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62. How Does Monetary Policy Affect the Poor? Evidence from the West African Economic and Monetary Union
- Author:
- David Fielding
- Publication Date:
- 01-2004
- Content Type:
- Working Paper
- Institution:
- United Nations University
- Abstract:
- The West African Economic and Monetary Union (UEMOA) has a history of monetary stability and low inflation. Nevertheless, there is substantial variation in relative prices within some UEMOA countries, in particular in the price of food relative to other elements of the retail price index (IHPC). Using monthly time-series data for cities within the region, we analyze the impact of changes in monetary policy instruments on the relative prices of components of the IHPC. We are then able to explore how the burden of monetary policy innovations is likely to be shared between the rich and poor.
- Topic:
- Economics, Human Welfare, International Political Economy, and International Trade and Finance
- Political Geography:
- Africa
63. A Development-focused Allocation of the Special Drawing Rights
- Author:
- Ernest Aryeetey
- Publication Date:
- 03-2004
- Content Type:
- Working Paper
- Institution:
- United Nations University
- Abstract:
- Efforts to realize the issue of development-focused Special Drawing Rights (SDR) by the International Monetary Fund (IMF) have been on-going for many years. Recently, however, the campaign first gained a new momentum immediately after the Asian financial crises with the new liquidity problems of developing nations following the collapse of private capital markets. Currently the search for financing options towards the achievement of the Millennium Development Goals drives the interest in development-focused SDRs. Extending the uses to which SDR can be put is derived from the growing demands on the international financial system to respond to the development finance needs of poor nations. Apart from the need to provide emergency funds in times of crises and the whole area of crisis prevention, increasingly the facilitation of development in poor countries and assistance to make the best policy decisions is considered crucial.
- Topic:
- Development, Economics, International Political Economy, and International Trade and Finance
- Political Geography:
- Asia
64. Regional or National Poverty Lines? The Case of Uganda in the 1990s
- Author:
- Simon Appleton
- Publication Date:
- 12-2003
- Content Type:
- Working Paper
- Institution:
- United Nations University
- Abstract:
- Absolute poverty lines are often derived from the cost of obtaining sufficient calories. Where staples vary across regions, such poverty lines may differ depending on whether they are set using national or regional food baskets. Regional poverty lines are open to the objection that they may be contaminated by income effects. This paper explores this issue by focussing on Uganda, a country where widening spatial inequalities in the 1990s have caused concern. Conflicting results from earlier studies have suggested that the spatial pattern of poverty in Uganda is very sensitive to whether national or regional food baskets are used in setting poverty lines. We confirm this suggestion by comparing the spatial profile of poverty in 1993 using national and regional poverty lines. However, since the regions consuming the more expensive staple sources of calories are also those with higher incomes, using simple regional poverty lines is problematic. Instead, a method of setting regional poverty lines is considered that adjusts for income differentials between regions. Even with this adjustment, the use of regional food baskets implies a markedly different.
- Topic:
- Development, International Trade and Finance, and Poverty
- Political Geography:
- Uganda and Africa
65. Remittances by Emigrants: Issues and Evidence
- Author:
- Andrés Solimano
- Publication Date:
- 12-2003
- Content Type:
- Working Paper
- Institution:
- United Nations University
- Abstract:
- Remittances, after foreign direct investment, are currently the most important source of external finance to developing countries. Remittances surpass foreign aid, and tend to be more stable than such volatile capital flows as portfolio investment and international bank credit. Remittances are also an international redistribution from low-income migrants to their families in the home country.
- Topic:
- Development, Economics, International Trade and Finance, and Migration
66. Innovative Sources for Development Finance: Over-Arching Issues
- Author:
- Anthony B. Atkinson
- Publication Date:
- 12-2003
- Content Type:
- Working Paper
- Institution:
- United Nations University
- Abstract:
- In analysing proposals for new sources of development funding, there are several issues that arise across the board. What is the role of new sources in relation to existing overseas development assistance? Should we be seeking new sources that generate a double dividend? Can the key elements of a proposal be achieved by another route? What should be the fiscal architecture? Is there a modern transfer problem? It is with these general concerns that the present paper deals. Its aim is to bring to bear on global public finance the accumulated knowledge in the field of national public finance, and more generally public economics.
- Topic:
- Development, Economics, and International Trade and Finance
67. National Taxation, Fiscal Federalism and Global Taxation
- Author:
- Robin Boadway
- Publication Date:
- 12-2003
- Content Type:
- Working Paper
- Institution:
- United Nations University
- Abstract:
- This paper considers lessons from the practice of fiscal federalism for guidance on new approaches to development finance. Despite the fact that inter-regional redistribution in a federation relies on a central government with strong fiscal powers, the form of that redistribution can be used as a benchmark for international development assistance financing. In a federation, finance for less-developed regions takes the form of equalizing transfers to sub-national governments. The objective of these transfers is to enable sub-national governments to provide comparable levels of public services at comparable tax rates, called fiscal equity, leaving them discretion to implement interpersonal redistribution schemes within their jurisdictions. This same principle of assuming that national governments rather than donor nations are responsible for vertical equity within their borders leads to the view that the ideal form of development assistance is a system of equalizing inter-nation transfers intended to enhance fiscal equity.
- Topic:
- Development, Economics, Government, and International Trade and Finance
68. Environmental Taxation and Revenue for Development
- Author:
- Agnar Sandmo
- Publication Date:
- 12-2003
- Content Type:
- Working Paper
- Institution:
- United Nations University
- Abstract:
- This paper considers the role of global environmental taxes both as instruments for improving the global environment and as a source of revenue for funding economic development. It reviews the general case for environmental taxes and the particular issues that arise for the adoption of such taxes in an international setting without a single jurisdiction. It also discusses the possibilities for political acceptance of such taxes when tax revenue is linked to the goal of economic development. The revenue potential of global environmental taxes is evaluated with special reference to a global carbon tax. It is found that this tax alone has the potential to raise sufficient revenue to finance the United Nations' Millennium Development Goals.
- Topic:
- Development, Economics, Environment, and International Trade and Finance
69. Which Types of Aid Have the Most Impact?
- Author:
- George Mavrotas
- Publication Date:
- 12-2003
- Content Type:
- Working Paper
- Institution:
- United Nations University
- Abstract:
- The paper uses an aid disaggregation approach to examine the impact of different types of aid on the fiscal sector of the aid-recipient country. It uses time-series data on different types of aid (project aid, programme aid, technical assistance and food aid) for Uganda, an important aid recipient in recent years, to estimate a model of fiscal response in the presence of aid which combines aid disaggregation and endogenous aid. The empirical findings clearly suggest the importance of the above approach for delving deeper into aid effectiveness issues since different aid categories have different effects on key fiscal variables—an impact that could not be revealed if a single figure for aid was employed. More precisely, project aid and food aid appear to cause a reduction in public investment whereas programme aid and technical assistance are positively related to public investment. The same applies for government consumption. A negligible impact on government tax and non-tax revenues, and a strong displacement of government borrowing are also found.
- Topic:
- Economics, International Trade and Finance, and Poverty
- Political Geography:
- Uganda and Africa
70. Loan Processing Costs and Information Asymmetries - Implications for Financial Sector Development and Economic Growth
- Author:
- George Mavrotas and Salvatore Capasso
- Publication Date:
- 12-2003
- Content Type:
- Working Paper
- Institution:
- United Nations University
- Abstract:
- The paper presents a model in which credit-constrained firms might delay the adoption of new and more productive technologies because of the very high external financing costs they face. Our point of departure is that the efficiency of the banking system can have a profound impact on real resource and investment allocation not only directly, by reducing the amount of resources channelled to the credit market, but also indirectly by affecting entrepreneurs' investment decisions. Along these lines of reasoning we develop a model of information asymmetries in the credit market in which high costs of processing bank loan applications might obstruct investments in high-tech projects and favour, instead, low-return, self-financed investments in mature sectors. The result is that these kinds of costs have a negative impact on the average capital productivity and on the rate of economic growth. In specific circumstances, the combination of these costs and the dynamics of capital accumulation can be such that the economy incurs in a 'technology trap', in which new technologies, even if readily available, will never be adopted because of high frictions and inefficiencies in the credit market, a situation that seems to be relevant to many developing countries.
- Topic:
- Development, Economics, and International Trade and Finance
71. The Revenue and Double Dividend Potential of Taxes on International Private Capital Flows and Securities Transactions
- Author:
- Ilene Grabel
- Publication Date:
- 12-2003
- Content Type:
- Working Paper
- Institution:
- United Nations University
- Abstract:
- This paper explores two proposals to tax financial flows in developing economies—the package of policies implemented to various degrees by Chile and Colombia during the 1990s, widely referred to today as the Chilean model—and securities transactions taxes (STTs). I find that each provides a viable mechanism to raise revenue in some developing countries. Both can be introduced unilaterally (with the prospect of multilateral coordination in the future); both are progressive in their incidence, and in the case of the STT, represents an administratively manageable form of revenue collection. I also find that each entails double dividends that manifest in greater domestic and international macroeconomic stability.
- Topic:
- Development, Economics, and International Trade and Finance
72. Private Donations for International Development
- Author:
- John Micklewright and Anna Wright
- Publication Date:
- 12-2003
- Content Type:
- Working Paper
- Institution:
- United Nations University
- Abstract:
- Charitable donations by private individuals and firms can help fund the Millennium Development Goals. What are the prospects for increasing donations for international development, whether from small-scale donors, the super-rich (as in the recent gifts by Bill Gates and Ted Turner), or the corporate sector? The paper starts by reviewing how large are the sums currently given in OECD countries (including gifts of time) and the problems development has in competing with domestic causes. It then looks at possibilities for the future, including tax deductions, the new 'global funds', corporate social responsibility and 'cause-related marketing', the use of the Internet, and long-term donor education.
- Topic:
- Development, International Cooperation, International Trade and Finance, and Third World
73. Revenue Potential of the Currency Transaction Tax for Development Finance: A Critical Appraisal
- Author:
- Machiko Nissanke
- Publication Date:
- 12-2003
- Content Type:
- Working Paper
- Institution:
- United Nations University
- Abstract:
- The paper assesses the potential of currency transaction taxes (CTT, widely known as the Tobin tax), to raise revenue for global development. Though Tobin proposed and others assessed CTTs in terms of reducing exchange rate volatility and improving macroeconomic policy environments, this paper considers the CTT first and foremost from the standpoint of revenue. With a view of establishing a 'permissible' range of tax rates to obtain realistic estimates of revenue potential, it first reviews the debate over the effects of CTT on market liquidity and the efficiency of foreign exchange markets, and assesses the Spahn proposal for a two-tier currency tax. It then moves to a discussion of the technical and political feasibility of CTT, followed by an evaluation of several new proposals, such as those advanced by Schmidt and Mendez. The paper presents revenue estimates from CTT in light of recent changes in the composition and structure of foreign exchange markets.
- Topic:
- Development, Economics, Globalization, and International Trade and Finance
74. A Global Lottery and a Global Premium Bond
- Author:
- Tony Addison and Abdur R. Chowdhury
- Publication Date:
- 12-2003
- Content Type:
- Working Paper
- Institution:
- United Nations University
- Abstract:
- The world lottery market now amounts to at least US$126 billion in sales. World market sales for all gaming products (public, charitable and commercial) total some US$1 trillion, of which Internet gambling accounts for US$32 billion. This paper assesses the prospects for harnessing this large and growing market for the purposes of development finance by means of a global lottery and a global premium bond (with the successful UK scheme providing a model for the latter). Each has different strengths: the global lottery can add to the supply of grant finance for development, while the global premium bond could be an attractive savings instrument for ethical investors. The paper concludes that global versions of both a lottery and a premium bond are viable and complementary in mobilizing more development finance.
- Topic:
- Development, Economics, International Cooperation, and International Trade and Finance
- Political Geography:
- United Kingdom
75. The International Finance Facility: The UK HM Treasury-DFID Proposal to Increase External Finance to Developing Countries
- Author:
- George Mavrotas
- Publication Date:
- 12-2003
- Content Type:
- Working Paper
- Institution:
- United Nations University
- Abstract:
- The paper discusses the International Finance Facility (IFF), a joint HM Treasury-DFID proposal to increase development aid substantially for the Millennium Development Goals to be achieved by 2015. The main conclusion of the paper is that the proposed IFF is a promising, forward-looking and creative proposal for it implies a substantial increase in fresh, predictable and stable aid as well as a robust financial structure. However, there are a number of concerns about potential shortcomings of the proposal, namely its underlying assumptions about continuous commitment on behalf of the donor community towards the implementation of the IFF during the life of the Facility and most importantly its heavy reliance on political coordination among donor countries participating in the proposed scheme. Potential absorptive capacity constraints in IFF aid-recipient countries may be also relevant. Achieving its huge political task as well as alleviating the crucial constraints regarding its successful implementation seem to be the main challenges this innovative proposal needs to deal with in the near future.
- Topic:
- Development, International Cooperation, and International Trade and Finance
- Political Geography:
- United Kingdom and Europe
76. Some Welfare Implications of 'Who Goes First?' in WTO Negotiations
- Author:
- Basudeb Guha-Khasnobis
- Publication Date:
- 09-2003
- Content Type:
- Working Paper
- Institution:
- United Nations University
- Abstract:
- We envisage a logical framework to explain why some trade negotiations are delayed because parties differ on who should 'go first'. In our model, there are substantive welfare implications depending on which party sets tariff rates (or subsidies) first in a strategic optimization exercise. When knowledge about cost levels are incomplete or missing, and hence must be guessed with a probability, the chances of conflict regarding who goes first are extremely high in the situation modeled in this paper. As an institution with some power to set the rules of negotiations, the WTO should be able to anticipate such conflicts in upcoming negotiations. It can then set the rule (in this case, dictate who should go first) depending on whose interest it wants to protect. There is a wide range of choices for the WTO in this regard: OECD consumer's surplus, OECD producers' loss, net exports of developing countries, firm profits, or even, world welfare as the sum of all these components.
- Topic:
- Development, International Organization, International Political Economy, and International Trade and Finance
77. Who Gains from Tariff Escalation?
- Author:
- Basudeb Guha-Khasnobis
- Publication Date:
- 09-2003
- Content Type:
- Working Paper
- Institution:
- United Nations University
- Abstract:
- With the help of a simple model of production and trade, we examine the differential impact of tariff escalation on skilled and unskilled wages in an economy. Our findings provide a lobbying-based explanation of the prevalence of tariff escalation in developed countries. It also predicts the possible response of a developing country and shows how similar lobbying activity in that country can slow the pace of liberalization of service sector trade.
- Topic:
- Development, Economics, and International Trade and Finance
78. International Trade, Location and Wage Inequality in China
- Author:
- Songhua Lin
- Publication Date:
- 09-2003
- Content Type:
- Working Paper
- Institution:
- United Nations University
- Abstract:
- Models of economic geography predict that transportation costs directly affect demand for goods and the supply of intermediate inputs. One of the reasons that international trade is concentrated in the coastal provinces of China is that they have lower transportation costs in transporting goods to other countries than do provinces in the interior. This paper examines the relationship between the provincial wage rate and each province's access to international markets, and to suppliers of intermediate inputs. A gravity equation is first estimated to construct these 'market access' and 'supplier access' variables. In the second stage, the effect of market access and supplier access on the wage rate is estimated. It is found that about one quarter of the provincial wage differences in the coastal provinces and 15 per cent of the wage differences in the interior provinces can be explained by these economic geography variables.
- Topic:
- Industrial Policy and International Trade and Finance
- Political Geography:
- China, Israel, and East Asia
79. Economic Polarization Through Trade: Trade Liberalization and Regional Growth in Mexico
- Author:
- Andrés Rodríguez-Pose and Javier Sánchez-Reaza
- Publication Date:
- 09-2003
- Content Type:
- Working Paper
- Institution:
- United Nations University
- Abstract:
- The paper analyses the impact trade liberalization and economic integration have had on regional growth and regional disparities in Mexico over the last two decades. It is highlighted that the passage from an import substitution system to membership of the General Agreement on Tariffs and Trade (GATT) first, and to economic integration in the North American Free Trade Agreement (NAFTA) later, has been associated with greater concentration of economic activity and territorial polarization. The analysis also shows that these changes herald a period of transition between two growth models. Regional growth in the final stages of the import substitution period was mainly characterized by convergence and linked to the presence of oil and raw materials and proximity to Mexico City. Economic liberalization and regional integration in NAFTA has been related to regional divergence, a reduction of the importance of Mexico City as the main market and to the emergence of an economic system in which the endowment of skilled labour starts to play a more important role.
- Topic:
- Economics and International Trade and Finance
- Political Geography:
- North America and Mexico
80. Regional Output Differences in International Perspective
- Author:
- Alan Heston and Bettina Aten
- Publication Date:
- 08-2003
- Content Type:
- Working Paper
- Institution:
- United Nations University
- Abstract:
- Accurate regional estimates of output are desired as an indicator of level of development and as a variable used to explain internal migration, demand patterns, fertility and other aspects of behaviour. This chapter explores one often neglected aspect of regional income differences, namely that due to price differences or regional purchasing power parities. When nominal regional income measures are adjusted for these price level differences they are termed real regional incomes. The preferred method of estimating regional purchasing power parities by detailed price comparisons is discussed for Brazil, the United States and the European Union. The empirical thrust of the chapter is an investigation of different methods for estimating regional real incomes based on PPP data for 167 countries and nominal regional incomes and other data for about 870 administrative areas at the subnational level. Even in their present form we believe the real income estimates provided for the geographical units present opportunities for understanding the world economic structure.
- Topic:
- Development, Economics, and International Trade and Finance
- Political Geography:
- United States, Europe, and Brazil