Issues on Counting the Poor

A credible poverty measurement system is essential in order to develop the proper policy instruments for reducing poverty. Hence, the measurement and analysis of poverty statistics should be done with due care. This Notes discusses the steps--and issues--attendant to it.poverty measurement, poverty reduction, poverty statistics

Recursive Contracts

We obtain a recursive formulation for a general class of contracting problems involving incentive constraints. These constraints make the corresponding maximization sup problems non-recursive. Our approach consists of studying a recursive Lagrangian. Under standard general conditions, there is a recursive saddle-point (infsup) functional equation (analogous to a Bellman equation) that characterizes the recursive solution to the planner's problem and forward-looking constraints. Our approach has been applied to a large class of dynamic contractual problems, such as contracts with limited enforcement, optimal policy design with implementability constraints, and dynamic political economy models.Recursive methods, dynamic optimization, Ramsey equilibrium, time inconsistency, limited participation, contract default, saddle-points, Lagrangian multipliers.

Household Vulnerability to Income Poverty

This Notes calls for the need to regularly come up with household vulnerability measurements and trends in the Philippines, in addition to official poverty measures, for purposes of guiding policy on poverty concerns. It argues that given the results of the vulnerability model that it used in its study, it becomes prudent for the government to incorporate not just alleviation efforts in its poverty reduction strategies but also prevention programs. Read more.vulnerability, poverty

Recursive Contracts

We obtain a recursive formulation for a general class of contracting problems involving incentive constraints. These constraints make the corresponding maximization (sup) problems non recursive. Our approach consists of studying a recursive Lagrangian. Under standard general conditions, there is a recursive saddle-point (infsup) functional equation (analogous to a Bellman equation) that characterizes the recursive solution to the planner's problem and forward-looking constraints. Our approach has been applied to a large class of dynamic contractual problems, such as contracts with limited enforcement, optimal policy design with implementability constraints, and dynamic political economy models.Transactional relationships, contracts and reputation, recursive formulation,participation constraint

The global minima of the communicative energy of natural communication systems

Until recently, models of communication have explicitly or implicitly assumed that the goal of a communication system is just maximizing the information transfer between signals and `meanings'. Recently, it has been argued that a natural communication system not only has to maximize this quantity but also has to minimize the entropy of signals, which is a measure of the cognitive cost of using a word. The interplay between these two factors, i.e. maximization of the information transfer and minimization of the entropy, has been addressed previously using a Monte Carlo minimization procedure at zero temperature. Here we derive analytically the globally optimal communication systems that result from the interaction between these factors. We discuss the implications of our results for previous studies within this framework. In particular we prove that the emergence of Zipf's law using a Monte Carlo technique at zero temperature in previous studies indicates that the system had not reached the global optimum.Peer ReviewedPostprint (author's final draft

Assessing the Resilience of ASEAN Banking Systems: The Case of the Philippines

Since the global financial crisis in 2008/09 there has been heightened concern about the resilience of banking systems in Southeast Asia. This paper proposes a methodology that uses a macroprudential perspective to assess the resilience of banking systems in member countries of the Association of Southeast Asian Nations. It then proceeds to apply this methodology to examine the resilience of the Philippine banking system. Data on financial soundness in the Philippine banking system are utilized in a vector autoregression model to study the dynamic relationships that exist among financial and macroeconomic indicators. Using impulse response functions, a simulation of financial ratios in the banking system is conducted by assuming unlikely but plausible stress scenarios to determine whether banking system credit and capital could withstand the impact of such circumstances. In the stress scenarios, the estimated impact of macroeconomic shocks on nonperforming loan and capital adequacy ratios is generally minimal. The results, however, do suggest that the Philippine banking system has some vulnerability to interest rate and stock market shocks. The results of such stress testing provide a better understanding of the level of preparedness required for managing risks in the financial system, especially in the wake of continuing global economic uncertainty.Banking System; Macroprudential; Stress Testing; Philippines; Panel VAR

Ensuring a More Evidence-based Policy for Basic Education

Can the Philippines achieve its goal on two key international commitments--the Millennium Development Goals (MDGs) on Education and the Education for All (EFA) Initiative--for the achievement of education for everyone? A closer look at the figures would show that the country may be at risk of not achieving its goal of attaining universal primary education by 2015. Given this scenario, the authors suggest that the government should intensify its efforts in improving basic education by having evidence-based policies and actions. In particular, they note that the Department of Education (DepEd) should be required to have a sound monitoring and evaluation system to regularly assess the conditions of basic education.basic education, millennium development goal (MDG), education indicators, monitoring and evaluation

Examining Recent Trends in Poverty, Inequality, and Vulnerability

Despite the many propoor policies, programs, and projects instituted, the country's gains in the fight against poverty have still been modest. This Note explains why and recommends that a comprehensive roadmap for economic development and poverty reduction based on analysis of historical trends and on a specific identification of goals and targets has to be drawn up.vulnerability, poverty, inequality, poverty reduction, Philippines