the new role for the world bank the world bank was founded to address what we would today call imperfections in international capital markets its founders thought that countries would borrow from the bank temporarily until they grew enough to borrow commercially nac 1946 p 312 black 1952 some critiques and analyses of the bank are based on the assumption that this continues to be its role for example some argue that the growth of private capital flows to the developing world has rendered the bank irrelevant however we will argue that modern analyses should proceed from the premise that the world bank s central goal is and should be to reduce extreme poverty and that addressing failures in global capital markets is now of subsidiary importance the bank s stated goal is reducing poverty the overwhelming majority of bank subsidies from its shareholder countries go to the international development association ida its arm for making grants and highly concessional loans to the lowest income countries the bank s greatest impact comes from its role in the dramatic policy changes many developing countries have undertaken in multiple sectors that most economists would consider likely to reduce poverty either by increasing growth or promoting equity why might donor countries choose to work through an international organization to advance the goal of reducing poverty effective aid often involves

monitoring liquidation and security design by identifying the possibility of imposing a credible threat of liquidation as the key role of informed bank finance in a moral hazard context we characterize the circumstances under which a mixture of informed and uninformed market finance is optimal and explain why bank debt is typically secured senior and tightly held we also show that the effectiveness of mixed finance may be impaired by the possibility of collusion between the firms and their informed lenders and that in the optimal renegotiation proof contract informed debt capacity will be exhausted before appealing to supplementary uninformed finance article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

when is foreign aid policy credible aid dependence and conditionality the author studies foreign aid policy within a principal agent framework he shows that one reason for foreign aid s poor overall record may be a moral hazard problem that shapes the aid recipient s incentive to undertake structural reform the model s basic prediction is a two way relationship disbursements of foreign aid are guided in part by the needs of the poor anticipating this recipients have little incentive to improve the welfare of the poor preliminary econometric work shows that the data support this hypothesis in principle conditionality could partly solve this problem but only if the donor can make a binding commitment to increase disbursements in good relative to bad states without such a commitment technology aid disbursements remain guided by the needs of the poor and recipient countries maintain a low effort to reduce poverty contrary to the conventional wisdom found in the aid literature the author shows that the welfare of all parties might be improved by using tied project aid or by delegating part of the aid budget to an international agency with less aversion to poverty

can the trade off theory explain debt structure we examine the optimal mixture and priority structure of bank and market debt using a tradeoff model where banks have the unique ability to renegotiate outside formal bankruptcy flexible bank debt offers a superior tradeoff between tax shields and bankruptcy costs ease of renegotiation limits bank debt capacity however optimal debt structure hinges upon which party has bargaining power in private workouts weak firms have high bank debt capacity and utilize bank debt exclusively strong firms lever up to their lower bank debt capacity augment with market debt and place the bank senior therefore the tradeoff theory offers an explanation for i why young small firms use bank debt exclusively ii why large mature firms employ mixed debt financing and iii why bank debt is senior the tradeoff theory also generates predictions consistent with international evidence in countries where the bankruptcy regime entails soft tough enforcement of contractual priority bank debt capacity is low high implying greater less reliance on market debt

does aid availability affect effectiveness in reducing poverty a review article this paper addresses the impact of aid supply on aid effectiveness first we review theoretical literature that deals with the problem of governance in donor recipient relationships and are susceptible of highlighting effects of aggregate aid availability second we provide a conceptual framework that explicitly incorporates a trade off between considerations of needs and governance we examine the impact of aid supply on the manner in which a donor agency allocates the available money between countries differing in terms of both needs and domestic governance the central conclusion is that a donor s utility function that embodies the need governance trade off and the associated optimization mechanism yield a meaningful rule to guide inter country allocation of aid resources

are bilateral and multilateral aid for trade complementary using the first comprehensive estimates of ad valorem tariff equivalent bilateral trade costs spanning the time period 2002 10 we examine whether the aid for trade aft inflows reduce bilateral trade costs facing aid recipients if so we ask whether the trade costs reduction effects of aft from bilateral and multilateral sources are complementary by showing the extent to which the observed trade cost reduction effects of aft from bilateral multilateral sources correlate with the magnitudes of aft disbursements from multilateral bilateral sources we present plausible explanation for the cross country variations in the extent to which aft promotes trade flows our findings have thus important policy implications for shaping future discourses on the coordination of disbursements for enhancing the effectiveness of aft

the hard challenge of aid coordination aid coordination is a constant theme of discussion among national and international aid agencies in their search for more effectiveness and efficiency in delivering development assistance this paper seeks to clarify some of the arguments currently made in support of aid coordination and to precise unavoidable trade offs born of the existence of political costs it is anchored in the available literature on aid delivery while focusing on the implementation problems of aid coordination among donor countries in particular it deals with a the issue of consistently and collectively handling possible governance failures in recipient countries and b the impact of heterogeneity of donor countries on the effectiveness of aid coordination

continuous s s policy with mmpp correlated demand abstract this work considers a continuous inventory replenishment system where demand is stochastic and dependent on the state of the environment a markov modulated poisson process mmpp is utilized to model the demand process where the corresponding embedded markov chain represents the state of the environment the equations to calculate the system inventory measures and the number of orders per unit time are obtained for a continuous infinite horizon and dynamically changing s s policy an efficient optimization heuristic is presented and compared to the commonly used approach of approximating the demand count process over the lead time with a normal distribution an investigation of the mmpp demand process is considered where we quantify the impact of variability in the demand count process which is due to auto correlation our findings indicate that when demand correlation is high a dynamic control where the s s policy changes with state of the environment governing the mmpp is highly superior to the commonly used static heuristics we propose two dynamic policies of varying computational complexity and cost efficiency depending on the class of the product one for class a and one for classes b and c to handle such high correlation situations

why conditional aid does not work and what can be done about it abstract this paper studies a simple reform that introduces ex post incentives for the donor to reward good policies contrary to existing practices instead of committing aid to each recipient ex ante and making aid conditional on reform the donor centralizes the disbursement decision by committing aid to a group of countries the actual amount disbursed to each individual country would depend on its relative performance this explicit linkage of the allocation and disbursement decisions has two important advantages as compared to present practices first it raises the opportunity cost of disbursing aid ex post thereby giving the donor stronger incentives to reward good policies second competition among recipients allows the donor to make inferences about common shocks which otherwise conceal the recipient s choice of action this enables the donor to give aid more efficiently

revenue management with limited demand information in this paper we consider the classical multifare single resource leg problem in revenue management for the case where demand information is limited our approach employs a competitive analysis which guarantees a certain performance level under all possible demand scenarios the only information required about the demand for each fare class is lower and upper bounds we consider both competitive ratio and absolute regret performance criteria for both performance criteria we derive the best possible static policies which employ booking limits that remain constant throughout the booking horizon the optimal policies have the form of nested booking limits dynamic policies which employ booking limits that may be adjusted at any time based on the history of bookings are also obtained we provide extensive computational experiments and compare our methods to existing ones the results of the experiments demonstrate the effectiveness of these new robust methods

inventory control in a fluctuating demand environment we present an inventory model where the demand rate varies with an underlying state of the world variable this variable can represent economic fluctuations or stages in the product life cycle for example we derive some basic characteristics of optimal policies and develop algorithms for computing them in addition we show that certain monotonicity patterns in the problem data are reflected in the optimal policies

an empirical analysis of the determinants of corporate debt ownership structure i examine the relation between corporate debt ownership structure and several firm characteristics suggested by recent theory the results demonstrate the importance of monitoring and information costs the likelihood and costs of inefficient liquidation and borrowers incentives in affecting firms debt source preferences several theoretical predictions receive support while others do not the results also suggest important differences between bank and private non bank debt which contrasts with most theoretical models additionally i find evidence of systematic use of bank debt by firms with access to public debt suggesting the benefits attributed to bank debt in theoretical models remain important after firms gain access to public debt markets although different lenders appear to have different maturity preferences the results also suggest debt maturity and debt ownership decisions may be separable

revenue management under a general discrete choice model of consumer behavior customer choice behavior such as buy up and buy down is an important phenomenon in a wide range of revenue management contexts yet most revenue management methodologies ignore this phenomenon or at best approximate it in a heuristic way in this paper we provide an exact and quite general analysis of this problem specifically we analyze a single leg reserve management problem in which the buyers choice behavior is modeled explicitly the choice model is very general simply specifying the probability of purchase for each fare product as a function of the set of fare products offered the control problem is to decide which subset of fare products to offer at each point in time we show that the optimal policy for this problem has a quite simple form namely it consists of identifying an ordered family of efficient subsets s 1 s m and at each point in time opening one of these sets s k where the optimal index k is increasing in the remaining capacity x and decreasing in the remaining time that is the more capacity or less time available the further the optimal set is along this sequence we also show that the optimal policy is a nested allocation policy if and only if the sequence of efficient sets is nested that is s 1 s 2 s m moreover we give a characterization of when nesting by fare order is optimal we also develop an estimation procedure for this setting based on the expectation maximization em method that jointly estimates arrival rates and choice model parameters when no purchase outcomes are unobservable numerical results are given to illustrate both the model and estimation procedure

small is beautiful motivational allocation in the non profit sector we build an occupational choice general equilibrium model with for profit firms non profit organizations and endogenous private warm glow donations lack of monitoring on the use of funds implies that an increase of funds of the non profit sector because of a higher incomein the for profit sector a stronger preference for giving or an inflow of foreign aid worsens the motivational composition and performance of the non profit sector we also analyze the conditions under which donors through linking donations to the motivational composition of the non profit sector non profits themselves through peer monitoring or the government using a tax financed public funding of non profits can eliminate the low effectiveness equilibrium we present supporting case study evidence from humanitarian emergencies and developing country ngo sector and humanitarian emergencies

effects of system parameters on the optimal cost and policy in a class of multidimensional queueing control problems we consider a class of markov decision processes frequently employed to model queueing and inventory control problems for these problems we explore how changes in different system input parameter

aid fragmentation and effectiveness what do we really know summary aid fragmentation is widely recognized as being detrimental to development outcomes we reinvestigate the impact of fragmentation in the context of growth bureaucratic policy and education focusing on a number of conceptually different indicators of fragmentation and paying attention to potentially heterogeneous effects across countries sectors and channels of influence our systematic and detailed reexamination of existing empirical studies shows that this differentiation is crucial in some sectors such as primary education donor concentration or limiting donor numbers appear to be detrimental rather than beneficial for development outcomes in other areas we find the expected negative effect but only when we conceptualize fragmentation as a lack of lead donors too limited concentration rather than in terms of donor numbers in all cases sufficient initial administrative capacity in recipient countries prevents the negative and reinforces the positive effects of fragmentation this stresses the importance of questioning the sweeping conclusions drawn by much of the previous literature based on what we currently know generalizing judgments about the effect of aid fragmentation may be misleading

political conditionality and foreign aid this article argues that a new generation of political conditionalities has emerged during the last decade this requires an expansion of the original definition and research agenda beyond the traditional questions of use and effectiveness however there is also a need to dig deeper into the dynamics surrounding political conditionalities particularly the bargaining processes and outcomes along the aid chain from domestic donor politics donor harmonization fora policy dialog spaces to the political economy of recipient institutional reform and donor coping strategies because they influence the set up use follow up purpose and effectiveness of pcs

airline seat allocation with multiple nested fare classes this paper addresses the problem of determining optimal booking policies for multiple fare classes that share the same seating pool on one leg of an airline flight when seats are booked in a nested fashion and when lower fare classes book before higher ones we show that a fixed limit booking policy that maximizes expected revenue can be characterized by a simple set of conditions on the subdifferential of the expected revenue function these conditions are appropriate for either the discrete or continuous demand cases these conditions are further simplified to a set of conditions that relate the probability distributions of demand for the various fare classes to their respective fares the latter conditions are guaranteed to have a solution when the joint probability distribution of demand is continuous characterization of the problem as a series of monotone optimal stopping problems proves optimality of the fixed limit policy over all admissible policies a comparison is made of the optimal solutions

optimal policies for inventory systems with finite capacity and partially observed markov modulated demand and supply processes we analyze a single item periodic review inventory system with random yield and finite capacity operating in a random environment the primary objective is to extend the model of gallego and hu 2004 to the more general case when the environment is only partially observable although our analysis is specific to inventory systems it can also be applied to production systems by replacing the fixed capacity supplier with a fixed capacity producer using sufficient statistics we consider single period multiple period and infinite period problems to show that a state dependent modified inflated base stock policy is optimal moreover we show that the multiple period cost converges to the infinite period cost as the length of the planning horizon increases

structural properties of markov modulated revenue management problems abstract the admission decision is one of the fundamental categories of demand management decisions in the dynamic model of the single resource capacity control problem the distribution of demand does not explicitly depend on external conditions however in reality demand may depend on the current external environment which represents the prevailing economic financial social or other factors that affect customer behavior we formulate a markov decision process mdp to maximize expected revenues over a finite horizon that explicitly models the current environment we derive some structural results of the optimal admission policy including the existence of an environment dependent thresholds and a comparison of threshold levels in different environments we also present some computational results which illustrate these structural properties finally we extend some of the results to a related dynamic pricing formulation

contracting for aid abstract foreign aid is analyzed as a contract where the north gives a transfer to the south in return for poverty reduction regarded as an international public good the issue of conditionality is first discussed in a moral hazard framework and then under asymmetric information about the degree of altruism of the government of the south additional actors like local ngos and multilateral aid institutions are then added to the model the optimal contracts to avoid free riding or collusion are then presented

lease expiration management for a single lease term in the apartment industry abstract lease expiration management lem in the apartment industry aims to control the number of lease expirations and thus achieve maximal revenue growth we examine rental rate strategies in the context of lem for apartment buildings that offer a single lease term and face demand uncertainty we show that the building may incur a significant revenue loss if it fails to account for lem in the determination of the rental rate we also show that the use of lem is a compromise approach between a limited optimization where no future demand information is available and a global optimization where complete future demand information is available we show that the use of lem can enhance the apartment building s revenue by as much as 8 when the desired number of expirations and associated costs are appropriately estimated numerical examples are included to illustrate the major results derived from our models and the impact on the apartment s revenue of sensitivity to the desired number of expirations and associated costs