government expenditure decisions using data on british local government the model introduces two distinctive feautures into the incremental budegeting literature firstly it takes explicit account of the availability of an independent source of revenue for jurisdictions in this example a local property tax and secondly it shows how it is possible to develop satisfactory emperical models when budget constraints are only piecewise linear the model is shown to perform well both in explaining within year variability in budgeting decisions and in predicting subsequent budgets under revised budget constraints

assessing the economic vulnerability of small island developing states and the least developed countries macro vulnerability of the small island developing states sids as well as of least developed countries ldcs has been an increasing concern for the international community this has led to the design of an economic vulnerability index evi to assess the structural economic vulnerability resulting from natural or external shocks we first explain how vulnerability affects growth development and poverty reduction particularly in small developing countries we then examine how the evi has been designed and how it can be used to compare sids and ldcs we argue that evi is a relevant tool not only for identification of ldcs but also for geographical aid allocation to favour vulnerable countries including ldcs and sids even though not all sids qualify as ldcs

optimizing the level of grant support for local government an application of a behavioral model abstract the united kingdom government has over the last decade undertaken an unprecedented campaign designed to reduce the level of current expenditure in local authorities the campaign has patently failed not least because of a failure adequately to research many of the measures introduced during the 1980s a major reform of local government finance has now been implemented which includes the replacement of the local domestic property tax by a community charge or poll tax this paper shows how using behavioural models of local authority budgeting developed under the old system of local government finance it might be possible for the government to approach an optimal policy in the implementation of the reforms

does the flypaper model stick a test of the relative performance of the flypaper and conventional models of local government budgetary behaviour two of the most widely referred to models of local or state budgetary behaviour are developed and tested the models considered are a variant of the flypaper model see for example courant et al 1979 and oates 1979 and a conventional model which builds on the seminal work of wilde 1969 1971 the models are developed in a manner which allows them to be tested empirically using data for english local governments two types of test are employed the ability of the two models to explain the variations in expenditure levels across local governments within any given fiscal year the ability of the models to predict future levels of expenditure given changes to local government budget constraints as brought about for example by changs in grants in aid from central government

exchange rate volatility economic growth nexus in uganda abstractthe global financial crisis has disrupted trade and capital flows in most developing economies resulting in an increased volatility of exchange rates we develop an autoregressive distributed lag model to investigate the effect of exchange rate volatility on economic growth in uganda using data spanning the period 1960 2011 we find that exchange rate volatility positively affects economic growth in uganda in both the short run and the long run however in the short run political instability negatively moderates the exchange rate volatility economic growth nexus these results are robust to alternative specifications of the economic growth model

macroeconomic stability investment and growth in developing countries abstract it is widely hypothesised that sound macroeconomic policies promote growth by providing a more secure environment for private sector investment decisions this proposition is tested for a cross section of developing countries over the period 1980 1990 using a variety of measures of the quality of macroeconomic management the evidence suggests that good macroeconomic management is associated with faster growth for a given rate of investment it is less clear that the volume of investment is significantly affected there is little evidence of non linearities the results are robust to an extension of the data period back to 1972

foreign debt instability an analysis of national saving and domestic investment responses to foreign debt accumulation in 28 developing countries abstract i specify and estimate a foreign debt model that exploits the balance of payments identity current account national saving domestic investment foreign debt can affect both saving and investment behavior in this model if an increase in foreigndebt reduces investment by more than it reduces saving or raises investment by less than it raises saving the current account will eventually be brought into a steady state equilibrium with a sustainable ratio of foreign debt to gnp in such case the debt crisis is more illusory than real for the country sample analyzed here however the buildup of government and government guaranteed foreign debt appears to have produced perverse private sector responses an increase in this type of foreign debt reduces saving by more than it reduces investment hence the current account deficit worsens over time as such foreign debt accumulates dynamic simulations identify only government policy that it raises national saving as an effective way of improving the current account the consequent real depreciation in the exchange rate may increase exporrts and reduce imports sufficiently to cause a current account surplus surprisingly export promotion policies alone seem unlikely to produce any substantial improvement in the current account

the estimation of british local government expenditure decisions under a piecewise linear budget constraint in the light of the reforms that have affected local government finance in britain the empirical analysis of local government responses to the changes in the grant system has become a topical subject because of its policy implications barnett et al proposed different models to predict the likely impact of the reforms on local government expenditure but never tested ofr the validity of the functional form used in their model the main reason for this omission is related to the piecewise nature of the budget constraint faced by local authorities which complicated the estimation techniques and restricted the choice of the functional forms that could be used the presented here tests for the validity of the functional form using data for the three fiscal years that preceded the poll tax reform namely 1986 87 to 1988 89 and suggests specific tests to compare the parameters obtained using different models the main conclusion of the analysis is that only the behaviour of metropolitan districts is consistent

bilateral trade flows the linder hypothesis and exchange risk bilateral trade flows are used to examine the linder hypothesis and the effect of exchange rate variability in a gra vity type trade model derived from an underlying demand and supply mo del a behavioral model is used to justify examining these issues joi ntly the model performs well empirically using a sample of seventeen countries for the period 1974 82 the authors find overwhelming supp ort for the linder hypothesis and this version of the gravity model moreover they find strong support for the hypothesis that increased exchange rate variability affects bilateral trade flows copyright 1987 by mit press

explaining african economic performance africa has had slow growth and a massive exodus of capital in many respects it has been the most capital hostile region we review and interpret the aggregate level and microeconomic literatures to identify the key explanations for this performance there is a reasonable correspondence of the two sets of evidence pointing to four factors as being important these are a lack of openness to international trade a high risk environment a low level of social capital and poor infrastructure these problems are to a substantial extent attributable to government behaviour and the paper includes a review of the political economy literature which addresses that behaviour

aid real exchange rate misalignment and economic growth in sub saharan africa generating sustained growth in sub saharan africa is one of the most pressing challenges in global development as the region needs foreign assistance to jump start its development foreign aid becomes crucial however aid booms can also lead to exchange rate overvaluation curtailing exports and growth this paper provides new evidence on the impact of aid and overvaluation on growth and exports using a sample of 83 countries from 1970 to 2004 we find that aid fosters growth with decreasing returns but induces overvaluation overvaluation reduces growth but the effect is ameliorated by financial development finally we find new evidence on the negative impact of overvaluation on export diversification and sophistication

local governments monopoly power and local tax reform theory and evidence from the u k this paper hypothesises the existence of several sources of monopoly power for local governments when the system of local taxation is reformed by central government in particular we argue that information asymmetries between tax payers and central and local government at the time of reform provide opportunities for local politicians to set tax levels which differ from those expected in a full information setting we predict that compared to pre reform tax levels local tax levels post reform will differ according to four local government characteristics i the size of the seat majority of the ruling local party ii whether the party controlling local government is the same as or is different from the ruling party of central government iii whether the local government structure has one or two tiers and whether the same party controls both tiers and iv the degree of indebtedness of the local authority testing the model on the u k local tax reform of 1990 we find strong evidence consistent with the hypothesis that inter authority differences in local tax levels reflect differences in the degree of local political monopoly power resulting from information asymmetries this monopoly power appears to have been used generally but not exclusively to raise tax levels

fdi in space spatial autoregressive relationships in foreign direct investment abstract there are a number of theoretical reasons why foreign direct investment fdi into a host country may depend on the fdi in proximate countries such spatial interdependence has been largely ignored by the empirical fdi literature with only a couple recent papers accounting for such issues in their estimation this paper conducts a general examination of spatial interactions in empirical fdi models using data on us outbound fdi activity we find that estimated relationships of traditional determinants of fdi are surprisingly robust to inclusion of terms to capture spatial interdependence even though such interdependence is estimated to be significant however we find that both the traditional determinants of fdi and the estimated spatial interdependence are quite sensitive to the sample of countries one examines

globalisation institutional reforms and financial development in east asian economies this study investigates the dynamic effects of globalisation on institutions and financial development in east asian economies using panel data tests our empirical results demonstrate that globalisation has a significant influence on institutional quality and that institutional reforms in turn facilitate and support financial development in particular the development of the banking sector in east asia globalisation is also found to have a favourable direct impact on stock market development without passing through an institutional quality channel

should developing countries undervalue their currencies abstract the washington consensus emphasizes the economic costs of real exchange rate distortions however a sizable recent empirical literature finds that undervalued real exchange rates help countries to achieve faster economic growth this paper shows that recent findings are driven by inappropriate homogeneity assumptions on cross country long run real exchange rate behavior and or growth regression misspecification when these problems are redressed the empirical results for a sample of 63 developing countries suggest that deviations of the real exchange rate in either direction from the value that is consistent with external and internal equilibriums reduce economic growth deviations from balassa samuelson adjusted purchasing power parity on the other hand do not seem to matter for growth performance the real exchange rate should thus be consistent with external and internal balances irrespective of implied purchasing power parity benchmarks

measuring exchange rate misalignment in turkey we propose a new methodology to measure exchange rate misalignment for turkey which has already undergone a severe economic crisis we estimate the real exchange rate within a time varying parameter model where a return to normality assumption about the parameters are assumed contrary to common belief it is found that except the initial four months of the stabilization program the turkish lira remained structurally undervalued for most of 2000 also we observe a pattern where lira has been structurally overvalued after the crisis in 1994 until 1998 and has displayed structural undervaluation after then

an unbalanced spatial panel data approach to us state tax competition abstract this paper assesses spatial competition in excise taxation among us states over the time period 1975 1999 we estimate the slope and shifters of the tax reaction curves using spatial panel data methods recently proposed by kapoor et al in press kapoor m kelejian h h prucha i r in press panel data models with spatially correlated error components j econ

incentive policies and export performance in sub saharan africa abstract the paper presents the results of an econometric investigation which shows that exports in general and agricultural exports in particular are responsive to price incentives in sub saharan africa it is further shown that within sub saharan africa market oriented countries generally gained and interventionist countries lost export market shares the differences in export performance are even greater if comparisons are made between private market economies and etatist countries in a three fold classification scheme that puts some countries in an intermediate category

measuring exchange rate misalignment inflation differentials and domestic relative prices abstract empirical studies of exchange rate misalignment generally use crosscountry differences in overall inflation as proxy measures for a country s real exchange rate rer this paper shows that using such differential inflation proxies introduces two systematic biases in model results understatement of rer movements and a spurious trend towards depreciation these biases can be corrected only with disaggregated data on domestic relative prices of tradable and nontradable products using a standard model with disaggregated data for zimbabwe it is found that proxy based results understate misalignment by almost 25 and exaggerate depreciation by 4 per year

do civil and political repression really boost foreign direct investments multinational enterprises are often accused of having a preference for investing in countries in which the working populations civil and political rights are largely disregarded this article presents an empirical investigation of the popular political repression boosts fdi hypothesis and arrives at the conclusion that the hypothesis is not supported on the contrary multinational enterprises rather appear to be attracted by countries in which civil and political freedom is respected

openness and inflation new empirical panel data evidence abstract the purpose of this paper is to test the hypothesis first documented by romer 1993 that inflation is lower in more open economies according to this hypothesis central banks have a smaller incentive to engineer surprise inflations in economies that are more open because the phillips curve is steeper in this paper the panel data technique has been employed to examine the aforementioned hypothesis concerning the developed and developing countries over the last two decades also comparing with other empirical studies this paper has estimated the relationship between economic globalization as one dimension of the new kof globalization index and inflation the paper s results cast substantial doubts on the conventional view that suggests a robust and negative relationship between trade openness and inflation the estimation result regarding the traditional measure of trade openness indicates a positive and significant association between trade openness and inflation which opposes the view of the romer 1993 hypothesis in contrast the estimation results regarding a new economic globalization index the kof index suggest that higher economic globalization will decrease inflation as supported by the romer 1993 hypothesis for both developed and developing countries during 1990 9 and 2000 9 thus it seems that the new economic globalization measure the kof index which is a broader comprehensive index is a better proxy for openness

capital flows real exchange rate misalignment and ppp tests in emerging market countries the economic performance of emerging markets has significant impacts on economic growth and volatility of macroeconomic indicators in various countries emerging markets accounted for 20 43 of global exports during the period 1970 2005 and held 70 of global foreign reserves in recent years more than 50 of the exports from the euro area japan and the united states go to emerging markets and other developing countries the globalization of capital flows is facilitated by technological innovations and excellent information networks coupled with sharp increases in savings that are directed into financial instruments across borders the use of purchasing power parity ppp as a benchmark in exchange rate policy reforms assumes the existence of a stable relationship between the exchange rate and the ratio of price levels in two countries this article investigates whether or not long run ppp holds in emerging markets johansen s cointegration technique is used with annual data in analysing the relationsh

human rights treaty ratification of aid receiving countries this paper studies the decision to ratify human rights treaties hrt at the united nations we present new empirical evidence that sheds light on who raties when and why controlling for the quality of domestic human rights institutions high levels of predetermined hrt participation relative to other aid recipients has a signicant positive eect on a country s foreign aid receipts suggesting that aid donors use treaty participation as a criterion to allocate foreign aid surprisingly though we nd that high levels of hrt participation precipitates a decline in the quality of domestic human rights institutions taken together with the result that donors reward treaty participation with foreign aid this suggests that using foreign aid as an incentive for treaty participation has indirect negative consequences for real human rights inconsistent with the traditional view that aid donors have a positive preference for human rights practices in developing countries we show however that the treaty participation of other aid recipients has a strong and positive eect on domestic human rights institutions that more than osets the negative eects

economic growth in africa abstract this paper draws on the recent endogenous growth methodology to study the factors behind differences in per capita growth rates across africa the results indicate that various economic factors including initial conditions investment population growth trade orientation inflation financial development and the growth of the government sector contribute significantly to economic growth in addition to economic variables we find the degree of political freedom to be a significant contributor to economic growth finally we find some evidence that economic growth by the members of the cfa franc zone has not fared well in comparison to other african countries

oil dependency and exchange rate regimes in arab oil economies time to rethink the paradigm this study examines implications of the current exchange rate regimes on the macroeconomic and growth performance of five arab oil producing countries saudi arabia the uae sudan algeria and yemen the study evaluates alternative exchange rate regime policy options towards exploring an optimal exit strategy to ensure successful transition to more sustainable exchange rate regime especially in the fixed regime economies of saudi arabia and the uae this study proposes the adoption of a transparent broad basket band and crawl bbc regime by the arab oil economies in order to provide a better alternative to the existing fixed pegs or dirty floats however it is imperative to note that the timing of the exit from the current regime and the extent of institutional development and market sophistications are very critical to successful transition to more sustainable regime that would provide a larger scope for counter cyclical policies and diversification in these economies