We show that geographical factors influence long-run per capita income directly, as well as indirectly, through the quality of institutions. The direct influence of geography on per capita incomes is ...robust to the inclusion of a sub-Saharan Africa dummy and other tests. We obtain our results by replacing the usual instrument (settlers’ mortality (SM)) by stronger instruments for institutional quality (latitude, the share of the country in the temperate climatic zone). We also provide evidence that SM suffers from endogeneity with respect to institutional quality for early colonies, because of its dependence on nineteenth-century mortality data.
Moncarz P. E. and Bleaney M. The regional impact of trade liberalization in a model with congestion costs à la Helpman, Regional Studies. The effects of the liberalization of international trade are ...analysed in a New Economic Geography model of a country with an asymmetrical distribution of housing between regions. Labour is mobile between regions, but not between countries. Trade liberalization tends to reduce inequalities in the distribution of the population between the two regions, although the population is more unequally distributed than housing. Results are similar when there is a bias in preferences towards home-produced varieties of manufactures. If consumers care relatively little about housing and transport costs are high enough, an agglomerated equilibrium becomes stable.
Moncarz P. E. et Bleaney M. Une analyse de l'impact régional de la libéralisation des échanges à partir d'un modèle comportant des coûts d'encombrement à la Helpman, Regional Studies. A partir d'un modèle du type Nouvelle Géographie Economique d'un pays à une distribution interrégionale du logement asymétrique, on analyse l'impact de la libéralisation des échanges. La main-d'oeuvre est mobile sur le plan interrégional mais ne l'est pas au niveau international. La libéralisation des échanges a tendance à réduire les inégalités de la distribution de la population entre deux régions, bien que la population soit distribuée de manière plus inégale que ne le soit le logement. Les résultats s'avèrent similaires quand il y a une tendance en faveur des fabrications locales. Si les consommateurs s'intéressent relativement peu au logement et que les frais de transport soient suffisamment élevés, un équilibre aggloméré devient stable.
Libéralisation des échanges Agglomération Frais de logement
Moncarz P. E. und Bleaney M. Die regionale Auswirkung einer Handelsliberalisierung in einem Modell mit Verkehrsmittelnutzungskosten à la Helpman, Regional Studies. Anhand eines Modells der neuen Wirtschaftsgeografie analysieren wir in einem Land mit innerhalb der Regionen asymmetrisch verteiltem Wohnungsangebot die Auswirkungen der Liberalisierung des internationalen Handels. Arbeitskräfte sind auf interregionaler, nicht jedoch auf internationaler Ebene mobil. Eine Liberalisierung des Handels baut tendenziell Ungleichgewichte bei der Verteilung der Bevölkerung auf zwei Regionen ab, wobei allerdings die Bevölkerung ungleichmäßiger verteilt ist als das Wohnungsangebot. Die Ergebnisse fallen ähnlich aus, wenn die Präferenz einseitig zugunsten einheimisch produzierter Arten von Erzeugnissen tendiert. Wenn die Verbraucher auf das Wohnungsangebot relativ wenig Wert legen und die Verkehrsmittelnutzungskosten hoch genug liegen, erhält ein agglomeriertes Gleichgewicht Stabilität.
Handelsliberalisierung Agglomeration Wohnungskosten
Moncarz P. E. y Bleaney M. Impactos regionales de la liberalización comercial en un modelo con costos de congestión a la Helpman, Regional Studies. Los efectos de la liberalización comercial son analizados usando un modelo de la Nueva Geografía Económica, suponiendo una economía con una distribución asimétrica entre regiones del stock de vivienda. El factor trabajo es móvil entre regiones pero no entre países. La liberalización comercial tiende a reducir la desigualdad en la distribución de la población entre las regiones, aunque esta se distribuye de forma más desigual que el stock de vivienda. Resultados similares emergen cuando se permite la presencia de un sesgo en las preferencias por los bienes producidos domésticamente. Si los consumidores no se preocupan lo suficiente por el consumo de servicios de vivienda, y los costos de transporte son elevados, un equilibrio con la población concentrándose en una sola región se vuelve estable.
Liberalización comercial Aglomeración y costos de vivienda
Previous research on inflation targeting (IT) has focused on high‐income countries and emerging market economies (EMEs). Only recently have sufficient data accumulated for the performance of IT in ...low‐income countries (LICs) to be assessed. We show that IT has not so far been as effective in reducing inflation in LICs as in EMEs. Relatively low central banks’ instrument independence in LICs, associated with weak restrictions limiting a central bank’s lending to the government, helps explain this result.
Purpose - Penn World Tables (PWT) data on output measured at international prices are the data most frequently used in cross-country growth regressions. These data are subject to revision, and the ...amendments can be substantial for a minority of countries, although negligible for most. The purpose of this paper is to investigate the effect of data revisions on research results using the data.Design methodology approach - Using Hanushek and Kimko's analysis of the relationship between growth and schooling quality and Sala-i-Martin's tests of model selection, the authors investigate how much the results of cross-country growth regressions vary if the most recent vintage (6.2) of PWT data is used, rather than the previous vintage (6.1).Findings - The variation is substantial enough to imply significant differences in research results using different vintages of the PWT data.Practical implications - The results reinforce the case for examining the sensitivity of growth regressions to outliers, which may be subject to subsequent data revision that might substantially affect the conclusions.Originality value - Previous research has identified significant revisions between successive vintages of PWT growth data, but has implied that this is not likely to affect the results of cross-country growth regressions based on long-run averages rather than on annual data. The findings suggest that this is not necessarily the case.
This paper explores the relationship between the denomination of public debt and the choice of exchange rate regime. Three types of debt (nominal, indexed, and foreign) and two regimes (fixed and ...flexible) are considered. Indexed debt is insulated against unexpected inflation. The real (domestic-currency) value of foreign debt is subject to valuation effects from real exchange rate shocks. The 'fear-of-floating' result, that foreign debt makes pegging more attractive, is shown to hold unambiguously only if the peg is fully credible. If the peg lacks credibility, a critical factor is the perceived likelihood of using the 'escape clause' of a switch to a float, which raises the costs of pegging. Foreign debt increases the temptation to resort to the escape clause, so when a peg is not fully credible (as is almost always the case in reality), pegging tends to be less attractive than floating in the presence of foreign debt. Ce mémoire explore le rapport entre la dénomination de la dette publique et le choix d'un régime de taux de change. Trois types de dettes sont considérées (nominale, indexée, étrangère), et deux types de régimes (taux fixes et taux flexibles). La dette indexée est immunisée contre l'inflation imprévue. La valeur réelle (en monnaie domestique) de la dette étrangère est sujette à des effets attribuables aux chocs dans les taux de change réels. La «peur de laisser flotter le taux de change» aide à comprendre qu'une dette étrangère rend le taux fixe plus attrayant, mais ce résultat est sans ambiguïté seulement si le taux fixé est pleinement crédible. Si le taux fixé manque de crédibilité, un facteur critique est la perception de la probabilité qu'on va utiliser «l'échappatoire» du passage au taux flottant, ce qui augmente les coûts d'un taux fixe. La dette étrangère accroît la tentation d'avoir recours à la «clause échappatoire», ce qui fait que quand un taux fixé n'est pas pleinement crédible, (comme c'est à peu près toujours le cas en réalité), un régime de taux de change fixe tend à être moins attrayant qu'un régime de taux de change flottants quand il y a dette étrangère.
ABSTRACT
It has been suggested that the Phillips curve (positive output‐inflation correlation) is inverted in poor countries. It is argued here that the truth is more complex. In poor countries ...temporary supply‐side shocks, for example to agricultural output, induce a negative correlation between prices and output rather than between inflation rates and output. Empirical evidence supports this hypothesis.
It is very common to analyse the factors associated with the onset and continuation of civil wars entirely separately, as if there were likely to be no similarity between them. This is an ...overstatement of the theoretical position, which has established only that they may be different (i.e. less than perfectly correlated). The hypothesis that the explanatory variables are the same is not theoretically excludable and is empirically testable, both for individual variables and for combinations of them. Starting from this approach yields a rather different picture of the factors associated with the continuation of civil wars, because the relatively small sample size means that confidence intervals on individual coefficients are wide in this case. It is shown here that country size, mountainous terrain and (in most datasets) ethnic diversity seem significant for the continuation of civil wars, starting from the null hypothesis that variables affect onset and continuation probabilities identically, rather than entirely independently. One variable that affects onset and continuation significantly differently is anocracy, which we find to matter only for onset. Civil war is more likely if it occurred two years previously, as well as one year previously, which indicates that wars are more likely to restart after only one year of peace, and also more likely to stop in their first year. The combined model strengthens the result that ethnic diversity matters (it is consistently significant across datasets, whereas it is not when onset is analysed separately), although in the UCD/PRIO dataset it is significant only for onset. By contrast, if continuation is analysed independently, virtually nothing is significant except a pre-1991 dummy and a dummy for civil war two years previously.
Using data from a large sample of developing countries from 1985 to 2001, we confirm that hard pegs (currency boards or a shared currency) reduce inflation and money growth. There is no evidence that ...soft pegs confer any monetary discipline, after other factors are controlled for. Inflation triggers regime switches. Under hard pegs, monetary growth is unaffected by fiscal deficits or by inflation shocks. Under soft pegs, as under floats, increased fiscal deficits and positive inflation shocks are associated with higher monetary growth. The apparently slower per capita output growth under hard pegs is explained by their geographical distribution.
We investigate the choice of regime amongst hard pegs, soft pegs, managed floats and independent floats for a panel of developing countries. There is evidence of a matched ordering of regimes and ...country characteristics. We find some evidence for the 'balance sheet' hypothesis that foreign liabilities in the banking system and foreign debt are associated with less exchange rate flexibility, particularly when a 'de facto' regime classification is used. Easily the best predictor of a country's current regime is its regime in the previous year.
A second-generation model of currency crises is combined with a standard banking model. In a pegged exchange rate regime, after funds have been committed to the banks, news arrives about the quality ...of the banks' assets and about the exchange rate fundamentals. A run on the banks may cause a currency crisis, or
vice versa. There are multiple equilibria (with either twin crises or no crisis), depending on depositors' expectations of other depositors' actions. Suspension of deposit convertibility can prevent a speculative attack on the currency, but last resort lending to solvent banks can induce one.
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