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391. Quality of Government and the Relationship between Natural Disasters and Child Poverty: A Comparative Analysis.

Author:
Adel Daoud, Bjorn Hallerod, and Debarati Guha Sapir
Publication Date:
09-2015
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
This paper explores the degree to which exposure to reoccurring natural disasters of various kinds explains seven dimensions of severe child poverty in 67 middle- and low-income countries. It also analyzes how certain institutional conditions, namely the quality of government (QoG), have moderating effects on the relationship between disasters and child poverty. Two main hypotheses are tested. The first is that disasters do have an adverse average effect on severe poverty. The second is that disasters reveal a positive coefficient (i.e., more disasters, more deprivation) but that higher levels of QoG negatively moderate this effect, i.e., the adverse effect of disasters is diminished by increasingly high QoG levels. From 70 possible combinations of relationships (7 types of deprivation combined with 10 types of natural disaster measures), 11 have the expected correlation between disasters and child deprivation and only one has the expected interactive correlation between quality of government, disasters, and child poverty. Several unexpected results could also be observed which are discussed in the paper along with recommendations for future research.
Topic:
Economics, Natural Disasters, Governance, Research, and Child Poverty
Political Geography:
Global Focus

392. Gains from Harmonizing US and EU Auto Regulations under the Transatlantic Trade and Investment Partnership

Author:
Caroline Freund and Sarah Oliver
Publication Date:
06-2015
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
Regulatory standards protect consumers from defective products, but they impede trade when they differ across countries. The Transatlantic Trade and Investment Partnership (TTIP) seeks to reduce distortions in the automobile and other industries. Freund and Oliver evaluate the equivalence of automobile regulations in the United States and the European Union in terms of catastrophe avoidance and estimate the trade gains from harmonization. The UN 1958 Agreement on automobiles, which harmonizes regulations among signatories, is used to quantify the trade effect of regulatory convergence. The removal of regulatory differences in autos is estimated to increase trade by 20 percent or more. The effect on trade from harmonizing standards is only slightly smaller than the effect of EU accession on auto trade. The large economic gains from regulatory harmonization imply that TTIP has the potential to improve productivity while lowering prices and enhancing variety for consumers.
Topic:
Economics, International Trade and Finance, Treaties and Agreements, and European Union
Political Geography:
Global Focus

393. Fiscal Tightening and Economic Growth: Exploring Cross-Country Correlations

Author:
Paolo Mauro and Jan Zilinsky
Publication Date:
09-2015
Content Type:
Policy Brief
Abstract:
The global financial and economic crisis that began in 2008 has rekindled the debate on the impact of fiscal policy on economic growth. At the outset of the crisis the focus—particularly in the United States—was on whether fiscal stimulus (an expansion in the fiscal deficit) boosts economic growth. Since 2011 or so, with the depth of the crisis becoming more severe in some European countries and Greece in particular, the emphasis of the debate has shifted to whether fiscal adjustment (a reduction in the fiscal deficit) curtails economic growth. Public discourse has been heavily influenced by simple charts analyzing the correlations between measures of fiscal "austerity" and economic growth for small samples of countries over limited time periods. Mauro and Zilinsky analyze the correlations in the data starting from the simplest and gradually building up, in a step-by-step, transparent manner, to multivariate regressions based on various samples of countries for different periods. The results show that simple correlations are no longer significant when considering slightly longer sample periods and omitting outliers, like Greece, from the sample. In multivariate regressions using broader samples, a tightening of fiscal policy is significantly associated with lower economic growth only in some specifications and estimation samples. On the whole, the data offer partial support to the notion that fiscal choices and output growth are correlated.
Topic:
Debt, Economics, and Financial Crisis
Political Geography:
Global Focus

394. Driving sustainable development through better infrastructure: Key elements of a transformation program

Author:
Lord Nicholas Stern, Jeremy Oppenheim, and Amar Bhattacharya
Publication Date:
07-2015
Content Type:
Working Paper
Institution:
The Brookings Institution
Abstract:
The agendas of accelerating sustainable development and eradicating poverty and that of climate change are deeply intertwined. Growth strategies that fail to tackle poverty and/or climate change will prove to be unsustainable, and vice versa. A common denominator to the success of both agendas is infrastructure development. Infrastructure is an essential component of growth, development, poverty reduction, and environmental sustainability.
Topic:
Climate Change, Development, Economics, Poverty, and Infrastructure
Political Geography:
Global Focus

395. Aid procurement and the development of local industry: A question for Africa

Author:
Christine Zhang and Jeffrey Gutman
Publication Date:
06-2015
Content Type:
Working Paper
Institution:
The Brookings Institution
Abstract:
Economic development is often tied to the evolution of local industry. One way to assess a country’s emergence as a major player in the global economy is by examining the ability of its domestic firms to compete on the global market. Public procurement—the purchase of goods, works, and services by governments—represents a significant portion of this market, making up an estimated average of 15 to 30 percent of a country’s GDP. Procurement in the developing world is especially noteworthy, since large projects are often partially or wholly financed by external donors such as the World Bank and other international financial institutions (IFIs), which encourage developing country governments to internationally advertise the goods, works, or services they require and to select the most competitive bid they receive. Yet the role of IFI-funded procurement in the emergence of global markets, particularly for and among developing countries, is seldom a topic of empirical study, despite its linkages to global growth.
Topic:
Development, Economics, Emerging Markets, World Bank, and Developing World
Political Geography:
Global Focus

396. Risk Nexus: Overcome by cyber risks? Economic benefits and costs of alternate cyber futures

Publication Date:
09-2015
Content Type:
Working Paper
Institution:
Atlantic Council
Abstract:
In 2030, will the Internet and related information and communications technologies (ICTs) continue to drive global innovation and prosperity? Or will that bright promise be swamped by an unstable and insecure Internet, so overwhelmed by non-stop attacks that it has become an increasing drag on economic growth? The answers, as far as we can predict, are not promising and mean the difference in tens of trillions of dollars in global economic growth over the next fifteen years.
Topic:
Economics, Science and Technology, Communications, and Cybersecurity
Political Geography:
Global Focus

397. The Case against a Carbon Tax

Author:
Robert P. Murphy, Patrick J. Michaels, and Paul "Chip" Knappenberger
Publication Date:
10-2015
Content Type:
Working Paper
Institution:
The Cato Institute
Abstract:
A vigorous campaign aimed at American policymakers and the general public has tried to create the perception that a federal carbon tax (or similar type of “carbon price”) is a crucial element in the urgently needed response to climate change. Within conservative and libertarian circles, a small but vocal group of academics, analysts, and political officials are claiming that a revenue-neutral carbon tax swap could even deliver a “double dividend” — meaning that the conventional economy would be spurred in addition to any climate benefits. The present study details several serious problems with these claims. The actual economics of climate change — as summarized in the peer-reviewed literature as well as the U.N. and Obama Administration reports — reveal that the case for a U.S. carbon tax is weaker than the public has been told.
Topic:
Climate Change, Economics, Energy Policy, and Politics
Political Geography:
Global Focus

398. On the Desirability of Nominal GDP Targeting

Author:
Julio Garin, Robert Lester, and Eric Sims
Publication Date:
08-2015
Content Type:
Working Paper
Institution:
The Cato Institute
Abstract:
This paper evaluates the welfare properties of nominal GDP targeting in the context of a New Keynesian model with both price and wage rigidity. In particular, we compare nominal GDP targeting to inflation and output gap targeting as well as to a conventional Taylor rule. These comparisons are made on the basis of welfare losses relative to a hypothetical equilibrium with flexible prices and wages. Output gap targeting is the most desirable of the rules under consideration, but nominal GDP targeting performs almost as well. Nominal GDP targeting is associated with smaller welfare losses than a Taylor rule and significantly outperforms inflation targeting. Relative to inflation targeting and a Taylor rule, nominal GDP targeting performs best conditional on supply shocks and when wages are sticky relative to prices. Nominal GDP targeting may outperform output gap targeting if the gap is observed with noise, and has more desirable properties related to equilibrium determinacy than does gap targeting.
Topic:
Economics, Human Welfare, Markets, and GDP
Political Geography:
Global Focus

399. The Supply of Transaction Assets, Nominal Income, and Monetary Policy Transmission

Author:
Joshua R. Hendrickson and David Beckworth
Publication Date:
06-2015
Content Type:
Working Paper
Institution:
The Cato Institute
Abstract:
Over the last few years, the Federal Reserve has conducted a series of large scale asset purchases. Given the Federal Reserve’s dual mandate, the objective of this policy has been to generate an increase in real economic activity while maintaining a low, stable rate of inflation. The effectiveness of large scale asset purchases and the ability of the central bank to achieve a particular target has been subject to debate. The monetary transmission mechanism is of primary importance for understanding the effects of both the recent large scale asset purchases and of monetary policy more generally. The purpose of this paper is to propose a monetary transmission mechanism and to present empirical support for this mechanism. In particular, this paper suggests that monetary policy is transmitted through changes in the growth rate of transaction assets through both a direct and indirect effect. First, an increase in the growth rate of the monetary base, whether through lump sum transfers or open market operations, generates a real balance effect that increases real economic activity. Second, the indirect effect is through bank lending. Since bank loans are often a function of nominal income, expansionary monetary policy increases bank lending. Since economics agents are forward-looking and the the effects of monetary policy are persistent, monetary policy is transmitted through the expected future time path of the growth of transaction assets and nominal income. This characteristic is especially important in light of the policy recommendations of Sumner (2011, 2012) and Woodford (2012), in which the central bank attaches an explicit target for the level of nominal income to large-scale asset purchases.1
Topic:
Economics, Markets, Monetary Policy, and Federal Reserve
Political Geography:
Global Focus

400. International Developments in the Insurance Sector: The Road to Financial Instability?

Author:
Therese M. Vaughan and Mark A. Calabria
Publication Date:
05-2015
Content Type:
Working Paper
Institution:
The Cato Institute
Abstract:
International activity related to the regulation and supervision of financial services has exploded since the global financial crisis. The crisis exposed weaknesses in the structure for regulating internationally active banks, and motivated a number of work streams aimed at strengthening standards (most notably, significant revisions to the Basel capital standard for internationally active banks, now known as Basel III). The insurance sector was also stressed by the meltdown in financial markets that occurred in 2007-2008, albeit far less than the banking sector, and, with the exception of AIG, it is generally recognized that insurers played little role in the financial crisis, and that traditional insurance activities do not pose a systemic risk to the financial system.1,2 Nonetheless, the insurance sector has also been targeted for a new stream of regulatory initiatives at the international level. The most important organizations with respect to these activities are the International Association of Insurance Supervisors (IAIS) and the Financial Stability Board (FSB), both based in Basel, Switzerland. The purpose of this paper is to review these developments and to highlight potential concerns for U.S. insurance markets.
Topic:
Economics, International Trade and Finance, Markets, and Financial Crisis
Political Geography:
Global Focus