Health Expenditures Under the HIPC Debt Initiative

One of the goals of the Heavily Indebted Poor Countries (HIPC) debt initiative is to provide additional resources for basic health care to the population of eligible developing countries. In this paper I investigate the effect of debt relief on per capita health expenditure in a sample of developing countries while controlling for other factors used in the literature. I find that debt relief has – at the margin – little or no effect on health expenditure in countries that are classified as HIPC. The level of health expenditures in HIPC countries, however, is significantly higher than in other developing countries. On the other hand, countries not classified as HIPC increase their per capita health expenditures more than proportionally if they receive debt relief. This result is surprising considering that per capita amounts of debt relief provided to HIPC countries are on average significantly higher than those to Non-HIPC countries.HIPC debt initiative, debt relief, foreign aid, public health expenditure

Consequences of Debt Relief Initiatives in the 1990s

In this paper I investigate the effects of recent debt relief initiatives such as the Heavily Indebted Poor Countries (HIPC) Debt Initiative of 1996 on resource flows to developing countries. Focusing on a sample of low-income countries, I concentrate on the following questions. First, is the HIPC initiative selective in the sense of “rewarding” improved policies in HIPC countries with higher transfers? Measuring improvement directly with dummy variables representing progress in the initiative, I find that good macroeconomic management does not seem to matter in terms of the level of resource transfers and foreign aid received by a HIPC country. Second, have HIPCs and non-HIPCs experienced reductions in aid inflows (other than debt relief) in the 1990s and early 2000s? My estimates suggest that countries classified as HIPCs received higher (official and aggregate) net transfers than non- HIPC countries in the first half of the 1990s. These differences persist after 1996, however, at a lower level. Looking at net official development assistance, differences between HIPC countries and non-HIPC countries persist throughout the 1990s and early 2000s, with higher levels of aid going to HIPC countries. Third, have the debt relief initiatives in the 1990s provided additional resources to low-income countries? Confirming findings in earlier literature, my results suggest that aid flows have not changed significantly in response to debt relief.HIPC debt initiative, foreign aid, selectivity, additionality

Can Debt Relief Buy Growth?

The purpose of the paper is twofold. First, I investigate whether numerous debt initiatives during the 1980s and 1990s have had a significant effect on economic growth rates in developing countries in general. The major initiatives during that time period were negotiated as bilateral agreements under the guidance of the Paris Club of Creditors. These agreements were complemented later on by the Heavily Indebted Poor Countries (HIPC) debt relief initiative in 1996 and its “enhanced” version in 1999. I find that, on average, debt relief has no effect on growth rates of developing countries. The second question I address in this paper is whether the effect on growth rates was different for different subsets of developing countries. I find that countries that are not classified as HIPC have benefited significantly from debt relief, whereas the growth rates of HIPC countries have been unaffected.HIPC debt initiative, foreign aid, growth

COMPARISON OF MICHIGAN FARMLAND RETURNS TO NONFARM INVESTMENTS

Farmland is both a financial investment and a production resource when it is used by the farm family in generating income for the business. The resource is used in producing crops for sale or feed for animals. The basic choices for controlling land are ownership and lease. Land leases allows the control of land for income generation, but it does not allow the lessor to participation in the investment characteristics of the property. Land ownership provides a means for gaining income for the business as well as capital gains for the owner's wealth accumulation. Agricultural land prices increased for almost 50 years until the agricultural financial crisis in the 1980's halted the upward movement in values. From 1981 to 1987, Michigan farmland prices decreased 37 percent. How does the return to farmland compare to the yield from nonfarm investments in the last 10 years? Is agricultural land a good investment? The purpose of this article is an evaluation of investment returns from Michigan farmland for the owners, and a comparison of the returns over time with competing long-term nonfarm investments.Land Economics/Use,

Generalized constructive tree weights

The Loop Vertex Expansion (LVE) is a quantum field theory (QFT) method which explicitly computes the Borel sum of Feynman perturbation series. This LVE relies in a crucial way on symmetric tree weights which define a measure on the set of spanning trees of any connected graph. In this paper we generalize this method by defining new tree weights. They depend on the choice of a partition of a set of vertices of the graph, and when the partition is non-trivial, they are no longer symmetric under permutation of vertices. Nevertheless we prove they have the required positivity property to lead to a convergent LVE; in fact, we formulate this positivity property precisely for the first time. Our generalized tree weights are inspired by the Brydges-Battle-Federbush work on cluster expansions and could be particularly suited to the computation of connected functions in QFT. Several concrete examples are explicitly given.Comment: 22 pages, 2 figure

Interstate risk sharing in Germany: 1970-2006

We study the channels of interstate risk sharing in Germany for the time period 1970 to 2006 following the methodology of Asdrubali et al. (1996). Their framework allows us to estimate the degree of smoothing of a shock to a state's gross domestic product by factor markets, the government sector, and credit markets, respectively. For the time period from 1970 to 1994 pre-unification Germany we find that about 19 percent of shocks to a state's gross domestic product (GDP) are smoothed by private factor markets, 50 percent are smoothed by the German government sector, and a further 17 percent are smoothed through credit markets. For the post-reunification period, 1995 to 2006, the relative importance of the smoothing channels changes. In the complete sample, factor markets contribute around 50.5 percent to consumption smoothing, and credit markets contribute another 17.5 percent. The government sector's role is diminished: it smoothes around 10 percent of a shock. For this period, we also split our sample between West and East German states. In West Germany, 63 percent of idiosyncratic income shocks are smoothed out by factor markets; and another 15 percent by the government sector. In East Germany, factor markets smooth about 34.5 percent of the volatility in state GDP, the government sector about 19 percent, and another 18 percent are smoothed by credit markets. --Regional Risk-sharing,Factor Markets,Consumption Smoothing,Fiscal Federalism

Fiscal federalism in Germany: Stabilization and redistribution before and after unification

We provide empirical estimates of the risk-sharing and redistributive properties of the German federal fiscal system based on data from 1970 until 2006, with special attention to the effects of German unification. We find that tax revenue sharing between the states and the federal government and the fiscal equalization mechanism (Länderfinanzausgleich) together reduce differences in per-capita state incomes by 37 percent during period 1970 to 1994. After the full integration of East German states into the mechanism in 1995, the redistributive effects increase slightly to about 39 percent. With respect to the insurance effect of the German fiscal system, our results indicate that the federal fiscal system offsets 47 percent of an asymmetric shock to state per-capita incomes. This effect has significantly decreased after the inclusion of the East German states in 1995. Furthermore, we find that the German fiscal system provides almost perfect insurance for state government budgets against asymmetric revenue shocks; also, its redistributive effect with regard to the tax resources available to state governments is very strong. --Regional Risk-sharing,Fiscal Federalism,Monetary Union