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31. America's Infrastructure: Ramping Up or Crashing Down

Author:
Bruce Katz
Publication Date:
01-2008
Content Type:
Working Paper
Institution:
The Brookings Institution
Abstract:
Infrastructure has a dramatic effect on the economic competitiveness of our nation, the health of our environment and our quality of life. And infrastructure—freight ports, airports, bridges, roads, rail and transit networks, water and sewer systems, web of channel communications—is the connective tissue of our nation. Smart policies and investments can enhance and further national prosperity and the health and vitality of metropolitan areas, where the bulk of our population lives and jobs are located.
Topic:
Debt, Economics, and Political Economy
Political Geography:
United States

32. The Future of Red, Blue and Purple America

Author:
Ruy Teixeira
Publication Date:
01-2008
Content Type:
Working Paper
Institution:
The Brookings Institution
Abstract:
Political polarization in the United States has a number of causes, ranging from media hype to gerrymandering to hyper- ideological elites to cultural “sorting” between the parties. But there is another key contributor that is frequently overlooked: demographic and geographic changes in the electorate that have altered the sizes of different population groups and even shifted their political orientations over time. These changes have helped produce the current deadlock between coalitions of roughly equal size and opposed outlooks. But these same changes—since they will continue to alter group sizes and political orientations in the future—could also provide the impetus for unlocking this polarization and policy gridlock in the future.
Topic:
Democratization, Economics, and Politics
Political Geography:
United States and America

33. Reform of Quota and Voting Shares in the International Monetary Fund: "Nothing" Is Temporarily Preferable to an Inadequate "Something"

Author:
Ralph C. Bryant
Publication Date:
01-2008
Content Type:
Working Paper
Institution:
The Brookings Institution
Abstract:
A prosperous, stable world economy is in the self interest of every nation—large or small, rich or poor. The International Monetary Fund (IMF) is a worldwide intergovernmental institution that can facilitate that prosperity and stability. Because every nation has a stake, each should participate in the IMF's governance and operations. The value to each nation of an effective IMF increases as the world economy and financial system become more integrated.
Topic:
Development, Economics, International Organization, and International Political Economy

34. Where Does the Money Go? Best and Worst Practices in Foreign Aid

Author:
William Easterly and Tobias Pfutze
Publication Date:
06-2008
Content Type:
Working Paper
Institution:
The Brookings Institution
Abstract:
This paper does not address the issue of aid effectiveness—that is, the extent to which foreign aid dollars actually achieve their goals—but instead focuses on “best practices” in the way in which official aid is given, an important component of the wider debate. First, we discuss best practice for an ideal aid agency and the difficulties that aid agencies face because they are typically not accountable to their intended beneficiaries. Next, we consider the transparency of aid agencies and four additional dimensions of aid practice: specialization, or the degree to which aid is not fragmented among too many donors, too many countries, and too many sectors for each donor); selectivity, or the extent to which aid avoids corrupt autocrats and goes to the poorest countries; use of ineffective aid channels such as tied aid, food aid, and technical assistance; and the overhead costs of aid agencies. We compare 48 aid agencies along these dimensions, distinguishing between bilateral and multilateral ones. Using the admittedly limited in- formation we have, we rank the aid agencies on different dimensions of aid practice and then provide one final comprehensive ranking. We present these results as an illustrative exercise to move the aid discussion forward.
Topic:
Economics, Humanitarian Aid, Poverty, Third World, and United Nations

35. The Decline of the White Working Class and the Rise of a Mass Upper Middle Class

Author:
Alan Abramowitz and Ruy Teixeira
Publication Date:
04-2008
Content Type:
Working Paper
Institution:
The Brookings Institution
Abstract:
Dramatic shifts have taken place in the American class structure since the World War II era. Consider education levels. Incredible as it may seem today, in 1940 three-quarters of adults 25 and over were high school dropout s (or never made it as far as high school), and just 5 percent had a four-year college degree or higher. But educational credentials exploded in the postwar period. By 1960, the proportion of adults lacking a high school diploma was down to 59 percent; by 1980, it was less than a third, and by 2007, it was down to only 14 percent. Concomitantly, the proportion with a BA or higher rose steadily and reached 29 percent in 2007. Moreover, those with some college (but not a four-year degree) constituted another 25 percent of the population, making a total of 54 percent who had at least some college education 1 . Quite a change: moving from a country where the typical adult was a high school dropout (more accurately, never even reached high school) to a country where the typical adult not only has a high school diploma, but some college as well.
Topic:
Civil Society, Demographics, and Economics
Political Geography:
United States

36. Why Are Saving Rates of Urban Households in China Rising?

Author:
Eswar Prasad and Marcos Chamon
Publication Date:
12-2008
Content Type:
Working Paper
Institution:
The Brookings Institution
Abstract:
From 1995 to 2005, the average urban household saving rate in China rose by 7 percentage points, to about one quarter of disposable income. We use household-level data to explain why households are postponing consumption despite rapid income growth. Tracing cohorts over time indicates a virtual absence of consumption smoothing over the life cycle. Saving rates have increased across all demographic groups although the age profile of savings has an unusual pattern in recent years, with younger and older households having relatively high saving rates. We argue that these patterns are best explained by the rising private burden of expenditures on housing, education, and health care. These effects and precautionary motives may have been amplified by financial underdevelopment, as reflected in constraints on borrowing against future income and low returns on financial assets.
Topic:
Economics, Education, Emerging Markets, and Health
Political Geography:
China and Israel

37. The Diversification Challenge in Africa's Resource-Rich Economies

Author:
John Page
Publication Date:
12-2008
Content Type:
Working Paper
Institution:
The Brookings Institution
Abstract:
For a growing number of countries in Africa the current commodity boom is a huge opportunity. But if the economic history of resource-rich, poor countries-especially in Africa-is any guide, rather than bringing prosperity, the resource boom may drive them into what Paul Collier (2007) in his influential book The Bottom Billion terms the "Natural Resources Trap." In Africa, countries dependent on oil, gas, and mining have tended to have weaker long-run growth, higher rates of poverty, and higher inequality than Non mineral-dependent economies at similar levels of income.
Topic:
Development, Economics, Political Economy, and Poverty
Political Geography:
Africa

38. Expecting the Unexpected: Macroeconomic Volatility and Climate Policy

Author:
Warwick J. McKibbin, Adele Morris, and Peter J. Wilcoxen
Publication Date:
11-2008
Content Type:
Working Paper
Institution:
The Brookings Institution
Abstract:
To estimate the emissions reductions and costs of a climate policy, analysts usually compare a policy scenario with a baseline scenario of future economic conditions without the policy. Both scenarios require assumptions about the future course of numerous factors such as population growth, technical change, and non-climate policies like taxes. The results are only reliable to the extent that the future turns out to be reasonably close to the assumptions that went into the model.
Topic:
Climate Change, Development, Economics, and Energy Policy

39. Technological Scarcity, Compliance Flexibility and the Optimal Time Path of Emissions Abatement

Author:
Bryan K. Mignone
Publication Date:
11-2008
Content Type:
Working Paper
Institution:
The Brookings Institution
Abstract:
The overall economic efficiency of a quantity-based approach to greenhouse gas mitigation depends strongly on the extent to which such a program provides opportunities for compliance flexibility, particularly with regard to the timing of emissions abatement. Here I consider a program in which annual targets are determined by choosing the optimal time path of reductions consistent with an exogenously prescribed cumulative reduction target and fixed technology set. I then show that if the availability of low-carbon technology is initially more constrained than anticipated, the optimal reduction path shifts abatement toward later compliance periods. For this reason, a rigid policy in which fixed annual targets are strictly enforced in every year yields a cumulative environmental outcome identical to the optimal policy but an economic outcome worse than the optimal policy. On the other hand, a policy that aligns actual prices (or equivalently, costs) with expected prices by simply imposing an explicit price ceiling (often referred to as a "safety valve") yields the opposite result. Comparison among these multiple scenarios implies that there are significant gains to realizing the optimal path but that further refinement of the actual regulatory instrument will be necessary to achieve that goal in a real cap-and-trade system.
Topic:
Climate Change, Economics, and Environment

40. Prices in Emissions Permit Markets: The Role of Investor Foresight and Capital Durability

Author:
Bryan K. Mignone
Publication Date:
11-2008
Content Type:
Working Paper
Institution:
The Brookings Institution
Abstract:
Of the many regulatory responses to climate change, cap-and-trade is the only one currently endorsed by large segments of the scientific, economic and political establishments. Under this type of system, regulators set the overall path of carbon dioxide (CO2) reductions, allocate or auction the appropriate number of emissions allowances to regulated entities and – through trading – allow the market to converge upon the least expensive set of abatement opportunities. As a result, the trading price of allowances is not set by the regulator as it would be under a tax system, but instead evolves over time to reflect the underlying supply and demand for allowances. In this paper, I develop a simple theory that relates the initial clearing price of CO2 allowances to the marginal cost premium of carbon-free technology, the maximum rate of energy capital replacement and the market interest rate. This theory suggests that the initial clearing price may be lower than the canonical range of CO2 prices found in static technology assessments. Consequently, these results have broad implications for the design of a comprehensive regulatory solution to the climate problem, providing, for example, some intuition about the proper value of a possible CO2 price trigger in a future cap-and-trade system.
Topic:
Climate Change, Economics, Environment, and Markets