Norman V. Loayza

Bio: Norman V. Loayza is an academic researcher from World Bank. The author has contributed to research in topics: Gross domestic product & Per capita. The author has an hindex of 24, co-authored 53 publications receiving 2331 citations. Previous affiliations of Norman V. Loayza include International Monetary Fund.

Economic Growth in Latin America and the Caribbean : Stylized Facts, Explanations, and Forecasts

Abstract: Economic Growth in Latin America and the Caribbean analyzes whether economic reforms have been beneficial to growth in the region. In doing so, it recognizes that growth is driven by a variety of factors - in some cases poor growth is due to insufficient structural reforms (e.g., low trade openness), in others to inappropriate stabilization policies (e.g., exchange rate overvaluation), and still in others to negative international conditions (e.g., growth slowdown in industrial countries). It is obvious but still correct to say that identifying the problem is the first step towards the solution. This book contributes to this effort by examining the growth performance of countries in Latin America and the Caribbean, explaining the underlying sources of their economic growth, and designing a strategy for further growth.

World development report 2014 : risk and opportunity - managing risk for development

Abstract: In recent years, the world has suffered a multitude of crises. Financial and economic turmoil have disrupted the world economy through loss of income, jobs, and social stability. Intense natural disasters have devastated entire communities from Haiti to Japan, leaving a trail of fatalities and economic losses in their wake. Concerns about global warming have grown, as have fears about the spread of deadly contagious diseases. The inability to manage risk properly leads to crises and missed opportunities. This poses significant obstacles to attaining the World Bank Group's two main goals: ending extreme poverty by the year 2030 and boosting shared prosperity of the bottom 40 percent of the population in developing countries. Managing risk effectively is, therefore, absolutely central to the World Bank's mission. The World Development Report (WDR) 2014 demonstrates that effective risk management can be a powerful instrument for development, it can save lives, avert economic shocks, and help people build better, more secure futures. This report calls for individuals and institutions to move from being 'crisis fighters' to becoming 'proactive and systematic risk managers.' There is substantial evidence that recognizing and preparing for risk can pay off abundantly. For instance, many developing countries displayed resilience in the face of the recent global financial crisis because they had previously reformed their macroeconomic, financial, and social policies.

Informality Trends and Cycles

Abstract: This paper studies the trends and cycles of informal employment. It first presents a theoretical model where the size of informal employment is determined by the relative costs and benefits of informality and the distribution of workers' skills. In the long run, informal employment varies with the trends in these variables, and in the short run it reacts to accommodate transient shocks and to close the gap that separates it from its trend level. The paper then uses an error-correction framework to examine empirically informality's long- and short-run relationships. For this purpose, it uses country-level data at annual frequency for a sample of industrial and developing countries, with the share of self-employment in the labor force as the proxy for informal employment. The paper finds that, in the long run, informality is larger in countries that have lower GDP per capita and impose more costs to formal firms in the form of more rigid business regulations, less valuable police and judicial services, and weaker monitoring of informality. In the short run, informal employment is found to be counter-cyclical for the majority of countries, with the degree of counter-cyclicality being lower in countries with larger informal employment and better police and judicial services. Moreover, informal employment follows a stable, trend-reverting process. These results are robust to changes in the sample and to the influence of outliers, even when only developing countries are considered in the analysis.

Forecasting, Structural Time Series Models and the Kalman Filter

Abstract: In this book, Andrew Harvey sets out to provide a unified and comprehensive theory of structural time series models. Unlike the traditional ARIMA models, structural time series models consist explicitly of unobserved components, such as trends and seasonals, which have a direct interpretation. As a result the model selection methodology associated with structural models is much closer to econometric methodology. The link with econometrics is made even closer by the natural way in which the models can be extended to include explanatory variables and to cope with multivariate time series. From the technical point of view, state space models and the Kalman filter play a key role in the statistical treatment of structural time series models. The book includes a detailed treatment of the Kalman filter. This technique was originally developed in control engineering, but is becoming increasingly important in fields such as economics and operations research. This book is concerned primarily with modelling economic and social time series, and with addressing the special problems which the treatment of such series poses. The properties of the models and the methodological techniques used to select them are illustrated with various applications. These range from the modellling of trends and cycles in US macroeconomic time series to to an evaluation of the effects of seat belt legislation in the UK.

Informality: Exit and Exclusion

Abstract: Informality: exit and exclusion analyzes informality in Latin America, exploring root causes and reasons for and implications of its growth. The authors use two distinct but complementary lenses: informality driven by exclusion from state benefits or the circuits of the modern economy, and driven by voluntary 'exit' decisions resulting from private cost-benefit calculations that lead workers and firms to opt out of formal institutions. They find both lenses have considerable explanatory power to understand the causes and consequences of informality in the region. Informality: exit and exclusion concludes that reducing informality levels and overcoming the 'culture of informality' will require actions to increase aggregate productivity in the economy, reform poorly designed regulations and social policies, and increase the legitimacy of the state by improving the quality and fairness of state institutions and policies. Although the study focuses on Latin America, its analysis, approach, and conclusions are relevant for all developing countries.

Inequality and Growth: What Can the Data Say?

Abstract: This paper describes the correlations between inequality and the growth rates in cross-country data. Using non-parametric methods, we show that the growth rate is an inverted U-shaped function of net changes in inequality: Changes in inequality (in any direction) are associated with reduced growth in the next period. The estimated relationship is robust to variations in control variables and estimation methods. This inverted U-curve is consistent with a simple political economy model, although, as we point out, efforts to interpret this model causally run into difficult identification problems. We show that this non-linearity is sufficient to explain why previous estimates of the relationship between the level of inequality and growth are so different from one another.