Debt and development: The role of foreign capital in economic growth

Capital flows, whether between individuals or nations, are dominated by a two- fold paradox. Borrowers are initially primarily interested in obtaining sufficient funds for their needs, but once they have obtained a loan, their indebtedness becomes their principal concern. While a loan is being negotiated the lenders usually have the upper hand, but once it is made, they become dependent on the borrowers for repayment with interest. Their power to withhold future loans becomes their only real measure of control. Borrowing and lending has costs and benefits, and these balance out only in exceptional cases for both the borrowing and lending countries and the principal social groups within them. The debate about the impact of international capital flows accordingly has a long history. This paper begins with a historical perspective, and then reviews the principal characteristics of capital flows to developing countries since the 1950s. A discussion of the impact of capital flows on development, with a particular emphasis on trends in developing country indebtedness, follows. A brief examination of borrowing and debt management issues for borrowers, lenders and the international community concludes the paper.     

Public Disclosure of Forward Contracts and Revelation of Proprietary Information

Financial executives of firms engaged in forward contracting have raised concerns that mandated disclosure of those contracts would reveal proprietary information to rival firms. This paper considers the basis for those concerns in the framework of a duopoly in which one privately informed producer enters the forward market prior to production. In choosing its forward position, the firm considers the effects of that position on the forward price and second stage product market competition with its rival. Two regimes are considered: mandated disclosure and no disclosure. Under the former, the contracting firm faces a tension between exploiting its information advantage in the forward market and attempting to influence the production decision of its rival. On average, in equilibrium, the contracting firm gains a first-mover advantage, but at the cost of revealing its private information to its rival and extracting less expected gains from uninformed forward market participants. In contrast, with no disclosure, the contracting firm cannot influence rival firm beliefs, but extracts more expected gains from its private information in both the forward and product markets. On balance, the contracting firm prefers no disclosure. Moreover, parameterizations exist such that the rival also prefers that regime. These findings explain the opposition of respondents to draft proposals of Statement of Financial Standards No. 133.     

The Allocation of Nutrient Load Reduction across a Watershed: Assessing Delivery Coefficients as an Implementation Tool

Delivery coefficients have long been used in economic analysis of policies that seek to address environmental problems like water pollution. However, the derivation and validity of delivery coefficients have not been examined carefully by empirical analyses. We derived estimates of delivery coefficients and then evaluated them as a bridge between complex simulation models and economic policies like water quality trading. We found that the allocations achieved outcomes that differed from intended water quality targets by less than 10% in most cases. For the least-cost allocation with heterogeneous costs, cost savings significantly outweighed deviations from water quality targets.     

Rogoff revisited: The conservative central banker proposition under active fiscal policies

The paper re-examines Rogoff's [Rogoff, K., 1985. The Optimal Degree of Commitment to an Intermediate Monetary Target. Quarterly Journal of Economics 100, 1169–1189.] influential monetary policy result. It shows that responses of a conservative central banker and the resulting macroeconomic outcomes may be substantially different if interactions with (ambitious) fiscal policy are taken into account.     

Rezoned for Business: How Eco-Tourism Unlocked Black Farmland in Eastern Zimbabwe

Eco‐tourism is undermining black smallholders' entitlement to land in Zimbabwe. In the 1890s, British administrators restrained whites from alienating the whole of the country by demarcating native reserves. In terms of this limited aim, the policy of native reserves worked. It ensured a land base for black agriculture, particularly for women and children. In the late 1980s, however, CAMPFIRE (Communal Areas Management Programme for Indigenous Resources) invited the tourism industry to begin operations in the lowland reserves. These ?rms have claimed land, made money and relocated smallholders. Based on economic and ecological arguments, CAMPFIRE has rede ?ned the black entitlement as merely a claim competing with those of other ‘stakeholders’. No guarantees exist for residents and cultivators. Indeed, government and NGOs are fast transforming the lowland reserves into privileged and subsidized investment zones. Held in check for a century, a new kind of settler colonialism is sweeping down from the highlands.     

Establishing public preferences for coalition government: An empirical study in economic planning behaviour

Summary The analysis of public policy demands an understanding of public priorities, and some model for evaluating alternative policy decisions rationally. Therefore models of economic planning behaviour, whether positive or normative, need to reflect collective rather than private objectives in order to be able to describe consensus decisions. This paper argues that where decisions can be treated as if derived from ‘bargaining’ between planners and an economic model through individual policy experiments, the information on which options were preferred or rejected can be used to build up the corresponding priorities via an interactive planning scheme. Certain restrictions on such representations of priorities are noted. A numerical example establishes the economic priorities of a recent Dutch coalition government, using unrestricted quadratic objectives.