The Microfinance Promise
Journal of Economic Literature, Dec 1999, Vol. 37 Issue 4, p1569, 46p.
The article presents information about a set of financial institutions in underdeveloped countries which are striving to alleviate poverty by providing financial services to low-income households. These institutions, united under the banner of microfinance, share a commitment to serving clients that have been exclude from the formal banking sector. Almost all of the borrowers do so to finance self-employment activities, and many start by taking loans as small as $75, repaid over several months or a year. Only a few programs require borrowers to put up collateral, enabling would-be entrepreneurs with few assets to escape positions as poorly paid wage laborers or farmers. The programs point to innovations like "group-lending" contracts and new attitudes about subsidies as keys to their success. Group-lending contracts effectively make a borrower's neighbors co-signers to loans, mitigating problems created by informational asymmetries between lender and borrower. Neighbours now have incentives to monitor each other and to exclude risky borrowers from participation, promoting repayment even in the absence of collateral requirements.
The Political Manipulation of U.S. State Rainy Day Funds under Rules versus Discretion
State Politics and Policy Quarterly 8(2): 150-176.
Anecdotal evidence suggests that politicians manipulate rainy day funds for political purposes, but such claims remain untested in the literature. This article finds that lawmakers withdraw nearly three times more funds in response to a deficit shock of a given size if the shock occurs in an election year rather than a non-election year; this occurs despite the fact that the magnitude of shocks does not vary over the electoral cycle. This effect is stronger when incumbents are eligible for re-election than when they are term-limited. When it comes to preventing political manipulation, rainy day fund rules that increase the number of veto players who must approve of withdrawals seem to be more effective than rules that specify the economic conditions under which funds may be withdrawn.
Taxing the Poor: Income Averaging Reconsidered
40 Harvard Journal on Legislation 395.
This Article presents an original empirical analysis demonstrating the disproportionate burden taxation of annual income places upon low-income families. The author proposes two simple income averaging devices to redress this effect: averaging the Earned Income Tax Credit over a two-year period and carrying back the standard deduction and personal and dependent exemptions.
Financing the State: Campaign Finance and Its Discontents
Critical Review 2003, Volume 15.
Among the principal targets of criticism in recent American politics has been the alleged corruption, inequity, overall cost, and regulatory complexity of the U.S. campaign-finance system. Scholarship has not borne out any of these criticisms, and, if anything, empirical investigation suggests that the current system does a fair job in addressingï¿½as much as this is possible under modern conditionsï¿½the problem of public ignorance in mass democracies.
Risks and Costs of a Terrorist Attack on the Electricity System
The Economic Impacts of Terrorist Attacks Volume 2, edited by H.W. Richardson, P. Gordon and J.E. Moore II, Cheltenham, UK: Edward Elgar Publishers.
Zimmerman, R., Restrepo, C., Simonoff, J.S. & Lave, L.B.,
As suggested by the title, this is a collection of essays on the economic effects of successful terrorist attacks focusing on the electrical transmission, and transportation infrastructure of the United States. Those familiar with the literature on the economic effects of natural disasters will
find the arguments and economic models quite familiar. The individual essays are by leading experts who do not necessarily agree on the most appropriate methods or policy conclusions. This provides a refreshing measure of potential controversy.
Is Retirement Being Remade? Developments in Labor Market Patterns at Older Ages
Managing Retirement Payouts edited by John Amerikis and Olivia Mitchell.
As Baby Boomers make the transition into their 60s, they have focused policymakers and the media's attention onto how this generation will manage the retirement phase of its lifetime. This volume acknowledges that many, though not all, in this older cohort have accumulated substantial assets, so for them, the question is what will they do with what they have?
We offer a detailed exploration of how people entering retirement will deploy their accumulated assets in the near and long term, so to best meet their myriad spending, investment, and other objectives. The book offers readers an invaluable study of emerging issues regarding assets and expectations on the verge of retirement, including uncertainty regarding life expectancy and morbidity. It is composed of chapters from a distinguished set of authors including a Nobel Laureate and a wonderful mix of academics and practitioners from the legal, financial, and economic fields.
Gasoline Prices, Interest Rates, and the 2008 Election
The New York Observer June
Forget immigration, global warning, Donald Rumsfeld and abortion rights.
The hot issues of today will quickly fade away if the current surge in gasoline prices and home-mortgage rates continues unabated. And all indications are that both the price of gas and the cost of borrowing are moving in one direction only: north.
Do Fiscal Rules Dampen the Political Business Cycle?
Public Choice 128: 407-431.
This paper develops and tests the theory that fiscal rules limit politicians' ability to manipulate the budget for electoral gain. Using panel data from the American states, I find evidence suggesting that stringent balanced budget rules dampen the political business cycle. That is, while spending rises before and falls after elections in states that can carry deficits into the next fiscal year, this pattern does not exist in states with strict "no-carry" rules. Neither binding gubernatorial term limits nor the partisan composition of government appear to significantly affect the magnitude of the political business cycle.
The Causes of Fiscal Transparency: Evidence from the American States
IMF Staff Papers, Special Issue, Vol. 53, pp. 30-57.
Alt, J.E., Lassen, D.D. & Rose, S.
We use unique panel data on the evolution of transparent budget procedures in the American states over the past three decades to explore the political and economic determinants of fiscal transparency. Our preliminary results suggest that more equal political competition and power sharing are associated with both greater levels of fiscal transparency and increases in fiscal transparency during the sample period. Political polarization is associated with lower transparency, and past fiscal conditions also appear to affect the level of transparency.
Women of Color in New York City: The Challenges of the New Global Economy
First Annual Status of Women of Color Report.
The first Status of Women of Color Report originated out of the need to provide data and research focusing on women of color. By drawing attention to the trends seen in income, unemployment, welfare, and incarceration for women of color in New York city , this report summarizes their achievements and lack of it during the 1990's.
Local Property Taxation in Theory and Practice: Some Reflections
in Wallace E. Oates, editor, Property Taxation and Local Government Finance, Cambridge, MA: Lincoln Institute of Land Policy,
The property tax is considered a most unpopular tax, among both scholars and taxpayers. Yet, recent research and analysis has proposed at least a partial rehabilitation of this tax and its role in the arena of local public finance. Based on a conference sponsored by the Lincoln Institute in January 2000, this book presents a systematic and comprehensive review of the economics of local property taxation and examines its policy implications. The ten papers and paired commentaries are written in a nontechnical form to make the findings available to a broad audience of policy makers and other noneconomists.
International Aspects of Heritage Policies
in Alan Peacock, editor, Does the Past Have a Future? The Political Economy of Heritage, London: The Institute of Economic Affairs.
The Outlook for the Metropolitan Area
Economic Policy Review, Federal Reserve Bank of New York, February.
State Infrastructure and Productive Performance
American Economic Review, December 1996, Vol. 86, No. 5, pp 1095-1111.
Schwartz, A.E. & Morrison, C.
Recent research on productivity growth has focused on public infrastructure and its impact on economic growth and productivity. We construct a model of firms' technology and behavior, taking advantage of the analytical framework provided in the cost-function-based applied production-theory literature, and apply it to state-level data for U.S. manufacturing. We find that infrastructure investment provides a significant return to manufacturing firms and augments productivity growth. The net benefits of infrastructure investment may or may not be positive, depending upon the social costs of infrastructure investment and the relative growth rates of output and infrastructure.
Poverty and the 'Population Problem'
Population and Poverty in Developing Countries, Massimo Livi-Bacci and Gustavo de Santis, eds., Oxford University (Clarendon) Press.
Morduch, J. & Anand, S.
Risk and Insurance in Transition: Perspectives from Zouping County, China
Chapter 8 in Community and Market in Economic Development, Oxford University Press, edited by Professors Masahiko Aoki and Yujiro Hayami.
Morduch, J. & Sicular, T.
This book explores the role of community in facilitating the transition to market relationships in economic development, and in controlling and sustaining local public goods such as irrigation, forests, grazing land, and fishing grounds. Previously it was customary to classify economic systems in terms of varying combinations of state and market control of resource allocation. In contrast, this book recognizes community as the third major element of economic systems. This new approach also departs from the conventional view that markets and community norms should be treated as mutually exclusive means of organizing economic activity, instead clarifying the situations in which they may become complementary. Further discussion focuses on the conditions under which management of local commons can, and should, be delegated to local communities rather than subjected to the control of central government.
Decentralization, Externalities, and Efficiency
Review of Economic Studies 62, April 1995, 223-247.
Morduch, J. Klibanoff, P.
In the competitive model, externalities lead to inefficiencies, and inefficiencies increase with the size of externalities. However, as argued by Coase, these problems may be mitigated in a decentralized system through voluntary coordination We show how coordination is limited by the combination of two factors: respect for individual autonomy and the existence of private information. Together they imply that efficient outcomes can only be achieved through coordination when external effects are relatively large Moreover, there are instances in which coordination cannot yield any improvement at all, despite common knowledge that social gains from agreement exist This occurs when external effects are relatively small, and this may help to explain why coordination is so seldom observed in practice. When improvements are possible, we describe how simple subsidies can be used to implement second-best solutions and explain why standard solutions, such as Pigovian taxes, cannot be used. Possible extensions to issues arising in the structure of research joint ventures, assumptions in the endogenous growth literature, and the location of environmental hazards are also described.
Income Smoothing and Consumption Smoothing
Journal of Economic Perspectives 9(3), Summer 1995, 103-114.
Examines the ways in which farm households in developing countries may self-insure, with a particular emphasis on the idea that farm households may seek to smooth their consumption by altering their methods of production. Quantifying the importance of risk; Consumption smoothing and risk; Income smoothing; Simplicity and complexity in low-income economies.
Using Mixturn Models to Detect Sex Bias in Health Outcomes in Bangladesh
Journal of Econometrics 77 (1), March, 259-276.
Morduch, J. & Stern, H.
Many interesting economic hypotheses entail differences in behaviors of groups within a population, but analyses of pooled samples shed only partial light on underlying segmentations. Finite mixture models are considered as an alternative to methods based on pooling. Robustness checks using t-regressions and a Bayesian analogue to the likelihood ratio test for model evaluation are developed. The methodology is used to investigate pro-son bias in child health outcomes in Bangladesh. While regression analysis on the entire sample appears to wash out evidence of bias, the mixture models reveal systematic girl-boy differences in health outcomes.
Technological Adoption in Rural Cochabamba, Bolivia
Journal of Anthropological Research 54, 351-371.
Bravo, D., Godoy, R. & Morduch, J.