Measuring real exchange rate instability in developing countries : empirical evidence and implications

Exchange rate policy has received renewed attention because of its prominent role in adjustment programs. Several analysts have examined the impact of real exchange rate uncertainty on the performance of such economic variables as GDP growth, exports, and investment. The author uses data on the real exchange rate for 56 developing countries with managed exchange rates to make three points. First, the distribution of annual changes in real exchange rates is highly non-normal - both skewness and excess kurtosis. Secondly, this asymmetric non-normality implies that the common practice of using the standard deviation (or coefficient of variation) to compare real exchange rate uncertainty across countries is not justified. Finally, empirically, the higher order moments (skewness and kurtosis) are at least as important as the standard deviation in explaining cross-country performance.Macroeconomic Management,Achieving Shared Growth,Economic Stabilization,Statistical&Mathematical Sciences,Economic Theory&Research

Divergence, big time

Recently, much attention has been paid in the literature on economic growth to the phenomenon of"conditional convergence,"the tendencies of economies with lower-level incomes to grow faster, conditional on their rate of factor accumulation. The author documents that, regardless of conditional convergence, perhaps the basic fact of modern economic history is massive absolute divergence in the distribution of incomes across countries. Discussions of long-run convergence or divergence has been hindered by the lack of reliable historical estimates of per capita income for poor countries. The author shows that to draw reasonable inferences about whether incomes have converged or diverged does not require historical estimates of per capita income as a plausible lower limit for historical per capita incomes combined with estimates of current income in poor countries places a binding constraint on their historical growth rates. Finally, the author estimates that between 1870 and 1985 the ratio of incomes in the richest and poorest countries increased sixfold, the standard deviation of (natural log) per capita incomes increased by between 60 and 100 percent, and the average income gap between the richest and the poorest countries grew almost ninefold (from $1,500 to over$12,000).Economic Theory&Research,Economic Conditions and Volatility,Poverty Impact Evaluation,Public Sector Economics&Finance,Public Institution Analysis&Assessment,Economic Theory&Research,Inequality,Achieving Shared Growth,Governance Indicators,Economic Conditions and Volatility

The Light Composite Higgs in Strong Extended Technicolor

This paper extends an earlier one describing the Higgs boson $H$ as a light composite scalar in a strong extended technicolor model of electroweak symmetry breaking. The Higgs mass $M_H$ is made much smaller than $\Lambda_{ETC}$ by tuning the ETC coupling very close to the critical value for electroweak symmetry breaking. The technicolor interaction, neglected in the earlier paper, is considered here. Its weakness relative to extended technicolor is essential to understanding the lightness of $H$ compared to the low-lying spin-one technihadrons. Technicolor cannot be completely ignored, but implementing technigluon exchange together with strong extended technicolor appears difficult. We propose a solution that turns out to leave the results of the earlier paper essentially unchanged. An argument is then presented that masses of the spin-one technifermion bound states, $\rho_H$ and $a_H$, are much larger than $M_H$ and, plausibly, controlled by technicolor. Assuming $M_{\rho_H}$ and $M_{a_H}$ are in the TeV-energy region, we identify $\rho_H$ and $a_H$ with the diboson excesses observed near $2\,{\rm TeV}$ by ATLAS and CMS in LHC Run 1 data, and we discuss their phenomenology for Runs 2 and 3.Comment: 23 pages, 3 figures. Updated discussion of diboson resonance status in view of current Run 2 data. Version to be published in JHE

The 30 GeV dimuon excess at ALEPH

A simple variation of a two-Higgs-doublet model is proposed to describe the 30 GeV dimuon excess reported by Heister in his reanalysis of Z → ¯bb events in ALEPH data taken in 1992-95. The heavier CPeven Higgs H is the 125 GeV Higgs boson discovered at the LHC. The model admits two options for describing the dimuon excess: (1) The lighter CP-even Higgs h and the CP-odd state ηA are approximately degenerate and contribute to the 30 GeV excess. (2) Only the h is at 30 GeV while the ηA and H are approximately degenerate at 125 GeV. The ALEPH data favor option 1. Testable predictions are presented for LHC as well as LEP experiments. A potential no-go theorem for models of this type is also discussed.Published versio

Time-Bound Labor Access to the United States: A Four-Way Win for the Middle Class, Low-Skill Workers, Border Security, and Migrants

The US economy needs low-skill workers now more than ever, and that requires a legal channel for the large-scale, employment-based entry of low-skill workers. The alternative is what the country has now: a giant black market in unauthorized labor that hinders job creation and harms border security. A legal time-bound labor-access program could benefit the American middle class and low-skill workers, improve US border security, and create opportunities for foreign workers

Intra - Sub - Saharan African trade : is it too little?

Trade among sub-Saharan African countries is very limited. This fact, plus other political and economic considerations, has been used to motivate a growing number of regional integration schemes. Although many authors have shown that intra-sub-Saharan African trade is limited, none has yet asked whether the level of intra-sub-Saharan African trade is higher or lower than one would expect, given a plausible model of the determination of trade flows. The authors compare actual trade with what a traditional gravity model would predict. They find that a gravity model predicts the low level of intra-sub-Saharan African trade. For the 19 sub-Saharan African countries in their sample, the actual sub-Saharan African share of imports plus exports was an average (median) of 8.1 percent (4.5 percent) while the gravity model predicts a slightly lower, not higher, mean (median) of 7.5 percent (4.5 percent).TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT,Economic Theory&Research,Environmental Economics&Policies,Trade Policy,Common Carriers Industry

The effect of household wealth on educational attainment : demographic and health survey evidence

Primary Education,Earth Sciences&GIS,Economic Theory&Research,Roads&Highways,Teaching and Learning,Roads&Highways,Poverty Assessment,Primary Education,Health Monitoring&Evaluation,Earth Sciences&GIS

What educational production functions really show : a positive theory of education spending

The accumulated results of empirical studies show that the public sector typically chooses spending on inputs such that the productivity of additional spending on books and instructional materials is 10 to 100 times larger than that of additional spending on teacher inputs (for example, higher wages, small class size). The authors argue that this pervasive and systemic deviation of actual spending from the technical optimum requires a political, not economic or technical, explanation. The evidence is consistent only with a class of positive models in which public spending choices are directly influenced by a desire for higher spending on teacher inputs, over and above their role in producing educational outputs. This desire could be due either to teacher power, or bureaucratic budget-maximizing behavior, or political patronage. The authors conclude by exploring the implications of these positive political models of educational spending behavior for various types of proposed educational reforms (localized control, parental participation, vouchers, and so on) which requires an examination of how the proposed reforms shift the relative powers of the stakeholders in the educational system: students and parents, educators, bureaucrats, and politicians.Economic Theory&Research,Curriculum&Instruction,Teaching and Learning,Environmental Economics&Policies,Fiscal&Monetary Policy,Curriculum&Instruction,Teaching and Learning,Economic Theory&Research,Environmental Economics&Policies,Gender and Education

Desired fertility and the impact of population policies

Ninety percent of the differences across countries in total fertility rates are accounted for solely by differences in women's reported desired fertility. Using desired fertility constructed from both retrospective and prospective questions, together with instrumental variables estimation, it is shown this strong result is not affected by either ex-post rationalization of births nor the dependence of desired fertility on contraceptive access or cost. Moreover, despite the obvious role of contraception as a proximate determinant of fertility, the additional effect of contraceptive availability or family planning on fertility is quantitatively small and explains very little cross country variation. These empirical results are consistent with theories in which fertility is determined by parent's choices about children within the social, educational, economic, and cultural environment that parents, and especially women, face. They contradict theories that assert a large causal role for expansion of contraception in the reduction of fertility.Reproductive Health,Gender and Social Development,Life Sciences&Biotechnology,Biodiversity,Poverty Reduction Strategies

Estimating wealth effects without expenditure data - or tears : with an application to educational enrollments in states of India

This paper has an empirical and overtly methodological goal. The authors propose and defend a method for estimating the effect of household economic status on educational outcomes without direct survey information on income or expenditures. They construct an index based on indicators of household assets, solving the vexing problem of choosing the appropriate weights by allowing them to be determined by the statistical procedure of principal components. While the data for India cannot be used to compare alternative approaches they use data from Indonesia, Nepal, and Pakistan which have both expenditures and asset variables for the same households. With these data the authors show that not only is there a correspondence between a classification of households based on the asset index and consumption expenditures but also that the evidence is consistent with the asset index being a better proxy for predicting enrollments--apparently less subject to measurement error for this purpose--than consumption expenditures. The relationship between household wealth and educational enrollment of children can be estimated without expenditure data. A method for doing so - which uses an index based on household asset ownership indicators- is proposed and defended in this paper. In India, children from the wealthiest households are over 30 percentage points more likely to be in school than those from the poorest households.Environmental Economics&Policies,Economic Theory&Research,Consumption,Health Economics&Finance,International Terrorism&Counterterrorism,Environmental Economics&Policies,Poverty Assessment,Health Economics&Finance,Economic Theory&Research,International Terrorism&Counterterrorism