HIPC Debt Relief and Policy Reform Incentives

Debt overhang, incentives, Social expenditure, Investment

Bilateral Donors' Aid Allocation Decisions: A Three-dimensional Panel Analysis

international aid allocation, panel, Tobit

Exploring Lebanon's growth prospects

This paper attempts to identify Lebanon's greatest constraints to economic growth, following a growth diagnosis approach. It concludes that fiscal imbalances and barriers to entry are most binding on long-term growth. Macroeconomic imbalances and related perceived risks affect the nature of investment decisions in Lebanon, in favor of liquid instruments rather than longer-term productive investments. Further, many barriers to entry discourage agents from investing in a number of markets: legal impediments to competition, corruption, and a set of fiscal incentives favoring the allocation of resources to non-tradable sectors, where potential demand and investment opportunities are scarcer. In turn, using a steady-state computable general equilibrium model, the paper assesses the long-term growth impact of a selected set of policy reforms envisaged to lift such constraints. Results suggest that 1 to 2 percentage points of additional GDP growth per year could be gained through public expenditure reform, greater domestic competition, and tax harmonization.Economic Theory&Research,Debt Markets,,Emerging Markets,Access to Finance

Donor characteristics and the allocation of aid to climate mitigation finance

We make use of a panel dataset of 22 donor countries from 1998 to 2009 to examine the links between donor characteristics and the share of overseas development assistance allocated to climate mitigation finance. We find that donors with a larger green domestic budget tend to allocate a smaller portion of overseas aid to mitigation finance (possibly as a result of a competing interest between spending on domestic environmental projects and international climate projects). The opposite holds for donor countries with better institutions (governance) that have ratified the Kyoto Protocol. We also find important discrepancies when comparing the effects of donor characteristics on committed versus disbursed mitigation finance (as a share of aid). For the latter, only commitment to the Kyoto Protocol appears to be of high statistical significance

The impact of the Brady plans on debt reduction and short-term growth

This paper presents an assessment of the results of Brady plans for debtor countries which have implemented such agreements (Costa Rica, Mexico, the Philippines, Uruguay and Venezuela). It shows that the relatively successful Mexican case cannot be generalized, due to the great diversity of the agreement signed. It appears that the Brady accords lead to substantial debt reductions for Costa Rica and Mexico only. Debt reduction for the other countries considered is very modest. Hence, a case-by-case analysis is essential. Moreover, macroeconomic simulations are presented, providing an assessment of the short-term growth effects of the Brady plan. These effects appear to be very limited. -Author</p

The impact of the Brady plans on debt reduction and short-term growth

This paper presents an assessment of the results of Brady plans for debtor countries which have implemented such agreements (Costa Rica, Mexico, the Philippines, Uruguay and Venezuela). It shows that the relatively successful Mexican case cannot be generalized, due to the great diversity of the agreement signed. It appears that the Brady accords lead to substantial debt reductions for Costa Rica and Mexico only. Debt reduction for the other countries considered is very modest. Hence, a case-by-case analysis is essential. Moreover, macroeconomic simulations are presented, providing an assessment of the short-term growth effects of the Brady plan. These effects appear to be very limited. -Author</p

Financial development and economic growth in an oil-rich economy: The case of Saudi Arabia

© 2014 Elsevier B.V.We investigate the effect of financial development on economic growth in the context of Saudi Arabia, an oil-rich economy. In doing so, we distinguish between the effects of financial development on the oil and non-oil sectors of the economy. Using the Autoregressive Distributed Lag (ARDL) Bounds test technique, we find that financial development has a positive impact on the growth of the non-oil sector. In contrast, its impact on the oil-sector growth and total GDP growth is either negative or insignificant. This suggests that the relationship between financial development and growth may be fundamentally different in resource-dominated economies

Measuring the impact of decentralized electricity projects: a triangulation approach

FERDI has created a unique initiative to evaluate the impacts and identify best practices in projects for access to essential services, using decentralized electrification projects as its basis. Large amounts of evaluation data covering such projects have been collected into a database called CoSMMA (Collaborative Smart Mapping of Mini-Grid Action). The evaluations available are of variable scientific quality, with most being of low quality. An innovative approach is suggested to overcome this drawback, based on the triangulation principle, which makes it possible to evaluate the success of a project with an acceptable level of accuracy. It is then possible to construct a meta-analysis to identify factors for success.There are two primary lessons to be drawn from the data available in CoSMMA. The first is that projects seeking to increase the uptake of very low-power equipment have little chance of lasting success. Success for projects of this type will involve construction of mini-grids, not individual solutions, and therefore require collective action at the local level. The second lesson, informed by this first observation, concerns the importance accorded to questions of governance. Bottom-up governance models are more likely to succeed than top-down approaches. Lastly, good quality regulation of the sector increases the probability that the project will succeed. However, this conclusion also serves to highlight the lack of available data on the local governance structures overseeing these projects

A meta-analysis of Beta-Convergence: The legendary two-percent

The topic of convergence is at the heart of a wide-ranging debate in the growth literature. Empirical studies of convergence differ widely in their theoretical backgrounds, empirical specifications and in their treatment of cross-sectional heterogeneity. Despite these differences, a rate of convergence of about 2% has been found under a variety of different conditions, resulting in the widespread belief that the rate of convergence is a natural constant. We use meta-analysis to investigate whether there is substance to the ‘myth’ of the legendary 2% convergence rate, and to assess several unresolved issues of interpretation and estimation. Our dataset contains approximately 600 estimates taken from a random sample of empirical growth studies published in peer-reviewed journals. We show that publication bias does not interfere with the analysis, and that it is misleading to speak of a natural convergence rate, since estimates of different growth regression! s come from different populations. We find that correcting for the bias resulting from unobserved heterogeneity in technology levels leads to higher estimates of the rate of convergence. We also find that correcting for endogeneity in the explanatory variables has a substantial effect on the estimates, and that measures of financial and fiscal development are important determinants of long-run differences in per-capita income levels