HOW LONG CAN INFLATION TAX COMPENSATE FOR THE LOSS OF GOVERNMENT REVENUE IN WAR ECONOMIES? EVIDENCE FROM BURUNDI

The paper shows that civil war in Burundi in the 1990s has provoked an unprecedented decline in government revenue. Both foreign aid transfers and revenue from domestic sources dried up, inducing the government to rely more on inflation tax. Using quarterly data covering the period from 1980:1 to 2002:4 to measure the sensitivity of money demand to inflation we find that the long-run semi-elasticity of inflation to real money in circulation trebled between the pre-war to the war period. The remarkable increase of the semi-elasticity translates what is known in the literature as economic agents 'flight from domestic currency', a strategy that limits the government's capacity to use inflation tax to compensate for the loss in more traditional revenue sources. Shedding light on the behaviour of the demand for real money amidst persistent political and economic instability, illustrates the limits of using inflation and money creation as a dependable source of government revenue.

The Parts Are Greater Than the Whole: How Securitization of Divisible Interests Can Revolutionize Structured Finance and Open the Capital Markets to Middle-Market Companies

We evaluated whether new information could be drawn from additional data collection and unconventional statistical analyses of an on-farm trial. First, we compared a conventional sampling method using a biomass estimate of weed abundance to repeated visual assessment of the percentage ground cover of weeds. The biomass was sampled once after the treatment, whereas the ground cover was repeatedly sampled once before weed control plus several occasions after weed control. Second, we contrasted the outcomes from analysis of variance (ANOVA), taking samples from a single point in time with repeated measures (rm)ANOVA and a multivariate method. As the outcomes and conclusions drawn were relatively similar, we conclude that the ground cover estimate of weed abundance was as reliable as the biomass estimate. The rmANOVA enabled us to follow the temporal trend in response to treatments in the most abundant species, including possible initial differences. Multivariate analysis went even further, by clearly displaying species-wise responses and treatment selectivity.The definitive version is available at www.blackwell-synergy.com: LIBÈRE NKURUNZIZA and PER MILBERG, Repeated grading of weed abundance and multivariate methods to improve the efficacy of on-farm weed control trials, 2007, Weed Biology and Management, (7), 132-139. http://dx.doi.org/10.1111/j.1445-6664.2007.00247.x. Copyright: Blackwell Publishing www.blackwell-synergy.co

Credit Can Precipitate Firm Failure: Evidence from Kenyan Manufacturing in the 1990s

This paper models firm survival in Kenyan manufacturing with a particular emphasis on the effect of credit on firm resilience. The paper explores how firms coped with the challenging economic environment that prevailed in the 1990s particularly the effect of the dramatic increase in interest rates. The key finding is that the burden of past loans precipitated firm failure in the 1990s but overdrafts did not seem to have had a significant impact on firm failure. Furthermore, older firms appear to have resisted better than younger ones, but there is no evidence that large firms had higher survival rates. These results are robust to different specifications, namely probit models, Cox proportional hazard models and exponential, Gompertz and Weibull parametric hazard models. The main contribution of the paper is to highlight the role of credit in explaining firm failure in a shockprone developing economy. The study shows that the key factors explaining firm survival in developed economies, namely size and age, are not necessarily the most relevant determinants of firm survival in developing economies. Methodologically, this paper is one of the few that have applied hazard analysis to firms in developing economies.

Temperature effect on fructan storage and regeneration of Canada thistle (Cirsium arvense (L.) Scop)

Organic farming is challenged by perennial weeds such as Canada thistle. The increasing CO2 concentration levels causing temperature increase may lead to an increased photosynthesis and as a consequence elevated storage in underground perennating organs. In this study, we analyzed fructan, the main storage in Canada thistle, in juvenile and mature plants treated with different temperatures. Low temperatures caused higher concentrations of fructan in four weeks old plants. Proximal root fragments had higher amount of fructan than distal fragments. Regenerative ability from roots with different fructan concentrations was also associated to temperature and age. This implies that the timing of root fragmentation in autumn should occur earliest four weeks before low temperatures for each location. Otherwise, new shoots would accumulate fructan causing sprouting the subsequent spring

Reputation and Credit without Collateral in Africa’s Formal Banking

The analysis of reputation as a contract enforcement instrument where legal institutions, especially commercial courts, fail to enforce commercial contracts has focused on informal credit markets. The literature centres on the argument that lenders or co-borrowers in group lending can easily monitor each borrower, given the small size of an individual lender.s market. Verifiability allows the detection of opportunistic default and hence allows its punishment. This paper argues that in Africa, even formal credit markets rely on reputation. However, the modelling strategy is not based on monitoring and verifiability, given the potential for residual information asymmetry between a bank and a borrower after screening. Instead, the paper conceptualises the relationship between a bank and a borrower as an infinitely repeated game. The bank learns the type of the borrower through repeated interaction, a process by which a borrower builds his reputation as an honest partner. A defaulting dishonest borrower forfeits his access to future loans. The main result of the model is that the higher the reputation of a borrower, the lower his equilibrium payoff that is incentive compatible with debt repayment. Conversely, in the absence of any reputation, the payoff that is incentive compatible with repayment is equal to infinity meaning that credit trade is impossible without either a credible formal contract enforcement mechanism or some level of reputation.