rafmacalaba/datause-encoder-data huggingface dataset:
# **1 Introduction**

Macroeconomic models typically assume that the consumption choices of households respond to changes in their macroeconomic expectations. This notion is so deeply ingrained in economic thought that it is often taken for granted. However, surprisingly little causal evidence exists on the effect of macroeconomic expectations on consumer behavior.

Recent insights from behavioral economics provide several reasons why the link between macroeconomic expectations and household consumption might be more tenuous than is generally assumed. The typical household may, for example, not be sophisticated enough to understand how to optimally revise consumption choices in response to a change in macroeconomic expectations. Macroeconomic indicators might also not be sufficiently salient for consumers, for instance, because they face more pressing concerns when they make spending decisions. The resulting failure of consumers to factor macroeconomic expectations into their consumption behavior could have far-reaching consequences for macroeconomic policies, given that many of these policies are explicitly based on the premise that changes in expectations will affect real economic activity (Bernanke, 2007). The Federal Reserve, for example, explains on its website that “when central banks provide forward guidance, individuals and businesses will use this information in making decisions about spending and investments. Thus, forward guidance about future policy can influence financial and economic conditions today.”<sup>1</sup> In this paper, we provide novel evidence on the causal effect of macroeconomic expectations on consumption decisions. We focus on two macroeconomic factors that receive arguably the most attention in macroeconomic models: the inflation rate and the foreign exchange rate. We use an information-provision experiment with credit card customers to examine how shocks to inflation and exchange rate expectations affect households’ consumption decisions.

We collaborated with the consumer finance division of a large Malaysian bank and integrated a randomized experiment into the bank’s customer communications. The experiment was administered as part of a phone survey with the partner bank’s credit card customers and proceeded in the following steps. First, we elicited the respondents’ exchange rate and inflation expectations. Second, we provided randomly chosen subsets of the sample population with expert forecasts of inflation, the exchange rate, or both. Third, we elicited participants’ posterior beliefs and self-reported spending plans. Finally, we merged survey responses with data on credit card spending provided by the partner bank. This approach allows us to examine the impact of macroeconomic expectations on _actual_ consumption behavior.

The setting and customer population we use in our experiment are well-suited to study the link between macroeconomic expectations and economic decisions for several reasons. Macroeconomic trends in Malaysia are arguably representative of many small, open economies and,

1. See `www.federalreserve.gov/faqs` .

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As outlined above, the indices of deprivation are estimated by MCA for _housing_ , _basic utilities_ and _assets_ . The _housing_ index is computed using the indicators of the quality of the roof, walls and floors as well as indicators of overcrowding and ownership. For the _basic utilities_ index, the indicators involve access to a toilet, water, electricity and phone (both fixed line and mobile). They also include the time to access main services such as drinking water, food market, public transport, health center and primary and secondary schools. Each one of these time indicators is dichotomized in such a way that deprivation corresponds to the case where time to access the service is higher than 30 minutes. With regard to _assets_ , indicators on the possession of eight durable goods (radio, television, bike, motorbike, car, refrigerator, ventilator and computer) are used. All this information is collected in both surveys, so that the measures are the same in the two countries even if the MCA makes the index of assets incomparable between countries.

Our definition of deprivation in _education_ is in line with the second MDG, namely the effective completion of primary education for all children. From that, it may be suitable to consider an individual to be educationally deprived if his or her number of completed years of schooling is lower than six years. By contrast, the measurement of deprivation in _credit access_ and _employment_ differs from one country to another. In the case of Burkina Faso, the use of credit is retained as the indicator of _credit access_ . However, the non-use of credit by an individual does not necessarily mean that he or she is lacking financial assets. Individuals may not borrow money simply because they do not need it. Thus, an individual is considered to be deprived only when he or she lacks loan guarantees or ignores the procedures for credit access. The measure in Togo is different because of the available information. Here, an individual is considered to be not deprived if he or she has savings or holds an account at a financial institution. These two indicators may be regarded as potential financial assets.

_Employment_ is difficult to measure. As mentioned by Lugo (2007), the quality of employment goes beyond salary since several aspects such as safety, protection and occupational time should be considered. In Burkina Faso, people deprived of employment are identified as those who are unpaid apprentices or caregivers, among 19
# **Table 10: Prices for Dental Treatment in Comparison**

|**Treatment**|**Aus**<br>**According**<br>**to a 2005**<br>**report of**<br>**the**<br>**_Konsument_**|**tria**<br>**Viennese**<br>**HIF**|**According**<br>**to a 2005**<br>**report of**<br>**the**<br>**_Konsument_**|**Hunga**<br>**“Rosengarten”**<br>**Dental Group**<br>**in Sopron**|**ry**<br>**“Laserdent”**<br>**Dental**<br>**Clinic in**<br>**Sopron**|**“Perfect**<br>**Profiles”**<br>**Dental**<br>**Clinic in**<br>**Budapest**|
|---|---|---|---|---|---|---|
||Euro|Euro|Euro|Euro|Euro|Euro|
|Crown<br>(metal)|378–713||140–250|-|149–169|255|
|Crown<br>(porcelain)|378–713|Not<br>disclosed<sup>33</sup>|140–250|200–300|360|420|
|Fixed<br>denture|-||-|-|298–400|560|
|Removable<br>denture|-|176 (352)<sup>34</sup><br>(plastics)<br>447 (894)<br>(metal)|-|400 plus 50 per<br>tooth (metal)|298–400|230|

Note: These data have been taken from a report of the Austrian consumer protection journal _Konsument_ , the homepages of the Dental Clinic “Perfect Profiles” in Budapest, the Dental Clinic “Laserdent” in Sopron, the “Rosengarten” Dental Group in Sopron, and the Viennese HIF, March 2007.

# **5.3 Cosmetic Surgeries**

There are no reliable data on the number of cosmetic surgeries per year in Austria and Hungary. The clinics that were interrogated in the framework of this research did not want to (in the Austrian case) or were not able to (in the Hungarian case) disclose statistics about the number of surgeries per year.

The potential benefit for Austrian patients for receiving a cosmetic surgery in Hungary is difficult to calculate, because prices in the Hungarian clinic interrogated in this research depend on the clinical needs of patients, the number of days in the hospital, and the quality of the hotel.

If prices without accommodation are compared, the potential benefit oscillates between 710 and 1,710 Euro for various kinds of cosmetic surgeries (see Table 11). However, it has to be noted that travel costs to Budapest are not included in this calculation.

> 33 The Viennese HIF and individual dentists did not disclose price information on crowns and fixed dentures via telephone. They referred to the necessity of seeing the patient first.

> 34 The first figure signifies the amount that the insured person has to pay for the benefit. The figure in brackets provides the overall costs. The Viennese HIF covers half of the costs.

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_and Development: Lessons from Latin America_ , Washington, DC: The World Bank, pp. 133–70.

Adams, R.H. (2005), ‘Remittances and poverty in Guatemala’, World Bank Policy Research Working Paper No. 3418, Washington, DC: The World Bank.

<mark>Adams, R.H. and A. Cuecuecha (2010), ‘Remittances, household expenditure and</mark> <mark>investment in Guatemala’,</mark> _<mark>World Development</mark>_ <mark>,</mark> **<mark>38</mark>** <mark>(11), 1626–41.</mark> Amuedo-Dorantes, C. and S. Pozo (2009), ‘New evidence on the role of remittances on health care expenditures by Mexican households’, Discussion Paper No. 4617, Bonn, Germany: Institute for the Study of Labor (IZA).

Anderson, J. E. (1979), ‘A theoretical foundation for the gravity equation’, _The American Economic Review_ , **69** (1), 106–16.

Antón, J. (2010), ‘The impact of remittances on nutritional status of children in Ecuador’, _International Migration Review_ , **44** (2), 269–99.

Artuc, E., F. Docquier, Ç. Özden and Christopher Parsons (forthcoming), ‘A global assessment of human capital mobility’, _World Development._ Azam, J.P. and F. Gubert (2006), ‘Migrants’ remittances and the household in Africa: a review of the evidence’, _Journal of African Economies_ , **15** (2), 426–62.

Bandyopadhyay, S., C. Coughlin and H. J. Wall (2008), ‘Ethnic networks and US exports’, _Review of International Economics_ , **16** (1), 199–213.

Barbieri, A.F., E. Doningue, B.L. Queiroz, R.M Ruiz, J.I. Rigotti, J.A.M. Carvalho, and M. F. Resende (2010), ‘Climate change and population migration in Brazil’s Northeast: scenarios for 2025–2050’, _Population Environment_ , **31** , 344–70.

45
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currency per dollar), P, the dollar export price index, Py the GDP deflator and x and y real exports and GDP respectively. From equation (2. 1), the percentage change in the current price export ratio may (ignoring higher order effects) be decomposed into three components:

--

where A denotes percentage change.' The nominal export ratio rises if there is a devaluation even though all other factors (export and output volumes and prices) remain constant. In Tanzania the average exchange rate from the five years 1981-86 to the period 1987-91 increased over 800 per cent - by contrast the current price export ratio reported by Nord _et at._ increased by only 180 per cent. Export growth has been around the same level as that for the economy as a whole so that the third component of - equation (2.2) has been constant - the difference between the current price ratio and the large positive revaluation effect is accounted for by falling export prices whilst domestic inflation has been in the range 20-30 per cent a year. The apparent increase in the export ratio is purely a price effet, and so not indicative of any improvement in performance, as measured by the exportoutput ratio in real terms. In general, one should be careful in the interpretation of nominal price ratios during periods devaluation, especially if the ratio involves exports, imports or investment (as most investment goods are imported) and, of course, the aid ratio.

# _Comparator (control group) country approach_

The control group approach overcomes the problem of changes in external environment by comparing the experience of adjusting and non-adjusting countries over the same time period (although the variable analyzed may be either a levels indicator or the change in that indicator). The assumptions are that all included countries have experienced the same external environment over the period of the analysis and that they share the same basic structure. The World Bank studies identify three groups: non-adjusting, (early) intensively adjustng and other adjusting countries. Whether or not a country is "adjusting" is defined by whether or not it has drawn on adjustment credits, not its policy stance. No additional attempt is made to ensure comparability of the countries, so that doubt may be cast on the underlying assumption that countries in different groups are the same except for the fact of adjustment.

Table 2.1 shows data from the second World Bank report on adjustment lending which 7
systems losses, made efforts to improve customer service while strictly penalizing customers who steal electricity and don‘t pay their bills. They have also made progress in streamlining their organizations by removing redundant staff, and introduced transparency in recruitment. By contrast, many of the poorly performing ECs are characterized by high management turnover, excessive involvement of the Board of Directors and of municipal, provincial, and national political actors in the day-to-day functioning of the EC, serious procurement irregularities, patronage-based employment, and high non-technical systems losses due to theft, often due to the collusion of employees and customers.

To put it another way, the ECs‘ performances appear to correlate with the extent to which professional managers are granted sufficient autonomy to run them on technical, managerial grounds. The general managers‘ autonomy in turn is primarily a function of the extent of day-today interference by the board members. The boards‘ ability to dictate the ECs‘ management in turn depends on the level of autonomy they themselves enjoy from other local or national politicians. In short, given the highly localized nature of the ECs, the variable patterns of politicization that surrounds them unfold within a nested structure of state capture that is particular to each locality. We will elaborate on this structure below.

**Figure 2:  Key institutional indicators of electricity cooperatives (2008)**

<!-- Start of picture text --> Consumers per employee (2008) Collection Efficiency<br>800 100%<br>700 National average, 350 90%<br>600<br>80%<br>500<br>70%<br>400<br>300 60%<br>200<br>50%<br>100<br>40%<br>0<br>Ilocos Norte Isabela II Tarlac II Laguna Romblon Catanduanes VRESCO Camotes No Samar Misamis Or I So Cotabato I<br>System losses and overstaffing<br>30%<br>25%<br>20%<br>15%<br>10%<br>5%<br>0%<br>0 100 200 300 400 500 600 700 800<br>Consumer/employee<br>System loss<br><!-- End of picture text --> _Source_ : NEA

# **3. The Philippines Political Context: A Review of the Relevant Literature**

State capture is a common theme of the Philippine political economy. According to a widely accepted perspective, the state operates at the mercy of economic elites (e.g., landed oligarchs) who wield their wealth and influence to steer public policies in their favor (Hutchcroft 1998, 7
**Table 1: Sectoral Share of Total Export Revenue, selected transition economies)**

||**Agriculture/Food/ Mining**|**Manufactures**|**Services**|
|---|---|---|---|
|Albania|19|35|46|
|Croatia|9|49|42|
|Czech Rep.|5|80|15|
|Hungary|7|76|17|
|Poland|10|73|17|
|Romania|4|85|10|
|Slovakia|4|86|10|
|Slovenia|4|81|15|
|Estonia|11|66|22|
|Latvia|13|64|24|
|Lithuania|13|63|24|
|Russia|40|52|8|

_Source:_ GTAP Input-Output data derived from SAMs for 2001.

**Table 2:  Total Export Related Activity (direct plus indirect linkages), 2001**

||**Total**<br>||**Sh**|**ares**||
|---|---|---|---|---|---|
||**“Multiplier”**|**Agriculture/Food**|**Mining**|**Manufactures**|**Services**|
|Albania|4.8|20|4|24|52|
|Croatia|2.9|18|1|36|45|
|Czech Rep.|3.0|10|2|61|27|
|Hungary|2.8|10|2|51|37|
|Poland|4.2|17|3|43|38|
|Romania|6.6|27|3|39|30|
|Slovakia|2.9|12|3|57|28|
|Slovenia|2.9|10|1|58|31|
|Estonia|2.5|15|2|49|35|
|Latvia|3.0|17|1|36|47|
|Lithuania|3.5|17|4|36|42|
|Russia|3.6|14|17|30|39|
|Memo<br>:||||||
|Cyprus|2.5|10|7|30|52|
|Turkey|3.7|17|2|40|41|
|China|3.7|18|3|62|17|
|Malaysia|2.1|8|3|64|25|
|Germany|3.3|7|1|49|43|

_Source:_ GTAP Input-Output data derived from Social Accounting Matrices for 2001.

Although technology is making it easier to trade services, often a commercial presence remains required to sell services, i.e., FDI. Given the lack of a service sector under central planning, FDI can be expected to play a particularly important role, more so than in countries where incumbent competition confronts foreign providers. Overall, services account for some 62 percent of the stock of FDI in the reporting countries (Table 3).<sup>3</sup> Finance, transport, communications and distribution services account for the largest share of this FDI. The service intensity of FDI in services is highest in the Baltic states, presumably reflecting their relatively small size and limited manufacturing base, and lowest in Romania and the Ukraine. Services FDI

> 3 Aggregate data on FDI inflows are available for a wider set of countries, but these are not broken down across services sectors.

5
member) had taken any of a list of measures “as a result of a decline in income or other economic difficulty”. They were also asked whether they tried to borrow money, from whom and whether they were successful. Lastly, the module asked all respondents whether they (or someone in their household) applied for any of four types of government benefits (unemployment, housing, child support and targeted social assistance/guaranteed minimum income), the result of the application, whether the household had received its first payment, and how helpful this support was.

# **2.2. Subjective perceptions of the crisis impact and objective shocks experienced**

# **_Subjective perceptions of crisis impact and transmission channels_**

LiTS II confirms earlier findings that the impact of the crisis was widespread, and mostly through the labor market (World Bank, 2011). On average, two-thirds of the population report being affected: 16 percent of respondents declared that their household was affected “a great deal”, 26 percent “a fair amount”, 23 percent “just a little” and one-third “not at all”.

**Figure 1. Main crisis transmission channels**

<!-- Start of picture text --> Shocks affecting household members<br>(percent of respondents)<br>Wages reduced<br>Job loss<br>Wages delayed/suspended<br>Reduced remittances<br>Working hours reduced<br>Increased work hours in existing job<br>Had to take a second job<br>Household member started working<br>Family business closed<br>Family members abroad returned<br>0 5 10 15 20 25 30 35<br><!-- End of picture text --> <!-- Start of picture text --> Source: LiTS II (2010).<br><!-- End of picture text --> Households have been affected mostly through the labor market and particularly by reductions in wage earnings. Almost one-third of transition respondents report that a household member had 4
reforms of the Thatcher government) was different across firms, depending on their distance to the technological frontier (proxied by the productivity gap with respect to the most productive firms in each industry). Yet we still have much to learn about the empirical correlates of product innovation in developing countries.

This paper examines the empirical determinants of firm-level innovation in a large sample of manufacturing firms, covering at least 36 and up to 60 developing economies, 8 manufacturing industries, and totaling thousands of firms, depending on the empirical model. More specifically, we address two questions: First, is there evidence of market failures that would justify government involvement to raise private-sector investments in product innovation? In the presence of market failures, aspects of the investment climate associated with the extent of market competition can have unexpected effects on the private firms’ propensity to innovate, especially among firms that are farthest from the global technological frontier. For instance, regulatory reforms, as in the U.K. during the Thatcher era, might reduce private sector innovation as the enhanced entry of firms raises the prospects of imitation, thus leading entrepreneurs to reduce their innovation expenditures.

Second, is R&D investment correlated with product innovation in developing-country firms? If so, then the “D” in R&D – investments in product development -- might be an important correlate of the propensity to innovate by firms in developing countries even when such innovations are not patentable.

The evidence discussed herein, which is motivated by a simple model of firm behavior with respect to product innovation, suggests that market failures are empirically noticeable. Thus regulatory reforms can be beneficial for enhancing the diffusion of ideas and technology across firms and thus for productivity growth, but are not enough to stimulate product innovation.<sup>2</sup> Also, we find that R&D expenditures, which are mis-measured in the firm data, are highly correlated with the propensity for product innovation by firms in developing countries, although our estimates do not prove that there is a causal effect. Nevertheless, in our view, the main policy implication from these findings is that in the context of reforms that improve the investment

> 2 On the effects of entry regulations on new firm entry and incumbent-firm growth see, for example, Klapper, Laeven, and Rajan (2006).

2
- 25 -

activities which is reflected in the rise in share of foreign liabilities to total liabilities: foreign liabilities as a percentage of total liabilities rose from 5.4 percent (1988) to 6.45 percent (1992) to 17.4 percent (1996) (see Figure _5)."_

**Table 5. Private External Debt**

(end of period - billion US$)

||1990|1993|1994|1995|1996|
|---|---|---|---|---|---|
|Medium and Long-Term|7.4|_15.4_|20.2|_25.1_|36.2|
|Non-Bank|7.3|12.7|13.7|16.9|23.2|
|Bank Debt|0.1|2.7|_6.5_|8.2|13.0|
|BIBF|0.0|1.4|3.0|3.8|na|
|Other|0.1|1.3|3.5|4.4|na|
|Short-Term|10.1|22.7|28.9|41.0|37.6|
|Non-Bank|6.2|12.3|7.4|7.3|8.7|
|Bank Debt|3.9|10.4|21.5|33.7|28.9|
|BIBF|0.0|6.4|15.1|23.7|na|
|Other|3.9|4.0|6.4|10.0|na|
|Total Private|17.5|38.1|49.1|66.1|73.8|
|as%ofGDP|21%|30%|34%|39%|41%|
|Bank (% of total)|23%|34%|57%|63%|57%|
|Short-Tenn (% of GDP)|12%|18%|20%|24%|21%|
|Short-Term**(%**of total)|58%|60%|59%|62%|_51%_|

Souce: BOT

**Figure** 5. **The Share of Foreign Liabilities and Net Foreign Liabilities of Commercial Banks**

<!-- Start of picture text --> 25% 1200<br>F _For.Liab./TotalLiab. I<br>Net For. Liab.<br>1000<br>20%I<br>800<br>15%19 1<br>600 .<br>I a 0<br>:~~~~ 10% ~~~~~~~400<br>200<br>0% 0<br>1990 1991 1992 1993 1994 1995 1996<br>Year<br>Source: Bank of Thailand, Quarterly Bulletin.<br><!-- End of picture text -->

- 35 The data also illustrate that measures taken in 1995-96 by the government to curb short-term capital inflows (via BIBFs) seem to have had some effects (See Section V.2). In 1996, short-term, in particular bank, debt declined both in absolute terms and in relative terms, and as noted above, firms increased their direct external borrowing. However, according to World Bank DRS data, the average maturity of private debt continued to decline in 1996.
<!-- Start of picture text --> UK EXPORTS TO THE WORLD 2015<br>Animal products Other<br>Arts and antiques__ Paper goods 2° — “~<br>2% 2%<br>i Machines<br>tows 20%<br>Plastics and rubbers<br>3%<br>Foodstuffs<br>a%<br>Instruments<br>4%<br>Metals<br>5%<br>Chemical products<br>16%<br>Mineral products<br>7%<br>Precious metals stones<br>12% Transportation<br>16%<br>Source: WITS database, World Bank, 2016<br><!-- End of picture text -->