In countries where rain-fed agriculture constitutes a significant portion of household livelihood, increased weather variability represents a source of vulnerability to stable consumption, food security and household well-being. Weather induced income changes affect household consumption and saving decisions. We evaluate saving and consumption responses to weather variation in South Africa, leveraging a newly available panel of nationally representative households covering the period from 2008 to 2014 and long term climate data. We test our data against predictions of the standard rational consumption model and some of its main extensions (i.e., precautionary saving and myopic consumption), and compare differences among households engaged in agriculture activities versus those that do not. Furthermore, we evaluate the impact of saving on household life satisfaction and health behavior. In accordance with previous literature, we find that households save in response to both transitory and permanent income change, although the proportion saved from transitory income is significantly higher. We find signs of precautionary saving driven by non-agriculture households, while we find stronger evidences of myopic consumption for agriculture households. In addition, we show that a one-unit increase in log-saving from transitory income increases the odds of a unit increase in self-reported life satisfaction of the household head by 14%, and a one unit increase in log-saving from permanent income leads to a 6% increase in hazard ratio of having taken an HIV test. This latter result may indicate that preventative health behavior such as HIV testing requires a stronger inducement than a transitory injection of income. Further research is needed to identify the mechanisms by which saving affect life satisfaction and health seeking behavior in developing countries.
The make-up of the EU institutions, and their evolution, should explicitly be based on widely accepted federalism principles. This paper applies federalism principles to a few crucial questions, mainly fiscal policy, fiscal discipline and structural reforms, using where possible lessons from existing federations. After introducing the topic, Section 2 briefly reviews the key message from the fiscal federalism literature. The following sections use these principles to examine a number of areas where centralization may be insufficient or excessive in the EU. Section 3 looks at public spending, both in the aggregate and my main functions. Taxes are examined in Section 4. The next section looks at the issue of fiscal discipline, a weak spot of the Eurozone. The allocation of policy competences, a key characteristic of the UE, is the object of Section 6. The last section concludes.
Youth unemployment and disengagement from both education and work are negatively associated with levels of completed education and skill proficiency. Recent research highlights the importance of focusing on the quality of education and improving actual learning outcomes for all. Empirical findings show the central importance of preventive strategies targeted towards disadvantaged families such as early childhood interventions and remedial strategies for those young adults who experience youth unemployment.
It is increasingly claimed that unconventional monetary policies are subject to decreasing effectiveness in supporting growth and raising the inflation rate. There are good reasons to believe that the effects of further asset purchases by central banks and of moving the interest rate deeper in negative territory progressively decline. But has it been happening? This paper attempts to provide an answer. Looking at the Eurozone, the UK, the US and Japan, it uses different approaches (linear projection and Bayesian VAR) on different sub-samples. The evidence is mixed: interest rates seem to be subject to the decreasing effectiveness hypothesis, QE less so.
Few would dispute that sovereign defaults entail significant economic costs, including, most notably, important output losses. However, most of the evidence supporting this conventional wisdom, based on annual observations, suffers from serious measurement and identification problems. To address these drawbacks, we examine the impact of default on growth by looking at quarterly data for emerging economies. We find that, contrary to what is typically assumed, output contractions precede defaults. Moreover, we find that the trough of the contraction coincides with the quarter of default, and that output starts to grow thereafter, indicating that default episode seems to mark the beginning of the economic recovery rather than a further decline. This suggests that, whatever negative effects a default may have on output, those effects result from anticipation of a default rather than the default itself.
This paper synthesizes previous studies analyzing the effects of capital account liberalization on industry growth while controlling for financial crises, domestic financial development and the strength of institutions. We find reasonably strong evidence that financial openness has positive effects on the growth of financially-dependent industries, although these growth-enhancing effects evaporate during financial crises. Further analysis indicates that the positive effects of capital account liberalization are limited to countries with relatively well-developed financial systems, good accounting standards, strong creditor rights and rule of law. It suggests that countries must reach a certain threshold in terms of institutional and economic development before they can expect to benefit from capital account liberalization.
In April 2010, Greece became the first euro area country to request financial support from the IMF. The IMF joined the European Commission (EC) and the European Central Bank (ECB)—thus constituting what informally came to be known as the troika—in providing emergency financing, with the Fund’s contribution taking the form of a €30 billion three-year Stand-By Arrangement (SBA) approved in May. The sheer scale of financial commitments and the constraints imposed by the exceptional circumstances under which the Fund was called upon to provide financing for Greece raise questions about the modalities of Fund’s engagement and the design of the program. This paper assesses the IMF’s experience with surveillance and financial assistance in the context of the SBA, to draw lessons that can serve as a basis for debate and reform initiatives for the IMF’s future operational work.
