Aid Effectiveness,Debt Relief and Public Finance Response: Evidence from a Panel of HIPC Countries

Substantial amounts of debt relief have been granted to a set of low-income countries, as an alternative aid modality. Although the theoretical case for debt relief is firmly established, only empirical analysis can show whether debt relief is indeed a (more) effective mode of aid delivery. We investigate the linkages between debt relief and other fiscal variables such as current expenditure, government investment, taxation and domestic borrowing, in comparison to the effects of grants and concessional loans. We find that the fiscal impact of HIPC debt relief follows fairly complex dynamics. For example, debt relief initially reduces government investment, but the effect becomes positive after two years, well outperforming other modes of aid delivery. JEL no. F34, F35, O11, O19     

Are Environmental Social Movements Socially Exclusive? An Historical Study from Thailand

Environmental social movements in developing countries are often portrayed as democratizing but may contain important social divisions. This paper presents a new methodology to analyze the social composition and underlying political messages of movements. Nearly 5 000 newspaper reports during 1968–2000 in Thailand are analyzed to indicate the participation of middle and lower classes, and their association with “green” (conservationist) and “red-green” (livelihoods-oriented) environmental values. Results show middle-class “green” activism has dominated forests activism, but lower-class “red-green” activism has grown for forests and pollution. Newspapers, however, portray all environmentalism as “democratization,” suggesting that the possible exclusiveness of some environmental norms is unacknowledged.     

Current Account and Fiscal Policy in Japan: 1885–1991

This paper explores the empirical relationship between the current account balance and macroeconomic series for the Japanese economy over the years 1885–1991. The long-run equilibrium depends on which series (public debt or budget deficits) affects assets relative to a capital stock rate. Departing from the Ricardian Equivalence structure (no bequest motives), fiscal policy in Japan is shown to be more related to the current account when policy is introduced by shifts in tax revenues rather than by changes in national debt.     

Pollution in a globalized world: Are debt transfers among countries a solution?

We analyze the effects of a debt relief, that is, a decrease in public debt of a low-income country financed by a high-income country, on environmental quality. Under perfect mobility of assets, the debt relief increases the overall capital stock, and environmental quality when public abatements are sufficiently efficient. Welfare in both countries can also improve. Under a weak mobility of assets, capital does no more increase in the richest country, but environmental quality can improve. This comes from a crowding-out effect of debt in the high-income country, which does no more take place when the mobility of assets is significant.     

Outsourcing the State? Public–Private Partnerships and Information Technologies in India

This paper examines public–private partnerships (PPPs) for development through the example of telecenters in two Indian states. How might a developmental state position itself with respect to civil society under a PPP model of service delivery? We find that each state’s political economy is reflected in its PPP strategy, but that in both states the emerging middle classes rather than the poor benefit most from ongoing telecenter projects. Outsourcing development services to private entities need not “privatize” the state but does alter the way in which citizens “see” the state. Service delivery through telecenters becomes a symbol of government efficiency and responsiveness.     

Bondholder gains from the annexation of Texas and implications of the US bailout

The fate of distressed Republic of Texas debt offers a rare example of bondholder gains associated with state annexation. While soaring in hopes of a US bailout, Texas debt prices remained well below par and never seemed to presume full repayment, however. The fluctuations of the Texas debt on the Philadelphia Stock Exchange over the 1845–1855 period between annexation and final settlement feature structural breaks typically connected with either actual legislation or rumors of pending action. Negative turning points follow when US legislative initiatives in 1845 and 1850 failed to yield a quick resolution of the Texas debt.     

Budgetary Consolidation in Europe: Quality, Economic Conditions, and Persistence

In this article we study the importance of the quality of fiscal adjustments and macroeconomic conditions for the persistence of budgetary consolidations. In contrast to previous work in this area, we do not arbitrarily predefine a measure of persistence to evaluate consolidation “success.” By employing duration analysis techniques, the length of a consolidation spell is rather determined endogenously. Our results based on a sample of industrialised OECD countries show that “consolidation fatigue” and the quality of fiscal consolidations are indeed important determinants of their longevity. Moreover, high debt–GDP ratio and fiscal tightening in other OECD countries raise the likelihood of consolidations to persist. Applying our results to European countries in the 1990s provides only weak evidence suggesting that the Maastricht process contributed much to the fiscal consolidations observed in Europe during the 1990s. J. Japan. Int. Econ., December 2002, 16(4), pp. 512–535. ZEI, University of Bonn, Bonn, Germany, Indiana University, Bloomington, Indiana; and CEPR; Strathclyde University, Glasgow, Scotland; and CEPR; and ECB, Kaiserstrasse 29, D-60311 Frankfurt a.M., Germany; and ZEI. © 2002 Elsevier Science (USA).Journal of Economic Literature Classification Numbers: E61, E62, E65.     

投资于亚洲国家的主权债务更安全吗?

本文利用全球21个主要经济体的样本数据,通过跨期主权债务模型和实证模型的分析,探讨这些国家的主权债务风险情况,并给出各国所处的不同风险层级。研究结果表明世界上主要经济体的主权债务状况呈现较为明显的分化状态,且在区域内表现出明显的不对称性。亚洲和欧洲等地区都有国家分处在不同的安全级别,任何一个洲在整体上都不在主权债务安全水平上有特别的优势。本文的实证结果还同时甄别出现阶段主权债务风险较低的国家,为我国巨额外汇储备的投资组合提供了选择依据。     

Debt Relief and Credit to the Private Sector in African Countries

Abstract: The purpose of the paper is to empirically investigate the link between debt relief and credit to the private sector in African countries using a panel method over the period 1988–2004. The motivation for investigating the relationship between debt relief and credit to the private sector follows Christensen's (2004) hypothesis that domestic debt has a negative impact on the credit to private sector; therefore debt relief is expected to alleviate domestic debt and thereby create space for domestic credit, which if it is mostly constituted of public sector credit, crowds out credit to the private sector. The main results of the paper are as follows: (1) debt relief has a significant and positive effect on credit to the private sector in the short term; (2) in the long term, debt relief has positive effects on domestic credit to the private sector only when associated with good initial institutional quality.     

The Increasing Selectivity of Foreign Aid, 1984–2003

The Monterrey Consensus includes the idea that foreign aid is more effective when targeted to countries with sound institutions. We examine the extent to which foreign aid, bilateral and multilateral, is “selective” in terms of democracy and property rights/rule of law. We find that multilateral assistance is more selective than bilateral aid in targeting countries with good rule of law. “Selectivity” is a new phenomenon. During 1984–89, both bilateral and multilateral aid had significant negative relationships with rule of law; by 2000–03 this had shifted to a significant positive relationship for multilateral aid, and a positive but statistically insignificant relationship for bilateral aid.     

Debt Relief and Social Services Expenditure: The African Experience, 1989–2003

Abstract: In June 2005 the G8 proposed the Multilateral Debt Relief Initiative (MDRI) with the goal of canceling all International Development Association (IDA), International Monetary Fund (IMF) and African Development Fund (ADF) debt claims on countries that have reached, or will eventually reach, the completion point under the enhanced Highly Indebted Poor Countries (HIPC) initiative. The objective is to help HIPC make progress towards the Millennium Development Goals. The G8 initiative is worth $40 billion and would benefit 14 African countries immediately. It has the potential of freeing more resources than any past debt relief program. Between the 1988 Paris Club debt relief program up to 2003, Africa earned debt relief worth $65 billion. We take a critical look at the chances that the G8 initiative will reach its goals by empirically investigating the extent to which past debt relief granted to African countries did translate into a larger share of resources being allocated to social services expenditure. Our estimates indicate that debt relief provided to Africa between 1989 and 2003 had a positive impact on the share of a country's resources allocated either to public education or health in countries which have improved their institutions. Consequently, donors must address the need for institutional change as they grant debt relief to HIPC if the latter are to channel the freed‐up resources to the social sector.     

国债规模之我见

从1998年开始实施的以国债政策为主体的积极财政政策对我国经济发展功不可没。但是国债规模的日益扩大最终也可能产生其负面影响,因此对国债规模的研究日益受到我国经济学界和财政学界的广泛重视。同时,对国债规模的大小也是争论不休,存在的分歧较大。本文从对国债规模指标体     

A new institutional approach to pro-poor agricultural development: Lessons from Asia

Dr. Naya has been one of only two instructors of a course unique to the University of Hawaii called, “The Economics of Cooperation.” He was an early observer of deliberation councils and other institutions whereby the investment coordination problem was partly solved by extra-market cooperation in the East Asian “miracle” countries. These insights contributed to The Economics of Cooperation (1992), which featured the role of government as facilitator—a theme of Hawaii State Development Planning when Dr. Naya served on the Governor’s cabinet.Reconsidering government as a facilitator, and not as a replacement for markets, is one of the primary contributions of the New Institutional Economics (NIE). This paper extends and applies the facilitation perspective to the problem of agricultural development. Policy failures are detailed and sourced to the fallacy of misplaced exogeneity. In contrast, the method of fundamental explanation, inherent in NIE, acts as a corrective to misguided interventionism that has prevented pro-poor rural development from taking place.     

Mass democracy: The real reason that Brazil ended inflation?

“Populism” and expanded democratic participation often have been painted as the enemy of sane macroeconomics. Yet Brazil’s experience suggests possibly benign implications of stable mass democracy for national economic management in developing countries. Prior to 1930, agrarian elites ruled Brazil. As political participation gradually expanded, policymakers elaborated the regulatory framework of import-substituting industrialization (ISI). ISI not only generated strong growth but also chronically high and volatile inflation, with costs falling most heavily on the disenfranchised a poor majority. The advent of mass democracy in the mid-1980s gave the poor a political voice for the first time, and plausibly was the crucial cause for the demise of hyperinflation a decade later.     

Optimal currency shares in international reserves: The impact of the euro and the prospects for the dollar

Foreign exchange reserve accumulation has risen dramatically in recent years. The introduction of the euro, greater liquidity in other major currencies, and the rising current account deficits and external debt of the United States have increased the pressure on central banks to diversify away from the US dollar. A major portfolio shift would significantly affect exchange rates and the status of the dollar as the dominant international currency. We develop a dynamic mean-variance optimization framework with portfolio rebalancing costs to estimate optimal portfolio weights among the main international currencies. Making various assumptions on expected currency returns and the variance–covariance structure, we assess how the euro has changed this allocation. We then perform simulations for the optimal currency allocations of four large emerging market countries (Brazil, Russia, India and China), adding constraints that reflect a central bank's desire to hold a sizable portion of its portfolio in the currencies of its peg, its foreign debt and its international trade. Our main results are: (i) The optimizer can match the large share of the US dollar in reserves, when the dollar is the reference (risk-free) currency. (ii) The optimum portfolios show a much lower weight for the euro than is observed. This suggests that the euro may already enjoy an enhanced role as an international reserve currency (“punching above its weight”). (iii) Growth in issuance of euro-denominated securities, a rise in euro zone trade with key emerging markets, and increased use of the euro as a currency peg, would all work towards raising the optimal euro shares, with the last factor being quantitatively the most important. J. Japanese Int. Economies 20 (4) (2006) 508–547.     

Poverty Comparisons Over Time and Across Countries in Africa

We use Demographic and Health Surveys (DHS) to compare “poverty” at two or more points in time within and between African countries. Our welfare measure is an index resulting from a factor analysis of various household characteristics, durables, and household heads’ education. An advantage of this measure is that for intertemporal and intraregional comparisons, we need not rely on suspect price deflators and currency conversion factors. The wide availability and similarity of questionnaires of the DHS facilitate comparisons over both time and countries. Our results generally show declines in poverty during the previous decade, largely due to improvements in rural areas.     

COMPARATIVE FISCAL RESPONSE EFFECTS OF DEBT RELIEF: AN APPLICATION TO AFRICAN HIPCS

As part of the efforts of the international donor community to scale up aid to Africa, substantial debt relief has been granted in recent years through the Heavily Indebted Poor Countries (HIPC) Initiative and its successor, the Multilateral Debt Relief Initiative. This paper tries to assess, for a sample of 24 African countries that have at least reached decision point status in the HIPC Initiative, to what extent this debt relief has created fiscal space in recipient country budgets, and what, on average, the actual fiscal response effects have been, relative to other types of aid. Inspired by the fiscal response literature, we model public finance behaviour as a system of structural equations and estimate the reduced form parameters in a Vector Autoregressive framework. In general, we are unable to find evidence that debt relief might provoke no or even perverse fiscal responses. On average, debt relief affects public finance behaviour in a desired way, with effects being most similar to those of its most direct substitute, programme grants.     

Global Retail Chains and Poor Farmers: Evidence from Madagascar

Global retail companies (“supermarkets”) have an increasing influence on developing countries, through foreign investments and/or through the imposition of their private standards. The impact on developing countries and poverty is often assessed as negative. In this paper we show the opposite, based on an analysis of primary data collected to measure the impact of supermarkets on small contract farmers in Madagascar, one of the poorest countries in the world. Almost 10,000 farmers in the Highlands of Madagascar produce vegetables for supermarkets in Europe. In this global supply chain, small farmers’ micro-contracts are combined with intensive farm assistance and supervision programs to fulfill complex quality requirements and phyto-sanitary standards of supermarkets. Small farmers that participate in these contracts have higher welfare, more income stability and shorter lean periods. We also find significant effects on improved technology adoption, better resource management and spillovers on the productivity of the staple crop rice. The small but emerging modern retail sector in Madagascar does not (yet) deliver these benefits as they do not (yet) request the same high standards for their supplies.