Risk sharing, finance and institutions in international portfolios

We show that international consumption risk sharing is significantly improved by capital flows, especially portfolio investment. Concomitantly, we show that poor institutions hamper risk sharing, but to an extent that decreases with openness. In particular, risk sharing is prevalent even among economies with poor institutions, provided they are open to international markets. This is consistent with the view that the prospect of retaliation may deter expropriation of foreign capital, even in institutional environments where it is possible. This deterrent is anticipated by investors, who act to diversify risk. By contrast, capital flows headed for closed economies with poor institutions are designed and constrained so as to limit the cost incurred in case of expropriation, and thus achieve little risk sharing. Finally, we show this non-linearity continues to be present in the determinants of international capital flows themselves. Institutions are crucial in attracting capital for closed economies, but are barely relevant in open ones. JEL Classification: F21, F30, G15Bank Loans, Cross-Border Investment, diversification, financial integration, Foreign Direct Investment, Portfolio Choice, portfolio investment, Risk Sharing

Errors in Variables and the Empirics of Economic Growth

We examine cross-sectional empirical evidence on the determinants of economic growth in light of an instrumental variables estimator, based on sample moments of order higher than two, which does not require extraneous instruments and which remains consistent, under quite reasonable assumptions, when measurement errors affect the explanatory variables. We focus on several in‡fluential papers — Barro (1991), Mankiw, Romer, and Weil (1992), Sachs and Warner (1997a), Easterly and Levine (1997), Levine and Zervos (1998)— and find that many of their results are “fragile”. We argue that the application of our estimator to cross-sectional empirical studies of the determinants of growth yields important insights which may qualify previous findings in the literature, especially given the errors in variables problems which are known to plague commonly used cross-sectional datasets.errors in variables;economic growth

Matching in Rural Producer Organizations

Using a rich dataset from West Africa we study the determinants of membership in rural producer organizations (RPO). We …nd that on average it is the more fortunate members of rural society who belong in RPOs. In Senegal, the dominant criteria are land ownership. In Burkina Faso it is economic status and family ties with village authorities. Ethnicity also plays a role: RPO membership is less likely for ethnic groups that traditionally emphasize livestock raising. We also look for evidence of assortative matching along multiple dimensions. To this e¤ect we develop an original methodology based on dyadic regressions. We …nd robust evidence of assortative matching by physical and ethnic proximity as well as by wealth and social status.keywords: matching, group membership, rural producer organizations, Africa

Matching in Rural Producer Organizations

Using a rich dataset from West Africa we study the determinants of membership in rural producer organizations (RPO). We ...nd that on average it is the more fortunate members of rural society who belong in RPOs. In Senegal, the dominant criteria are land ownership. In Burkina Faso it is economic status and family ties with village authorities. Ethnicity also plays a role: RPO membership is less likely for ethnic groups that traditionally emphasize livestock raising. We also look for evidence of assortative matching along multiple dimensions. To this e¤ect we develop an original methodology based on dyadic regressions. We ...nd robust evidence of assortative matching by physical and ethnic proximity as well as by wealth and social status.keywords: matching;group membership;rural producer organizations;Africa

Environmental Protection, Producer Insolvency and Lender Liability

The present paper deals with some legal issues surrounding environmental protection, namely those issues concerning the liability of the different firms and individuals directly or indirectly involved in the generation of environment damaging accidents. We consider in particular the potential effects of extending a firm's liability in case of an environmental disaster to its lenders and financiers when the cost of this liability is too large in relation to the firm's assets. Such extended liability regimes exist or are considered in many countries. The most important case is the 1980/85 Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) in the USA that led to an extensive jurisprudence over the last fifteen years. Nous traitons ici du cadre légal de la responsabilité directe des entreprises lors de désastres environnementaux et de l'extension de cette responsabilité aux prêteurs en cas de faillite de l'entreprise. De tels régimes existent ou sont à l'étude dans plusieurs pays. Le cas le plus connu est le Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) de 1980/85 aux États-Unis et nous analysons les principaux cas de jurisprudence auxquels cette loi a donné lieu depuis 15 ans.Environment, Extended Lender Liability, CERCLA, Environnement, responsabilité, CERCLA

Errors in Variables and the Empirics of Economic Growth

We examine cross-sectional empirical evidence on the determinants of economic growth in light of an instrumental variables estimator, based on sample moments of order higher than two, which does not require extraneous instruments and which remains consistent, under quite reasonable assumptions, when measurement errors affect the explanatory variables. We focus on several in‡fluential papers — Barro (1991), Mankiw, Romer, and Weil (1992), Sachs and Warner (1997a), Easterly and Levine (1997), Levine and Zervos (1998)— and find that many of their results are “fragile”. We argue that the application of our estimator to cross-sectional empirical studies of the determinants of growth yields important insights which may qualify previous findings in the literature, especially given the errors in variables problems which are known to plague commonly used cross-sectional datasets.errors in variables, economic growth