rafmacalaba/datause-encoder-data huggingface dataset:
External sustainability : a stock
            equilibrium perspective
The authors consider external
            sustainability from the perspective of equilibrium in net
            foreign asset positions. Under their approach, an external
            situation is sustainable if it is consistent with
            international and domestic investors' achieving their
            desired portfolio allocation across countries. They develop
            a reduced-form model of net foreign asset positions whose
            long-run equilibrium condition expresses the ratio of net
            foreign assets to the total wealth of domestic residents as
            a negative function of investment returns in the country
            relative to the rest of the world, a positive function of
            investment risk, and an inverse function of the ratio of
            foreign-owned to domestically owned wealth. To estimate this
            equilibrium condition, the authors use a newly constructed
            data set of foreign asset and liability stocks for a large
            group of industrial and developing countries, from the 1960s
            to the present. They also develop summary measures of
            country returns and risks. Their econometric methodology is
            an application of the Pooled Mean Group estimator recently
            developed by Pesaran, Shin, and Smith (1999), which allows
            for unrestricted cross-country heterogeneity in short-term
            dynamics while imposing a common long-run specification. The
            estimation results lend considerable support to the model,
            especially when applied to countries with low capital
            controls or high or upper-middle income. The results for
            countries with high capital controls and, especially,
            lower-income countries are less supportive of the stock
            equilibrium model. As a by-product of the model's
            estimation, the authors obtain estimates of the long-run
            equilibrium ratios of net foreign assets to wealth,
            conditional on the observed values of the country's
            relative returns, risks, and wealth. Then, for a selected
            group of industrial and developing countries, they evaluate
            the extent to which actual ratios diverge from their
            long-run counterparts - and hence the sustainability of
            current net foreign asset positions.
Money, politics and a future for the
            international financial system
In developing the architecture for a
            financial system, the challenge is to combine deregulation
            and safety nets against systemic failure with effective
            prudential regulation and oversight. The author analyzes
            three approaches to choosing an adequate regulatory
            framework for a financial system. a) Those most worried
            about panic and herd behavior tend to favor relatively
            extensive controls on financial institutions'
            activities, including controls on interest rates and on the
            volume and direction of lending. b) Those most concerned
            about moral hazard advocate abolishing controls and safety
            nets, seeing the solution is stronger market discipline and
            reduced powers and discretion for regulators. c) Mainstream
            opinion advocates a mix of measures, to both strengthen
            market discipline and improve regulatory oversight. The
            approach a county opts for depends on 1) which monetary and
            exchange rate regime it chooses, 2) whether it is more
            concerned about moral hazard or about panic and herd
            behavior, and 3) how the politics of reform shape its
            solutions. The author suggests a scenario for development of
            the global financial system over the next two or three
            decades that assumes that the final outcome will resemble
            the market solution - not because that is the optimal policy
            choice but because of how political weakness will interact
            with advances in settlement technology. In the author's
            scenario, the world moves toward a monetary system in which
            fixed exchange rate systems or de facto currency competition
            limit the power of central banks. This limits options for
            discretionary and open-ended liquidity support to help deal
            with systemic financial crises. The costs of inflexible
            exchange rates are moderated by new types of wage contracts,
            using units of account that are correlated with the shocks a
            particular industry or kind of contract faces -- thus
            maintaining the positive aspects of monetary systems with
            flexible nominal exchange rates. Mistrust in monetary
            authorities and the emergence of private settlements lead to
            a return of asset-backed money as the means of payment. The
            disciplines on financial systems come to resemble somewhat
            those of historical "free banking" systems, with
            financial institutions requiring high levels of equity and
            payments systems protected only by limited, fully funded
            safety nets.
Financial development and industrial
            capital accumulation
In an economy where decisions are
            decentralized and made under conditions of uncertainty, the
            financial system can be seen as the complex of institutions,
            infrastructure, and instruments that society adopts to
            minimize the costs of trading promises when agents have
            incomplete trust and limited information. Building on a
            microeconomic general equilibrium model that portrays such
            fundamental financial functions, the author shows that, in
            line with recent empirical evidence, the development of
            financial infrastructure stimulates greater and more
            efficient capital accumulation. He also shows that economies
            with more developed financial infrastructure can more easily
            absorb exogenous shocks to output. The results call for
            addressing a crucial issue in the sequencing of reform in
            the financial sector: early in development, banks provide
            essential financial infrastructure services as part of their
            exclusive relationships with borrowers. Further economic
            development requires that such services be provided
            extrinsically to the bank-borrower relationship, clearly at
            the expense of bank rents. There may be a compelling
            discontinuity to financial sector development in that banks
            need to be supported early in development but to be
            "weakened" later - at the expense of bank rents -
            to foster further development. The important question for
            policy is when and how to generate and manage this
            discontinuity so that it is not forced on society by costly
            and traumatic events such as bank failures.
Does democracy facilitate the
            economic transition : an empirical study of Central and
            Eastern Europe and the Former Soviet Union
The authors analyze whether political
            freedom and civil liberties help or hinder economic
            liberalization, using panel data from 25 post-communist
            countries of Central and Eastern Europe and the former
            Soviet Union between 1992 and 1997. Building on arguments
            and counter-arguments put forth in recent literature, they
            identify the channels through which political freedom
            affects economic liberalization during the transition. Then
            they test the arguments empirically with an econometric
            framework that takes into account possible problems with
            simultaneity between the economic and political transitions.
            Their empirical findings clearly reveal that democracy has
            facilitated economic liberalization in countries of Central
            and Eastern Europe and the former Soviet Union. This
            conclusion is confirmed under various model specifications,
            for both ordinary and two-stage least squares procedures and
            using two different measures of liberalization. The
            econometric results reveal that the existence of a vibrant
            civil society at the start of the transition has the most
            explanatory power in the author's regressions.
Fiscal risks and the quality of
            fiscal adjustment in Hungary
The government of Hungary has contained
            the main fiscal risks of the transition to a market economy.
            It has paid off and resolved most problems in the banking
            and enterprise sectors. Since 1995 it has implemented fiscal
            adjustment with the objective of long-term fiscal stability
            rather than an immediate deficit target. The main result has
            been pension reform, which has raised temporary deficits but
            reduced the long-term public liability. Only the health
            sector awaits the reform needed for long-term fiscal
            stability. Levels of government spending, budget deficits,
            and public service remain high, but the government has made
            great progress toward rationalizing public spending and
            improving the management of budget and off-budget fiscal
            risks. In the transition, the government has taken on new
            fiscal risks--mainly state guarantees and growing programs
            of credit and guarantee agencies (operating on behalf of the
            government) organized after privatization to support, first,
            industries and, later, exporters. The government has dealt
            with these new programs of contingent government support
            prudently and transparently, with reasonable ceilings on
            (and reporting of) risks. Hungary is likely to face pressure
            for additional spending. Priorities in fiscal policy should
            include reforming health financing, establishing checks on
            hidden subsidies in guarantee programs, and determining the
            government's optimal exposure to risk. In terms of
            institutions, the government should aim to create a more
            flexible, responsive budget process and greater capacity to
            analyze medium-term fiscal risks, to build a more
            results-oriented budget management system, and to improve
            mechanisms for sharing risk between the public and private
            sectors under government programs.
Sector growth and the dual economy
            model - evidence from Cote d'Ivoire, Ghana, and Zimbabwe
The authors analyze and compare sectoral
            growth in three African economies - Cote d'Ivoire,
            Ghana and Zimbabwe - since 1965. They extend the classic
            dual economy - the agriculture and industry sectors - by
            adding the services sector. For all the three countries,
            they find at least one statistically significant long-run
            relationship for sectoral GDP. This indicates a large degree
            of interdependence in long-run growth among the three
            sectors. This also provides evidence against the basic dual
            economy model, which implies that a long-run relationship
            cannot exist between agricultural and industrial output.
            Analysis of the impulse response and analysis of short-run
            sectoral growth support the results on the interdependence
            of sectoral growth. Both imply that a positive link exists
            between growth in industry and growth in agriculture. Their
            findings contradict the literature on the dual economy - and
            suggest that more attention should be paid to inter-sectoral
            dynamics and dependencies in Sub-Saharan Africa. Why?
            Because an adverse shock in, say, agriculture after a
            drought is likely to have an adverse impact on the other
            economic sectors. Policymakers should try to accommodate not
            only the initial shock in agriculture but also its adverse
            effects in other sector. They find that focusing mainly on
            industry was not optimal policy in Cote d'Ivoire,
            Ghana, and Zimbabwe. For maximum economy-wide growth, it
            would have been better to balance policies to include all
            three sectors: agriculture, industry, and services.
Tradeoffs from hedging oil price
            risk in Ecuador
The oil sector is critical to
            Ecuador's economy, contributing about 17 percent to the
            country's GDP. Ecuador began exporting crude oil in
            1972 and over the past two and a half decades oil has become
            the country's most important sector. It is controlled
            by the government through the public enterprise,
            PETROECUADOR, which serves as the holding company for all
            state-owned petroleum operations. Movements in oil prices
            are of major concern to the government, and forecasts of oil
            prices are built into the government budget. Ecuador's
            macroeconomic performance depends on the oil sector's
            performance; shocks to the sector have economywide
            repercussions. The authors investigate methods to reduce
            risk for the country's oil exports through hedging in
            futures markets. They find that hedging Ecuadorian oil has
            significant potential for risk reduction. After simulating
            ex-ante cross hedges for 1991-96, they find that in each
            case ex-ante hedging effectively reduces risk. They
            calculate the tradeoffs between return and risk from hedging
            and find that for a risk-minimizing short hedger, a
            1-percent reduction in risk would cost a reduction in return
            of 0.65 percent.
Antidumping in law and practice
The alarming increase in the number of
            antidumping actions pursued by both industrial and
            developing countries has caused considerable concern among
            economists, lawyers, and trade reformers. These concerns
            have led to suggestions to substitute antitrust principles
            for antidumping laws and regulations or to use safeguard
            measures under Article XIX of GATT 1994 and the Uruguay
            Round Agreement on Safeguards. The author contends that,
            under current international trade law, neither proposal
            appears feasible. Moreover, antidumping actions have become
            a fact of life and the international community recognizes
            them as the only legitimate tool to combat dumping as
            defined by and determined in accordance with law. Despite
            urgings in some quarters, neither national legal systems nor
            international agreements have mandated an economy-wide
            cost-benefit analysis of proposed antidumping actions.
            Because of political, technical, and other implications,
            such a methodology is unlikely to be accepted soon. Although
            the most recent Uruguay Round antidumping agreement (URAA)
            has enhanced the discipline and made a number of
            improvements, it cannot claim to have plugged all loopholes
            for the misuse of antidumping. In those matters on which the
            agreement is silent or ambiguous or allows room for
            flexibility in adopting a less restrictive rule or practice.
            A case in point is the U.S. practice on voting in the
            International Trade Commission. A 3-3 vote in antidumping
            and countervailing duty investigation constitutes an
            affirmative decision. It would be preferable to require a
            clear majority rather than treat an evenly divided vote as
            sufficient to establish a finding of injury.
The evolution of payments in Europe,
            Japan, and the U.S. : lessons for emerging market economies
Some payment arrangements are more
            efficient in promoting economic growth in a market-based
            economy. The payment experience of industrial countries is
            diverse enough to identify those payment arrangements that
            provide the infrastructure for sustained growth and the
            emergence of market-based enterprise. Based on the
            historical experiences of Europe, Japan, and the United
            States, a number of Country attributes have led to the
            intensive use of different payment instruments and a
            different mix of private and public ownership and payment
            system participation. Such attributes included country size,
            population density, banking structure, legal framework,
            safety, and payment instrument pricing. These attributes
            explain why Japan relies heavily on cash at the point of
            sale, but uses electronic payments for bill payments and
            business transactions. They also are the reason Europe
            relies on credit-transfer giro payments for all types of
            transactions and United States instead relies on checks.
            Finally, the fact that consumer payment needs were not met
            within the banking system led to the establishment of postal
            giros in Europe, while untimely business payments led to
            central bank involvement in payment processing in the United
            States. Unmet user needs, inefficient payment arrangements,
            differences in payment instrument costs, and improper
            pricing of payment services will determine the future
            structure of payment systems in emerging market economies
            just as they have determined the evolution of payment
            systems in industrial countries. The authors discuss these
            issues and apply the lessons learned to payment arrangements
            in emerging market economies. Although the evolution of
            payments has taken decades in industrial countries, emerging
            market economies hope to complete the process in just a few
            years, and so will benefit by having a better roadmap for
            transforming their payment systems.
Strategies to develop mortgage
            markets in transition economies
The transformation of the planned
            economies of central and eastern Europe to market economies
            has focused on economic stabilization and liberalization,
            privatization, and financial sector development. The housing
            sector and the mortgage market have been factors in each of
            these processes but not always positive ones. The authors
            analyze the factors hindering the development of mortgage
            markets in these transition economies and propose a strategy
            to expedite that development. They show that banks in
            transition economies are reluctant to make mortgage loans
            because of the risks in mortgage lending (credit, interest
            rate, and liquidity risk). Together with the required
            primary market improvements, a secondary mortgage market is
            likely to help solve this problem. A secondary mortgage
            market separates the act of making mortgage loans (which can
            still be carried out by banks) from the act of holding
            mortgage loans (which can be carried out more effectively by
            capital market investors). The authors emphasize the
            potential role of the housing finance system in being an
            engine of innovation for the rest of the financial sector.
            But, if the housing finance system is stunted, other
            nonmarket devices would develop for financing and
            subsidizing the housing sector -creating negative
            externalities for the rest of the system. The authors point
            out that a market-based housing finance system is unlikely
            to emerge without initial government support. Moreover, the
            transition economies must first create an economic and legal
            infrastructure to support the long-term and complex market
            relationships and contracts that constitute a housing
            financial system.
Reforming Cote d'Ivoire's
            cocoa marketing and pricing system
Cote d'Ivoire has historically
            taxed cocoa producers. Market reforms over the past 10 years
            have somewhat succeeded in making domestic and foreign
            marketing more transparent and competitive. But they have
            not done much to raise producer prices in real terms or as a
            share of the FOB (free on board) price. Maintaining fixed
            producer prices and marketing costs and margins has
            encouraged rent-seeking and led to efficiency losses. New
            reform will fully liberalize the country's export
            marketing system by eliminating public management of
            exports. This means the end of mandatory export
            authorization, of public forward sales, and of fixed minimum
            producer prices and marketing margins. The new reform is
            expected to improve producers' incomes. The authors
            find that the benefits from the new reform (in terms of
            lower implicit taxes, lower marketing costs and margins, and
            higher producer prices) will outweigh the costs from
            eliminating public forward sales and fixed producer prices.
            Results from a general equilibrium model indicate that
            reducing export taxes would have a small negative effect on
            aggregate income but would improve income distribution for
            poorer rural areas. The fact that Cote d'Ivoire has
            market power in the world cocoa market justifies a higher
            optimal export tax than the current one. But raising export
            taxes may eventually reduce its market share and worsen
            income distribution, at the expense of the poorer rural sector.