rafmacalaba/datause-encoder-data huggingface dataset:
# **SUMMARY**

Fiscal rules have become an important subject of policy debate in the Western Balkans. The rise in public debt during the global financial crisis focused attention on strategies for restoring sound public finances, while plans to join the European Union (EU) mean that the countries will need to be in a position to adopt and comply with the EU’s fiscal rules. This paper aims to help the countries make decisions about fiscal rules in the period before they join the EU.

Fiscal rules are long-term quantitative constraints on the government’s spending, deficit, debt, or other fiscal aggregate. A few decades ago, only a handful of countries had fiscal rules; now more than 90 do, including, of course, the member states of the EU. All the countries of the Western Balkans apart from North Macedonia have established fiscal rules.

Fiscal rules are designed to limit the government’s discretion over fiscal policy and thereby to limit the fiscal deficit and the growth of public debt. There is evidence that strong fiscal rules (e.g., those entrenched in the constitution and those for which compliance is monitored by an independent agency) foster fiscal discipline, at least in countries with a tradition of large deficits. But fiscal rules, especially self-imposed rules, cannot always be rigorously enforced: a government that can establish a fiscal rule may be able to abolish, circumvent, or ignore it. Thus, the mere enactment of fiscal rules may not achieve much. Yet if fiscal rules enjoy widespread support, and compliance with them is politically important, they may guide fiscal policy even if they are difficult to enforce.

This paper’s assessment of the fiscal rules in the Western Balkans has five main findings:

- A rough estimate suggests that the debt and overall-deficit rules have been complied with a little more than half the time. This is not out of line with the experience of other regions and is consistent with the difficulty of enforcing national fiscal rules.

- An online survey conducted for this paper reveals public awareness of fiscal rules, but also suggests that understanding of the rules may not be sufficient to give governments strong political incentives to comply with them, partly explaining imperfect compliance.

- A qualitative assessment of the rules against established criteria finds that the rules have both strengths and weaknesses. Some rules require fairly prudent levels of debt, but others are arguably too permissive for countries that borrow mainly in currencies that they do not control. Some rules are admirably flexible or impressively comprehensive, but these benefits come at the cost of considerable complexity, which may explain why they are not always widely understood.

- Quantitative analyses show that some countries in the region with high debt will have to do more than merely comply with their overall-deficit rules to get their debt down to prudent levels by the time of possible EU membership. That does not make the achievement of prudent debt levels impossible: the countries have sometimes run deficits

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**Figure A.8: CLASS Scores by Years of Teaching Experience**

<!-- Start of picture text --> 7<br>6<br>5<br>4<br>3<br>2<br>1<br>0<br>Less than 5 6 to 10 11 to 15 16 to 20 Greater than 20<br><!-- End of picture text --> Source: Guangdong class observations; authors’ calculations.

Note: Years of teaching experience were collected in the supplementary packets given to all observed teachers.

The least experienced teachers and the most experienced teachers stand out—the youngest teachers on Emotional Support and the oldest on Instructional Support. They are also the two strongest groups in Classroom Organization. The group of teachers with between six and 10 years of experience is weakest across all three domains. It is easier to hypothesize why the youngest, least experienced teachers may be the strongest at Emotional Support—newer pedagogical teachings emphasize improved teacher–student relations and fostering a positive classroom environment, while the most experienced teachers have decades of experience teaching content in an environment that stressed test results above all else. These are possible, but not definite, explanations for the trends in the data. It is more difficult to assess why there is a dip in the middle years.

# **A.4 By type of observation**

Of the 36 teachers who were observed, 30 were videotaped while six were only evaluated in person. Five of the 30 videotaped were evaluated solely by videotape, while the remaining 25 were coded by a mix of live and video observations.

In this section, we compare the five that were coded only through video against the six that were observed only in person. In follow-up discussions, classroom raters noted that they felt that live observations allowed for better evaluation of the classroom environment as well as teacher-student interaction. The small sample size prevents us from drawing any significant conclusions, but it is notable that the live observations had higher scores across all dimensions except for Instructional Learning Formats and Analysis and Inquiry. Teachers observed live were scored nearly a point higher in Positive Climate and more than a point higher in Instructional Dialogue (figure A.9).

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instruments for FDPs as they would allow to track the same individuals over time, understand their livelihood and residency trajectories, and understand how FDPs take decisions. However, classic panel surveys typically rely on home addresses and they are particularly difficult to administer when populations are highly mobile. This has encouraged scholars working on FDPs to develop new instruments to track people over time. Etang and Hoogeveen (2020) developed a survey known as the “Listening to Displaced People Survey (LDPS)”, a survey that tracked living conditions of displaced people over time in Mali with a face-to-face baseline survey complemented by monthly follow-up mobile phone interviews for a period of 12 months. These data have been used by Hoogeveen, Rossi and Sansone (2019) to study patterns of return of the displaced and understand the factors that contribute to return.

Phone interviews have also increased in popularity with the COVID-19 pandemic, which made it necessary to conduct interviews without face-to-face contact. During this period, the UNHCR and World Bank have launched bi-monthly monitoring surveys of the impact of COVID-19 on the well-being of refugees in several countries across the MENA, SSA and Latin America regions using phone interviews. These resulted in panel surveys that now offer the possibility to assess the impact of COVID-19 on refugees over time and across countries in a comparable manner. Vintar et al. (forthcoming), for example, provide an example of how to use these data to understand the differential labor impacts of COVID-19 on refugees and nonrefugees (see also the report “Answering the Call: Forcibly Displaced During the Pandemic”<sup>i</sup> ). UNCHR’s proGres database includes phone numbers for refugee family heads that can be utilized as a sampling frame. However, data privacy concerns need to be addressed if the phone survey is conducted by a firm. A possible solution is sending text messages to selected respondents asking for permission to share phone numbers with a contractor.

Comparisons between FDPs and host populations are also an essential exercise to conduct in the context of FDP poverty measurement. These comparisons are important for FDPs, host countries and international organizations given that resentment against FDPs is often fueled by a perception that FDPs receive special assistance that is not available to locals. Several surveys have now been conducted in Jordan, Lebanon, Iraq and a few Sub-Saharan African countries to compare the well-being of FDPs and their hosts. These comparisons, while important, are complex because host populations have full access to the labor and consumer markets and government services that are often not available to FDPs, whereas FDPs rely on aid from the international community that is not available to local residents. It is difficult to compare health services in camps, for example, to those provided to the host population by the government, or other social protection services such as unemployment insurance or paid leave that do not exist for FDPs. Again, these are new and largely under-researched issues among poverty specialists.

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quality of public administration as well as property rights and rule-based governance.<sup>5</sup> The trends on public sector management and institutions need, however, to be put in historical and comparative perspective to be better apprehended: as illustrated by Andrews et al. in their 2017 book on “Building State Capability”, institutional development has historically been an extremely slow-moving process that unfolds over decades, and even centuries. Rather than being an anomaly, slow institutional development that is also subject to reversals appears to be the norm and warrants more realistic and gradual policy prescriptions for governance reform.

**Figure 5. Trends in CPIA governance indicators, SSA, 2005-2021**

<!-- Start of picture text --> Property rights and rule-<br>3.5<br>based governance<br>3.4<br>Quality of budgetary and<br>3.3 financial management<br>3.2<br>Efficiency of revenue<br>mobilization<br>3.1<br>3.0 Quality of public<br>administration<br>2.9<br>Transparency,<br>2.8<br>accountability, and<br>corruption in the public<br>2.7 sector<br>2.6<br>2 0 0 5 2 0 0 7 2 0 0 9 2 0 1 1 2 0 1 3 2 0 1 5 2 0 1 7 2 0 1 9 2 0 2 1<br>CPIA governance indicators<br><!-- End of picture text --> Source: Country Policy and Institutional Assessment (CPIA), 2022, World Bank. Note: CPIA values range from 1=low to 6=high. Q12: Property rights and rule-based governance; Q13: Quality of budgetary and financial management; Q14: Efficiency of revenue mobilization; Q15: Quality of public administration; Q16: Transparency, accountability, and corruption in the public sector.

There are variations across different dimensions of state effectiveness: on average, higher scores can be observed on selected ‘fundamentals’ such as revenue mobilization or budget and financial management (Figures 5). This relative performance points to the power of incentives in state-building. Faced with high fiscal deficits and pressures from citizens to deliver public services (see section on ‘civic capacity’), governments have strong incentives to build state capacities that allow them to raise more revenues and manage their limited resources more efficiently. Areas that are strategic for governments hence appear to see more progress. In contrast, other public sector dimensions perform less well: rule-based governance, characterized by clear contract and property rights and a strong legal and judicial system to

> 5 It is noteworthy that other CPIA clusters have behaved differently. The overall CPIA score has been relatively stable over time, hiding conflicting trends across clusters: CPIA cluster scores show a clear regression on economic management but an improvement on social inclusion. Indeed, while the “Social inclusion” cluster experienced continuous improvement over the 2000-2019 period, the “Economic management” cluster’s trend has had a steady decline from 2012. The “Structural policies” cluster and “Public sector management and institutions” cluster, on the other hand, have been relatively stable over the observed period, with however lower levels for the latter.

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provide their address so that the household received a card that entitled it to collect monthly the $8.50. No eligibility criteria were required other than providing information to ensure that the household was receiving the subsidy only through one instrument (i.e., through the electricity bill or via the government-issued card). For those receiving the subsidy through the electricity bill the mechanism was as follows. The subsidy came in the form of a barcode at the bottom of the electricity bill that people had to take to the bank; the teller would then scan the barcode and give the choice to the consumer if they wanted to apply it against the electricity bill or cash it. Most people applied the subsidy to the bill, which then got discounted. For those with the electricity bill under a direct debit scheme (which very few people did), they still had to go to the bank and get the teller to scan the barcode and give them the cash.

It is worth highlighting that the reform had been announced long before its implementation and it suffered a few adjustments along the way. Within the first 100 days after taking office in June 2009 the government announced the intention to “rationalize” or “focalize” the LPG subsidy. However, the plans materialized only in late 2010 when the specifics of the reform described above were introduced to the public. Between December 2010 and February 2011, the eligibility criteria based on electricity consumption was revised (the maximum consumption limit increased from 99kw/h to 200kw/h). The eligibility criteria for individuals without electricity or individual electricity meters did not change, but subsistence business became eligible for the subsidy shortly after implementation began. These groups faced a few challenges for registering and getting the electronic card. Issues frequently raised by individuals include long lines and lack of adequate information at the registration center. These implementation adjustments could potentially have affected individual’s views about the reform.

An incidence analysis of the April 2011 reform shows that the new scheme was substantially more propoor than the one in existence until then. First, the poor households that did not use LPG as cooking fuel would now benefit from the $8.50 per month. Second, some of the richest households in El Salvador would become ineligible for the LPG subsidy on account of their high electricity consumption or because they would collect the subsidy for only one of their properties. Based on electricity billing records, around 6 percent of households consumed 200 or more KWh per month. In addition, the incentive to smuggle was removed and consumption of LPG in El Salvador decreased by 15 percent in 2011 compared to 2010, while it increased in Guatemala by 7 percent (CEPAL [3]).

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<!-- Start of picture text -->
[Year [Fund Sie [IAFacilUS$MM S i zety [TAas<br>Leopard Haiti Fund. 2011 75 3 to 5 4%% toof7% Fund<br>Africa Agnicultural Capital 2011 25 15 6%<br>African Agniculture Fund 2011 151 133 9%<br>Aureos’s Africa Health Fund 2011 105 84 8%<br>Fanisi Venture Capital Fund $.C_A. 2010 50 2.0 4%<br>LeapFrog Investments 2008 135 50 4%<br>Business Partners Lt. 2006 85 8.0 %<br>Afncap Microfinance Fund 2001 15 3.8 26%<br>Average 9%<br>Median 7%<br><!-- End of picture text -->

||Year||S$MM<br><br>||
|---|---|---|---|---|
||||||
|<sup>Haiti Fund.</sup>|<br>2011|<br><br>75|<br>3 to 5|<br> <br>4% to 7%|
|AfricaAgnicultural Capital|2011|25|15|6%|
|AfricanAgnicultureFund|2011|151|133|9%|
|Aureos’sAfricaHealthFund|2011|105|84|8%|
|FanisiVenture CapitalFund$.C_A.|2010|50|2.0|4%|
|LeapFrog Investments|2008|135|50|4%|
|BusinessPartnersLt.|2006|85|8.0|%|
|AfncapMicrofinanceFund|2001|15|3.8|26%|
||||Average|9%|
||||Median|7%|
information framework proposed in this paper emphasizes the benefits of short-term contracts as a screening device in high-risk credit markets. Building on Von Thadden (1995), we do not assume that monitoring is perfect and the lender learns the firm’s credit quality with certainty. Our paper models information acquisition as a screening process, through repeated short-term lending relationships, which may be more or less effective depending on the level of uncertainty in the micro-, macroeconomic as well as institutional environment.

The results of the model are then tested on empirical data of both developed economies and developing countries around the world. Although most existing empirical studies on corporate debt maturity focus on individual countries (mainly the US), there is a growing literature on how institutional differences across countries influence maturity choices (see, Dermirguc-Kunt and Maksimovic, 1999, Giannetti, 2003, and Fan, Titman and Twite, 2006). All of the above papers mainly focus on legal institutions of countries. A recent study by Djankov, McLiesh, and Shleifer (2006) analyzes the benefits of credit bureaus for the growth of private credit. Our study contributes to this line of research by investigating the impact of institutions aiming at reducing credit information asymmetries on the structure of corporate debt maturity. In particular, we focus on public and private credit bureaus and accounting standards as determinants of debt maturity structure after controlling for the impact of legal institutions, financial development and other macro and micro factors.

The main findings of the paper can be summarized as follows.

From a theoretical standpoint, unlike in Hart and Tirole (1988), we find that it is possible for lenders to separate in equilibrium borrowers of different risk levels, under the assumption that higher-risk borrowers are more myopic, i.e. have higher time discount factors. In this case, repeated short-term contracting becomes an important mechanism for lenders to “learn” about the credit quality of borrowers. Our model shows that a high degree of information asymmetries in credit markets makes short-term lending the choice preferred by banks in equilibrium, although it may not be the socially optimal outcome.

In the empirical part of the paper, we assemble a novel cross-country database to test the main predictions arising from the model. Our main finding is that better credit information (as proxied by the existence and coverage of private and public credit registries as well as by improvements in accounting standards) is associated with a higher share of long-term debt as a proportion of total corporate debt in both developed and developing countries. We also find that countries with more uncertain legal frameworks are characterized by higher short-term 2
1 Delivered by François Bourguignon at the IREDU International Conference on the Economy and Education, June 2006, Dijon, France. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors, and do not necessarily represent the views of the World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

2 For a review of distributional incidence on the expenditure side of public finance in developing countries, see van de Walle and Nead (1995). Few studies are available on the tax side, perhaps because of the consensus that little progressivity may be achieved through existing tax instruments, as argued, for instance, in Burgess and Stern (1993). Other studies supporting this point include Devarajan and Hossain (1993) and Sahn and Younger (2000).

3 See Hammer, Nabi and Cercone (1995) for Malaysia and the early study on Colombia by Selowski (1979). For other references, see Demery (1997).

4 See van de Walle and Nead (1995).

5 These studies were inspired themselves by the first incidence studies in developed countries – in particular Gillespie (1966).

6 This term may also include human capital passed on intergenerationally outside the public education system 7 This paper focuses on the quality of education for those children going to school rather than the decision of parents to send their children to school. The general argument in the paper may be adapted to this second case, however. In effect, it applies to all situations where the government raises taxes to finance spending in education that does not directly benefit the adult generation of some segment of the population.

8 This is a rather standard result of this model. See, for instance, Bertola (1993).

9 This is a plausible assumption for developing countries, given the relative importance of sales and import taxes in their revenue bases. Considering an income rather than a consumption tax would require modifying the optimal consumption path of the dynasty, since it would modify the net rate of return on wealth.

10 This tax is often referred to as the 'negative income tax'. It may also be considered as part of a basic income with flat tax rate schedule (see Atkinson, 1995) 11 This will turn out to be an important assumption; in the concluding section, we discuss the effects of relaxing it.

12 See for instance Brunner (1996).

13 To be completely general, it would be necessary to consider possible links between the variation of consumption of present and future generations of poor adults. The drop in the adult generation, 0, might imply less non15
spatial distribution of poverty. Figure 20 illustrates that instead of observing that 35% of municipalities can be ranked (with 95% confidence), the “optimistic” poverty map would have led the policy maker to perceive 42% of municipalities as rankable. At a 75% confidence level the difference between the “optimistic” and “conservative” poverty maps is less than three percentage points.

Figure 19: ELL simulation at municipality level and 95% confidence intervals <!-- Start of picture text --> 100%<br>90%<br>80%<br>70%<br>60%<br>50%<br>40%<br>30%<br>20%<br>10%<br>0%<br>1 101 201 301 401 501 601 701 801<br>Municipalities IC conservative IC<br>FGT(0)<br><!-- End of picture text --> Source: Authors’ Calculation.

Figure 20: Share of municipalities that can be ranked and statistically distinguished one another <!-- Start of picture text --> 50%<br>49%<br>48%<br>47%<br>46%<br>45%<br>44%<br>43%<br>42%<br>41%<br>40%<br>39%<br>38%<br>37%<br>36%<br>35%<br>34%<br>33%<br>32%<br>31%<br>30%<br>29%<br>28%<br>27%<br>26%<br>25%<br>75 80 85 90 95 97.5 99 99.5<br>Confidence Interval (%)<br>ELL Conservative ELL<br>Source: Authors’ Calculation.<br>% of municipalities with significant changes<br><!-- End of picture text -->

# **VI. Conclusion**

The results presented here suggest that, in a setting where the underlying assumptions can be explicitly scrutinized and estimates can be compared to their “true” values, the ELL methodology performs reasonably well. In the state of Minas Gerais, Brazil, a unique model estimated at the 30
_6_ _Ways Out of Poverty - Diflfismng Best Practices and Creating Capabilities_ growth, not in redistribution. Opinion polls in Latin America show that the poorer people are, the more they place their hopes on productivity growth than on redistribution (figure 3).

<!-- Start of picture text --> Figure 3: What do people think their country needs most to get ahead-more<br>productivity or more redistribution?<br>80<br>Honduras<br>75-<br>70- Nicaragua<br>70 NEl Salvador<br>4 65<br>Bolivia<br>Cs , 60 X CsaRc<br>Guatemala o<br>Ž55 - Cdombia<br>50- Paraguy \Unga<br>X 45- + o 8razil Argentina<br>40- Venezuela<br>R 2 = 0 51 ,Panama 0Chile<br>35 -<br>0 5,000 10,000 15,000<br>1998 GDP per capita (PPP$)<br>Note: The vertical aids represents the percentage of people in the opinion poll who chose<br>productivity growth over redistribution.<br>Source: Graham, in Fields and Pfeffemnann (2002).<br><!-- End of picture text --> Most debates about pro-poor growth today center on means to provide opportunity to poor people by improving their health and education,'<sup>3</sup> by providing them access to credit,'<sup>4</sup> by connecting them to the global market,'<sup>5</sup> by helping to create risk insurance schemes, and by creating jobs through stimulating overall growth in poor countries and regions. **_16_** Required is deeper understanding of what such interventions can accomplish and how to implement them effectively. But the basics are clear. Growth processes need to spread to areas where poor people live or where they can migrate.

> **3** World Bank, 2002b.

> 4 Morduch, 1999; Robinson, 2001.

> _15_ See World Bank, 2002b for examples of how information and communications technology is being used around the world to connect producers in low-income or remote areas directly to buyers and to provide them with access to market and business-related information. **6** Stern, 2001.