Making Conditional Cash Transfer Programs More Efficient: Designing for Maximum Effect of the Conditionality

Conditional cash transfer programs are now used extensivelyto encourage poor parents to increase investments in their children’shuman capital. These programs can be large and expensive, motivatinga quest for greater efficiency through increased impact of theprograms’ imposed conditions on human capital formation.This requires designing the programs’ targeting and calibrationrules specifically to achieve this result. Using data from theProgresa randomized experiment in Mexico, this article showsthat large efficiency gains can be achieved by taking into accounthow much the probability of a child’s enrollment is affectedby a conditional transfer. Rules for targeting and calibrationcan be made easy to implement by selecting indicators that aresimple, observable, and verifiable and that cannot be manipulatedby beneficiaries. The Mexico case shows that these efficiencygains can be achieved without increasing inequality among poorhouseholds.     

Chinese banking reforms in perspective: towards global alignment or national specificity?

The reforms of the banking sector in China conducted so far have been seeking to accomplish, simultaneously, two conflicting goals. On the one hand, the objective was to prepare Chinese banks for international competition and put them at the pace with the transformations observed in its overall economy. On the other, there is a social-driven agenda concerning employment and regional inequalities. Using principal component analysis, this article explores the impact of the ongoing reforms in the Chinese banking sector on the performance of individual banks. The results show that despite identical regulation, business practices can be dissimilar at the individual level. Taken collectively, the results also show the increasing influence of Western management standards in the Chinese banking sector.     

Europe’s Search for Superstar Firms: The Puzzle of European Champions

Intereconomics - Europe appears to be on a quest for so-called ‘European champions’. These firms have become a symbol and measure for European competitiveness. To date, we know little...     

Corporate Finance and Sustainability: the Case of the Electric Utility Industry

The electric utility industry is in transition but needs to move even faster if the country is to meet its emissions goals. The industry has historically moved cautiously, but policies and regulatory approaches must avoid unintentionally reinforcing the status quo. Incentive‐oriented policies and redesigned regulations must balance environmental sustainability with economic sustainability. The authors draw on well‐established corporate finance principles to guide more effective policies. Shareholder‐focused utility executives must make investments conditioned by three elements: (1) the return on equity the utility can expect to make on each project; (2) the investors' required return on equity capital for each project; and (3) the size of the investment. The well‐established economic value added (EVA) model can assist policy analysis: V=(r‐k)I; where V is the shareholder value created, r is the return on equity, k is the return investors require if they are to invest in the stock, and I is the scale of the project. Any new incremental V translates into higher stock prices. All three elements of their model (i.e., risk, return, and scale) require attention by regulators and policymakers to create value for shareholders. The authors show how the right state policies could create powerful incentives for shareholder focused utility executives to support such transitions.     

Hunger games: or how the Allied blockade in the First World War deprived German children of nutrition,and Allied food aid subsequently saved them

At the onset of the First World War, Germany was subject to a shipping embargo by the Allied forces. Ostensibly military in nature, the blockade prevented not only armaments but also food and fertilizers from entering Germany. The impact of that blockade on civilian populations has been debated ever since. Germans protested that the Allies had wielded hunger as a weapon against women and children with devastating results, a claim that was hotly denied by the Allies. The impact of what the Germans termed the Hungerblockade on childhood nutrition can now be assessed using a newly discovered dataset based on heights and weights of nearly 600,000 German schoolchildren measured between 1914 and 1924. Statistical analysis reveals a grim truth: German children suffered severe malnutrition due to the blockade. Social class impacted risk of deprivation, with working‐class children suffering the most. Surprisingly, they were the quickest to recover after the war. Their rescue was fuelled by massive food aid organized by the former enemies of Germany, and delivered cooperatively with both government and civil society. The ability of former belligerents to work together after an exceptionally bitter war to feed impoverished children may hold hope for the future.     

DYNAMIC OUTPUT RESPONSE REVISITED: THE INDIAN CASH CROPS

Diverse instruments have been used to encourage developing agriculture. In the process, billions of dollars have been spent on providing incentives to peasants. Given scarce resources, an important concern has been the issue of what policy instruments to emphasize. In this regard, useful policy information can be gleaned from the role of expected profits (revenue and input prices), assets (irrigation and infrastructure), and relevant risks, in evoking peasant response. Using panel data for the period 1967/1968 to 1999/2000 pertaining to seven major Indian cash crops cultivated across 14 major states, we find strong evidence of a differential producer response in the post‐liberalization phase, although the important variables per se are much the same. Our results suggest that the preferred policy ought to emphasize availability of irrigation, affordable fertilizer, and rural infrastructure, rather than incessant increases in output prices.     

It’s so hot: predicting climate change effects on urban tourists’ time–space experience

Abstract

Progressive changes in mean annual temperatures are arguably the strongest evidence of ongoing climate change. In destinations with a Mediterranean climate, in contrast to the colder months, during summer, rising air temperatures are believed to inhibit tourist movements and activities, and consequently affect tourists’ evaluation of and satisfaction with their experiences. To the best of our knowledge, no previous study has investigated the potential impact of climate change on tourists’ time–space activity using actual behavioural tracking-based information. Data collected via GPS technology and a post-visit survey of tourists (n = 404) visiting Lisbon during the summer were analysed via structural equation modelling (PLS-SEM). The results report empirical evidence of the present impact of (summer) weather on urban tourists’ time–space activity and on their intra-destination experience evaluation. Specifically, maximum air temperature is found to have a significant negative effect on overall satisfaction, while the meteorological conditions of the entire day reveal a significant impact on tourists’ activities and movements. The results are particularly useful for the sustainable adaptive management of urban attractions and destinations that are especially vulnerable to climate change, as well as in managing its adverse impact on tourists’ experiences.     

GROWTH, POVERTY, AND INEQUALITY IN LATIN AMERICA: A CAUSAL ANALYSIS, 1970–94

Taking advantage of consistent poverty and income inequality data for 12 Latin American countries between 1970 and 1994, we analyze the determinants of changes in the incidence of urban and rural poverty and in Gini coefficients over spells of years, stressing in particular the role of aggregate income growth. We find that income growth reduces urban and rural poverty but not inequality. We also find that income growth is more effective in reducing urban poverty if the levels of inequality and poverty are lower, and the levels of secondary education higher. We show that there is an asymmetry in the impact of growth on poverty and inequality, with recession having strong negative effects on both poverty and inequality. Since growth does not reduce inequality, economic cycles create ratchet effects on the level of inequality. However, post-structural adjustment growth is quite effective at reducing poverty, particularly if inequality is low.     

Reasons for Japan's low unemployment rate

Since the beginning of the seventies, most OECD member countries have suffered from a substantial increase in measured unemployment rates. A notable exception is Japan, whose official unemployment rate is far below observed figures in other countries. This article examines the reasons why Japan's unemployment record has been better than those of the USA and West Germany.