Reform of the Malawian Public Sector: Incentives, Governance and Accountability

Accountability , Civil service reform, Good governance, Malawi , Public sector reform

Ethiopia: Updated Inflation Forecasts

The purpose of this section is to simulate possible policy scenarios and thus predict the CPI over June 2009 to December 2010 for illustrative purposes. The empirical models are based on Loening, Durevall and Birru (2009). Although highly tentative, our scenarios show that inflation will decrease substantially though inflation inertia may prevent a rapid stabilization of food prices. One of the main driving forces behind domestic inflation is agricultural output growth. While exchange rate and monetary policies can make a significant difference, it is crucial to take into consideration the development of the domestic cereal market. If international prices would start increasing again, they would to have a strong impact on Ethiopia, and the model predictions will not be valid.Inflation; Forecast; Ethiopia

Intimate partner violence and HIV in ten sub-Saharan African countries: what do the Demographic and Health Surveys tell us?

Background Many studies have identifi ed a signifi cant positive relation between intimate partner violence and HIV in women, but adjusted analyses have produced inconsistent results. We systematically assessed the association, and under what condition it holds, using nationally representative data from ten sub-Saharan African countries, focusing on physical, sexual, and emotional violence, and on the role of male controlling behaviour. Methods We assessed cross-sectional data from 12 Demographic and Health Surveys from ten countries in sub- Saharan Africa. The data are nationally representative for women aged 15–49 years. We estimated odds ratios using logistic regression with and without controls for demographic and socioeconomic factors and survey–region fi xed eff ects. Exposure was measured using physical, sexual, emotional violence, and male controlling behaviour, and combinations of these. The samples used were ever-married women, married women, and women in their fi rst union. Depending on specifi cation, the sample size varied between 11 231 and 45 550 women. Findings There were consistent and strong associations between HIV infection in women and physical violence, emotional violence, and male controlling behaviour (adjusted odds ratios ranged from 1·2 to 1·7; p values ranged from <0·0001 to 0·0058). The evidence for an association between sexual violence and HIV was weaker and only signifi cant in the sample with women in their fi rst union. The associations were dependent on the presence of controlling behaviour and a high regional HIV prevalence rate; when women were exposed to only physical, sexual, or emotional violence, and no controlling behaviour, or when HIV prevalence rates are lower than 5%, the adjusted odds ratios were, in general, close to 1 and insignifi cant. Interpretation The fi ndings indicate that male controlling behaviour in its own right, or as an indicator of ongoing or severe violence, puts women at risk of HIV infection. HIV prevention interventions should focus on high-prevalence areas and men with controlling behaviour, in addition to violence. Funding Swedish National Science Foundation and Gothenburg Centre of Globalization and Development, University of Gothenburg, Gothenburg, Sweden

Inflation dynamics and food prices in an agricultural economy : the case of Ethiopia

Ethiopia has experienced a historically unprecedented increase in inflation, mainly driven by cereal price inflation, which is among the highest in Sub-Saharan Africa. Using monthly data from the past decade, the authors estimate error correction models to identify the relative importance of several factors contributing to overall inflation and its three major components, cereal prices, food prices, and non-food prices. The main finding is that, in a longer perspective, over three to four years, the main factors that determine domestic food and non-food prices are the exchange rate and international food and goods prices. In the short run, agricultural supply shocks and inflation inertia strongly affect domestic inflation, causing large deviations from long-run price trends. Money supply growth does affect food price inflation in the short run, although the money stock itself does not seem to drive inflation. The results suggest the need for a multi-pronged approach to fight inflation. Forecast scenarios suggest monetary and exchange rate policies need to take into account cereal production, which is among the key determinants of inflation, assuming a decline in global commodity prices. Implementation of successful policies will be contingent on the availability of foreign exchange and the performance of agriculture.Markets and Market Access,Currencies and Exchange Rates,Economic Theory&Research,Food&Beverage Industry,Emerging Markets

Inflation Dynamics and Food Prices in an Agricultural Economy: The Case of Ethiopia

Ethiopia has experienced a historically unprecedented increase in inflation, mainly driven by cereal price inflation, which is among the highest in Sub-Saharan Africa. Using monthly data over the past decade, we estimate error correction models to identify the relative importance of several factors contributing to overall inflation and its three major components, cereal prices, food prices and non-food prices. Our main finding is that, in the long run, domestic food and non-food prices are determined by the exchange rate and international food and goods prices. In the short to medium run, agricultural supply shocks and inflation inertia strongly affect domestic inflation, causing large deviations from long-run price trends. Money supply growth affects food price inflation in the short run, though excess money supply does not seem to drive inflation in the long run. Our results suggest a challenging time ahead for Ethiopia, with the need for a multipronged approach to fight inflation. Forecast scenarios suggest monetary and exchange rate policies need to take into account the cereal sector, as food staple growth is among the key determinants of inflation, assuming a decline in global commodity prices. Implementation of successful policies will be contingent on the availability of foreign exchange and the performance of agriculture.Agriculture; Cointegration analysis; Ethiopia; Exchange rate; Money demand; Food prices; Forecast; Inertia; Inflation

Ethiopia: Updated Inflation Forecasts

The purpose of this section is to simulate possible policy scenarios and thus predict the CPI over June 2009 to December 2010 for illustrative purposes. The empirical models are based on Loening, Durevall and Birru (2009). Although highly tentative, our scenarios show that inflation will decrease substantially though inflation inertia may prevent a rapid stabilization of food prices. One of the main driving forces behind domestic inflation is agricultural output growth. While exchange rate and monetary policies can make a significant difference, it is crucial to take into consideration the development of the domestic cereal market. If international prices would start increasing again, they would to have a strong impact on Ethiopia, and the model predictions will not be valid

East African Community: Pre-conditions for an Effective Monetary Union

Kenya, Tanzania and Uganda signed the Treaty for the establishment of the East African Community (EAC) in 1999, which entered into force in July 2000. In 2007 it was signed by Burundi and Rwanda. According to the Treaty, EAC should first form a customs union, then a common market and a monetary union, and finally a political union. The Customs Union was formally completed in 2010, and Common Market Protocol was signed in 2009. Currently the intention is to sign the East African Monetary Union protocol 2012, while the date for actual implementation of the common currency is uncertain. The purpose of this note is to discuss preconditions for an effective monetary union among the EAC members, with a focus on Rwanda. It first outlines potential economic benefits and costs of a monetary union, and then discusses political and institutional preconditions. It concludes that although there are potentially substantive economic net-benefits, a monetary union is a risky project for political reasons. The political will among policymakers is key to successful implementation, and it could vanish with a change of government or because of discontent among influential lobby groups. However, the process towards forming are monetary union is appears to be highly beneficial the EAC members, both directly by improving monetary policy and indirectly by contributing to economic integration.JEL classification: F15; F

Are Fairtrade Prices Fair? An Analysis of the Distribution of Returns in the Swedish Coffee Market

Consumers pay a premium for Fair Trade coffee, often assuming that it mainly benefits poor coffee farmers. However, several studies report that most of the premium accrues to actors in the consumer countries, such as roasters and retailers. This paper analyses how the returns to Fair Trade are distributed among bean producer countries, roasters and retailers, and Fairtrade Sweden, using scanner data on 185 products from Sweden and information about costs of production. The distribution depends on how much more costly it is to produce Fair Trade coffee compared to conventional coffee, given costs of beans and licences. Assuming the difference is 5 SEK per kg (about USD 0.80), which is on the high side, roasters and retailers get 61%, while producer countries, i.e., coffee farmers, cooperatives, middlemen, exporters and Fairtrade International, get 31%. The rest accrues to Fairtrade Sweden. These estimates are uncertain, but there is there strong evidence that Fair Trade retail prices are higher than the level attributable to the costs of Fair Trade beans and licences.JEL: D43, O19, P4

A Dynamic Model of Inflation in Kenya

This paper analyses the dynamics of inflation in Kenya during 1974 –1996, a period characterised by external shocks and internal disequilibria. By developing a parsimonious and empirically constant model we find that the exchange rate, foreign prices, and terms of trade have long-run effects on inflation, while money supply and interest rate only have short run effects. Inertia is found to be important up until 1993, when about 40% of the current inflation was carried over to the next quarter. After 1993, inertia drops to about 10%. Moreover, inflation is also influenced by changes in maize-grain prices, indicating a non-negligible role for agricultural supply constraints in the inflation process

Does Market Liberalization Increase Total Factor Productivity: Evidence from the Manufacturing Sector in Zimbabwe

In this paper we analyze if the structural adjustment program (ESAP), implemented during 1991-1995, contributed to an increase in total factor productivity in the manufacturing sector. To evaluate if productivity has grown we first estimate indexes of total factor productivity for 31 manufacturing sub-sectors for the period 1980-1995. Then we use panel data methods to test for the effects of trade reform and other variables related to ESAP. In general the growth rates vary greatly both over time and across sections. The overall impression is that there was no growth in total factor productivity on average during the whole period of ESAP. However, during the last two years, 1994-1995, most sub-sectors experienced increases in total factor productivity