Migration and Credit Constraints: Theory and Evidence from Vietnam

The new economics of labor migration (NELM) frequently emphasizes the importance of migration as a way for rural households to overcome credit constraints. If this hypothesis is correct, then the credit constraint is a motivation for migration (a relaxation of this constraint would encourage less migration). Conventionally, it is believed that migration is costly and has to be financed with borrowed capital, so the credit constraint is a deterrent of migration (a relaxation of this constraint would encourage more migration). In this paper, an agricultural household model is developed to study whether the credit constraint is a motivation for or a deterrent to migration. The model's result confirms the NELM's hypothesis: for households with high demand for agricultural investments and high net migration return, migration is used as a way to finance capital investments. Using data from four provinces in Vietnam, preliminary evidence is found supporting this hypothesis.     

International credit and welfare: A paradoxical theorem and its policy implications

This paper considers a developing nation that faces a foreign exchange shortage and hence its demand for foreign goods is limited both by its income and its foreign exchange balance. Availability of international credit relaxes the second constraint. We develop a simple model of strategic interaction between lending institutions and firms, and show that the availability of international credit at concessionary rates can leave the borrowing nation worse off than if it had to borrow money at higher market rates. This ‘paradox of benevolence’ is then used to motivate a discussion of policies pertaining to international lending and the Southern government's method of rationing out foreign exchange to the importers.     

完善我国农业信贷政策的现实选择

农业信贷政策是政府农业政策体系中的一个重要的构成部分。借鉴其他国家在农业发展过程中实施的农业信贷政策措施,完善我国农业信贷政策,以促进我国农业现代化发展,从根本上提升中国农业的整体素质和国际竞争力。     

Renewable resource and capital with a joy-of-giving resource bequest motive

In this article we ask whether a privately owned natural renewable resource can be conserved and managed efficiently when households have a joy-of-giving resource bequest motive. We model an overlapping generations economy in which firms have access to a CES production technology combining the natural resource, physical capital and labor. Our results shed light on the interplay between the resource bequest motive and the substitutability/complementarity relationship between capital and the natural resource in the determination of the equilibrium propensity to use the resource. The mere existence of the bequest motive does not guarantee that the resource will be conserved in the long run. When the resource is highly substitutable with capital, the equilibrium actually never exhausts the resource stock whatever the intensity of the bequest motive. When the resource is a poor substitute for capital, the equilibrium preserves the resource only if the taste for bequeathing is strong enough. Be the economy in over-accumulation or in under-accumulation of the natural resource, it always increases aggregate consumption to run the stock of capital at a level lower than the efficiency level.     

Capital endowment, credit constraint and FDI: Analysis based on heterogeneous firms

To examine the impact of capital endowment and credit constraint on firms’ FDI decisions, we build a model of investment portfolio based on heterogeneous firms setup. We find that financial factors matter for firms’ internationalization. More capital endowment or less credit constraint lowers cutoff productivity for firms to do FDI.     

Growth and optimal policies in an R&D-growth model with imperfect international capital mobility

In this paper, we examine the effects of international capital mobility on innovation, growth, and optimal growth policies in a small open economy with R&D-driven growth. Households can borrow funds from an imperfect international capital market to finance their investment in R&D firms. We show that the economy can reach a higher growth rate if international capital is more mobile. This result is consistent with recent empirical findings. Moreover, we show that the common growth-enhancing policies, such as patent protection and the R&D subsidies, have an additional negative welfare effect when households can access the international capital market. Accordingly, the optimal patent protection and R&D subsidy should be smaller when the degree of international capital mobility is higher.     

Allocation of emission permits with leakage through capital markets

This paper analyses how tradable emission permits should be allocated to firms when capital is internationally mobile. When international environmental problems are attempted solved through uncoordinated policies between countries, it might be desirable for the home country to issue free emission permits in proportion to the use of capital in order to prevent leakage through international capital movements. The desirability of free emission permits will however be reduced if capital also can be employed in a domestic non-polluting sector. In this case, it may even be optimal to tax the use of capital in the polluting sector. It is also shown that it is always optimal to subsidise the use of capital in the polluting sector if the use of labour is taxed at an optimal rate. Finally, leakage does not affect the optimal domestic emission limit as long as appropriate capital subsidies and labour taxes are implementeed.     

家庭借贷约束、公共教育支出与社会流动性

人力资本投资是增强社会流动性的重要手段,然而借贷约束使得底层家庭无力对子女进行最优的人力资本投资;与此同时,富裕家庭则不受借贷约束的影响,总体结果是社会流动性减弱。利用中国健康与养老追踪调查和全国综合社会调查数据,本文发现,借贷约束确实提高了居民收入和教育的代际传递弹性,降低了社会流动性。在匹配政府公共教育支出数据后发现,公共教育支出可以缓解家庭层面人力资本投资的不足,提高教育水平的代际流动性。     

Natural resources and civil strife: a two-stage process

This article explains why resource-rich countries tend to spawn predatory political states that distort the economy and create four of Collier's conditions for civil strife, namely a growth collapse, low educational attainment, a large cohort of unemployed young males and high resource dependence. Yet, the article also shows that these conditions characterize the resource-rich countries as a group, and most have avoided civil strife. The second part of the study therefore identifies the specific properties of natural resources associated with conflict, namely socio-economic linkages, the ratio of commodity value to weight and relative location. However, this manifestation of the resource curse, like others, is not a deterministic phenomenon so that domestic and global policies can limit resource-driven conflict.     

产业政策中的资金配置:市场力量与政府扶持

产业政策具有重要的国家战略意义,如何有效引导经济资源流向政策支持产业,是产业政策发挥成效的关键.现有相关研究未深入考察经济资源在扶持行业之间及行业内部配置的规律,而且没有综合探讨不同资金配置的关联.文章考察了市场力量与政府扶持两种机制如何引导产业政策下的资金配置.研究发现,产业政策支持的企业获得了更多的债务融资和政府补助.其中,债务融资更多地流向了成长行业中规模较大的企业,政府补助使成长行业中的小规模企业和成熟行业中的大规模企业受益更多.研究结果表明,市场看重企业的增长机会,政府补助则会顾及当前成长性较弱而相对不受市场青睐的企业,对产业政策下的市场化资金配置起到了补充作用.文章的研究为如何协调市场机制和政府扶持两种力量提供了一定的借鉴.     

Business cycle asymmetry via occasionally binding international borrowing constraints

This paper illustrates how occasionally binding credit constraints can be quantitatively important to delivering business-cycle asymmetries. An empirical exercise suggests that countries display some business-cycles asymmetries, and an open-economy real business-cycle model is assessed where an international borrowing constraint binds occasionally. In the model, downward movements with a slack constraint are sharper and quicker than upward movements with a binding constraint, and this can deliver asymmetry over the business cycle. The model is calibrated to Canadian data and suggests that a necessary ingredient for asymmetry is a high initial level of foreign debt.     

Capital income taxation in a growing world economy

This paper deals with dynamic adjustment in large economies to changes in the rate of capital income taxation or in the rate of investment tax credit in one country. The framework applied in the paper is a continuous-time, overlapping generations model with two countries. It features population growth and debt non-neutrality. We address impact and steady state effects of capital income tax and investment subsidy changes in the home country on consumption per capita, the capital intensity, and the per capita net foreign asset position in both countries. We also briefly consider individual welfare consequences of these policies.     

Foreign-Investment Tax and Tariff Policies in Developing Countries

In this paper we examine the welfare effects of tax on foreign capital and tariff policies for a small open economy with sectoral unemployment. The individually and jointly optimal tax and tariff rates in the absence or presence of international tax credits are derived. A subsidy on foreign capital coupled with a tariff can be jointly optimal when tax credits are absent in the source country. However, the capital subsidy policy may fail to hold when the foreign country follows a tax credit system.     

Why Finance Ministers Favor Carbon Taxes,Even If They Do Not Take Climate Change into Account

Fiscal considerations may shift governmental priorities away from environmental concerns: finance ministers face strong demand for public expenditures such as infrastructure investments but they are constrained by international tax competition. We develop a multi-region model of tax competition and resource extraction to assess the fiscal incentive of imposing a tax on carbon rather than on capital. We explicitly model international capital and resource markets, as well as intertemporal capital accumulation and resource extraction. While fossil resources give rise to scarcity rents, capital does not. With carbon taxes, the rents can be captured and invested in infrastructure, which leads to higher welfare than under capital taxation. This result holds even without modeling environmental damages. It is robust under a variation of the behavioral assumptions of resource importers to coordinate their actions, and a resource exporter’s ability to counteract carbon policies. Further, no green paradox occurs—instead, the carbon tax constitutes a viable green policy, since it postpones extraction and reduces cumulative emissions.     

Credit constraint and human capital investment: an empirical analysis using Brazilian household budget survey

This article is a first step towards understanding the relationship between credit market imperfections and inequality of opportunity in skill formation. The main goal is to investigate the effects of the credit constraint on the optimal human capital decision, in terms of degree of schooling, taking into account the household preferences for education. Our starting point is a theoretical model of human capital investment decision with credit constraint. Following a previous model in the literature, we propose a reduced-form approach that estimates the relation between education decision and initial wealth in Brazil. Our empirical analysis is conducted using data from a Brazilian Household Budget Survey (Pesquisa de Orçamentos Familiares), for years 2002–2003 and 2008–2009. Our results point out that education decision is in fact credit constrained. The empirical results show a strong and highly significant effect of wealth on educational level of children, teenagers and adults, even controlling by education expenditures. But we find no evidence of credit constraint on high level education decision, like undergraduate and graduate levels.     

Credit rationing and capital accumulation with investment and consumption loans revisited

A simple model is developed to evaluate the roles of credit rationing and government policies of financial repression in the process of capital accumulation. In the model, credit rationing on both investment and consumption loans decreases as capital accumulates but increases as the government imposes policies of financial repression to a greater extent. While a reduction in credit rationing on consumption loans impedes capital accumulation, such a reduction on investment loans facilitates it. We find that developing countries may be trapped at a low-capital-stock steady state while developed countries converge to a high-capital-stock steady state. Instead of adopting policies of financial liberalization, interestingly, this paper finds that policies of financial repression may enable developing countries to escape the development trap.     

Trade,Growth, and Environmental Quality*

This paper examines linkages between international trade, environmental degradation, and economic growth in a dynamic North–South trade game. Using a neoclassical production function subject to an endogenously improving technology, North produces manufactured goods by employing labor, capital, and a natural resource that it imports from South. South extracts the resource using raw labor, in the process generating local pollution. We study optimal regional policies in the presence of local pollution and technology spillovers from North to South under both non‐cooperative and cooperative modes of trade. Non‐cooperative trade is inefficient due to stock externalities. Cooperative trade policies are efficient and yet do not benefit North. Both regions gain from improved productivity in North and faster knowledge diffusion to South regardless of the trading regime.     

Capital Inflows,Exchange Rate Flexibility and Credit Booms

Historically, capital flow bonanzas have often fueled sharp credit expansions in advanced and emerging market economies alike. Focusing primarily on emerging markets, this paper analyzes the impact of exchange rate flexibility on credit markets during periods of large capital inflows. It is shown that bank credit is larger and its composition tilts to foreign currency in economies with less flexible exchange rate regimes, and that these results are not explained entirely by the fact that the latter attract more capital inflows than economies with more flexible regimes. The findings thus suggest countries with less flexible exchange rate regimes may stand to benefit the most from regulatory policies that reduce banks' incentives to tap external markets and to lend/borrow in foreign currency; these policies include marginal reserve requirements on foreign lending, currency‐dependent liquidity requirements and higher capital requirement and/or dynamic provisioning on foreign exchange loans.     

The trade-off between agriculture and biodiversity in marginal areas: Can crofting and bumblebee conservation be reconciled?

Crofting is a low intensity agricultural system restricted to the Highlands and Islands of northern Scotland typified by small scale mixed livestock production and rotational cropping activities. As with other low intensity farming systems across Europe, crofting is changing in response to a range of socio-economic factors. This is having a negative impact on the populations of rare bumblebees that are associated with this agricultural system. In this paper we use an ecological-economic modelling approach to examine the likely impacts of introducing two different management options for conserving bumblebees on croft land-use and income. Two linear programming models were constructed to represent the predominant crofting systems found in the Outer Hebrides, and varying constraints on bumblebee abundance were imposed to examine the trade-off between conservation and agricultural incomes. The model outputs illustrate that in some instances it is likely that both agricultural profits and bumblebee densities can be enhanced. We conclude that policy-makers should take into consideration the type of farming system when designing cost-effective agri-environment policies for low intensity farming systems, and that improvements in bee conservation are not necessarily in conflict with maintaining farm income.