Land policies are of fundamental importance to sustainable growth, good governance, and the well-being of, and the economic opportunities open to, both rural and urban dwellers - particularly the poor. To this end, research on land policy, and analysis of interventions related to the subject, have long been of interest to the Bank's Research Department, and other academic, and civil society institutions. The report aims to strengthen the effectiveness of land policy in support of development, and poverty reduction, by setting out the results of recent research in a way that is accessible to a wide audience of policymakers, nongovernmental organizations, academics in the Bank's client countries, donor agency officials, and the broader development community. Its main message rests on three principles: 1) provision of secure tenure to land improves the welfare of the poor, particularly by enhancing the asset base of those whose land rights are often neglected, and, creates incentives needed for investment, paramount to sustainable economic growth; 2) facilitation of land exchange, and distribution, whether as an asset or for current services, at low cost, through markets, and non-market channels, will expedite land access by productive, but land-poor producers, so that once economic growth improves, financial markets would rely on the use of land as collateral; and, 3) governments' contribution to the promotion of socially desirable land allocation, and utilization. The report discusses mechanisms to promote tenure security, demonstrates the importance of rental market transactions, arguing the removal of impediments to these can generate equity advantages, and positive investments. It also illustrates mechanisms, ranging from taxation, to regulation and land use planning to address these issues.

Land policies for growth and poverty reduction

Over the past decades financial investment of non-financial businesses has been rising and accumulation of capital goods has been declining. The first part of the paper offers a novel theory to explain this phenomenon. Financialization, the shareholder revolution and the development of a market for corporate control have shifted power to shareholders and thus changed management priorities, leading to a reduction in the desired growth rate. In the second part the link between accumulation and financialization is tested econometrically by means of a time series analysis of aggregate business investment for USA, UK, France, and Germany. Extensive test of robustness are performed. For the first three countries evidence that confirms the negative effect of financialization on accumulation is found. (author's abstract)

Financialisation and the slowdown of accumulation

We've all had the experience at some time or other of walking through a department store and being amazed at the many different articles we see there. One counter after another filled with this, that, and the other thing-some useful, some of little or no use. Almost every day a new gadget is advertised, electric blankets, or hats that look like chimneys, or a special kind of vitamin tablets. A common reaction of people as they look in shop windows is, "What will they think of next?"This article can also be found at the Monthly Review website, where most recent articles are published in full.Click here to purchase a PDF version of this article at the Monthly Review website.

The Accumulation of Capital

Introduction References and Suggested Readings PART I REAL DYNAMIC MACROECONOMIC MODELS 1. Dynamic Programming A General Intertemporal Problem A Recursive Problem Bellman's Equations Nonstochastic Examples The Optimal Linear Regulator Problem Stochastic Control Problems Examples of Stochastic Control Problems The Stochastic Linear Optimal Regulator Problem Dynamic Programming and Lucas's Critique Dynamic Games and the Time Inconsistency Phenomenon Conclusions Exercises References and Suggested Readings 2. Search Nonnegative Random Variables Stigler's Model of Search Sequential Search for the Lowest Price Mean-Preserving Spreads Increases in Risk and the Reservation Price Intertemporal Job Search Waiting Times Firing Jovanovic's Matching Model Conclusions Exercises References and Suggested Readings 3. Asset Prices and Consumption Hall's Random Walk Theory of Consumption The Random Walk Theory of Stock Prices Lucas's Model of Asset Prices Mehra and Prescott's Finite-State Version of Lucas's Model Asset Pricing More Generally The Modigliani-Miller Theorem Government Debt and the Ricardian Proposition Remarks on Testing and Estimation Conclusions Exercises References and Suggested Readings PART II MONETARY ECONOMICS AND GOVERNMENT FINANCE 4. Currency in the Utility Function The Price of Inconvertible Government Currency in Lucas's Tree Model Issues and Models in Monetary Economics Government Debt in the Utility Function Government Currency in the Utility Function Seignorage and the Optimum Quantity of Currency A Neutrality Proposition Conclusions References and Suggested Readings 5. Cash-in-Advance Models A One-Country Model Fisher Equations Inflation-Indexed Government Debt Interactions of Monetary and Fiscal Policies Interest on Reserves A Two-Country Model Exchange Rate Indeterminacy Conclusions Exercises References and Suggested Readings 6. Credit and Currency with Long-Lived Agents The Physical Setup Optimal Allocations Competitive Equilibrium A Digression on the Balances of Trade and Payments The Ricardian Doctrine about Taxes and Government Debt The Model with Valued Currency and No Private Debt An Interventionist Optimal Monetary Equilibrium Townsend's \"Turnpike\" Interpretation Conclusions Exercises References and Suggested Readings 7. Credit and Currency with Overlapping Generations The Overlapping-Generations Model The Ricardian Doctrine about Taxes and Government Debt Again A Ricardian Proposition Currency, Bonds, and Open-Market Operations Computing Equilibria Interpretations as Currency Equilibria Optimality Four Examples on Inflation and Its Causes Seignorage and the Laffer Curve Dynamics of Seignorage Forced Saving International Exchange Rates Conclusions Exercises References and Suggested Readings 8. Government Finance in Stochastic Overlapping-Generations Models The Economy Some Examples A General Irrelevance Theorem Wallace's Modigliani-Miller Theorem for Open-Market Operations Chamley and Polemarchakis's Neutrality Theorem Interpretation as a Constant Fiscal Policy Indexed Government Bonds A Ricardian Proposition Further Irrelevance Theorems Conclusions Exercises References and Suggested Readings Appendix. Functional Analysis for Macroeconomics Metric Spaces and Operators First-Order Linear Difference Equations A Formula of Hansen and Sargent A Quadratic Optimization Problem in R A Discounted Quadratic Optimization Problem Predicting a Geometric Distributed Lead of a Stochastic Process Discounted Dynamic Programming A Search Problem Exercises References and Suggested Readings Index

Dynamic Macroeconomic Theory

An Analysis of Robert E. Lucas Jr.'s Why Doesn't Capital Flow from Rich to Poor Countries?

Using the Keynesian theory of effective demand, this paper demonstrates how particular models, such as that of "cooperative capitalism" enunciated by the left Keynesian social democrats, the Marxian model of "profit squeeze" emphasizing distributive conflict, and even the conservative model relying on "supply side" stimulus, fit in as particular variants of a more general theoretical scheme through a reconstruction of the familiar IS schedule. The argument is weaved around the theme of the relations between unemployment and real wage in the context of both a closed and an open economy to explain the common macroeconomic basis of contesting ideologies. Copyright 1990 by Oxford University Press.

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Unemployment and the real wage: the economic basis for contesting political ideologies

Publisher Summary This chapter discusses the formation of usurious interest rates in backward agriculture. Inadequate conventional explanations typically running in terms of a demand-and-supply approach to credit is rejected. It suggests an alternative formulation that brings out more clearly the exploitative mechanism underlying the formation of such usurious interest rates. Though necessarily unrealistic, such a schematized representation is intended to bring into sharp focus the crucial interconnections among certain of the relevant factors, based on some of the peculiar characteristics of the agrarian credit market. The chapter presents a summary of the argument incorporates comments on the possible links between the model and the reality of the agrarian credit market. It also describes some characteristics of the agrarian capital market.

On the formation of usurious interest rates in backward agriculture

This paper examines how variable output and profit share jointly determine investment and saving, while the difference between investment and saving drives the changes in output and profit share. Analysis of the resulting pair of differential equations yields novel implications for the multiplier process. In this more general framework a number of separate strands of the Keynesian-inspired literature can be understood. In particular, the model incorporates both forced saving and profit squeeze to analyse the stability of the dynamical system, and brings out the complex relation between in and out-of-equilibrium profit-led and wage-led regimes.

On the dynamics of profit-led and wage-led growth

This new approach incorporates on the demand side the problem of effective demand and unemployment, while rejecting on the supply side the oversimplistic use of a production function, with or without capital--labour substitution. The focus on the adoption and diffusion of labour productivity growth permits viewing supply as being driven endogenously by inter-class conflict over distribution as well as inter-class conflict among rival firms over market shares. The result is a race between growth rates in labour productivity and in the real wage rate, which drives demand and productivity growth on the one hand, while making wage share reasonably constant on the other. The existence and stability properties of the steady state are also examined. Copyright 2006, Oxford University Press.

Endogenous economic growth: a new approach

The paper examines three aspects of a financial crisis of domestic origin. The first section studies the evolution of a debt-financed consumption boom supported by rising asset prices, leading to a credit crunch and fluctuations in the real economy, and, ultimately, to debt deflation. The next section extends the analysis to trace gradual evolution toward Ponzi finance and its consequences. The final section explains the link between the financial and the real sector of the economy, pointing to an inherent liquidity problem. The paper concludes with comments on the interactions between the three aspects.

Amit Bhaduri

Papers

Unemployment and the real wage: the economic basis for contesting political ideologies

On the formation of usurious interest rates in backward agriculture

On the dynamics of profit-led and wage-led growth

Endogenous economic growth: a new approach

A Contribution to the Theory of Financial Fragility and Crisis