agricultural productivity and convergence europe and the united states this article applies the window malmquist index wmi approach to measure changes in agricultural total factor productivity tfp for the united states and a sample of nine european countries for the period 1973 to 1993 the dataset used in this article is obtained from ball et al 2001 the wmi is constructed by combining data envelopment analysis window analysis with the malmquist index approach furthermore the kruskal and wallis rank test is used for testing frontier shifts among observed periods the article also explores the question of convergence in tfp across the countries under consideration by testing for and convergence as well as for stochastic or long run convergence the results show wide variation in the rate of tfp growth across countries with an average trend growth rate of 1 62 the results indicate the presence of convergence but the absence of convergence for the full period under consideration but the presence of both and convergence for the sub period 1983 to

institutions capital and growth the international development community has encouraged investment in physical and human capital as a precursor to economic progress recent evidence shows however that increases in capital do not always lead to increases in output we develop a growth model where the allocation and productivity of capital depends on a country s institutions we find that increases in physical and human capital lead to output growth only in countries with good institutions in countries with bad institutions increases in capital lead to negative growth rates because additions to the capital stock tend to be employed in rent seeking and other socially unproductive activities

property rights and consumption volatility evidence from a land reform in vietnam summary during vietnam s transition from a socialist to a market economy household s property rights over agricultural land were considerably strengthened through a land certification program this resulted in active formal credit and land markets either of which potentially affects consumption levels and volatility this article evaluates the program impact with respect to consumption outcomes in particular it identifies the channel of impact through which improved property rights affect consumption volatility we find that land certification increases consumption levels for rural households but also consumption volatility for a subgroup of households identified by an instrument we show that the certification program affects consumption outcomes of this subgroup through presumably more risky credit based agricultural investment at the intensive margin

seasonal migration and agricultural production in vietnam abstract when markets are incomplete migration can have multiple effects on agricultural production i use instrumental variables techniques to explore the effects of seasonal migration on agricultural production in rural vietnam during the 1990s using network variables specific to vietnam as instruments i find that migrant households in north vietnam appear to move out of rice production and into the production of other crops inputs used by migrant households decrease relative to similar non migrant households the evidence is consistent with a shift from labor intensive into land intensive crops rather than productivity changes or the use of additional capital in production

does rising landlessness signal success or failure for vietnam s agrarian transition in the wake of reforms to establish a free market in land use rights vietnam is experiencing a pronounced rise in rural landlessness to some observers this is a harmless by product of a more efficient economy while to others it signals the return of the pre socialist class structure with the rural landless at the bottom of the economic ladder the authors theoretical model suggests that removing restrictions on land markets will increase landlessness among the poor but that there will be both gainers and losers with uncertain impacts on aggregate poverty empirically they find that landlessness is less likely for the poor and that the observed rise in landlessness is poverty reducing on balance however there are marked regional differences notably between the north and the south

commodity price instability and economic goal attainment in developing countries abstract this paper reviews the theoretical and empirical micro and macro foundations for the frequent claims that instabilities in international commodity markets have deleterious effects on goal attainment in primary commodity exporting developing countries this review leads to the conclusion that the available evidence does not support these claims the paper concludes with speculation on why such claims are so strong despite the lack of supporting evidence perhaps it is because of measurement problems and perhaps because of small but articulate groups with vested interests in overstating the problem

the effects of volatility in the terms of trade on output growth new evidence abstract this paper examines the empirical evidence for the hypothesis that there is a negative relationship between terms of trade volatility and output growth it finds a statistically significant link between income terms of trade volatility and lower growth rates when the degree of volatility in the income terms of trade is decomposed into its components fluctuations in real exports are of a magnitude similar to those in the relative price of tradables similarly the volatility in the net barter terms of trade is equally affected by variations in the price of exports and of imports any policies aimed at stabilizing the terms of trade or any of its components need to take account of this

capture and governance at local and national levels 135 despite the importance of this issue not much systematic research appears to have been devoted to assessing the relative susceptibility of national and local governments to interestgroup capture here we describe a model of two party electoral competition with probabilistic voting behavior and lobbying by specialinterest groups based on david baron 1994 and gene grossman and elhanan helpman 1996 that helps identify determinants of relative capture at different levels of government these include relative levels of voter awareness and interest group cohesiveness electoral uncertainty electoral competition heterogeneity of districts with respect to inequality and the electoral system while some of these uphold the traditional madisonian presumption others are likely to create a tendency for lower capture at the local level so the net effect is theoretically ambiguous this suggests that the extent of relative capture may be context specific and needs to be assessed empirically

testing convergence in economic growth for oecd countries this article explores tests for absolute convergence in economic activity among a set of countries it proposes a new test procedure that allows the researcher to identify particular countries within the group which might not be converging it also proposes that convergence among a set of similar countries is better thought of as movement toward a group leader rather than movement towards a group mean applying the new procedure to 22 oecd countries it finds strong evidence for absolute convergence for the vast majority of countries towards their common steady state level this article also points out why using standard unit root or cointegration tests with bernard and durlauf s definition of convergence is inappropriate

an empirical model of labor supply in a life cycle setting this paper formulates and estimates a structural intertemporal model of labor supply using theoretical characterizations derived from an economic model of lifetime behavior a two step empirical analysis yields estimates of intertemporal and uncompensated substitution effects which provide the information needed to predict the response of hours of work to life cycle wage growth and shifts in the lifetime wage path

real convergence empirical evidence for latin america this article investigates the real convergence of 17 latin american countries to the us economy for the period 1950 to 2011 time series methods are used to test stochastic and convergence these methods include the possibility of one or two structural changes the results show that when endogenous structural changes are considered several latin american countries exhibit stochastic convergence nevertheless real convergence to the us is found only for three latin american countries chile costa rica and trinidad and tobago with these countries also presenting evidence of stochastic and convergence

debt relief and the current account an analysis of the hipc initiative in this paper i develop a model to investigate the connection between debt relief and current account sustainability this model can be used as a key input in assessing whether a hipc country s real exchange rate is overvalued and will thus need to go through devaluation the working of the model is illustrated for the case of nicaragua a country that in 2002 had one of the highest external debt to gdp ratios almost 300 per cent nicaragua is the second poorest country in the western hemisphere after haiti and for the last decade has relied very heavily on foreign assistance and aid moreover in the last few years nicaragua has run extremely large current account deficits in excess of 37 per cent of gdp during 1997 2001 largely financed by grants donations and migrant remittances

convergence and divergence in latin america 1970 1998 this paper examines the process of convergence in latin america over the period 1970 1998 there has been relatively little work on income convergence among developing countries in general and in latin america in particular even though many studies have examined convergence both within and among developed countries there is little support for the convergence hypothesis over the sample period as a whole although the beta coefficient is positive it is insignificant convergence is strong in the 1970s but by the 1990s it has disappeared there is no evidence of a narrowing in the cross country dispersion of income sigma convergence for the sample period as a whole the results offer little support for the neo classical growth model poorer countries have not grown faster than richer ones there is a strong case for strengthening regional development policy

are real gdp levels nonstationary evidence from panel data tests potential nonstationarity of important macroeconomic variables and unit root tests are now a standard procedure in empirical analyses while there are many findings of unit roots in macroeconomic variables using the popular augmented dickey and fuller 1979 test this test has low power against near unit root alternatives recently panel data procedures have been proposed as an avenue to increased power this paper applies panel unit root tests to international real gdp and real gdp per capita data the results overwhelmingly indicate that international real gdp and real gdp per capita levels are nonstationary

trend model testing of growth convergence in 15 oecd countries 1946 1997 a framework based on a linear deterministic trend function is introduced in order to model growth convergence the approach is a practical solution to the nonlinearity and nonstationarity found in the convergence of output per capita gaps between the usa and 14 oecd countries in 1946 1997 convergence is found to be a typical feature of european oecd countries and japan but for some major countries it altered since the beginning of 1980 some evidence of divergence exists too valid statistical inference on trend growth estimates is based on sample size standardized t and wald test statistics since the model residuals are close to i 1 small sample test values are derived using bootstrap methods

unit root and trend breaks in per capita output evidence from sub saharan african countries abstractthis article examines the nonstationary properties of per capita real output in 28 sub saharan african ssa countries covering the period 1960 2014 the sequential testing approach proposed by kejriwal and lopez 2013 econometric reviews 32 8 892 927 is used to categorize ssa countries into growth shift level shift and linear trend hypotheses based on the presence or not of breaks in slope and or level of the trend function the break dates are associated to major historical or economic events such as sociopolitical crisis commodity price fluctuations on international market the discovery and the exploitation of mineral deposits or unfavourable environmental and climatic conditions the empirical evidences of appropriate unit root tests fail to reject the unit root hypothesis in all the countries suggesting that a shock would have a permanent effect on growth process and stabilization policies may be implemented in dealing with income fluctuations

aggregate spending and the terms of trade is there a laursen metzler effect this paper investigates the spending and current account effects of terms of trade shifts in a model where households maximize utility over an infinite planning period in the framework developed here an economy specialized in production must experience a fall in aggregate spending and a current surplus as a result of an unanticipated permanent worsening in its terms of trade the paper s model thus provides a setting in which the current account deficit predicted by laursen and metzier harberger and others fails to materialize

the macroeconomy of angola breaks and persistence in angolan macro data using long range dependence techniques we examine the order of integration of angola s macro variables from a fractional viewpoint based on a small open economy model the series examined are money reserves credit money supply lending rate exchange rates cpi gdp oil revenues and government expenditure for the period of january 2000 to december 2013 the results suggest that the variables are nonstationary with orders of integration equal to or higher than 1 suggesting nonmean reverting behaviour structural breaks reveal that the series reflect the imf intervention in angola in 2003 to control inflation policy implications are derived

convergence or divergence in latin america a time series analysis this article investigates the occurrence of per capita income convergence in 19 latin american countries we apply a time series approach to test for stochastic convergence and convergence based on structural breaks unit root tests where the dates of breaks are unknown and determined endogenously this approach is essential since it does not impose common break dates and parameter homogeneity among countries in fact the econometric methodology employed attempts to provide what was lacking in previous works as a consequence unlike prior studies the results indicate that there is substantial evidence in favor of conditional convergence in latin america we show that this evidence is even greater when analyzing south and central america separately

trade shocks and macroeconomic fluctuations in africa this paper examines the role of external shocks in explaining macroeconomic fluctuations in african countries we construct a quantitative stochastic dynamic multi sector equilibrium model of a small open economy calibrated to represent a typical african economy in our framework external shocks consist of trade shocks modeled as fluctuations in the prices of exported primary commodities imported capital goods and intermediate inputs and a financial shock modeled as fluctuations in the world real interest rate our results indicate that while trade shocks account for roughly 45 percent of economic fluctuations in aggregate output financial shocks play only a minor role we also find that adverse trade shocks induce prolonged recessions

stochastic trends and economic fluctuations are business cycles mainly the result of permanent shocks to productivity this paper uses a long run restriction implied by a large class of real business cycle models identifying permanent productivity shocks as shocks to the common stochastic trend in output consumption and investment to provide new evidence on this question econometric tests indicate that this common stochastic trend cointegration implication is consistent with postwar u s data however in systems with nominal variables the estimates of this common stochastic trend indicate that permanent productivity shocks typically explain less than half of the business cycle variability in output consumption and investment copyright 1991 by american economic association

property rights labour markets and efficiency in a transition economy the case of rural china we investigate the consequences of imperfect factor market development for farm efficiency in north china we estimate the extent to which an inverse relationship in farm productivity can be attributed to the administrative as opposed to market allocation of land combined with unevenly developed off farm opportunities using a new household survey we find considerable inefficiency in the use of labour this inefficiency is alleviated by external labour markets and to a limited degree by administrative reallocations the reallocations do not go far enough however which raises important questions about con straints on rental activity and property rights formation more generally jel classification q15 012

multiple breaks terms of trade shocks and the unit root hypothesis for african per capita real gdp summary this paper presents an investigation of the unit root hypothesis for per capita real gdp series in 46 african countries from maddison 2003 over the period spreading during 1950 and 2001 toward this end we employ highly flexible panel techniques which incorporate multiple mean and slope shifts in the output series our findings are clearly supportive of regime wise trend stationarity in output after 1 allowing for cross dependence and multiple breaks and 2 removing four countries that exert undue influence on the whole panel remarkably our main results hold true for alternative per capita real gdp proxies retrieved from the penn world table 6 2 as well as for different country groups constructed on the basis of the country s participation in regional integration processes interestingly the timing of the breaks broadly coincides with terms of trade shocks associated with large fluctuations in the price of primary commodities based on our results we draw some policy prescriptions that point to the need for managing adequately terms of trade booms and busts to avoid large swings in africa s aggregate output

more powerful panel data unit root tests with an application to mean reversion in real exchange rates unit root tests seeking mean or trend reversion are frequently applied to panel data we show that more powerful variants of commonly applied tests are readily available moreover power gains persist when the modifications are applied to bootstrap procedures that may be employed when cross correlation of a rather general sort among individual panel members is suspected copyright 2004 john wiley sons ltd

the unit root hypothesis for aggregate output may not hold after all new evidence from a panel stationarity test with multiple breaks author affiliation diego romero avila pablo de olavide university department of economics carretera de utrera km 1 41013 seville spain dromtor upo es acknowledgment the author would like to thank seminar participants at pablo de olavide university and dg economics of the european central bank and two anonymous referees for useful comments and suggestions 1 introductionsince the seminal work by nelson and plosser 1982 researchers have paid considerable attention to the presence of stochastic trends in macroeconomic variables that work also changed the way macroeconomists think about secular trends and short run fluctuations in business cycles since the existence of a unit root in output purports that shocks are permanent short run fluctuations cannot be explained by the traditional view as deviations around a deterministic trend that represents the secular component of the series instead the trend function itself can fluctuate as a result of permanent shocks king et al 1991 found that supply factors are important in explaining economic fluctuations but may not be the lone source of short run fluctuations campbell and mankiw 1987 stressed that demand shocks may also be the source of permanent shocks to output the existence of a high degree of persistence in output has important implications in macroeconomics for example the keynesian view that most shocks to output are transitory and output fluctuations are temporary deviations from the secular trend is inconsistent with a unit root in output on the contrary the real business cycle view conceives fluctuations as largely the result of real permanent shocks essentially of a technological nature this has important implications for economic policy since stabilization policies lose their effectiveness when variations of output are mainly permanent thus running counter to the keynesian view much of the empirical literature has focused on the nonstationarity properties of real u s gross national product gnp to cite a few studies perron and phillips 1987 schwert 1987 campbell and mankiw 1987 and perron 1988 fail to reject the null hypothesis of a unit root in real u s gnp these results have not gone unchallenged christiano and eichenbaum 1990 and rudebusch 1993 highlighted the low power of standard unit root tests of the augmented dickey and fuller 1979 type to distinguish between the trend stationary and unit root behavior in aggregate output the development of cross country data sets such as the long gross domestic product gdp series provided by maddison 1989 and the penn world table pwt constructed by summers and heston 1990 has allowed researchers to provide international evidence on the unit root behavior in aggregate output for instance wasserfallen 1986 found a unit root in gnp series for some organization for economic co operation and development oecd countries over the postwar era kormendi and meguire 1990 confirmed the existence of a unit root in output for twelve oecd countries over the period 1870 1985 1 however the seminal work of perron 1989 uncovered the fact that nonstationarity may conceal the existence of stationarity with structural change showing that standard unit root tests tend to misinterpret trend stationarity with a structural break as a unit root by exogenously imposing a structural break in real u s gnp perron 1989 was able to strongly reject the unit root hypothesis however zivot and andrews 1992 provided slightly less evidence of a unit root in real u s gnp using a test that allowed for a structural break that was endogenously determined from the data in an international context zelhorst and de haan 1994 1995 found evidence for oecd countries that over long time periods where the presence of structural change becomes more likely the null of a unit root in output tends to be rejected in favor of regime wise stationarity

land allocation in vietnam s agrarian transition while liberalizing key factor markets is a crucial step in the transition from a socialist control economy to a market economy the process can be stalled by imperfect information high transaction costs and covert resistance from entrenched interests the authors study land market adjustment in the wake of vietnam s reforms aiming to establish a free market in land use rights following de collectivization inefficiencies in the initial administrative allocation are measured against an explicit counterfactual market solution the authors tests using a farm household panel data set spanning the reforms suggest that land allocation responded positively but slowly to the inefficiencies of the administrative allocation they find no sign that the transition favored the land rich or that it was thwarted by the continuing power over land held by local officials

external debt labour productivity growth and convergence evidence from sub saharan africa sub saharan africa ssa has long suffered from lagging productivity and excessive levels of indebtedness using both parametric and non parametric techniques this paper examines the impact of external debt on labour productivity growth and convergence across ssa economies over the period 1970 2010 the results indicate the presence of debt overhang effects regardless of model and sample specification debt reduction through the heavily indebted poor countries and multilateral debt relief initiatives enhanced growth but was not successful in offsetting the debt overhang effects moreover excessive levels of external debt were responsible for divergence in output per worker over the early 1990s although this trend was reversed over the 2000s reduction in debt through the debt relief initiatives seems to have been insufficient in helping heavily indebted countries in ssa catch up with the labour productivity levels of the best performing economies in the region

on the exploitation of additional duality relationships in consumer demand analysis abstract this paper advocates more extensive use of the frisch profit function in static consumer demand studies and intorduces its inverse the price of utility function paralleling the well known relationships between indirect utility and expenditure functions an examination of the relationship between these four functions suggests i a fourth system complementing marshallian hicksian and frisch demand systems and ii a fourth theorem complementing roy s identity shephard s theorem and hoteling s lemma

optimal consumption and portfolio policies when asset prices follow a diffusion process abstract we consider a consumption portfolio problem in continuous time under uncertainty a martingale technique is employed to characterize optimal consumption portfolio policies when there exist nonnegativity constraints on consumption and on final wealth we also provide a way to compute and verify optimal policies our verification theorem for optimal policies involves a linear partial differential equation unlike the nonlinear partial differential equation of dynamic programming the relationship between our approach and dynamic programming is discussed we demonstrate our technique by explicitly computing optimal policies in a series of examples in particular we solve the optimal consumption portfolio problem for hyperbolic absolute risk aversion utility functions when the asset prices follow a geometric brownian motion the optimal policies in this case are no longer linear when nonnegativity constraints on consumption and on final wealth are included by these examples one can see that our approach is much easier than the dynamic programming approach

willingness to pay for forest property rights and the value of increased property rights security this paper studies the willingness to pay wtp for forest property rights in viet nam we do so by asking respondents to estimate the value of two different forest property rights regimes where only the level of property security differs and all other forest plot characteristics are constant we use this information to identify the value of the property rights security our results reveal that a significant number of individuals are willing to pay for an additional area of forestland but that the amount offered appears to be inadequate to compensate sellers as very few land market transactions actually take place the results further indicate that income relates positively to wtp irrespective of forest property regime wealth age and ethnicity also have an impact on the amount households are willing to pay as expected there was a significant mark up on the more secure right econometric estimates of the difference between the wtp for secure and insecure property rights show that a higher level of female education and household age decrease the difference between the two wtp measures while the difference tends to increase as income improves this has important policy implications as it indicates that households tend to evaluate the property rights institutions differently

convergence and catching up in asean a comparative analysis the increasing diversity of average growth rates and income levels across countries has generated a large literature on testing the income convergence hypothesis most countries in south east asia particularly the five founding asean member countries asean 5 have experienced substantial economic growth with the pace of growth having varied substantially across countries recent empirical studies have found evidence of several convergence clubs in which per capita incomes have converged for selected groupings of countries and regions this paper applies different time series tests of convergence to determine if there is a convergence club for asean 5 as well as asean 5 and the usa the catching up hypothesis states that the lagging country with low initial income and productivity levels will tend to grow more rapidly by copying the technology of the leader country without having to bear the associated costs of research and development given the important effects of technological change on growth

structural stability in a cross country neoclassical growth model this paper tests for structural stability of the solow growth model as recently extended to human capital and applied to a large section of countries by mankiw romer and weil the evidence is obtained by ranking each explanatory variable of the model in ascending order and then running recursive regressions and by then splitting the original sample according to cluster analysis before running separate regressions the evidence shows that the model exhibits overall structural breaks the convergence coefficient however is very stable the coefficients of the production factors become unstable where the factors become very abundant or very scarce the coefficient of labour growth is negative and significant as required by the theory only if a small group of countries with scarce labour is considered the same coefficient is instead positive and significant for a group of countries with abundant labour and favourable initial income and investments the coefficient of investment in human capital is not

new evidence of regional income divergence in post reform russia this article investigates regional income convergence in russia during 2000 2008 we test the hypothesis in which income divergence across regions of the country should give place to income convergence as the country moves toward free market economy with strong market institutions the study contributes to the existing literature by using the exponential smooth autoregressive augmented dickey fuller adf unit root test in a panel setup a novel econometric technique which encompasses cross sectional dependence results show strong evidence of on going regional income divergence in post reform period

towards a more general approach to testing the time additivity hypothesis a new procedure is proposed for re examining the assumption of additivity of preferences over time which although untenable is usually maintained in intertemporal analyses of consumption and labour supply the method is an extension of a famous work by browning however it is more general in permitting the estimation of intertemporal demand systems which are explicit in an unobservable variable price of utility but may lack a closed form representation in terms of observable variables such as prices and total outlay it also makes extensive use of duality theory to solve the endogeneity problem encountered in browning s study applying this method with an appropriate estimator to the australian aggregate data it is found that the time additivity hypothesis is decisively rejected which is consistent with browning s conclusion

optimal consumption wealth relationships derived by consumer intertemporal profit maximisation abstract this paper proposes an artificial intertemporal consumer profit maximisation problem that is simple to solve the optimal consumption function which is consistent with intertemporal utility maximisation is then generated directly from a specification of the consumer s instantaneous profit function

decentralized targeting of an antipoverty program abstract developing country governments often delegate authority over the targeting of antipoverty programs to community organizations while retaining control over how much goes to each community we offer a theoretical characterization of the information structure in such programs and the interconnected behavior of the various players our model motivates an econometric specification for explaining distributional outcomes results for bangladesh s food for education ffe program indicate that within village targeting improved with program size lower land inequality less remoteness fewer shocks and less private redistribution there is no sign that the center took account of village attributes conducive to reaching the poor

terms of trade shocks in africa are they short lived or long lived abstract this paper examines the persistence of shocks to the terms of trade using annual data on 42 sub saharan african countries for the period 1960 96 instead of using unit root tests to distinguish between stationary and random walk processes for the terms of trade this paper characterizes the persistence of shocks using point and interval estimates of the half lives of terms of trade shocks using median unbiased mu estimation techniques that remove the downward bias of standard least squares ls estimators we find that the cross country average of the half lives of terms of trade shocks is about 6 years it is also found that the estimated persistence of african terms of trade shocks varies widely for about one half of the countries their half lives are short lived less than 4 years while for one third of the countries their half lives are long lived permanent the majority of african countries are found to have terms of trade that typically experience finitely persistent transitory shocks which is consistent with the reversion of terms of trade to their long run trends

convergence in brazil recent trends and long run prospects this paper applies to the analysis of the interstate income distribution in brazil a set of techniques that have been widely used in the current empirical literature on growth and convergence usual measures of dispersion in the interstate income distribution the coefficient of variation and theil s index suggest that sigma convergence was an unequivocal feature of the regional growth experience in brazil between 1970 and 1986 after 1986 the process of convergence seems however to have slowed down almost to a halt a standard growth model is shown to fit the regional data well and to explain a substantial amount of the variation in growth rates providing estimates of the speed of conditional beta convergence of approximately 3 p a different estimates of the long run distribution implied by the recent growth trends point towards further reductions in the interstate income inequality but also suggest that the relative per capita incomes of a significant number of states and the number of very

convergence in sub saharan africa a nonstationary panel data approach given the development of time series econometrics and nonstationary data analysis st aubyn empirical economics 24 23 44 1999 demonstrates a new paradigm for testing income convergence or better defined income stability namely testing the stationarity of pair wise income differentials in this paper a panel data set of sub saharan african countries is constructed and panel cointegration and unit root tests are used to investigate the convergence properties of incomes and standards of living within africa overall little evidence is found to substantiate claims of convergence across africa although in some cases smaller convergence clubs within africa may be found in addition the use of nonstationary panel data techniques is proposed for the testing and establishing of coherent convergence clubs

african terms of trade and the commodity terms of trade close cousins or distant relatives this paper examines whether there is a relationship between the commodity terms of trade the price of primary commodities relative to the price of manufactures and the net barter terms of trade of 42 sub saharan african countries for most countries there is little evidence of a stable long run relationship between the two terms of trade series accordingly the practice in the literature of proxying for movements in any given country s terms of trade by using an aggregate index of relative commodity prices is inappropriate and is likely to engender misleading policy conclusions

the terms of trade the real exchange rate and economic fluctuations this paper examines the relationship between terms of trade and business cycles using a three sector intertemporal equilibrium model and a large multicountry database results show that terms of trade shocks account for nearly one half of actual gdp variability the model explains weak correlations between net exports and terms of trade the harberger laursen and metzler effect and produces large and weakly correlated deviations from purchasing power parity and real interest rate parity terms of trade shocks cause real appreciations and positive interest differentials although productivity shocks have opposite effects the puzzle that welfare gains of international asset trading are negligible is left unresolved copyright 1995 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

why has africa grown slowly we distinguish between policy and destiny explanations of africa s slow growth during the past three decades policies were poor high export taxation and inefficient public service delivery and destiny was adverse landlocked tropical locations and terms of trade deterioration during the 1990s africa s economic policies improved although with considerable variation both between countries and between policies trade and exchange rate policies improved much more than service delivery thus the differing explanations of past slow growth imply different predictions for growth in the coming decade we argue that poor public economic services are likely to be the binding constraint

cross country growth regressions problems of heterogeneity stability and interpretation the paper discusses the issues of heterogeneity and stability of cross country growth regressions that have been used to study the problem of convergence almost all studies use pooled regressions the paper considers the issue of pooling under heterogeneity using a hierarchical bayesian method and estimates growth regressions for different panels studied in earlier papers and different regimes the conclusion is that the convergence rates are higher than those obtained from pooled regressions under the assumption of homogeneity and that there is instability over time in the relationships

income and co2 emissions evidence from panel unit root and cointegration tests abstract this paper re investigates the stationarity properties of per capita carbon dioxide co 2 emissions and real gross domestic product gdp per capita for 109 countries within seven regional panel sets covering 1971 2003 we apply the recent unit root test of the panel seemingly unrelated regressions augmented dickey fuller suradf test developed by breuer et al 2001 misleading inferences from panel unit root tests with an illustration from purchasing power parity review of international economics 9 482 493 2002 series specific unit root tests with panel data oxford bulletin of economics and statistics 64 527 546 the panel suradf test accounts for the presence of cross country correlations in the data and the parameters in the panel specification vary across countries more importantly this test allows us to identify how many and which members of the panel contain a unit root overall our empirical results illustrate that real gdp and co 2 emissions in these countries are a mixture of i 0 and i 1 processes and that the traditional panel unit root tests could lead to misleading inferences as well as the conduct of cointegration analysis being perhaps inappropriate the results of our analysis carry critical implications for the modeling of co 2 emissions and gdp because of the different orders of integration for the two variables

non farm activity household expenditure and poverty reduction in rural vietnam 2002 2008 summary diversifying into non farm activities has been suggested as an effective way out of poverty for rural households in developing countries using the vietnamese household living standards surveys of 2002 2004 2006 and 2008 we test this claim and investigate the effect of non farm sector involvement on poverty and expenditure growth our endogeneity corrected estimates show that an additional household member involved with non farm activity reduces the probability of poverty by 7 12 and increases the household expenditure by 14 over a two year period our findings also indicate that non farm involvement reduces the hours worked on farm but not the household agricultural income

china s regional convergence in panels with multiple structural breaks this study investigates the existence of regional convergence of per capita outputs in china from 1952 to 2004 particularly focusing on considering the presence of multiple structural breaks in the provincial level panel data first the panel based unit root test that allows for the occurrence of multiple breaks at various break dates across provinces is developed this test is based on the p value combination approach suggested by fisher 1932 next the test is applied to china s provincial real per capita outputs to examine the regional convergence in china to obtain the p values of unit root tests for each province which are combined to construct the panel unit root test this study assumes three data generating processes dgps a driftless random walk process an autoregressive moving average arma process and an autoregression ar process with cross sectionally dependent errors in monte carlo simulation the results obtained from this study reveal that the convergence of the provincial per c

terms of trade fluctuations and economic growth in developing economies abstract the effect of terms of trade fluctuations on capital accumulation is investigated in a simple open economy stochastic growth model imported inputs make domestic capital more productive but export prices are uncertain the model s output process has a random walk component so even transient price shocks have permanent effects on output levels the size of the random walk component depends on the country s trade share the supply response of exports and other structural parameters also more variable export prices generally reduce expected domestic investment these results are consistent with the estimated variance ratios and impulse response functions for a number of ldcs

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

the overvaluation of purchasing power parity abstract recent panel studies of purchasing power parity have reported strong evidence of mean reversion in real exchange rates however these studies fail to control for cross sectional dependence in the data this failure has dramatic consequences raising the significance level of tests with a nominal size of 5 percent to as much as 50 percent it is shown in this paper that controlling for cross sectional dependence no evidence against the random walk null can be found in panels of up to 64 real exchange rates this finding cannot be attributed to low power as there is ample power in panels of this size to reject the unit root null