Demand for World Bank lending

Bridging the external financing gap has been an important factor in borrowing cgovernment's demand for World Bank loans. The demand for IBRD and IDA lending is positively related to an increase in debt service payments and inversely related to a borrowing country's level of reserves. These two variables explain a large part of the variation in IBRD and IDA lending commitments, not only since the Asian crisis but also during tranquil times over the past two decades. Borrowing to service debt during a crisis is consistent with the Bank's role as a lender of last resort as well as with its core development objectives, but such borrowing during tranquil times may conflict with the Bank's long-term objective ofreducing poverty. That investment lending commitments are related to debt service payments implies that aid may be more fungible than previously believed. If Bank lending is fungible and there is no guarantee that a particular Bank loan is financing an identified investment project or program, a case could be made for greater use of programmatic lending (with well-defined conditionality) As developing countries become larger and more integrated with volatile international capaital markets, there is also likely to be a greater need for fast-disbursing, contingent program lending facilities from the Bank.Economic Adjustment and Lending,Payment Systems&Infrastructure,Financial Intermediation,Economic Theory&Research,Banks&Banking Reform,Financial Intermediation,Banks&Banking Reform,Strategic Debt Management,Economic Theory&Research,Economic Adjustment and Lending

Complementarity between multilateral lending and private flows to developing countries : some empirical results

Despite the surge in private capital flows in the 1990s, lending by the multilateral development banks continues to be a significant source of external finance for low-income and lower-middle-income countries. And for middle-income countries, which receive the lion's share of private flows, multilateral lending has played an important stabilizing role during times of credit rationing. Even though multilateral loans may have behaved countercyclically with respect to private flows in the short term, these loans also tended to complement private flows in the medium term by signaling-and often fostering-a better investment environment in the borrowing countries.Banks&Banking Reform,Economic Theory&Research,Financial Intermediation,International Terrorism&Counterterrorism,Payment Systems&Infrastructure,Economic Theory&Research,Poverty Assessment,Economic Development,Macroeconomic Management,Banks&Banking Reform

Twin Deficits or Distant Cousins? Evidence from India

The twin-deficits theory has intrigued economists and policy-makers alike for the past few decades. In a Keynesian economy, budget deficit increases the absorption of the economy, causes import expansions, and thereby, worsens the trade deficit. It also causes domestic interest rates to rise, domestic currency to appreciate, and thereby, contributes to trade deficits. Using monthly data over 1998-2009 and the bounds testing approach to cointegration, we find evidence that the twin-deficits theory holds for India in the short-run. Evident of the Ricardian Equivalence Hypothesis (REH), it appears that no such relation exists the long run.Bounds-Testing, Budget Deficit, Fiscal Stimulus, India, Trade Deficit, Twin Deficits

Asian Financial Crisis and the J-Curve: Evidence from South Korea

Using an error correction version of an autoregressive distributed lag model, we investigate the dynamics of the Korean J-Curve against her eight trading partners. The strict version of the J-Curve is observed with a few major Korean trading partners, such as the U.S. and Indonesia. The estimation results from the Trade Balance Model and the Error Correction Model confirm that, after a depreciation of the Korean won, there has been a long-run adjustment toward the improvement of Korean trade balance against most trading partners. The findings are consistent over different sample periods, including before and after the financial crisis in 1997, and with different trading partners. After the Asian financial crisis, we find that the J-Curve relationship with Korean trading partners has become much more apparent than it was before the crisis.Bilateral Trade, J-Curve, Currency Crisis

Impact of the Global Financial Crisis on Migration and Remittances

Remittances to developing countries are estimated to have declined by 6.1 percent in 2009 as a result of weak job markets in major destination countries. Although new migration has fallen, it is still positive. The stock of international migrants, therefore, has continued to grow and remittances have remained resilient. Going forward, remittance flows to Latin America are expected to recover, whereas those to East Asia and South Asia are likely to slow. Policy responses should involve efforts to facilitate migration and remittances to make these flows cheaper, safer, and more productive for both the sending and the receiving countries.remittances, labor, developing countries, development, migration, migrants, financial crisis, Latin America, East Asia, South Asia

Asian Financial Crisis and the J-Curve: Evidence from South Korea

Using an error correction version of an autoregressive distributed lag model, we investigate the dynamics of the Korean J-Curve against her eight trading partners. The strict version of the J-Curve is observed with a few major Korean trading partners, such as the U.S. and Indonesia. The estimation results from the Trade Balance Model and the Error Correction Model confirm that, after a depreciation of the Korean won, there has been a long-run adjustment toward the improvement of Korean trade balance against most trading partners. The findings are consistent over different sample periods, including before and after the financial crisis in 1997, and with different trading partners. After the Asian financial crisis, we find that the J-Curve relationship with Korean trading partners has become much more apparent than it was before the crisis.Bilateral Trade, J-Curve, Currency Crisis

Improvement of PolSAR Decomposition Scattering Powers Using a Relative Decorrelation Measure

In this letter, a methodology is proposed to improve the scattering powers obtained from model-based decomposition using Polarimetric Synthetic Aperture Radar (PolSAR) data. The novelty of this approach lies in utilizing the intrinsic information in the off-diagonal elements of the 3$\times$3 coherency matrix $\mathbf{T}$ represented in the form of complex correlation coefficients. Two complex correlation coefficients are computed between co-polarization and cross-polarization components of the Pauli scattering vector. The difference between modulus of complex correlation coefficients corresponding to $\mathbf{T}^{\mathrm{opt}}$ (i.e. the degree of polarization (DOP) optimized coherency matrix), and $\mathbf{T}$ (original) matrices is obtained. Then a suitable scaling is performed using fractions \emph{i.e.,} $(T_{ii}^{\mathrm{opt}}/\sum\limits_{i=1}^{3}T_{ii}^{\mathrm{opt}})$ obtained from the diagonal elements of the $\mathbf{T}^{\mathrm{opt}}$ matrix. Thereafter, these new quantities are used in modifying the Yamaguchi 4-component scattering powers obtained from $\mathbf{T}^{\mathrm{opt}}$. To corroborate the fact that these quantities have physical relevance, a quantitative analysis of these for the L-band AIRSAR San Francisco and the L-band Kyoto images is illustrated. Finally, the scattering powers obtained from the proposed methodology are compared with the corresponding powers obtained from the Yamaguchi \emph{et. al.,} 4-component (Y4O) decomposition and the Yamaguchi \emph{et. al.,} 4-component Rotated (Y4R) decomposition for the same data sets. The proportion of negative power pixels is also computed. The results show an improvement on all these attributes by using the proposed methodology.Comment: Accepted for publication in Remote Sensing Letter

Development financing during a crisis : securitization of future receivables

Mexico's Telmex undertook the first future-flow securitization transaction in 1987. From then through 1999, the principal credit rating agencies rated more than 200 transactions totaling $47.3 billion. Studying several sources, the authors draw conclusions about the rationale for using this asset class, the size of its unrealized potential, and the main constraints on its growth. Typically the borrowing entity (the originator) sells its future product (receivable) directly or indirectly to an offshore special purpose vehicle (SPV), which issues the debt instrument. Designated international customers make their payments for the exports directly to an offshore collection account managed by a trustee. The collection agent makes principal and interest payments to investors and pays the rest to the originator. This transaction structure allows many investment-grade borrowers in developing countries to pierce the sovereign credit ceiling and get longer-term financing at significantly lower interest costs. The investment-grade rating attracts a wider group of investors. And establishing a credit history for the borrower makes it easier for it to access capital markets later, at lower costs. This asset class is attractive forinvestors-especially buy-and-hold investors, such as insurance companies-because of its good credit rating and stellar performance in good and bad times. Defaults in this asset class are rare, despite frequent liquidity crises in developing countries. Latin American issuers (Argentina, Brazil, Mexico, and Venezuela) dominate this market. Nearly half the dollar amounts raised are backed by receivables on oil and gas. Recent transactions have involved receivables on credit cards, telephones, workers'remittances, taxes, and exports. The potential for securing future receivables is several times the current level ($10 billion annually). The greatest potential lies outside Latin America, in Eastern Europe and Central Asia (fuel and mineral exports), the Middle East (oil), and South Asia (remittances, credit card vouchers, and telephone receivables). One constraint on growth is the paucity of good collateral in developing countries. Crude oil may be better collateral than refined petroleum. Agricultural commodities are harder to securitize. Another constraint: the dearth of high-quality issuers in developing countries. Securitization deals are complex, with high preparation costs and long lead times. The ideal candidates are investment-grade entities (in terms of local currency) in sub-investment-grade countries (in terms of foreign currency). Establishing indigenous rating agencies can slash out-of-pocket costs. Developing standardized templates for certain types of securitizations might help. A master trust arrangement can reduce constraints on size. Multilateral institutions might consider providing seed money and technical assistance for contingent private credit facilities.Financial Intermediation,Payment Systems&Infrastructure,International Terrorism&Counterterrorism,Banks&Banking Reform,Environmental Economics&Policies,Financial Intermediation,Banks&Banking Reform,Housing Finance,Environmental Economics&Policies,Economic Theory&Research

Does an Undervalued Currency Promote Growth? Evidence from China

Whether currency devaluation promotes growth is an empirically open question. Coexistence of an undervalued currency and the world�s largest trade surplus alongside a booming economy makes China a unique case study. Using the bounds-testing approach to cointegration and error correction modeling proposed by Pesaran et al. (2001), we estimate a reduced form model for China. The findings suggest that devaluation of the Yuan is contractionary in the short run but expansionary in the long run.devaluation, output, growth, China, cointegration

Spatio-temporal co-occurrence of alien and native molluscs : a modelling approach using physical-chemical predictors

The invasion of alien species can have serious economic and ecological impacts. Ecologically, invasions often lead to an increased rate of native species replacement and decreased biodiversity. A critical step in the dominance of alien species is their successful co-occurrence with native species. In this study, we assessed the occurrence of alien molluscs and their co-occurrence with native molluscs and identified the determining physical-chemical variables. We expected that a combination of some key variables of water quality could provide suitable conditions promoting alien molluscs to occur and to co-occur with native molluscs. The analyses were based on 20-year data, collected from river systems across Flanders (Belgium). Classification Trees (CTs) were used to perform the analyses and to develop the predictive models. Based on CT models, the co-occurrence of alien and native molluscs could be reliably predicted based on physical-chemical variables. However, there was insufficient data to determine the environmental conditions in which alien taxa dominate. From the past to the present, spatial co-occurrence significantly increased. Sinuosity, ammonium and nitrate concentrations, chemical oxygen demand, pH and conductivity were the key determining variables. Our findings suggest that the co-occurrence of alien and native molluscs mainly occurs in straight rivers with good chemical water quality. These results provide insights into the ecology and behaviour of alien species which could support management practices and priority setting for conservation planning in surface waters of Flanders and Europe