This paper studies the relationship between civil war and HIV/AIDS in Burundi. It contributes to the empirical literature by providing micro level evidence using an identification strategy based on original data on the dynamics of rebel movements. The presence of exit and entry points from and to rebel safe havens is used to generate exogenous variation in conflict intensity. These points are plausibly assumed to serve as starting or end points for rebel attack, but are not directly related to HIV/AIDS or correlated with unobservables. The case of Burundi provides fruitful grounds of analysis, as seroprevalence rates are heterogeneous across the country, the serological and conflict data for Burundi is of good quality and conclusions are likely to serve as valuable insights in Burundi and other fragile countries with similar HIV/AIDS policy agendas. OLS, instrumental variable and binary response model results indicate that within provinces in Burundi there is no clear-cut relationship between local conflict intensity and seroprevalence, condom knowledge and use, knowledge of test opportunities and actual test taking, or rape. Findings suggest that although HIV/AIDS is a general development priority, it is not as urgent a post-conflict priority as commonly assumed.
This paper reconsiders the long term effect of fiscal policy on interest rates using a real-time dataset of macroeconomic and fiscal variables in a panel of 17 OECD countries over the period 1989-2009. We show that, after controlling for cross sectional dependence using a Factor Augmented Panel, interest rates are mostly related to global factors. Among domestic fiscal variables, the level of expected public debt mantains a positive correlation with interest rates, while among the global factors, the aggregate monetary and fiscal stance play a quantitatively sizeable role. We then analyze how impulses from the aggregate fiscal stance influence each country's interest rates. We find that these effects are modest in large economies and particularly strong in economies characterized by low initial financial integration, leading the way to a novel interpretation of the divergent behaviour of interest rates in the recent financial crisis.
The National Monetary Commission was deeply concerned with importing best practice. One important focus was the connection between the money market and international trade. It was said that Britain’s lead in the market for “acceptances” originating in international trade was the basis of its sterling predominance. In this article, we use a so-far unexplored source to document the portfolio of bills that was brought up to the Bank of England for discount and study the behavior of the Bank of England during the crisis of 1866 (the so-called Overend- Gurney panic) when the Bank began adopting lending of last resort policies (Bignon, Flandreau and Ugolini 2011). We compare 1865 (a “normal” year) to 1866. Important findings include: (a) the statistical predominance of foreign bills in the material brought to the Bank of England; (b) the correlation between the geography of bills and British trade patterns; (c) a marked contrast between normal times lending and crisis lending in that main financial intermediaries and the “shadow banking system” only showed up at the Bank’s window during crises; (d) the importance of money market investors (bills brokers) as chief conduit of liquidity provision in crisis; (e) the importance of Bank of England’s supervisory policies in ensuring lending-of-lastresort operations without enhancing moral hazard. An implication of our findings is that Bank of England’s ability to control moral hazard for financial intermediaries involved in acceptances was another reason for the rise of sterling as an international currency.
Height-for-age (HA) and weight-for-age (WA) of children are standard measures to study the determinants of stunting and short-term underweight. Rather than studying these indicators separately, this paper looks at their interaction and therefore at the dynamics of height and weight. Considering HA a child's health stock and WA nutritional investment, we develop an overlapping generations model. The main features of the model are self-productivity of health stocks and the dynamic complementarity between past health stocks and contemporaneous nutrition. We test the model's predictions on a Senegalese panel of 305 children between 0 and 5 years over three periods. To control for endogeneity and serial correlation we employ different GMM methods. We find evidence of self- productive health stocks and that child health produced at one stage raises the productivity of nutritional inputs at subsequent stages. Our results indicate that child health is quickly depleted and needs constant updating. Simulations based on our estimates show that a positive nutritional shock during the first six months of life is essentially depleted at the age of 2. Consequently, sustainable development and nutrition programs have to be long-term and yield higher returns if they reach babies in the early months of infancy.
The emergence of the gold standard has for a long time been viewed as inevitable. Fluctuations of the gold-silver exchange rate in world markets were accused to lead to brutal and unsustainable switches of bimetallic countries’ money supplies. However, more recent work has shown that the option character of bimetallism provided a stabilizing feedback loop. Using original data, this paper provides support to the new view. Using quotation prices for Indian Government bonds, we analyze agents’ expectations between 1860 and 1890. The intuition is that the spread between gold and silver bonds issued by the same entity (India) and backed by a credible agent (Britain) is a “pure” measure of the silver risk. The analysis shows that up until 1874 markets were expecting bimetallism to last. It is only after this date that markets gradually started requiring a premium to hold silver bonds indicating their belief that gold would eventually become the only metallic standard.
Improved consumption risk sharing is one of the fundamental predicted benefits of increased financial integration, yet the empirical evidence concerning this proposition is mixed. Using the novel empirical technique of wavelet analysis, this paper for the first time in the literature uncovers the heterogeneous evolution of consumption and output correlations over the time and frequency dimensions simultaneously. Periods of strong comovement in consumption growth rates not only occur during times of common (uninsurable) shocks to output, but also to some extent during times of increased financial integration. This evidence adds a new dimension to the consumption output correlation puzzle, which appears to only hold at certain time periods and frequencies.
Scant attention has been paid in the literature concerning 'consumption wealth effects' to asset heterogeneity in terms of foreign and domestic asset holdings. Through extending the approach of Lettau and Ludvigson (2004).and Nitschka (2007), this study uncovers that whilst households tend to view innovations to domestic asset holdings as part of their permanent income, changes in the value of foreign equity holdings are largely characterised as temporary in nature and unrelated to household consumption decisions. This evidence complements existing work concerning 'valuation effects' by highlighting at a disaggregated level an important mechanism by which this phenomenon affects a fundamental macroeconomic aggregate, and also draws implications for trade balance outcomes.
This article analyzes the economics of “badmouthing” in the context of the pre-1914 French capital market. We argue that badmouthing was a means through which racketeering journals sought to secure property rights over issuers’ reputation. We provide a theoretical study of the market setup that emerged to deal with such problems, and we test our predictions using new evidence from contemporary sources.
This paper assesses whether the allocation puzzle - the tendency for capital to flow to countries with relatively low productivity growth - is observed for foreign direct investment (FDI) flows, which should be particularly sensitive to productivity prospects. We look both at aggregate FDI flows and, using a new data set, at FDI flows into the main economic sectors. We make three points. First, we do not find evidence of an allocation puzzle for aggregate FDI flows. Second, we refine the aggregate result and document substantial sectoral heterogeneity. An allocation puzzle is observed in the agriculture, construction, mining/petroleum/utilities and tourism sector. By contrast, we show that countries with faster productivity growth in manufacturing attract more investment in that sector. The link is even stronger for service sectors. Third, we document a role for financial openness: a country with fast productivity growth draws in more FDI into its service sectors only when it is financially open. We conclude with a discussion of some tentative explanations for the results.
This paper investigates whether preferential trade agreements (PTA) promote exports to third nations through the expansion of the extensive margin (i.e. larger number of export goods). The analysis covers 11 South- South and South-North PTAs involving 36 countries that exported to 118 different destinations during the 5 years before and after the PTA. Using a conditional logit model, and trade data at the SITC 5-digit level, we estimate the effect of new within-PTA exports on the subsequent exports to thirdnation markets. The results suggest that PTAs have a positive indirect effect, i.e. spillover-effect, on exports to third countries. Previous export experience in a given product in the preferential area is shown to have a positive effect on the probability that the same product is subsequently exported to a nonmember market. The size of the effect, however, varies across PTAs.
