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931. Advance Market Commitments for Vaccines Working Paper and Spread Sheet

Author:
Rachel Glennerster, Heidi Williams, Georg Weizsacker, Ruth Levine, Jean Lee, Michael R. Kremer, and Ernst R. Berndt
Publication Date:
08-2006
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
The G8 is considering committing to purchase vaccines against diseases concentrated in low-income countries (if and when desirable vaccines are developed) as a way to spur research and development on vaccines for these diseases. Under such an “advance market commitment,” one or more sponsors would commit to a minimum price to be paid per person immunized for an eligible product, up to a certain number of individuals immunized. For additional purchases, the price would eventually drop to close to marginal cost. If no suitable product were developed, no payments would be made. We estimate the offer size which would make revenues similar to the revenues realized from investments in typical existing commercial pharmaceutical products, as well as the degree to which various model contracts and assumptions would affect the cost-effectiveness of such a commitment. We make adjustments for lower marketing costs under an advance market commitment and the risk that a developer may have to share the market with subsequent developers. We also show how this second risk could be reduced, and money saved, by introducing a superiority clause to a commitment. Under conservative assumptions, we document that a commitment comparable in value to sales earned by the average of a sample of recently launched commercial products (adjusted for lower marketing costs) would be a highly cost-effective way to address HIV/AIDS, malaria, and tuberculosis. Sensitivity analyses suggest most characteristics of a hypothetical vaccine would have little effect on the cost-effectiveness, but that the duration of protection conferred by a vaccine strongly affects potential cost-effectiveness. Readers can conduct their own sensitivity analyses employing a web-based spreadsheet tool.
Topic:
Development, Economics, Health, and Markets

932. Back by Unpopular Demand - Nicaragua's Daniel Ortega

Author:
Robert F. Noriega
Publication Date:
10-2006
Content Type:
Policy Brief
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
As Nicaraguans prepare to vote in their country's presidential election on November 5, Sandinista dictator Daniel Ortega is leading in the polls against a divided field. If Ortega were to regain the presidency, the reversal of the democratic trend in Central America would be devastating.
Topic:
Democratization, Markets, and Politics
Political Geography:
Central America

933. Housing and American Recessions

Author:
John H. Makin
Publication Date:
12-2006
Content Type:
Policy Brief
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
A weak housing sector has accompanied every American recession since 1965, but not every episode of housing weakness has accompanied a recession. An annual drop in the growth rate of residential investment (a good measure of homebuilding activity) of more than 10 percent has coincided with a recession five of the seven times it has occurred since 1965. (In 1967 and in 1995, declines in residential investment occurred without a recession.) A significant drop in residential investment therefore appears to be a necessary condition, but not a sufficient condition, for a U.S. recession.
Topic:
Economics, Human Welfare, and Markets
Political Geography:
United States and America

934. U.S. Slowdown: Self-Correcting or Self-Reinforcing?

Author:
John H. Makin
Publication Date:
11-2006
Content Type:
Policy Brief
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
The U.S. economy has slowed to a level below its trend growth rate during the second half of 2006. Trend growth, the rate that can be sustained over time without rising inflation, is probably about 3 percent, having been reduced by a quarter of a percentage point by weaker productivity data. As has often been the case over the past five years, the slowdown itself has set into motion market adjustments that may mitigate or even reverse it. Since August, interest rates on benchmark tenyear treasuries have dropped by about 60 basis points. That reduction, coupled with a stock market that is rising in part because of lower interest rates, has caused an easing of financial conditions equal to nearly 100 basis points since late June on the Goldman Sachs Financial Conditions Index. Meanwhile, since August, the price of oil has dropped by about $18 per barrel—which, if sustained, would be enough to add about 0.7 percentage points to U.S. growth over the next year.
Topic:
Development, Economics, and Markets
Political Geography:
United States and America

935. Fed Uncertainty Means Market Uncertainty

Author:
John H. Makin
Publication Date:
05-2006
Content Type:
Policy Brief
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
The new Federal Reserve chairman, Ben Bernanke, is making what cynics would call a serious mistake: he is being honest with the markets. The Fed is uncertain about the future path of U.S. growth and inflation. The most basic tenet of the theory of economic policy is that in circumstances of elevated uncertainty, policymakers should do less. Therefore, in his April 27 testimony to the Joint Economic Committee of Congress, Bernanke suggested that the Fed might start doing less: Even if in the Committees judgment the risks to its objectives are not entirely balanced, at some point in the future the Committee may decide to take no action at one or more meetings in the interest of allowing more time to receive information relevant to the outlook [emphasis added]. The new Federal Reserve chairman, Ben Bernanke, is making what cynics would call a serious mistake: he is being honest with the markets. The Fed is uncertain about the future path of U.S. growth and inflation. The most basic tenet of the theory of economic policy is that in circumstances of elevated uncertainty, policymakers should do less. Therefore, in his April 27 testimony to the Joint Economic Committee of Congress, Bernanke suggested that the Fed might start doing less: Even if in the Committees judgment the risks to its objectives are not entirely balanced, at some point in the future the Committee may decide to take no action at one or more meetings in the interest of allowing more time to receive information relevant to the outlook [emphasis added]. After its May 10 meeting, the Feds Open Market Committee reinforced the message of more uncertainty about the direction of the economy, saying: The Committee judges that some further policy firming may yet be needed to address inflation risks but emphasizes that the extent and timing of any such firming will depend importantly on the evolution of the economic outlook as implied by incoming information [emphasis added]. Chairman Bernanke and virtually all of his colleagues on the Open Market Committee have made it clear, most forcefully in their May 10 statement, that they view the Federal Reserves most important mandated objective as one of maintaining low and stable inflation. A glance at any long-run chart of U.S. growth and inflation data clearly demonstrates the basis for this view. Since the early 1980s, when inflation was reduced and held to low and stable levels, U.S. economic performance has improved markedly. Growth has been higher and steadier; productivity growth picked up especially after 1995 and has remained higher ever since. Virtually all macroeconomic data have stabilized in a way that has reduced the duration and severity of recessions, so that the last recession (in 2001) was barely detectable. The Great Moderation is an often-used term that describes policymakers pride and satisfaction with the beneficial results of bringing down inflation and holding it at low levels.
Topic:
Economics, Government, Markets, and Monetary Policy
Political Geography:
United States

936. An Appreciation: Milton Friedman, 1912-2006

Author:
Allan H. Meltzer
Publication Date:
11-2006
Content Type:
Policy Brief
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
On November 16, eminent economist Milton Friedman passed away. Friedman made unparalleled contributions to free-market economics, demonstrating in Capitalism and Freedom the close relationship of free enterprise to political liberty. His philosophy has been extraordinarily influential regarding social and economic policies in governments around the world.
Topic:
Development, Economics, Markets, and Politics

937. Land Titles, Credit Markets and Wealth Distributions

Author:
James C. MacGee
Publication Date:
12-2006
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
Does the existence of formal title to land and real estate matter for the distribution of wealth? This paper reviews the empirical literature on the economic impact of land and real estate administration systems across countries. This paper argues that a functioning credit market for secured credit is necessary to realize the full benefits of legal title to private real estate. This paper also reviews quantitative economic theory on wealth distribution to assess the likely impact of different land registration systems on wealth inequality. The implication of current theory is that poor land administration systems may sometimes lead to lower levels of wealth inequality than better land registration systems.
Topic:
International Relations, Demographics, Economics, and Markets

938. Analysis of the Potential Impact of the Current WTO Agricultural Negotiations on Government Strategies in the SADC Region

Author:
A.J.E. Charman and J. Hodge
Publication Date:
09-2006
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This study aims to help identify how the Agreement on Agriculture (AoA) could potentially constrain government action to achieve food security in the Southern African Development Community (SADC). The paper considers the proposed tariff and subsidy reduction modalities of the current round of WTO negotiations. The main focus is on the potential direct effects of the AoA, in terms of proposed reductions to domestic subsidies and tariffs, on food security policy in SADC countries. The study examines the argument that subsidy reductions and further liberalizing market access may pose constraints on the food security policy options of governments within the region.
Topic:
International Trade and Finance, Markets, and Treaties and Agreements
Political Geography:
Africa

939. Stock Market Development and Economic Growth

Author:
Salvatore Capasso
Publication Date:
09-2006
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
Since the 1990s economists have devoted considerable attention to the study of the relationship between financial markets development and economic growth. In particular, the emergence of stock markets with economic development is an intriguing and interesting aspect of such a relationship, and yet relatively unexplored. This paper examines the most recent findings in the theoretical and empirical literature trying to determine the rationale behind the development of stock markets along the path of growth and the nature of the interrelationship between real and financial variables.
Topic:
Development, Economics, Emerging Markets, and Markets

940. Institutional Analysis of Financial Market Fragmentation in Sub-Saharan Africa: A Risk-Cost Configuration Approach

Author:
Machiko Nissanke and Ernest Aryeetey
Publication Date:
08-2006
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
The paper examines the source of financial market fragmentation in sub-Saharan Africa in the framework of institutional economics. Based on fieldwork data from Ghana, Malawi, Nigeria, and Tanzania, it analyses financial risk management, the transaction costs for loan screening and monitoring, and contract enforcement. It shows how, faced with various institutional constraints, the range of clientele selected by formal and informal lenders becomes both narrow and at the extreme market-ends. It evaluates the prevailing state of managing risks for market structure, and binding institutional constraints for market transformation and deepening in sub-Saharan Africa.
Topic:
Development, Economics, and Markets
Political Geography:
Africa, Tanzania, Nigeria, Ghana, and Malawi