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Showing papers in "Research Papers in Economics in 2002"


Posted Content
TL;DR: In this article, the authors claim that the main reason for diverging experiences is differences in the quality of institutions, and they test this theory building on Sachs and Warner's influential works on the resource curse.
Abstract: Countries rich in natural resources constitute both growth losers and growth winners. We claim that the main reason for these diverging experiences is differences in the quality of institutions. More natural resources push aggregate income down, when institutions are grabber friendly, while more resources raise income, when institutions are producer friendly. We test this theory building on Sachs and Warner's influential works on the resource curse. Our main hypothesis: that institutions are decisive for the resource curse, is confirmed. Our results are in sharp contrast to the claim by Sachs and Warner that institutions do not play a role.

2,148 citations


Posted Content
TL;DR: In this article, the focus is on panels where a large number of individuals or firms are observed for a small number of time periods, typical of applications with microeconomic data, and the emphasis is on single equation models with autoregressive dynamics and explanatory variables.
Abstract: This paper reviews econometric methods for dynamic panel data models, and presents examples that illustrate the use of these procedures. The focus is on panels where a large number of individuals or firms are observed for a small number of time periods, typical of applications with microeconomic data. The emphasis is on single equation models with autoregressive dynamics and explanatory variables that are not strictly exogenous, and hence on the Generalised Method of Moments estimators that are widely used in this context. Two examples using firm-level panels are discussed in detail: a simple autoregressive model for investment rates; and a basic production function.

1,821 citations


Posted Content
TL;DR: In this paper, the forecast for real GDP growth in the world economy during 2002 (i.e., on a fourthquarter-to-fourth-quarter basis) is cut by about half a percentage point to 3 percent, a pace that is slightly below my estimate of the potential growth rate for world GDP.
Abstract: The global economic recovery is continuing but at a somewhat slower pace than was anticipated six months ago. Specifically, using the country weights from the IMF's World Economic Outlook, the forecast for real GDP growth in the world economy during 2002 (i.e., on a fourthquarter- to-fourth-quarter basis) is cut by about half a percentage point to 3 percent-- a pace that is slightly below my estimate of the potential growth rate for world GDP. This downward revision reflects primarily slower growth than earlier expected during the first half of 2002 in most industrial countries and the expectation that growth will remain somewhat more sluggish than earlier expected at least through year-end. For 2003, the forecast for global economic growth is also cut by about half a percentage point--to 4 percent--reflecting both general factors suggesting slightly weaker performance in many industrial and developing countries and the particular economic risks arising from possible military action against Iraq and from potential credit events affecting key developing countries. Despite these downward revisions, however, there is little doubt that the world economy will see significant improvement this year from the 1 percent growth recorded in 2001, and it is still reasonable to expect further improvement to a growth rate modestly above global potential during 2003.

1,555 citations


Posted Content
TL;DR: In this paper, the authors analyse an economy where managers engage both in the adoption of technologies from the world frontier and in innovation activities, and show that relatively backward economies may switch out of the investment-based strategy too soon, so certain economic institutions and policies, such as limits on product market competition or investment subsidies, which encourage the investmentbased strategy may be beneficial, however, fail to converge to the world technology frontier.
Abstract: We analyse an economy where managers engage both in the adoption of technologies from the world frontier and in innovation activities The selection of high-skill managers is more important for innovation activities As the economy approaches the technology frontier, selection becomes more important As a result, countries at early stages of development pursue an investment-based strategy, with long-term relationships, high average size and age of firms, large average investments, but little selection Closer to the world technology frontier, there is a switch to an innovation-based strategy with short-term relationships, younger firms, less investment and better selection of managers We show that relatively backward economies may switch out of the investment-based strategy too soon, so certain economic institutions and policies, such as limits on product market competition or investment subsidies, which encourage the investment-based strategy may be beneficial Societies that cannot switch out of the investment-based strategy, however, fail to converge to the world technology frontier Non-convergence traps are more likely when policies and institutions are endogenized, enabling beneficiaries of existing policies to bribe politicians to maintain these policies

1,384 citations


Posted Content
TL;DR: This paper provided a review of the United States and international evidence on the effectiveness of such input policies and contrasted the impact of resources with that of variations in teacher quality that are not systematically related to school resources.
Abstract: In an effort to improve the quality of schools, governments around the world have dramatically increased the resources devoted to them. By concentrating on inputs and ignoring the incentives within schools, the resources have yielded little in the way of general improvement in student achievement. This paper provides a review of the United States and international evidence on the effectiveness of such input policies. It then contrasts the impact of resources with that of variations in teacher quality that are not systematically related to school resources. Finally, alternative performance incentive policies are described.

1,258 citations


Posted Content
TL;DR: In this paper, the authors show that constraining portfolio weights to be nonnegative is equivalent to using the sample covariance matrix after reducing its large elements and then form the optimal portfolio without any restrictions on portfolio weights.
Abstract: Mean-variance efficient portfolios constructed using sample moments often involve taking extreme long and short positions. Hence practitioners often impose portfolio weight constraints when constructing efficient portfolios. Green and Hollifield (1992) argue that the presence of a single dominant factor in the covariance matrix of returns is why we observe extreme positive and negative weights. If this were the case then imposing the weight constraint should hurt whereas the empirical evidence is often to the contrary. We reconcile this apparent contradiction. We show that constraining portfolio weights to be nonnegative is equivalent to using the sample covariance matrix after reducing its large elements and then form the optimal portfolio without any restrictions on portfolio weights. This shrinkage helps reduce the risk in estimated optimal portfolios even when they have negative weights in the population. Surprisingly, we also find that once the nonnegativity constraint is imposed, minimum variance portfolios constructed using the monthly sample covariance matrix perform as well as those constructed using covariance matrices estimated using factor models, shrinkage estimators, and daily data. When minimizing tracking error is the criterion, using daily data instead of monthly data helps. However, the sample covariance matrix without any correction for microstructure effects performs the best.

1,208 citations


Posted Content
TL;DR: In this paper, the authors investigated the relationship between customer satisfaction and customer value in a cross-sectional survey with purchasing managers in Germany and found that perceived value is mediated by satisfaction.
Abstract: In recent years, there has been a resurgence of interest in the value construct among both marketing researchers and practitioners. Despite a growing body of research, it is still not clear how value interacts with related marketing constructs. Researchers have called for an investigation of the interrelationship between customer satisfaction and customer value to reduce the ambiguities surrounding both concepts. Investigates whether customer value and satisfaction represent two theoretically and empirically distinct concepts. Also addresses whether value is a better predictor of behavioral outcomes than satisfaction in a business marketing context. Two alternative models are developed and empirically tested in a cross-sectional survey with purchasing managers in Germany. The first model suggests a direct impact of perceived value on the purchasing managers' intentions. In the second model, perceived value is mediated by satisfaction. This research suggests that value and satisfaction can be conceptualized and measured as two distinct, yet complementary constructs.

1,134 citations


Posted Content
TL;DR: In this article, the authors investigate whether the industrial relations climate in Indian States has affected the pattern of manufacturing growth in the period 1958-92 and show that pro-worker amendments to the Industrial Disputes Act are associated with lowered investment, employment, productivity and output in registered manufacturing.
Abstract: This paper investigates whether the industrial relations climate in Indian States has affected the pattern of manufacturing growth in the period 1958-92. We show that pro-worker amendments to the Industrial Disputes Act are associated with lowered investment, employment, productivity and output in registered manufacturing. Regulating in a pro-worker direction is also associated with increases in urban poverty. This suggests that attempts to redress the balance of power between capital and labour can end up hurting the poor.

1,110 citations


Posted Content
TL;DR: In this article, the authors use a simple model to outline the conditions under which corporate investment will be sensitive to non-fundamental movements in stock prices and find strong support for this prediction.
Abstract: We use a simple model to outline the conditions under which corporate investment will be sensitive to non-fundamental movements in stock prices. The key cross-sectional prediction of the model is that stock prices will have a stronger impact on the investment of firms that are “equity dependent†– firms that need external equity to finance their marginal investments. Using an index of equity dependence based on the work of Kaplan and Zingales (1997), we find strong support for this prediction. In particular, firms that rank in the top quintile of the KZ index have investment that is almost three times as sensitive to stock prices as firms in the bottom quintile. We also verify several other predictions of the model.

1,095 citations


Posted Content
TL;DR: This article used a confidential version of the National Longitudinal Survey of Youth (NLSY) to estimate a model of non-random selection of workers among cities and then investigated the hypothesis that the correlation between college share and wages is due to unobservable individual characteristics that may raise wages and be correlated with college share.
Abstract: Economists have speculated for at least a century that the social return to education may exceed the private return. In this paper, I estimate spillovers from college education by comparing wages for otherwise similar individuals who work in cities with different shares of college graduates in the labor force. OLS estimates show a large positive relationship between the share of college graduates in a city and individual wages, over and above the private return to education. A key issue in this comparison is the presence of unobservable individual characteristics, such as ability, that may raise wages and be correlated with college share. I use a confidential version of the National Longitudinal Survey of Youth (NLSY) to estimate a model of non-random selection of workers among cities. By observing the same individual over time, I can control for differences in unobserved ability across individuals and differences in the return to skills across cities. I then investigate the hypothesis that the correlation between college share and wages is due to unobservable city-specific shocks that may raise wages and attract more highly educated workers to different cities. To control for this source of potential bias, I turn to Census data and use two instrumental variables: the lagged city demographic structure and the presence of a land--grant college. The results from Census data are remarkably consistent with those based on the NLSY sample. A percentage point increase in the supply of college graduates raises high school drop-outs' wages by 1.9%, high school graduates' wages by 1.6%, and college graduates wages by 0.4%. The effect is larger for less educated groups, as predicted by a conventional demand and supply model. But even for college graduates, an increase in the supply of college graduates increases wages, as predicted by a model that includes conventional demand and supply factors as well as spillovers.

1,083 citations


Posted Content
TL;DR: In this paper, the authors argue that financial imbalances can build up in a low inflation environment and that in some circumstances it is appropriate for policy to respond to contain these imbalance.
Abstract: This paper argues that financial imbalances can build up in a low inflation environment and that in some circumstances it is appropriate for policy to respond to contain these imbalances. While identifying financial imbalances ex ante can be difficult, this paper presents empirical evidence that it is not impossible. In particular, sustained rapid credit growth combined with large increases in asset prices appears to increase the probability of an episode of financial instability. The paper also argues that while low and stable inflation promotes financial stability, it also increases the likelihood that excess demand pressures show up first in credit aggregates and asset prices, rather than in goods and services prices. Accordingly, in some situations, a monetary response to credit and asset markets may be appropriate to preserve both financial and monetary stability.

Posted Content
TL;DR: In this paper, the authors analyse whether and how individual adoption decisions depend upon the choices of others in the same social networks. And they show that the relationship between the probability of adoption and the number of known adopters is shaped as an inverse-U.
Abstract: Despite their potentially strong impact on poverty, agricultural innovations are often adopted slowly. Using a unique household dataset on sunflower adoption in Mozambique, we analyse whether and how individual adoption decisions depend upon the choices of others in the same social networks. Since farmers anticipate that they will share information with others, we expect farmers to be more likely to adopt when they know many other adopters. Dynamic considerations, however, suggest that farmers who know many adopters might strategically delay adoption and to free-ride on the information gathered by others. We present empirical evidence which shows that the relationship between the probability of adoption and the number of known adopters is shaped as an inverse-U. In line with information sharing, the network effect is stronger for farmers who report discussing agriculture with others. The data contains information which is needed to ameliorate the identification issues that commonly arise in this context. In particular social networks are precisely identified, and in addition we can control for village heterogeneity and endogenous group information.

Posted Content
TL;DR: In this article, international and inter-personal differences in subjective well-being over the final fifth of the twentieth century were explained using data from three waves of the World Values survey covering about fifty different countries.
Abstract: This paper attempts to explain international and inter-personal differences in subjective well-being over the final fifth of the twentieth century The empirical work makes use of data from three waves of the World Values survey covering about fifty different countries The analysis proceeds in stages First there is a brief review of some reasons for giving a key role to subjective measures of well-being This is followed by a survey of earlier empirical studies, a description of the main variables used, a report of results and tests, and discussion of the links among social capital, education, income and well-being The main innovation of the paper, relative to earlier studies of subjective well-being, lies in its use of large international samples of data combining individual and societal level variables, thus permitting the simultaneous identification of individual-level and societal-level determinants of well-being This is particularly useful in identifying the direct and indirect linkages between social capital and well-being

Posted Content
TL;DR: In this article, the authors show that there are limits to venture capital as a solution to the funding gap, especially in countries where public equity markets are not highly developed, and further study of governmental seed capital and subsidy programs using quasi-experimental methods is warranted.
Abstract: Evidence on the "funding gap" for RD 2) evidence for high costs of RD 3) there are limits to venture capital as a solution to the funding gap, especially in countries where public equity markets are not highly developed; and 4) further study of governmental seed capital and subsidy programs using quasi-experimental methods is warranted.

Journal ArticleDOI
TL;DR: In this paper, the authors present a CGE model for developing countries, including household consumption of non-marketed (or "home") commodities, explicit treatment of transaction costs for commodities that enter the market sphere, and a separation between producing activities and commodities that permits any activity to produce multiple commodities and any commodity to be produced by multiple activities.
Abstract: Computable general equilibrium (CGE) models are used widely in policy analysis. The purpose of this paper is to contribute to and facilitate the use of CGE models. The paper includes a detailed presentation of a “standard” CGE model (an equation-by-equation description) and its required database. It incorporates features developed in recent years in research projects conducted at IFPRI. These features, which are of particular importance in developing countries, include household consumption of non-marketed (or “home”) commodities, explicit treatment of transaction costs for commodities that enter the market sphere, and a separation between producing activities and commodities that permits any activity to produce multiple commodities and any commodity to be produced by multiple activities. The paper discusses the implementation of the model in GAMS (the General Algebraic Modeling System) and is accompanied by a self-extracting zip file, which includes the GAMS files for the model, sample databases, simulations, solution reports, and a SAM aggregation program. Although the paper provides a standardized framework for analysis, the analyst is not forced to make “one-size-fits-all” assumptions. The GAMS code is written in a manner that gives the analyst considerable flexibility in model specification.

Posted Content
TL;DR: This article presented the first broad, cross-country examination of which view of financial structure is more consistent with the data and found that although overall financial development is robustly linked with economic growth, there is no support for either the bank-based or market-based view.
Abstract: For over a century, economists and policy makers have debated the relative merits of bank-based versus market-based financial systems. Recent research, however, argues that classifying countries as bank-based or market is not a very fruitful way to distinguish financial systems. This paper represents the first broad, cross-country examination of which view of financial structure is more consistent with the data. The results indicate that although overall financial development is robustly linked with economic growth, there is no support for either the bank-based or market-based view.

Posted ContentDOI
TL;DR: This article found that on average about half of all cooperation comes from subjects who understand free-riding but choose to cooperate out of some form of kindness, altruism, or warm-glow.
Abstract: The persistence of cooperation in public-goods experiments has become an important puzzle for economists. This paper presents the first systematic attempt to separate the hypothesis that cooperation is due to kindness, altruism, or warm-glow from the hypothesis that cooperation is simply the result of errors or confusion. The experiment reveals that on average about half of all cooperation comes from subjects who understand free-riding but choose to cooperate out of some form of kindness. This suggests that the focus on errors and "leaming"in experimental research should shift to include studies of preferences for cooperation as well. (JEL C92-, H41)

Posted Content
TL;DR: In this article, distance-based tests of localisation were developed to assess the statistical significance of departures from randomness, and the authors applied these tests to an exhaustive UK data set and found that only 51% of the industries were localised at a 5% confidence level.
Abstract: To study the detailed location patterns of industries, and particularly the tendency for industries to cluster relative to overall manufacturing, we develop distance-based tests of localisation. In contrast to previous studies, our approach allows us to assess the statistical significance of departures from randomness. In addition, we treat space as continuous instead of using an arbitrary collection of geographical units. This avoids problems relating to scale and borders. We apply these tests to an exhaustive UK data set. For four-digit industries, we find that (i) only 51% of them are localised at a 5% confidence level, (ii) localisation takes place mostly at small scales below 50 kilometres, (iii) the degree of localisation is very skewed, and (iv) industries follow broad sectoral patterns with respect to localisation. Depending on the industry, smaller establishments can be the main drivers of both localisation and dispersion. Three-digit sectors show similar patterns of localisation at small scales as well as a tendency to localise at medium scales.

Posted Content
TL;DR: In this paper, the authors propose a class of one-step models based on the scaling property that u equals a function of z times a one-sided error u * whose distribution does not depend on z. This is in contrast to a two-step procedure, where the first step is to estimate a standard stochastic frontier model, and the second step is the relationship between (estimated) u and z.
Abstract: Consider a stochastic frontier model with one-sided inefficiency u, and suppose that the scale of u depends on some variables (firm characteristics) z. A one-step model specifies both the stochastic frontier and the way in which u depends on z, and can be estimated in a single step, for example by maximum likelihood. This is in contrast to a two-step procedure, where the first step is to estimate a standard stochastic frontier model, and the second step is to estimate the relationship between (estimated) u and z. In this paper we propose a class of one-step models based on the scaling property that u equals a function of z times a one-sided error u * whose distribution does not depend on z. We explain theoretically why two-step procedures are biased, and we present Monte Carlo evidence showing that the bias can be very severe. This evidence argues strongly for one-step models whenever one is interested in the effects of firm characteristics on efficiency levels.

Posted Content
TL;DR: While characteristically "Austrian" themes such as entrepreneurship, economic calculation, tacit knowledge and the temporal structure of capital are clearly relevant to the business firm, Austrian economists have said relatively little about management, organization, and strategy.
Abstract: While characteristically ‘Austrian' themes such as entrepreneurship, economic calculation, tacit knowledge and the temporal structure of capital are clearly relevant to the business firm, Austrian economists have said relatively little about management, organization, and strategy. This innovative book features 12 chapters that all seek to advance the understanding of these issues by drawing on Austrian ideas.

Posted Content
TL;DR: In this paper, the authors examine the various links among foreign direct investment (FDI), financial markets, and economic growth and explore whether countries with better financial systems can exploit FDI more efficiently.
Abstract: In this paper, we examine the various links among foreign direct investment (FDI), financial markets, and economic growth We explore whether countries with better financial systems can exploit FDI more efficiently Empirical analysis, using crosscountry data between 1975- 1995, shows that FDI alone plays an ambiguous role in contributing to economic growth However, countries with well-developed financial markets gain significantly from FDI The results are robust to different measures of financial market development, the inclusion of other determinants of economic growth, and consideration of endogeneity

Posted Content
TL;DR: In this article, the authors show that large bidders have an incentive to reduce demand in order to pay less for their winnings, which creates an inefficiency in multi-unit auctions.
Abstract: Auctions typically involve the sale of many related goods. The FCC spectrum auctions and the Treasury debt auctions are examples. With conventional auction designs, large bidders have an incentive to reduce demand in order to pay less for their winnings. This incentive creates an inefficiency in multi-unit auctions. Large bidders reduce demand for additional units and so sometimes lose to smaller bidders with lower values. We demonstrate this inefficiency in several auction settings: flat demand and downward-sloping demand, independent private values and correlated values, and uniform pricing and pay-your-bid pricing. We also establish that the ranking of the uniform-price and pay-your-bid auctions is ambiguous. We show how a Vickrey auction avoids this inefficiency and how the Vickrey auction can be implemented with a simultaneous, ascending-bid design (Ausubel 1997). Bidding behavior in the FCC spectrum auctions illustrates the incentives for demand reduction and the associated inefficiency.

Posted Content
TL;DR: In this article, a stochastic dynamic general equilibrium (SDGE) model with sticky prices and wages for the euro area was developed and estimated using seven key macroeconomic variables: GDP, consumption, investment, prices, real wages, employment and the nominal interest rate.
Abstract: This paper, first, develops and estimates a stochastic dynamic general equilibrium (SDGE) model with sticky prices and wages for the euro area. The model incorporates various other features such as habit formation, costs of adjustment in capital accumulation and variable capacity utilisation and is estimated using seven key macro-economic variables: GDP, consumption, investment, prices, real wages, employment and the nominal interest rate. The introduction of eight orthogonal structural shocks (including productivity, labour supply, preference, cost-push and monetary policy shocks) allows for an empirical investigation of the effects of such shocks and of their contribution to business cycle fluctuations in the euro area. For example, it is found that productivity shocks account for only 10 percent of the long run variance in output. Using the estimated model, the paper then analyses the output (real interest rate) gap, defined as the difference between the actual and the flexible-price level of output (real interest rate). Finally, the estimated model is also used to analyse optimal monetary policy.

MonographDOI
TL;DR: In this article, a framework for empowerment of poor people is proposed, which focuses on increasing poor people's freedom of choice, and action to shape their own lives, by changing the mindset from viewing poor people as the problem to viewing them as essential partners in reducing poverty.
Abstract: Poverty will not be reduced on a large scale, without tapping into the energy, skills, and motivation of the millions of poor people around the world. This book offers a framework for empowerment, that focuses on increasing poor people's freedom of choice, and action to shape their own lives. This approach requires three societal changes: a change in the mindset, from viewing poor people as the problem to viewing them as essential partners in reducing poverty; a change in the relationship between poor people, and formal systems, enabling them to participate in decisions that affect their lives; and, a change in formal, and informal institutions to make them more responsive to the needs, and realities of poor people. Based on analysis of experiences from around the world, the book identifies four key elements to support empowerment of poor people: information, inclusions/participation, accountability, and local organizational capacity. This framework is applied to five areas of action to improve development effectiveness. These are: provision of basic services, improved local governance, improved national governance, pro-poor market development, and access to justice, and legal aid. The book also offers tools and practices, focusing on a wide range of topics, to support poor people's empowerment. These range from poor people's enterprises, information and communications technology, and, community driven development, to diagnostic tools such as corruption surveys, and citizen report cards.

BookDOI
TL;DR: The separation of ownership and control in corporate Europe is discussed in this article, where strong owners, weak minorities, and social control are identified as three types of owners in the Netherlands, Belgium, and Spain.
Abstract: 1. The Control of Corporate Europe 2. The Separation of Ownership and Control in Austria 3. Shareholding Cascades: The Separation of Ownership and Control in Belgium 4. Ownership and Voting Power in France 5. Ownership and Voting Power in Germany 6. Pyramidal Groups and the Separation between Ownership and Control in Italy 7. Ownership and Control in the Netherlands 8. Ownership and Control of Spanish Listed Firms 9. Ownership and Control in Sweden--Strong Owners, Weak Minorities, and Social Control 10. Strong Managers and Passive Institutional Investors in the United Kingdom 11. Beneficial Ownership in the United States THE LARGE HOLDINGS DIRECTIVE COMPARATIVE TABLES

Posted Content
TL;DR: In this article, the authors present a new set of integrated poverty and inequality estimates for India and Indian states for 1987-88, 1993-94 and 1999-2000, and show that poverty decline in the 1990s proceeded more or less in line with earlier trends.
Abstract: This paper presents a new set of integrated poverty and inequality estimates for India and Indian states for 1987-88, 1993-94 and 1999-2000. The poverty estimates are broadly consistent with independent evidence on per-capita expenditure, state domestic product and real agricultural wages. They show that poverty decline in the 1990s proceeded more or less in line with earlier trends. Regional disparities increased in the 1990s, with the southern and western regions doing much better than the northern and eastern regions. Economic inequality also increased within states, especially within urban areas, and between urban and rural areas. We briefly examine other development indicators, relating for instance to health and education. Most indicators have continued to improve in the nineties, but social progress has followed very diverse patterns, ranging from accelerated progress in some fields to slowdown and even regression in others. We find no support for sweeping claims that the nineties have been a period of "unprecedented improvement" or "widespread impoverishment".

Posted Content
TL;DR: In this paper, the authors assess two theories of why legal origin influences financial development: political and adaptation, and conclude that legal systems that adapt quickly to minimize the gap between the contracting needs of the economy and the legal system's capabilities will foster financial development more effectively than would more rigid legal traditions.
Abstract: A growing body of work suggests that cross-country differences in legal origin help explain differences in financial development. The authors assess two theories of why legal origin influences financial development. First, the"political"channel stresses that (1) legal traditions differ in the priority they give to the rights of individual investors compared with the state, and that (2) this has repercussions for the development of property rights and financial markets. Second, the"adaptability"channel holds that (1) legal traditions differ in their ability to adjust to changing commercial circumstances, and (2) legal systems that adapt quickly to minimize the gap between the contracting needs of the economy and the legal system's capabilities will foster financial development more effectively than would more rigid legal traditions. The authors use historical comparisons and cross-country regressions to assess the validity of these two channels.

Posted Content
TL;DR: In this article, the authors construct a simple model where political elites may block technological and institutional development, because of a "political replacement effect." Innovations often erode elites' incumbency advantage, increasing the likelihood that they will be replaced.
Abstract: We construct a simple model where political elites may block technological and institutional development, because of a ‘political replacement effect.’ Innovations often erode elites’ incumbency advantage, increasing the likelihood that they will be replaced. Fearing replacement, political elites are unwilling to initiate change, and may even block economic development. We show that elites are unlikely to block development when there is a high degree of political competition, or when they are highly entrenched. It is only when political competition is limited and also their power is threatened that elites will block development. We also show that such blocking is more likely to arise when political stakes are higher, and that external threats may reduce the incentives to block. We argue that this model provides an interpretation for why Britain, Germany and the US industrialized during the nineteenth century, while the landed aristocracy in Russia and Austria-Hungary blocked development.

Posted Content
TL;DR: This paper provided closed-form solutions under the assumption that the underlying distribution of income is Log-normal and analyzed the quality of these approximations in a sample of actual growth spells in developing countries.
Abstract: An identity links the rate of economic growth, the speed of poverty reduction and changes in the distribution of income during some time period in a given country A few authors used that identity to understand the causes for observed changes in poverty and to identify the exact role of economic growth in poverty reduction Yet, many empirical cross-country studies of the relationship between growth and poverty are based on linear regression models that are ill specified because they ignore that identity This paper provides approximations that permit doing much better than these linear models In particular, it gives closed-form solutions under the assumption that the underlying distribution of income is Log-normal The second part of the paper analyzes the quality of these approximations in a sample of actual growth spells in developing countries It turns out that the discrepancy between empirical and theoretical growth elasticities of poverty amounts to much less than 50 per cent and is mostly explained by distributional changes

Posted ContentDOI
TL;DR: In this paper, the authors examined whether dietary diversity, defined as the number of unique foods consumed over a given period of time, provides information on household food security, and found that dietary diversity would appear to show promise as a means of measuring food security and monitoring changes and impact, particularly when resources available for such measurement are scarce.
Abstract: Household food security is an important measure of well-being. Although it may not encapsulate all dimensions of poverty, the inability of households to obtain access to enough food for an active, healthy life is surely an important component of their poverty. Accordingly, devising an appropriate measure of food security outcomes is useful in order to identify the food insecure, assess the severity of their food shortfall, characterize the nature of their insecurity (for example, seasonal versus chronic), predict who is most at risk of future hunger, monitor changes in circumstances, and assess the impact of interventions. However, obtaining detailed data on food security status—such as 24- hour recall data on caloric intakes—can be time consuming and expensive and require a high level of technical skill both in data collection and analysis. This paper examines whether an alternative indicator, dietary diversity, defined as the number of unique foods consumed over a given period of time, provides information on household food security. It draws on data from 10 countries (India, the Philippines, Mozambique, Mexico, Bangladesh, Egypt, Mali, Malawi, Ghana, and Kenya) that encompass both poor and middle-income countries, rural and urban sectors, data collected in different seasons, and data on calories acquisition obtained using two different methods. ....[D]ietary diversity would appear to show promise as a means of measuring food security and monitoring changes and impact, particularly when resources available for such measurement are scarce.