Nepal’s Civil War and Its Economic Costs

This paper estimates the macroeconomic effects of increased spending on defense and internal security necessitated by the decade-long Maoist insurgency in Nepal. An investment equation is specified to examine the relationship between defense spending and investment. The estimation results indicate that there is a significant negative effect of defense spending on investment. A simple Harrod-Domar growth relationship is used to estimate the effect of the increase in defense spending on economic growth. This analysis suggests that between 1996 and 2006, the opportunity cost of the conflict in terms of lost output has been about 3 percent of Nepal’s current GDP

Poverty reduction in Nepal: a clinical economics approach

Following Sachs (2005), this paper adopts a clinical economics approach and attempts to undertake a systematic “differential diagnosis” of the nature and scope of poverty in Nepal. Subsequently, we will examine the causes of poverty and the determinants of household per capita income in Nepal. Ultimately, we hope to propose programs and institutions to address the critical barriers to poverty reduction that are identified through the differential diagnosis

Foreign Aid, FDI and Economic Growth in East European Countries

This paper examines the effectiveness of foreign aid and foreign direct investment in the Czech Republic, Estonia, Hungary, Latvia, Lithuania and Poland. The model includes the labor force, capital stock, foreign aid and foreign direct investment, and is estimated using pooled annual time series data from 1993 to 2002. Before carrying out the estimation, the time series properties of the data are diagnosed and an error-correction model is developed and estimated using a fixed-effects estimator. The results indicate that an increase in the stock of domestic capital and inflow of foreign direct investment are significant factors that positively affect economic growth in these countries. Foreign aid did not seem to have any significant effect on real GDP.

Regional economic integration in Mercosur: The role of real and financial sectors

This study explores economic interdependence in Mercosur by examining common trends and common cycles among key macro-variables representing both the real and financial sectors of the economy. The serial correlation common features test reveals that the key macroeconomic variables (real output, investment, and intra-regional trade) share common trends in the long run suggesting that macroeconomic interdependence in the Mercosur economies is strong. The exchange rates demonstrate co-movement in the long run as they share a single common trend. These finding suggests that these economies cannot swing away from long-run equilibrium for an extended duration; they will be brought together by their common trends. Similarly, each variable under consideration shares common cycles lending support to the notion of short-run synchronous movement. The trend-cycle decomposition results reveal that the cyclical movements of real output and trade are synchronized with a high degree of positive correlations. Our overall findings thus provide justification and optimism for deeper economic integration among Mercosur countries

Full Proceedings

Full abstracts of all papers along with additional content

Another empirical look at the Kuznets curve

This paper examines the functional relationships between income inequality, economic factors, institutions, and Kuznets' inverted-U hypothesis. A model that incorporates interactive as well as direct effects of several factors to capture their combined effect on inequality is developed. The model is estimated using two popular measures of inequalitythe Gini coefficient, and the ratio of income shares in income distributionusing a panel data set for 57 countries from 1987 to 2006. The results provide support for Kuznets' hypothesis; however, the relationship between growth and inequality is conditioned by a host of economic and institutional factors

Full Proceedings

Papers, abstracts and proceedings of the Third Annual Himalayan Policy Research Conference, Thursday, October 16, 2008, Madison Concourse Hotel and Governors\u27 Club, Preconference Venue of the 37th South Asian Conference at the University of Wisconsin-Madiso

Nepal and Bhutan: development strategies and growth

This paper has sought to examine the factors that have contributed to the economic growth of Nepal and Bhutan. After a brief discussion of the economy and growth strategy of each country, standard growth models for Nepal and Bhutan are developed and estimated. The results indicate that domestic capital has been a significant source of economic growth in Nepal whereas foreign aid has not had any appreciable effect on growth. The reverse is true for Bhutan

Full Proceedings

Papers, abstracts and proceedings of the Fourth Annual Himalayan Policy Research Conference, Thursday, October 22, 2009, Madison Concourse Hotel and Governors\u27 Club, Preconference Venue of the 38th South Asian Conference at the University of Wisconsin-Madison

Exchange Rate Volatility And Foreign Direct Investment: Evidence From East Asian Countries

This paper uses panel data to examine the effect of exchange rate uncertainty on foreign direct investment in China, Indonesia, Malaysia, the Philippines, South Korea, and Thailand – countries that have continued to attract considerable foreign direct investment (FDI) inflows while also experiencing a great deal of volatility in exchange rates.  After establishing the stationarity of the data series, a panel cointegration test was conducted, following which an error correction model was developed and estimated using two sets of panel data.  The overall estimation results are consistent with theoretical predictions.  We find that exchange rate volatility has a favorable effect on foreign direct investment in our sample countries