The Penn-Belassa-Samuelson Effect in Developing Countries: Price and Income Revisited

It is conventional wisdom that richer countries have a higher price level than poorer countries. This paper provides evidence that the price-income relationship is non-linear and that it turns negative, or at best flat, in low income countries. The result is robust along both cross-section and time-series dimensions. Additional robustness checks show that biases in PPP estimation and measurement error in low-income countries do not drive the result.Balassa-Samuelson, Penn effect, developing countries, non-parametricestimation, purchasing power parity, real exchange rate

Powering education

More than 1.3 billion people worldwide have no access to electricity and this has first-order effects on several development dimensions. In this paper we focus on the link between access to light and education. We randomly distribute solar lamps to 7th grade pupils in rural Kenya and monitor their educational outcomes throughout the year at quarterly frequency. We find that access to lights through solar lamps is a relevant and effective input to education. Our identification strategy accounts for spillovers by exploiting the variation in treatment at the pupil level and in treatment intensity across classes. We find a positive and significant intention-to-treat effect as well as a positive and significant spillover effect on control students. In a class with the average treatment intensity of our sample (43%), treated students experience an increase in math grades of 0.88 standard deviations. Moreover, we find a positive marginal effect of treatment intensity on control students: raising the share of treated students in a class by 10% increases grades of control students by 0.22 standard deviations. We exploit household geolocation to disentangle within-class and geographical spillovers. We show that geographical spillovers do not have a significant impact and within-school interaction is the main source of spillovers. Finally, we provide suggestive evidence that the mechanism through which lamps affect students is by increasing co-studying at school especially after sunset

International financial flows and misallocation

We study the impact of international financial flows on credit allocation exploiting the early 2000s boom of capital inflows in Italy. Using detailed bank-firm matched data we compare the patterns of credit allocation of banks with different exposure to the shock. Exposed banks significantly expand lending to high productivity and low credit-constraint firms. Constrained but high productivity firms also benefit from the shock. These results hold using alternative measures of firm productivity and credit constraints or of bank exposure to the flows, and do not seem to be driven by concurrent changes in bank funding or by the sorting of borrowers and lenders. We also find that the patterns of credit allocation induced by capital inflows have a positive, albeit small, impact on aggregate TFP. These results show that international financial flows did not contribute to increase misallocation

The Design and Development of a Vibrating Reed Transducer for Process Monitoring and Particle Characterisation

This thesis describes the design and development of a novel vibrating reed technique for the measurements of various process parameters such as fluid density and viscosity under adverse conditions. Briefly, the system consists of a stiff elastic reed which is securely clamped at an intermediate point along its length. One free span, the remote end, is exposed to the test environment while the other is sinusoidally vibrated at the primary resonant frequency of the reed using an electromagnet. Changes in the vibrational characteristics of the system reveal information about the properties of the test medium. Early in the study, the design conditions required for the successful transfer of the vibration from the drive to the remote span together with the monitoring of the vibrational characteristics of the system at the same drive end are described. Two mathematical models, one based on finite element analysis and the other using the receptance approach have also been developed. These successfully predict, as verified by experimental evidence, some of the optimal design criteria required for maximum sensitivity and stability in response. The main thrust of the thesis deals with the application of the same type of device for particle characterisation in terms of thermogravimetry, sizing and classification. A typical resolution in terms of mass measurement is ± 3 x 10-3g when the system is employed as a thermogravimetric analyser in the range 20 - 500 °C. Particle sizes are measured using a modified version of the remote drive which handles dry powders in a 'vibro-fluidised' state. Average particle sizes for different types and shapes of powders in the range 20 - 950 μm are reported with ca. ±10 μm resolution. Also, the response of the system in the particle sizing mode is successfully predicted using a viscoelastic model

Import competition, trade credit and financial frictions in general equilibrium

We analyze the role of trade credit and financial frictions in the propagation of international trade shocks along the supply chain. First, we show empirically that exposure to import competition from China increased the use of trade credit in the U.S. Then, we use a multi-country input-output trade model with borrowing constraints, trade credit, and endogenous employment to quantify the general equilibrium effects of such increase, characterizing the different channels at work. Borrowing constraints amplify the negative consequences of the China shock on employment, but introducing trade credit reduces these losses by 8%-27%, depending on the tightness of the constraints

Trade shocks and credit reallocation

The effect of trade liberalization on welfare and economic activity remains one of the most important questions in economics. The literature identifies a number of key determinants that reduce the potential gains from trade, by focusing on frictions to labor mobility across regions or sectors. This paper contributes to this debate by exploring a novel channel, namely the reallocation of credit in the aftermath of a trade shock. We find that there are endogenous financial frictions that arise from trade liberalization and spillovers between losers and winners from trade that go through banks, as banks can be negatively affected by a trade shock through the portfolio of firms they lend to. Using data from the Italian credit registry, matched with bank and firm level data, we follow the evolution of bank and firm activities prior to and after the entry of China into the WTO. We identify the sectors most affected by import competition from China and estimate the transmission of this trade shock from firms to their lending banks, and the consequence of the shock on banks' lending to other firms. We find that, controlling for credit demand, banks exposed to the China shock decrease their lending relative to non-exposed banks. Importantly, this lending is reduced both for firms exposed to competition from China and to those that are not and that we should expect to expand. The main mechanism is related to the reduction of the core capital of banks, and their resulting funding capacity, through the rise of non-performing loans. We quantify the impact of this effect on real outcomes such as employment, investment, and output and we find relevant aggregate implications. These findings provide evidence that following a trade shock, bank lending has a key impact on the reallocation channel and on the potential gains from trade

Poor productivity: an Italian perspective

Productivity growth has been slow in Western countries since the global financial crisis, but in Italy it has been stagnating for 25 years. Fadi Hassan and Gianmarco Ottaviano investigate inefficiency and misallocation in the Italian economy to draw broader lessons about what lies behind the 'productivity puzzle'

Unusual case of pancreatic inflammatory myofibroblastic tumor associated with spontaneous splenic rupture

<p>Abstract</p> <p>Background</p> <p>Spontaneous splenic rupture considered a relatively rare but life threatening. The three commonest causes of spontaneous splenic rupture are malignant hematological diseases, viral infections and local inflammatory and neoplastic disorders. We describe a unique and unusual case of inflammatory myofibroblastic tumor of the tail of pancreas presented with massively enlarged spleen and spontaneous splenic rupture.</p> <p>Case presentation</p> <p>A 19 years old male patient with no significant past medical history presented to emergency room with abdominal pain and fatigue. Massively enlarged spleen was detected. Hypotension and rapid reduction of hemoglobin level necessitated urgent laparatomy. About 1.75 liters of blood were found in abdominal cavity. A large tumor arising from the tail of pancreas and local rupture of an enlarged spleen adjacent to the tumor were detected. Distal pancreatectomy and splenectomy were performed. To our knowledge, we report the first case of massively enlarged spleen that was complicated with spontaneous splenic rupture as a result of splenic congestion due to mechanical obstruction caused by an inflammatory myofibroblastic tumor of the tail of pancreas. A review of the literature is also presented.</p> <p>Conclusion</p> <p>Inflammatory myofibroblastic tumor of the tail of pancreas should be included in the differential diagnosis of the etiological causes of massively enlarged spleen and spontaneous splenic rupture.</p

Essays in international and development macroeconomics

The thesis comprehends four chapters: the first chapter concerns with the positive correlation between cross-country price level and per-capita income, which is generally regarded as a stylized fact renowned as the Penn-Balassa-Samuelson effect. The chapter provides evidence that the price-income relationship is actually non-linear and that it turns negative in low income countries. The result is robust along both cross-section and panel dimensions. The main contribution of this chapter is to uncover a new empirical regularity such that the price level firstly decreases and then increases along the development process. The second chapter argues that, in order to capture the non-monotonicity of the price-income relationship, we need a modified Balassa-Samuelson framework that accounts for the fact that low-income and high-income countries have very different economic structures and are at different stages of development. Particular emphasis needs to be put on the relevance of the agricultural sector in poor countries and for . The contribution of this chapter is to show that a model linking the price level to the process of structural transformation captures the non-monotonic pattern of the data. The third chapter departs from the Balassa-Samuleson framework and analyses the price-income relationship in a multisector Eaton-Kortum model of trade. The chapter shows that also within this framework a negative-price income relationship emerges. This provides further support to the empirical result shown in the first chapter and additional insights on the determinants of such relationship. The fourth chapter focuses on the relationship between foreign capital flows and income inequality in emerging countries. Developing countries experience a prolonged period of real exchange rate overvaluation after they have opened their capital and current account. This real exchange rate overvaluation is associated with rising income inequality within a country. The chapter provides evidence of a significant positive correlation between net capital flows and the Gini coefficient. The chapter presents also a model connecting the dynamics of the balance of payments with a search and matching model of the labor market. This provides a useful analytical framework to disentangle the mechanisms that can link foreign capital flows to income inequality through the impact of real exchange rate adjustment on the price of labor and quantity of employment