MACROECONOMIC ADJUSTMENT AND POVERTY IN AFRICA: AN EMERGING PICTURE

The view that macroeconomic adjustment disproportionately hurtsthe poor in Africa has become commonplace. The popular mediaand the nongovernmental aid community frequently express thisview in critiques of Bankfunded economic reform programs. Yetthe evidence on which the claim has been based is flimsy andanecdotal. The emergence of more convincing data, from detailedhousehold surveys in Africa, provides an opportunity to setthe record straight. The evidence from six African countries reviewed in this articledemonstrates that poverty was more likely to decline in thosethat improved their macroeconomic balances than in those thatdid not. The critical factor is economic growth: the economygrew more rapidly and poverty declined faster in countries thatimproved macroeconomic balances, depreciating the real effectiveexchange rate. Changes in the real exchange rate also immediatelyand favorably affected rural incomes, benefiting the poor bothdirectly and indirectly. But the findings also highlighted threecauses for policy concern. First, many African governments haveyet to display a real commitment to macroeconomic reform; second,the poorest of the poor have not benefited from recent growthin some countries; and, third, the prospects for the poor arenot rosy unless there is more investment in human capital andbetter targeting of social spending.      

ISSUES IN MEDIUM-TERM MACROECONOMIC ADJUSTMENT

Four years after the onset of the world debt crisis, the issueis how to restore growth. The answer is structural adjustment,both macro and micro. At the macro level, adjustments have tobe made to the structure of aggregate demand and supply to restoregrowth while generating the needed trade surpluses. This meansprimarily real exchange rates that are maintained at appropriatelevels and an emphasis on investment. At the micro level, itis argued that most developing countries need to liberalizetrade, allow the price system to operate, develop financialsystems, reform taxes, and improve the efficiency of publicenterprises, perhaps by selling them. The article discussesthe nature of these two types of reforms and the policy andresearch issues relevant to World Bank analysis of growth programs.      

MACROECONOMIC ADJUSTMENT IN DEVELOPING COUNTRIES

The short-run adjustment problem in developing countries involvesboth the improvement of the current account and the reductionof inflation. In both cases, the usual reason for adjustmentis shown to be the fiscal deficit. The article distinguishesprimary adjustment costs, which are inevitable, from secondarycosts, which result, for example, from failure to devalue orfrom real wage rigidity. The article then analyzes the effectsof expenditure reduction and currency devaluation on varioussectors of the economy. Reducing inflation involves both aninflation tax replacement and a price adjustment problem, and"heterodox" policies designed to deal with the latter are discussed.If the fiscal deficit cannot be reduced, the article argues,improving the current account may be at the cost of increasinginflation and likewise reducing inflation may be at the costof worsening the current account.      

MACROECONOMIC ADJUSTMENT TO CAPITAL INFLOWS: LESSONS FROM RECENT LATIN AMERICAN AND EAST ASIAN EXPERIENCE

Capital inflows to some developing countries have increasedsharply in recent years. Impelled by better economic prospectsin those countries, lower international interest rates, anda slowdown of economic activity in the capital-exporting countries,the inflows have furnished financing much needed to increasethe use of existing capacity and to stimulate investment. Butcapital inflows can bring with them their own problems. Typicalmacroeconomic repercussions have been appreciation of the realexchange rate, expansion of nontradables at the expense of tradables,larger trade deficits, and, in regimes with a fixed exchangerate, higher inflation and an accumulation of foreign reserves. Should government intervene to limit some of these side effects—andif so, how? The question is especially pressing in the wakeof the Mexican crisis of December 1994. This article looks foranswers in the experience of four Latin American and five EastAsian countries between 1986 and 1993, examining the effectsof the capital inflows on the economy and comparing the differentways in which these countries responded to the problem of "toomuch" capital.      

THE ROLE OF INVESTMENT BANK REPUTATION AND RELATIONSHIPS IN EQUITY PRIVATE PLACEMENTS

We explore the role of placement agents in equity private placements. Reputable agents are more likely to place shares of firms that have performed better and that have had frequent prior relationships with the agent. Controlling for self‐selection and endogeneity, firms using reputable agents offer smaller price discounts. However, issuers having frequent prior relationships with placement agents incur higher gross spreads. Although the results support the certification role of investment banks in private placements, they also shed light on the costs incurred by issuers that frequently rely on the same investment bank.     

THE SPEED OF ADJUSTMENT OF PRICES TO PRIVATE INFORMATION: EMPIRICAL TESTS

We estimate speeds of adjustment of individual stock prices to private information using daily data. We use a model in which private information gives rise to return variance and private information decays linearly over time. We find that, on average, about 85 percent to 88 percent of private information is incorporated into prices within one trading day, with variation depending upon the stock's trading volume and whether the stock is listed on an exchange. The findings support strong form market efficiency.     

PRIVATE EQUITY: SOURCES AND USES

Private equity capital is playing a large and growing role in the funding of small to medium-sized, high-growth businesses. Today's private equity investment typically takes the form of purchase of a minority interest in a post-start-up, high-technology company followed by an IPO a few years later. A large number of such investors are scouring the markets for new investment possibilities and the competitive pressures are growing.
Although private equity investors can and often do add significant value to a company, private equity is potentially expensive, in terms of both loss of ownership and loss of control over long-term strategic decisions of the company. Owner-managers who want to retain as much of both as possible are advised to install more formalized business procedures, expand the company's outside relationships, and become more familiar with the company's financial needs and options. These changes should reduce capital needs, reduce the costs of private equity funding, and increase negotiating leverage when dealing with large, sophisticated private capital investors.     

RISK-RETURN SEASONALITY AND MACROECONOMIC VARIABLES

In this paper I examine seasonality in the pricing of the Chen, Roll, and Ross (1986) macroeconomic variables. January seasonality is observed in the risk premia from 1932 to 1990. Examination of the 1932–57 period indicates nonstationary seasonals in the risk premia. The results cannot be attributed to the previously documented firm size effect. Residual risk is priced, and a strong January seasonality is observed in the residual risk premia. The market portfolio is not priced in the presence of the other variables. Trading volume is not priced in the individual months, but appears significant when all months are considered together.     

投资合作信息

<正>1.黎巴嫩"万德福"餐厅寻有意与中国餐饮业的投资商中国驻黎巴嫩使馆经商处发布,黎巴嫩"万德福"中餐厅盼寻有意投资黎巴嫩中国餐饮业的中国投资商的信息。陈朝阳,现任黎巴嫩国家武术队总教练。已旅居黎巴嫩8年之久,与当地各     

投资合作信息

<正>1俄罗斯医疗假肢合作俄罗斯OOO《НИКАМЕД》拟与中国生产医疗假肢的企业建立合作关系。详情可上网查询,www.nikamed.ru;     

投资合作信息

<正>1.斯洛文尼亚著名葡萄酒厂寻求合作伙伴斯洛文尼亚濒临地中海,有悠久的生产葡萄酒的传统。Goriska Brda酒庄则是其中著名酒庄之一。从品质而言,该区域葡萄酒味美甘醇,质量上乘,并且价格低廉。较法国、意大利葡萄酒则具有较高的性价比和利润空间。     

MACROECONOMIC NEWS AND STOCK MARKET CALENDAR AND WEATHER ANOMALIES

An analysis of six stock market calendar and weather anomalies from 1980 to 2003 shows that (1) returns on trading days in which macroeconomic announcements were made generate the anomalies and (2) five of the six anomalies are not present at all on the trading days in which such announcements were not made (more than 60% of the sample). The results suggest that the market response to macroeconomic news, not psychological or institutional factors, is the main source of calendar and weather anomalies.