rafmacalaba/datause-encoder-data huggingface dataset:
The long-run economic costs of AIDS
            : theory and an application to South Africa
# WPS3152

## The Long-run Economic Costs of AIDS: Theory and an Application to South Africa<sup>_∗_</sup>

Clive Bell<sup>†</sup> , Shantayanan Devarajan<sup>‡</sup> and Hans Gersbach<sup>§</sup> First version: May 2001 This version: June 2003

> _∗_ We thank Bernhard Pachl, Ramona Schrepler (who did all of the programming) and Lars Siemers for excellent research assistance, and Alexandra Holten for the skilful and patient typing of a trying manuscript. We are also grateful to participants in several seminars at the World Bank for their valuable comments and suggestions, while absolving them of responsibility for any errors of opinion or analysis that remain. Finally, the opinions expressed in the paper are ours as individual scholars, and not necessarily those of our respective institutions.

> †S ̈ud-Asien Institut, University of Heidelberg, INF 330, D-69120 Heidelberg, Germany, and The World Bank.

‡The World Bank, 1818 H Street, NW, Washington, DC 20433, USA.

§Alfred-Weber-Institut, University of Heidelberg, Grabengasse 14, D-69117 Heidelberg, Germany.
Does infrastructure reform work for
            the poor A case study on the cities of La Paz and El Alto in Bolivia
From 1994 onward, Bolivia undertook a
            major reform of its infrastructure sectors. The authors
            examine the impact of the reforms from the perspective of
            poor households in the adjacent cities of La Paz and El
            Alto, particularly in terms of access to services. Different
            policies adopted across the infrastructure sectors led to
            diverging outcomes. In the water and sewerage sector, the
            concessionaire was placed under legal obligation to meet
            connection targets in low income neighborhoods, while
            customers were given the facility to spread payment of
            connection charges over a two year period and opt for a
            lower cost "condominial connection." As a result
            the rate of expansion of services increased by 70 percent
            relative to the pre-reform period. In the telecommunications
            sector, fixed and cellular services tell very different
            stories. On the one hand, fixed line services remained
            inaccessible to the poor due to the membership fee of
            US$1,500 charged by the cooperative, or the alternative
            nonmember option of paying a US$23 monthly rental fee. On
            the other hand, cellular coverage increased tenfold from
            1996-99 as the advent of competition led to huge reductions
            both in connection and calling charges, while the
            introduction of prepayment cards greatly facilitated the
            control of expenditure The expansion that took place did not
            bypass the poor. While first quintile households saw barely
            any improvement in access to utility services in the period
            leading up to the 1994 reforms, in the five years that
            followed coverage rates for these households rose by more
            than 20 percentage points for water and sewerage, and more
            than 10 percentage points for electricity and telephones.
            Overall, 80 percent of new water and sewerage connections
            and 65 percent of new electricity and telephone connections
            went to residents in the poorest neighborhoods of La Paz and
            El Alto.
Emerging markets instability: do
            sovereign ratings affect country risk and stock returns
Financial market instability has been
            the focus of attention of both academic and policy circles.
            Rating agencies have been under particular scrutiny lately
            as promoters of financial excesses, upgrading countries in
            good times and downgrading them in bad times. Using a panel
            of emerging economies, this paper examines whether sovereign
            ratings affect financial markets. The authors find that
            changes in sovereign ratings have an impact on country risk
            and stock returns. They also find that these changes are
            transmitted across countries, with neighbor-country effects
            being more significant. Rating upgrades (downgrades) tend to
            occur following market rallies (downturns). Countries with
            more vulnerable economies, as measured by low ratings, are
            more sensitive to changes in U.S. interest rates.
To serve the community or oneself -
            the public servant's dilemma
Embezzlement of resources is hampering
            public service delivery throughout the developing world.
            Research on this issue is hindered by problems of
            measurement. To overcome these problems, the authors use an
            economic experiment to investigate the determinants of
            corrupt behavior. They focus on three aspects of behavior:
            1) Embezzling by public servants. 2) Monitoring effort by
            designated monitors. 3) Voting by community members when
            provided with an opportunity to select a monitor. The
            experiment allows the authors to study the effect of wages,
            effort observance, rules for monitor assignment, and
            professional norms. Their experimental subjects are
            Ethiopian nursing students. The authors find that service
            providers who earn more embezzle less, although the effect
            is small. Embezzlement is also lower when observance
            (associated with the risk of being caught and sanctioned) is
            high, and when service providers face an elected, rather
            than a randomly selected monitor. Monitors put more effort
            into monitoring when they face reelection, and when the
            public servant receives a higher wage. Communities reelect
            monitors who put more effort into exposing embezzlement.
            Framing-whereby players are referred to as "health
            workers" and "community members" rather than
            by abstract labels-affects neither mean embezzlement nor
            mean monitoring effort, but significantly increases the
            variance in both. This suggests that different types of
            experimental subjects respond differently to the framing,
            possibly because they adhere to different norms.
A financial social accounting matrix
            for the integrated macroeconomic model for poverty analysis
            : application to Cameroon with a fixed-price multiplier analysis
Cameroon is engaged in the Poverty
            Reduction Strategy Paper (PRSP) process, which emphasizes
            increased focus on poverty reduction in the design and
            implementation of growth and adjustment strategies. The
            Integrated Macroeconomic Model for Poverty Analysis (IMMPA)
            recently developed at the World Bank provides an analytical
            structure for supporting the PRSP process and quantifying
            poverty reduction strategies. Drawing on that framework, the
            authors provide a detailed financial social accounting
            matrix (SAM) for the Cameroonian economy to serve as input
            into the construction of an IMMPA model for Cameroon. An
            analysis of this financial SAM shows that the dramatic fall
            in investment during the crisis period persisted in the
            post-devaluation growth period in the late 1990s. Continued
            low investment has implications for ongoing high
            unemployment rates and poor welfare indicators. The authors
            illustrate this with simulations based on fixed-price
            multiplier analysis that highlight the potential growth and
            welfare benefits of increased public investment, following
            hypothetical debt relief and reduction of external debt
            servicing within the framework of the heavily indebted poor
            countries initiative.
A financial social accounting matrix
            for the integrated macroeconomic model for poverty analysis
            : application to Cameroon with a fixed-price multiplier analysis
# **A Financial Social Accounting Matrix for the Integrated Macroeconomic Model for Poverty Analysis**

- **Application to Cameroon with a Fixed Price Multiplier Analysis**<sup>**1**</sup>

By

## Christian A. Emini* and Hippolyte Fofack**

**Abstract** : Cameroon is engaged in the Poverty Reduction Strategy Paper (PRSP) process, which emphasizes increased focus on poverty reduction in the design and implementation of growth and adjustment strategies. The Integrated Macroeconomic Model for Poverty Analysis (IMMPA) framework recently developed at the World Bank provides an analytical structure for supporting the PRSP process and quantifying poverty reduction strategies. Drawing on that framework, this paper provides a detailed financial social accounting matrix for the Cameroonian economy to serve as input into the construction of an IMMPA model for Cameroon. An analysis of this financial SAM shows that the dramatic fall in investment during the crisis period persisted in the post-devaluation growth period in the late 1990s. Continued low investment has implications for ongoing high unemployment rates and poor welfare indicators. This is illustrated by simulations based on fixed-price multiplier analysis, which highlight the potential growth and welfare benefits of increased public investment, following hypothetical debt relief and reduction of external debt servicing within the framework of the Highly Indebted Poor Countries Initiative.

### JEL classification: C68, D31, D57, O11

_Keywords_ : Backward and forward linkages, financial social accounting matrix, fixed-price multipliers, poverty reduction strategy papers, integrated macroeconomic model for poverty analysis (IMMPA)

## World Bank Policy Research Working Paper 3219, February 2004

_The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the view of the World Bank, its Executive Directors, or the countries they represent. Policy Research Working Papers are available online at http://econ.worldbank.org._

> 1 *CEREG - University of Yaoundé II, formerly Université Laval (Quebec, Canada), and ** World Bank. This paper has benefited from discussions with Pierre-Richard Agénor and the authors would like to thank him for his assistance on various aspects of this research. We are grateful to Cadman Atta Mills, Chukwuma Obidegwu, Henning Jensen, Eduardo Haddad and Ernest Bamou for helpful comments on an earlier version of this paper, and Issouf Samaké and Raju Kalidindi for research assistance. The authors gratefully acknowledge the support provided by the World Bank Research Committee.
India : why fiscal adjustment now
India's growth performance has been
            impressive over the last two decades. But its sustainability
            has been in question, first with the 1991 fiscal-balance of
            payments crisis (BoP), and then again after 1997/98, when
            fiscal deficits returned to the 10 percent of GDP range and
            government debt grew. This paper analyzes the deterioration
            in India's public finances and presents evidence
            suggesting that, in the absence of a fiscal adjustment, low
            inflation and high reserves may have been pursued at the
            expense of long-run growth and poverty reduction. Resolving
            this inflation-external vulnerability-growth policy trilemma
            requires fiscal adjustment. In making its case, the paper
            shows, first, that fiscal fundamentals have weakened after
            1997/98 even when compared with the pre-1991 crisis period.
            This has continued in spite of the recent record lows in
            interest rates. Second, the fiscal stance is not conducive
            to long-run growth and poverty reduction because capital
            spending has been cut to accommodate higher interest
            payments and other current spending, with expenditures on
            the social sectors stagnating. Third, without a fiscal
            adjustment, the debt burden is likely to reach unmanageable
            levels by the end of the Tenth Plan period. In contrast, a
            phased adjustment beginning now and focusing on a relatively
            small set of reforms is likely to improve debt dynamics
            substantially over the same horizon, while also promoting
            faster growth and poverty reduction.
Professional development and
            incentives for teacher performance in schools in Mexico
The quality of education is a
            determining factor in competitiveness. In order to globally
            compete, Mexico would have to raise its standards beyond its
            current low achievement. Several innovations at federal and
            state levels have been developed to raise the quality of
            basic education. One example is Carrera Magisterial (CM),
            which is a professional development program that was created
            as part of the National Agreement for the Modernization of
            Basic Education in 1992. This program is aimed at raising
            the quality of basic education through teachers'
            professional training, new learning presence in schools, and
            improving working and salary conditions this report
            evaluates the impact of CM. She shows several important
            results. First, teacher's enrollment in the CM program
            has a positive impact on learning achievement. Second,
            family characteristics are important in explaining
            students' achievement. Third, investment in primary
            school teachers is most effective when targeted toward
            increasing teachers' practical experience and
            developing content-specific knowledge. And fourth, students
            in schools with a high degree of supervision on the part of
            the school principal achieve better scores.
Institutional trap
The author studies the persistence of
            inequality and inefficient governance in a physical capital
            accumulation model with perfect information, missing credit
            markets, and endogenous barriers to entry. When access to
            investment opportunities is regulated, rent-seeking
            entrepreneurs form coalitions of potentially varying size to
            bribe a regulator to restrict entry. Small coalitions run
            short of resources, while large coalitions suffer more
            severe free-rider problems. The distribution of wealth thus
            determines the equilibrium coalition structure of the
            economy and consequently the level of regulatory capture. A
            dynamic analysis supports the persistence of inefficiencies
            in the long run. Initial conditions determine whether the
            economy converges to a steady state characterized by
            efficient governance and low levels of inequality, or a path
            toward an institutional trap where regulatory capture and
            wealth inequality reinforce each other.
Explaining and forecasting inflation
            in Tukey
The growing adoption of an inflation
            targeting framework in emerging market economies has
            increased the importance of understanding inflation dynamics
            and forecasting its future path in these countries. The
            author considers the case of Turkey and investigates the
            performance of models that have some theoretical
            foundations. To this end, his study focuses on mark-up
            models, monetary models, and the Phillips curve. The
            findings suggest that the mark-up models have the best
            in-sample performance followed by money gap models and the
            Phillips curve. The empirical results from out-of-sample
            forecasting performance for the period covering the new
            economic program (May 2001-December 2002), however, show
            that the Phillips curve and the money gap models perform
            better than mark-up models. These findings, in turn, imply
            that (1) Phillips curves augmented with the exchange rate
            and money models might provide complementary views in the
            Turkish context; and (2) the relative importance of output
            gap and monetary disequilibrium in the inflation process has
            increased under the floating exchange rate regime. The
            results underscore the importance of relying on multiple
            models of inflation in the conduct of Turkish monetary policy.
Economic and Welfare Effects of the
            Abolition of Health User Fees : Evidence from Uganda
The authors use household level data for
            Uganda for 1999-2000 and 2002-03, before and after the
            abolition of user fees for public health services, to
            explore the effect of this policy on different groups'
            ability to access health services and morbidity outcomes.
            They find that the policy change improved access and reduced
            the probability of sickness in a way that was particularly
            beneficial to the poor. Although the challenge of
            maintaining service quality remains, aggregate benefits are
            estimated to be significantly larger than the estimated
            shortfalls from the abolition of user fees.
Regulation of fixed income
            securities markets in the United States
The author looks at the development and
            regulation of the fixed income securities market in the
            United States. The U.S. fixed income market is one of the
            oldest and most developed debt markets in the world. It is
            also one of the most heterogeneous, with the four key market
            segments-government securities, the securities of
            government-sponsored enterprises, municipal securities, and
            corporate debt securities-all being relatively large and
            deep. The author describes the evolution of fixed income
            market regulation in the United States, discussing both
            primary and secondary market regulation. She also looks at
            market integrity issues and the enforcement authority of the
            U.S. Securities and Exchange Commission, which is broad and
            has played an important role in the effectiveness of
            regulation. The author concludes that the fact that the U.S.
            fixed income market flourished for many years in the absence
            of regulation must be seen in a broader legal and regulatory
            context. While the debt market itself may have been
            unregulated, it operated within a larger framework of equity
            market regulation and enforcement, complemented by a long
            history of bank supervision that had a significant impact on
            its development. It is this context that permitted U.S.
            authorities to adopt regulation in stages, in response to
            differing demands and priorities. The dynamic nature of the
            regulation of the U.S. fixed income market-its development
            in response to market crises-underscores the need for
            regulation to remain responsive to market developments, and
            to be adapted to domestic constraints.
Detecting illegal trade practices by
            analyzing discrepancies in forest products trade statistics
            : An application to Europe, with a focus on Romania
Discrepancies in bilateral trade
            statistics for forest products have recently attracted
            attention as potential indicators of illegal trade
            practices. For example, if exporters understate quantities
            to evade export taxes or quotas, then one might expect
            reported exports to be less than reported imports.
            Discrepancies in trade statistics can exist for reasons that
            have nothing to do with illegal activities, however, such as
            measurement error and shipment lags. Any attempt to infer
            evidence of illegal activities from statistical
            discrepancies must control for these other explanations. The
            author estimates the discrepancies between reported imports
            and exports for bilateral flows of sawnwood traded by
            Romania and other European countries. The author also
            examines whether these discrepancies reflect illegal
            activities by the traders. The mean discrepancy for sawnwood
            exported by Romania during 1982-97 was significantly
            different from zero for coniferous sawnwood but not for
            nonconiferous sawnwood. Yet the sign of the discrepancy for
            coniferous sawnwood-reported exports tended to be greater
            than reported imports-implies that illegal trade activities
            were more likely occurring in Romania's trading
            partners than in Romania. An econometric analysis of
            bilateral trade statistics for Romania and other European
            countries finds evidence that measurement error, shipment
            lags, and intentional underreporting all play a role in
            explaining discrepancies for both types of sawnwood. The
            econometric model is not sufficiently reliable, however, for
            estimating the portion that was due solely to illegal
            activities or determining whether those activities occurred
            primarily in Romania or in its trading partners. Moreover,
            given that it is based on observed discrepancies in
            bilateral trade statistics, it fails to detect illegal trade
            activities that occur simultaneously in both importing and
            exporting countries. For these reasons, econometric methods
            appear unlikely to be of practical use in revealing illegal
            trade activities in the Romanian forest sector.