Modelling multilateral trade resistance in a gravity model with exchange rate regimes

In estimating a gravity model it is essential to analyse not just bilateral trade resistance, the barriers to trade between a pair of countries, but also multilateral trade resistance (MTR), the barriers to trade that each country faces with all its trading partners. Without correctly modelling MTR, it is impossible either to obtain accurate estimates of the effects on trade of exchange rate regimes and other variables or to perform accurate counterfactual simulations of trade patterns under other assumptions about exchange rate regimes or other variables. In this paper we implement a number of different ways of modelling MTR – both for a standard gravity model and for an extended model which includes a full range of bilateral exchange rate regimes – notably several variants of the technique developed by Baier and Bergstrand (2006), which turn out to produce broadly similar results. We then illustrate our preferred approach by carrying out simulations of the effects of the creation of an East African currency union and the effects of a withdrawal from EMU by Italy.gravity, geography, trade, exchange rate regime, currency union, transactions costs, multilateral trade resistance.

Making Bad Decisions: firm size and investment under uncertainty

This paper presents a 'real options' model of investment under uncertainty, which incorporates the assumption of a financial market characterised by asymmetric information and which can explain the stylised facts of firm growth. The decision-making situation faced by small and medium-sized enterprises (SMEs) features much greater constraints on the ability to gather information in order to reduce uncertainty about their investment opportunities, compared with that faced by large companies (LCs). This necessarily causes relatively poor decision-making by SMEs, and explains their substantial death rates.

The Financing and Technology Decisions of SMEs: II. Technology and Policy

This paper surveys the theoretical and empirical literature on technology investment by SMEs to complement previous analysis of financial constraints on Southern European SMEs. The finding of the previous paper was that finance is a determinant of the nature as well as the level of technology investment; we now add detailed examination of the literature specifically on technology. The resulting life cycle model of the firm combines financing and technological typologies and provides the basis for policy in banking and venture capital. The analytical model for which the foundations are laid here will be presented in full in the subsequent paper.

Capital Account Liberalisation and Poverty

While poverty reduction has become the central focus of the multilateral institutions, research into macroeconomic policy has lagged behind and continues to be almost solely growth-focused. This paper aims to contribute to one policy area, that of capital account regulation, and sets out a framework of linkages to poverty. The key conclusion is that while the growth benefits of liberalisation are far from clear for poorer countries, there may be significant costs in poverty terms. While further research is required in a number of areas identified, the main policy implication is that capital controls must be retained as part of the toolbox of pro-poor macroeconomic policymaking.

Promoting Group Justice: Fiscal Policies in Post-Conflict Countries

In the aftermath of violent conflict, governments have an opportunity to address fundamental inequalities between internal groups. As taxation and expenditure policies are developed to rebuild a functional domestic economy and infrastructure, policies can be designed to lessen divisions and promote equity.The authors assert that good data about the status quo on inequality in a country is the first step to addressing it through policy. They then discuss some options for formulating a tax code that addresses distributional issues and increases progressivity. Expenditure planning can also be designed to help create equity in income and non-income resources, such as public services, employment, health and education. The role of aid donors is discussed, particularly as a source of successful strategies gleaned from other post-conflict countries.This study is part of a series on Public Finance in Post-Conflict Environments, published jointly by PERI and New York University's Center on International Cooperation.inequality; horizontal inequality; post-conflict economies; fiscal policies; taxation incidence; expenditure incidence

Undergraduate students: interactive, online experiences and ePortfolio development

Results of a previous study by the authors into the perceived value and potential of ePortfolios to assist undergraduate students indicated that technology was an important aspect of their everyday lives. It was also felt it to be beneficial to their learning. A large percentage of students were found to be using digital techniques to store evidence of their learning, and were also using interactive, online tools in their learning activities. There was, however, little reported structured use of ePortfolio development in their learning. Students acknowledged they were discovering for themselves the value of online technologies in learning. This paper focuses on student skills and experiences of online tools on entry to university, and considers their experience of ePortfolio development using the Wordpress personal publishing platform. Results indicate that students’ skill level of online, interactive tools was high and wide-ranging. Although previous experience of using these tools was unstructured and informal, ePortfolio creation was found to be an engaging, relevant and worthwhile activity. The ePortfolio development exercise also provided an experiential learning experience, and had a positive effect on students’ attitudes to learning

Tax Evasion, Tax Avoidance and Development Finance

Domestic revenue mobilisation is key to sustainable development finance - only self-sufficiency will allow the development of fully-functioning states with flourishing systems of political representation and economies reflecting societies' expressed preferences in regard to, for example, inequality. Tax evasion and tax avoidance are important insofar as they affect both the volume and nature of government finances. This paper estimates the total cost to developing countries of these leakages as US$385 billion annually, dwarfing any potential increase in aid. An additional result suggests that doubling aid to low income countries may have little positive revenue effect but damage the strength of political representation, if full trade liberalisation is simultaneously required.

Causes of conflict in Sudan: Testing the Black Book

The Black Book of Sudan claims to identify a pattern of political control - by people of its northern regions - which is unbroken during the post-independence period. This is the basis for the view of many of the rebels in the south and west of the country that the conflicts are the result not of racial or religious discrimination but rather of regional marginalisation. This paper uses the available data to evaluate the extent to which differences in regional access to power have resulted in differential human development progress. Indicators ranging from infant mortality to adult literacy, coupled with data on regional expenditure allocations, offer substantial support to the idea that policy has discriminated against the population of the southern and western regions, not least Darfur. The danger is that development community efforts that do not recognise the basis for the conflict may facilitate a continuation of the same distortions and sow the seeds for future conflict even before peace is achieved.