Unsecured Debt, Consumer Bankruptcy, and Small Business

In this paper we develop a quantitative model of entrepreneurial activity (risk-taking) and consumer bankruptcy choices and use the model to study the effects of bankruptcy regulations on entrepreneurial activity, bankruptcy rate and welfare. We show that eliminating bankruptcy exemptions leads to a modest increase in the fraction of entrepreneurs, a large decrease in the overall bankruptcy rate and a significant welfare gain. In contrast, eliminating the whole consumer bankruptcy system leads to a large fall in the fraction of entrepreneurs and a substantial welfare loss. These two findings suggest that the consumer bankruptcy system is desirable but it must be well-designed with regard to bankruptcy asset exemptions. In particular, excessive bankruptcy exemptions can be counter-productive. Finally, we argue that entrepreneurial activity is important when studying different bankruptcy rules or regulations.Economic models; Financial stability; Financial system regulation and policies

Uninsurable Investment Risks and Capital Income Taxation

This paper studies the capital accumulation and welfare implications of reducing capital income taxation in a general equilibrium economy with uninsurable investment risks. It has been shown that, with uninsurable investment risks, under-accumulation of capital may result compared to the complete markets economy. We show that reducing somewhat the capital income tax rate increases the capital stock and leads to a welfare gain. The complete elimination of the capital income tax, however, is not necessarily welfare improving.Economics models

Uninsurable Investment Risks

The authors study a general-equilibrium economy in which agents have the ability to invest in a risky technology. The investment risk cannot be fully insured with optimal contracts, because shocks are private information. The authors show that the presence of these risks may lead to an underaccumulation of capital relative to an economy where idiosyncratic shocks can be fully insured. They also show that, although the availability of state-contingent (optimal) contracts cannot provide full insurance, it brings the aggregate stock of capital close to the complete markets level. Institutional reforms that make the use of these contracts possible have important welfare consequences.Economic models; Financial institutions; Financial markets

Price-Level Uncertainty, Price-Level Targeting, and Nominal Debt Contracts

Many central banks around the world have embraced inflation targeting as a monetary policy framework. Interest is growing, however, in price-level targeting as an alternative. The choice of frameworks has important consequences for financial contracts, most of which are not fully indexed to the price level. Changes in the price level therefore lead to changes in the real value of contracts. Price-level targeting would reduce the size of these changes in real wealth and decrease uncertainty about the future price level. This article assesses the merits of price-level targeting vis-à-vis inflation targeting from a debt-revaluation perspective, with a focus on channels affecting risk premiums, the maturities of nominal debt contracts, and redistribution of wealth. A general conclusion flowing from the analysis is that accounting for the revaluation of nominal debts and assets strengthens the relative merits of price-level targeting compared with inflation-targeting.

Leverage, Balance Sheet Size and Wholesale Funding

Some evidence points to the procyclicality of leverage among financial institutions leading to aggregate volatility. This procyclicality occurs when financial institutions finance their assets with non-equity funding (i.e., debt financed asset expansions). Wholesale funding is an important source of market-based funding that allows some institutions to quickly adjust their leverage. As such, financial institutions that rely on wholesale funding are expected to have higher degrees of leverage procyclicality. Using high frequency balance sheet data for the universe of banks, this study tries to identify (i) if such a positive link exists between the assets and leverage in Canada, (ii) how wholesale funding plays a role for this link, and (iii) market and macroeconomic factors associated with this link. The findings of the empirical analysis suggest that a strong positive link exists between asset growth and leverage growth, and the use to wholesale funding is an important determinant of this relationship. Furthermore, liquidity of several short-term funding markets matters for procyclicality of leverage.Financial stability; Financial system regulation and policies; Recent economic and financial developments

Aggregate and Welfare Effects of Redistribution of Wealth Under Inflation and Price-Level Targeting

Since the work of Doepke and Schneider (2006a) and Meh and Terajima (2008), we know that inflation causes major redistribution of wealth - between households and the government, between nationals and foreigners, and between households within the same country. Two types of monetary policy, inflation targeting (IT) and price level targeting (PT), have very different implications for the price level path subsequent to a price-level shock, and consequently, have different redistributional properties which is what we explore in this paper. For Canada, we show that the magnitude of redistributions of an unexpected 1% price-level increase under IT is about three times larger than under PT. Households' and foreigners' wealth losses from a price level increase is matched by the gains of the government. Even though this redistribution is zero-sum, we observe positive effects on GDP due to the wealth loss, the lower value of the debt and its associated fiscal adjustment, and the non-linear effects on work effort of the redistribution of wealth across households. Finally, the direction of the change in the weighted welfare of households depends on the fiscal policy.Economic models; Monetary policy framework; Sectoral balance sheet; Inflation: costs and benefits; Inflation targets; Inflation and prices

Differing growth responses to nutritional supplements in neighboring health districts of Burkina Faso are likely due to benefits of small-quantity lipid-based nutrient supplements (LNS)

Background : Of two community-based trials among young children in neighboring health districts of Burkina Faso, one found that small-quantity lipid-based nutrient supplements (LNS) increased child growth compared with a non-intervention control group, but zinc supplementation did not in the second study. Objectives : We explored whether the disparate growth outcomes were associated with differences in intervention components, household demographic variables, and/or children's morbidity. Methods : Children in the LNS study received 20g LNS daily containing different amounts of zinc (LNS). Children in the zinc supplementation study received different zinc supplementation regimens (Z-Suppl). Children in both studies were visited weekly for morbidity surveillance. Free malaria and diarrhea treatment was provided by the field worker in the LNS study, and by a village-based community-health worker in the zinc study. Anthropometric assessments were repeated every 13-16 weeks. For the present analyses, study intervals of the two studies were matched by child age and month of enrollment. The changes in length-for-age z-score (LAZ) per interval were compared between LNS and Z-Suppl groups using mixed model ANOVA or ANCOVA. Covariates were added to the model in blocks, and adjusted differences between group means were estimated. Results : Mean ages at enrollment of LNS (n = 1716) and Z-Suppl (n = 1720) were 9.4 +/- 0.4 and 10.1 +/- 2.7 months, respectively. The age-adjusted change in mean LAZ per interval declined less with LNS (-0.07 +/- 0.44) versus Z-Suppl (-0.21 +/- 0.43; p<0.0001). There was a significant group by interval interaction with the greatest difference found in 9-12 month old children (p<0.0001). Adjusting for demographic characteristics and morbidity did not reduce the observed differences by type of intervention, even though the morbidity burden was greater in the LNS group. Conclusions : Greater average physical growth in children who received LNS could not be explained by known cross-trial differences in baseline characteristics or morbidity burden, implying that the observed difference in growth response was partly due to LNS

A Decolonial Critique of the Racialized “Localwashing” of Extraction in Central Africa

Responding to calls for increased attention to actions and reactions “from above” within the extractive industry, we offer a decolonial critique of the ways in which corporate entities and multinational institutions propagate racialized rhetoric of “local” suffering, “local” consultation, and “local” fault for failure in extractive zones. Such rhetoric functions to legitimize extractive intervention within a set of practices that we call localwashing. Drawing from a decade of research on and along the Chad-Cameroon Oil Pipeline, we show how multi-scalar actors converged to assert knowledge of, responsibility for, and collaborations with “local” people within a racialized politics of scale. These corporate representations of the racialized “local” are coded through long-standing colonial tropes. We identify three interrelated and overlapping flexian elite rhetoric(s) and practices of racialized localwashing: (a) anguishing, (b) arrogating, and (c) admonishing. These elite representations of a racialized “local” reveal diversionary efforts “from above” to manage public opinion, displace blame for project failures, and domesticate dissent in a context of persistent scrutiny and criticism from international and regional advocates and activists

Strategies Endogenesde Gestion des Ressources Naturelles : Cas des Forets Sacrees de la Commune de Tori-Bossito au Benin (Afrique de l’ouest)

Sacred forests constitute not only botanical reservoirs in the same way as the protected areas of the State, but also true means of communication, protection, prevention and conjuration of certain misfortunes. The present study is a contribution to a better knowledge of the diversity of sacred forests and the endogenous strategies implemented for their conservation in the Municipality of Tori-Bossito. The methodological approach used was based on socio-anthropological surveys of dignitaries, curators and traditional healers in the localities of the Commune, which are home to these sacred forests. In addition, the geographical coordinates of these sacred forests have been geo-referenced using a GPS. The results obtained reveal 51 sacred forests distributed in the six districts. They cover a total area of 38.55 ha and are divided into 3 categories, namely: the fetish forests (28 in number), the secret societies forests (21 in number) and the cemetery forests (02 in number). Ten endogenous management strategies for these sacred forests have been identified. These strategies are complementary and effectively contribute to the conservation of biodiversity in the Commune.Les forêts sacrées malgré leur rôle très important dans la vie socioéconomique d’une nation, subissent une nette régression due aux actions anthropiques. La présente recherche est une contribution à une meilleure connaissance de la diversité des forêts sacrées et des stratégies endogènes mises en œuvre pour leur conservation dans la Commune de Tori-Bossito. La démarche méthodologique utilisée s’est articulée autour des enquêtes socio anthropologiques auprès des dignitaires, des conservateurs et des tradithérapeutes dans les localités de la Commune abritant ces forêts sacrées. Par ailleurs, ces forêts sacrées ont été géo référencées au moyen d’un GPS Garmin 60. Les résultats obtenus révèlent 51 forêts sacrées réparties dans les six arrondissements de la commune de Tori-Bossito. Elles couvrent une superficie total de 38,55 ha et subdivisées en 3 catégories à savoir : les forêts fétiches (au nombre de 28), les forêts de sociétés secrètes (au nombre de 21) et les forêts cimetières (au nombre de 02). Dix (10) stratégies endogènes de gestion de ces forêts sacrées dont la sacralisation ; les interdits ; la délimitation ; l’association des divinités ;… ont été mises en évidences. Ces stratégies sont complémentaires et participent effectivement à la conservation de la biodiversité dans la Commune