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34461. Financial Regulation and Supervision in Emerging Markets. The Experience of Latin America since the Tequila Crisis

Author:
Barbara Stallings and Rogerio Studart
Publication Date:
04-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
The paper deals with changes in the regulation and supervision of the Latin American financial sector in the aftermath of the 'Tequila Crisis' of 1994–95. While it finds that both have improved, regulation and supervision cannot resolve all problems; good macroeconomic policy and performance are essential complements. This is especially true because of the procyclical nature of financial activity. The paper presents both regional data for Latin America, contrasting it with other emerging markets, and four country case studies (Argentina, Brazil, Chile, and Mexico). The latter show how individual country characteristics and experiences affect the operation of the financial systems. We close with some policy recommendations.
Topic:
Economics, Emerging Markets, and Government
Political Geography:
Brazil, Argentina, South America, Latin America, North America, Mexico, and Chile

34462. Debt Relief under the HIPC Initiative. Context and Outlook for Debt Sustainability and Resource Flows

Author:
Lisandro Abrego and Doris C. Ross
Publication Date:
04-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This paper analyses debt relief efforts by creditors to alleviate the debt burden of low- income countries. The Heavily Indebted Poor Countries (HIPC) Initiative builds on traditional debt relief, and for the first time involves relief on multilateral debt. It seeks to reduce debt to sustainable levels and eliminate any debt overhang that might hinder growth and investment. It provides substantial debt relief to eligible countries by reducing their overall debt stocks by about one-half, or, together with traditional relief over time, by some 80 per cent. It lowers debt service payments of HIPCs substantially, provides room for increased social spending, and provides a solid basis for debt sustainability. The latter requires efforts by both debtors and creditors. To find poverty reduction efforts, HIPC relief is important, but much broader international support is needed as external transfers to HIPCs in the past far exceeded debt service paid. Experience has shown that external support can only be effective if it reinforces sound policies implemented by HIPCs themselves. Thus debt relief and ODA are most important not in isolation, but as help for self-help.
Topic:
Economics, International Organization, and International Trade and Finance

34463. Assessing the Impact of Fiscal Policy on Poverty

Author:
Andrew McKay
Publication Date:
04-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
Fiscal policy measures are a key means by which governments can influence distribution and poverty, but in fact the relationships between fiscal policy and poverty are not well understood. The most commonly used technique for assessing the distributional impact, benefit incidence analysis, is straightforward, but applied by itself it suffers from a number of serious limitations. Assessment of the impact of fiscal policy needs to be developed in various directions, including allowing for behavioural responses and incorporating a broader range of information. In parallel with this careful attention needs to be paid to more effective monitoring of the poverty impsact of fiscal policy.
Topic:
Economics, Government, and International Trade and Finance

34464. International Bank Lending. Water Flowing Uphill?

Author:
John Hawkins
Publication Date:
04-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
International bank lending is a major component of capital flows between advanced and emerging economies. However, in recent years these flows have been going the wrong way, like water flowing uphill. Even four years after the Asian crisis, there is a net flow of funds from emerging economies to banks in advanced economies. This paper looks at this phenomenon, starting by setting out the relevant data, and then looking at factors influencing these flows. These include both cyclical influences (both 'push' and 'pull') and structural changes within the banking industry. There is some evidence that international lenders are now discriminating more between the various emerging economies.
Topic:
Economics, Emerging Markets, and International Trade and Finance
Political Geography:
Asia

34465. Countercyclical Fiscal Policy. A Review of the Literature, Empirical Evidence and some Policy Proposals

Author:
Carlos Budnevich L.
Publication Date:
04-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
For many emerging market economies, over reliance on monetary policy may bring worse macro results, when compared to a more balanced framework of countercyclical fiscal and monetary policy. The use of countercyclical fiscal policy requires as a precondition solvent and sustainable fiscal accounts and the re-engineering of fiscal institutions to increase the timeliness and flexibility of fiscal policy. A higher degree of tax or pension fund and/or unemployment insurance contribution flexibility may help in economies subject to significant external shocks. Automatic indexing rules to terms of trade or country risk spreads for pension contributions and interest payments on public debt may also contribute to the stabilization effort. If fiscal revenues are highly volatile, structural budget rules and commodity stabilization funds may provide the necessary framework to achieve saving (dissaving) during expansions (contractions).
Topic:
Economics, Government, and International Trade and Finance

34466. Aid, Public Sector Fiscal Behaviour and Developing Country Debt

Author:
Mark McGillivray and Simon Feeny
Publication Date:
04-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This paper looks at public sector debt in developing countries, being concerned specifically with the relationship between aid inflows and the public sector borrowing requirement net of aid loans. After examining the public sector budget constraint and various conditions under which aid might lead to an increase in this borrowing, the paper surveys the empirical results of literature on aid and public sector fiscal behaviour. It finds that the results of a number of studies are consistent with aid leading to increases in this borrowing. Further investigation, in the form of econometric analysis of panel data, also points to this outcome. The paper then looks at a number of theoretical scenarios in which aid leads to increases in borrowing net of aid loans.
Topic:
Economics, Government, and International Trade and Finance

34467. Producing an Improved Geographic Profile of Poverty: Methodology and Evidence from Three Developing Countries

Author:
Chris Elbers, Peter Lanjouw, Johan Mistiaen, Gabriel Demombynes, Jenny Lanjouw, and Berk Özler
Publication Date:
03-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This paper implements a methodology for estimating poverty in Ecuador, Madagascar and South Africa, at levels of disaggregation that to date have not generally been available. The methodology is based on a statistical procedure to combine household survey data with population census data, imputing into the latter a measure of per capita consumption from the former. The countries are very unlike each other—with different geographies, stages of development, quality and types of data, and so on. Yet the paper demonstrates that in all three countries the poverty estimates produced from census data are both plausible (in that they match well stratum-level estimates calculated directly from the household surveys) and satisfactorily precise (at a level of disaggregation far below that allowed by household surveys).
Topic:
Development, Economics, Government, and International Trade and Finance
Political Geography:
South Africa

34468. One Third of the World's Growth and Inequality

Author:
Danny Quah
Publication Date:
03-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This paper studies growth and inequality in China and India—two economies that account for a third of the world's population. By modelling growth and inequality as components in a joint stochastic process, the paper calibrates the impact each has on different welfare indicators and on the personal income distribution across the joint population of the two countries. For personal income inequalities in a China-India universe, the forces assuming first-order importance are macroeconomic: Growing average incomes dominate all else. The relation between aggregate economic growth and within-country in- equality is insignificant for inequality dynamics.
Topic:
Development and Economics
Political Geography:
China, South Asia, India, and Asia

34469. Gender and Education as Determinants of Household Poverty in Nigeria

Author:
Christiana E.E. Okojie
Publication Date:
03-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
The paper examines the linkages between gender of household heads, education and household poverty in Nigeria between 1980 and 1996. Data analyzed were obtained from four national consumer expenditure surveys conducted in Nigeria in 1980, 1985, 1992 and 1996 by the Federal Office of Statistics. Adjustments were made for price differentials over time and across regions of the country. However, only aggregated data for households were available. Per capita expenditure was used as the indicator of poverty, while the unit of analysis was the household. Two poverty lines were set: a moderate poverty line equal to two-thirds of mean per capita household expenditure, and a core poverty line equal to one-third of mean per capita expenditure. The Pa index proposed by Foster, Greer and Thorbecke was used to generate the headcount ratio as well as the depth and severity of poverty. Trends in inequality were analyzed using Gini coefficients and the Theil's index. Multivariate analysis was used to examine the relationships between gender, poverty and other household variables, including education, for all households as well as for subgroups of male-headed and female-headed households respectively.
Topic:
Education and Gender Issues
Political Geography:
Africa and Nigeria

34470. The New Basle Capital Accord and Developing Countries: Issues, Implications and Policy Proposals

Author:
Stephany Griffith-Jones and Stephen Spratt
Publication Date:
03-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This paper argues that, if implemented in its current form, the new Basle Capital Accord will adversely effect developing sovereigns, corporates and banks wishing to borrow in international markets. This impact will result from the major banks' lending patterns being altered by the adoption of internal ratings based approaches, leading to a significant reduction of bank, and/or a sharp increase in the cost of international borrowing for many developing countries. Greater use of banks' internal risk management systems is also inherently pro-cyclical and therefore likely to amplify the economic cycle, thus increasing both the frequency and scale of crises.
Topic:
Foreign Policy, Development, and Treaties and Agreements