ECONOMIC
ACTIVITY REPORT
JULY 2000-DECEMBER 2005
Economic
THE ECONOMIC
Christopher Udry, Director
M. Ann Judd, Business Manager
Faculty
Joseph Altonji
Patrick Bayer
Michael Boozer
Irene Brambilla
Donald Brown
Eduardo Engel
Robert Evenson
Penelopi Goldberg
Timothy Guinnane
Galina Hale
Koichi Hamada
Dean Karlan
Fabian Lange
Carolyn Moehling
Gustav Ranis
Mark Rosenzweig
T. Paul Schultz
T.N. Srinivasan
Christopher Udry
Affiliated Faculty
Cheryl Doss
Staff
Sarah Cattan, Research Assistant
Louise Danishevsky, Senior Administrative Assistant
M. Ann Judd, Business Manager/Research Associate
Paul McGuire, Programmer Analyst
Zane Olmer, Office Assistant
Peter Rondina, Administrative Assistant
Kathryn Toensmeier, Administrative Assistant
Hyungi Woo, Research Assistant
PREFACE
The Economic Growth Center, since its founding in 1961 by faculty in the
Economics Department at Yale University, has had the objective of studying and
promoting understanding of the economic development process within low-income
countries and how development is affected by trade and financial relations
between these countries and those that developed earlier. The work of the
Center is conducted by a staff of ten to fifteen regular Yale faculty, by an
equal number of visitors, including postdoctoral fellows, who come from all
regions of the world and undertake their own research projects during their stay
at the Center, and by an administrative, clerical and research support staff of
eight persons.
This report summarizes the activities of the Economic Growth Center for the
period of July 2000 through December 2005. The report is divided into the
following sections: Faculty Research;
Conferences and Lectures;
Special Programs;
Visiting Scholars and
Postdoctoral Fellows; Workshops;
Center Reprint and Discussion
Papers; Books and Other
Publications;
Faculty Teaching Fields and Research Interests;
Research, Training, and
Conference Grants.
JOSEPH ALTONJI
Professor Joseph
Altonji, a labor economist and applied econometrician, joined the Yale
Economics Department and the
Altonji, in
collaboration with Christopher Taber and Ching-I Huang (
Altonji’s other recent research includes studies of paid vacation leave, the development of estimation methods for nonseparable econometric models with endogenous variables with applications to the black/white wealth gap, the formulation and estimation of models of earnings fluctuations over a career, and the marginal propensity of parental spending on bequests.
IRENE BRAMBILLA
Professor Irene Brambilla has pursued several research projects since coming to
Yale in 2004. In the first, Brambilla looked at the behavior of
multinational firms in international oligopolistic markets with trade balance
constraints (“A Customs Union with Multinational Firms: The Automobile
Market in
Brambilla’s second project, joint with Guida Porto (The World Bank),
investigates the impact of cotton marketing reforms on farm productivity, a key
element for poverty alleviation, in rural Zambia (“Farm Productivity and Market
Structure. Evidence from Cotton Reforms in
Joined by colleagues Jorge Balat and Guido Porto from the World Bank, Brambilla sought to explain the small estimated impacts of trade barriers on poverty, especially in rural Africa (“Export Crops, Marketing Costs, and Poverty,” unpublished manuscript, February 2006). The authors’ basic hypothesis is that the availability of markets for agricultural export crops leads to higher participation in export cropping and that this, in turns, leads to lower poverty. They test their hypothesis using data from the Uganda National Household Survey. The authors establish that farmers living in villages with fewer outlets for the sale of agricultural exports are likely to be poorer than farmers residing in market-endowed villages. In addition, they show that market availability leads to increased household participation in export cropping (coffee, tea, cotton, fruits) and that households engaged in export cropping are less likely to be poor than are subsistence-based households. They conclude that the presence of marketing costs affects the way trade lowers poverty by hindering farmers from engaging in export cropping. The role of market access and price competition among buyers and intermediaries are key in the link between export opportunities and the poor.
Brambilla’s final area of research has focused on the advantages that affiliates of multinationals have to grow through an expansion in their range of products (“Introduction of New Varieties of Goods in the Chinese Manufacturing Sector,” unpublished manuscript, April 2006). Using firm-level data for the Chinese manufacturing sector during 1998-2000, Brambilla compares the performance of foreign and domestic firms in terms of the new varieties that they introduce and estimates whether the number of new varieties can be explained by differences in the cost of development and variable productivity. She finds that firms with more than 50 percent foreign ownership introduce, on average, more than twice as many new varieties of goods as private domestic firms. Advantages in productivity account for 33 to 45 percent of the difference in the number and sales of new varieties, while advantages in the cost of development account for 5 to 17 percent of these differences.
EDUARDO ENGEL
In the early 1990s, major deficits in transportation infrastructure (highways, airports, seaports) became an evident bottleneck for future growth in many developing countries. Lacking the financial, organizational and human resources to overcome these deficits, many governments embarked on ambitious franchising programs via build-operate-and-transfer (BOT) contracts. Under such a contract, a private firm builds and finances the infrastructure project and then collects user fees for a long period (usually between 10 and 30 years). When the franchise ends, the infrastructure is transferred to the state. Fifteen years later, it is evident that something went wrong. Fiscal savings were much less than expected, and many of the efficiency gains associated with private participation did not attain.
Professor Eduardo Engel has conducted research in this area (joint with Ronald Fischer and Alexander Galetovic) that develops and analyzes new approaches to private sector participation in the provision of public infrastructure. Engel and his colleagues want to understand why things did not go as planned and to propose new approaches. Among the questions they have considered is how concessions contracts should be designed to take account of: (a) undesirable opportunistic behavior (by the government and by franchise holders); (b) adequate risk-sharing (between the franchise holder, users and taxpayers); and (c) flexibility to adapt to unexpected circumstances. Among the proposals they have developed are flexible-term franchises, which are increasingly being used around the world. Engel, Fischer, and Galetovic have published a number of papers based on their research: “Least-Present-Value-of-Revenue Auctions and Highway Franchising,” Journal of Political Economy, Vol. 109, No. 5, October 2001, pp. 993-1020; “How to Auction a Bottleneck Monopoly when Underhand Vertical Agreements are Possible,” Journal of Industrial Economics, Vol. 52, No. 3, September 2004, pp. 427-455; “Highway Franchising and Real Estate Values,” Journal of Urban Economics, forthcoming; and “Privatizing Highways in Latin America: Fixing What Went Wrong,” Economia, The Journal of the Latin American and Caribbean Economics Association, Vol. 4, No. 1, October 2003, pp. 129-158.
PINELOPI GOLDBERG
Professor
Pinelopi Goldberg’s research in the past five years has focused on two projects.
The first one (joint with N. Pavcnik of
Goldberg’s
second project focuses on the effects of international protection of
intellectual property rights on developing countries. Under the TRIPS
agreement, WTO members are required to enforce product patents in all fields of
technology, including pharmaceuticals. The debate about the merits of
this requirement has been extremely contentious. Many low-income
economies claim that patent protection for pharmaceuticals will result in
substantially higher prices for medicines, with adverse consequences for the
health and well-being of their citizens. On the other hand,
research-based global pharmaceutical companies argue that prices are unlikely
to rise significantly because most patented products have therapeutic
substitutes. Central to the ongoing debate is the structure of demand for
pharmaceuticals in poor economies where, because health insurance coverage is
so rare, almost all medical expenses are met out-of-pocket. In the paper
“Estimating the Effects of Global Patent Protection in Pharmaceuticals: A Case
Study of Quinolones in India” (joint with S. Chaudhuri of the World Bank and P.
Jia of Yale), a detailed product-level data set from India is used to estimate
key price and expenditure elasticities and supply-side parameters for the
fluoroquinolones sub-segment of the systemic anti-bacterials (i.e.,
antibiotics) segment of the Indian pharmaceuticals market. Goldberg and
her colleagues then use these estimates to carry out counterfactual simulations
of what prices, profits and consumer welfare would have been had the
fluoroquinolone molecules they study been under patent in India as they were in
the U.S. at the time. Their results suggest that concerns about the
potential adverse welfare effects of TRIPS may have some basis. They
estimate that, in the absence of any price regulation or compulsory licensing,
the total annual welfare losses to the Indian economy from the withdrawal of
the four domestic product groups in the fluoroquinolone sub-segment would be on
the order of U.S. $450 million or about 73% of the sales of the entire systemic
anti-bacterials segment in 2000. Of this amount, foregone profits of
domestic producers constitute roughly $50 million (or 11%). The
overwhelming portion of the total welfare loss, therefore, derives from the
loss of consumer welfare. In contrast, the profit gains to foreign
producers in the absence of any price regulation are estimated to be only
around $53 million per year. The results of this work are summarized in the
paper “Estimating the Effects of Global Patent Protection in Pharmaceuticals: A
Case Study of Quinolones in
In her ongoing
research, Goldberg is focusing on investigating the effects of patent
enforcement on other segments of the Indian pharmaceuticals market, as well as
examining the implications of intellectual property rights protection for the
entry and marketing decisions of multinational firms in
TIMOTHY GUINNANE
During the past five years, Professor Timothy Guinnane pursued his long-standing interests in financial institutions and the fertility transition in history, pushing his research in new directions related to these basic themes. Guinnane currently has four different projects in progress.
He is nearing completion of a book
about the development of credit cooperatives in
Two other projects consider aspects
of the fertility transition in Western Europe and the
GALINA HALE
Professor Galina Hale has been working in two main areas; the first is concerned with the access of emerging market governments and private firms to foreign capital. Hale has completed two papers in this area, the first of which addresses the form of emerging markets debt: “Bonds or Loans? The Effect of Macroeconomic Fundamentals” (Cowles Foundation Discussion Paper No. 1403, and forthcoming, Economic Journal, January 2007). In this paper, Hale analyzes how macroeconomic fundamentals affect the composition of a country's foreign debt by affecting the investor’s perception of country risk. Hale finds that macroeconomic fundamentals explain a significant share of variation in debt composition for private borrowers, but not for the sovereign. She thus concludes that standard corporate finance models need not apply to sovereign borrowing. The second paper (joint with Mark Carlson of the Federal Reserve Board of Governors) applies a global game model to analyze the impact of credit ratings on the probability of sovereign default: “Courage to Capital? A Model of the Effects of Rating Agencies on Sovereign Debt Roll-over” (Cowles Foundation Discussion Paper No. 1506). Hale is currently continuing her work in this area with the analysis of the effects of currency and debt crises on the access of private firms to international capital, as well as the analysis of the factors that affect the length and the outcome of debt renegotiation processes by the sovereign borrowers. She is collaborating with Carlos Arteta from the Federal Reserve Board of Governors and Kenneth Kletzer from UC Santa Cruz.
The other area
of Hale’s research is concerned with
KOICHI HAMADA
Between January
2001 and January 2003, Professor Koichi Hamada served as President of the
Economics and Social Research Institute of Japan’s Cabinet Office. While
overseeing research activities in the Institute and helping the government fight
deflation and stagnation, Hamada was able to observe more or less directly the
process of macroeconomic policymaking in
After returning
to the Economic Growth Center in January 2003, Hamada wrote on deflation in
Japan (“Policy Making in Deflationary Japan,” The Japanese Economic Review,
Vol. 55, No. 3, September 2004, pp. 221-239; Center Reprint 600) and on the
role of ideas, in particular misleading ideas on deflation in policymaking
(Hamada and Asahi Noguchi, “The Role of Preconceived Ideas in Macroeconomic
Policy: Japan’s Experiences in the Two Deflationary Periods,” Economic Growth
Center Discussion Paper No. 908, March 2005). He and Robert Owen
organized a session, “Whither the Japanese Economy?,” for the American Economic
Association 2004 meetings in
Hamada
contributed a chapter to WTO Director General Moore’s final report:
“China’s Entry into the WTO and Its Impact on the Global Economic
System,” in Doha and Beyond: The Future of the Multilateral Trading
System, Mike Moore, editor, Cambridge University Press, 2004 (Center
Reprint No. 595). The collaboration of lawyers and economists, including
Hamada, advising Director General Panitchpakdi produced a volume authored by
the Consultative Board (chaired by Peter Sutherland), entitled The Future of
the WTO, WTO 2005, which attracted a great many readers over the
internet. This experience helped Hamada conduct theoretical research on
the possible undesirable effects of preferential trade arrangements to the
non-member nations and to promote research on the incentive mechanism of
international trade institutions (Hamada and Shyam Sunder (Yale School of
Management), “Information Asymmetry and the Problem of Transfers in Trade
Negotiations and International Agencies,” Economic Growth Center Discussion
Paper No. 910, May 2005). For the
Hamada produced several papers reflecting his interest in international economics, among them: “Capital Flight, North-South Lending, and Stages of Economic Development,” with Masaya Sakuragawa, International Economic Review, Vol. 42, No. 1, February 2001, pp. 1-24 (Center Reprint No. 569); “A Comparison of Currency Crises Between Asia and Latin America,” Latin American Economic Crises: Trade and Labour, IEA Conference Volume No. 136, edited by Enrique Bour, Daniel Heymann and Fernando Navajas, eds., pp. 3-23, Palgrave Macmillan, 2004 (Center Reprint No. 594).
FABIAN LANGE
Since becoming a
member of the
In his paper, “The Speed of Employer Learning,” Lange examines a number of well-known empirical regularities concerning the relation between schooling and IQ on the one hand and earnings growth over the life-cycle on the other. A prominent framework for interpreting these regularities is the model of common employer learning: firms learn about individual abilities and this learning process is reflected in earnings dynamics over the early part of individuals’ careers. Lange estimates the speed with which this process of employer learning proceeds and uses this estimate to address the importance of Job Market Signaling vs. Human Capital model for explaining returns to schooling.
More recently
Lange has embarked (together with Joseph Altonji (Yale) and Emiko Usui (
During the last
60 years, income differences across
In “Chronic
Disease Burden and the Interaction of Education, Fertility and Growth,” Hoyt
Bleakley (
CAROLYN MOEHLING
Much of
Professor Carolyn Moehling’s research in the past several years has focused on issues
surrounding family labor supply decisions in urban
In Moehling’s studies of child labor, one of the strongest predictors that a child would be working in the market was living in a family headed by a single mother. In “Family Structure, School Attendance, and Child Labor in the American South in 1900 and 1910,” Explorations in Economic History, Vol. 41, No. 1, January 2004, pp. 73-100, she examines how racial differences in family structure contributed to the racial differences in children’s experiences in the early twentieth century. Although the vast majority of children of both races in this period lived in two-parent families, the fraction of black children in single-parent families was nearly twice as large as the fraction of white children in such families. Moehling found that family structure was an important determinant of children’s school attendance and labor force participation. But racial differences in family structure accounted for a much smaller fraction of the racial gap in children’s experiences than did racial differences in adult literacy and school characteristics. The low school attendance of black children was due to the poverty of their families, regardless of structure, and to the poor quality of black schools in the South.
Building on her
previous research on the experiences of single mothers, Moehling is currently
working on a project examining the relationship between American family
structure and the American welfare system over the twentieth century.
“The American Welfare System and Family Structure: A Historical Perspective,”
unpublished manuscript, June 2005, traces the history of cross-state variation
in welfare generosity and family structure starting with the first public cash
assistance programs targeted to single mothers – mothers’ pensions.
Thirty-nine states enacted mothers’ pensions laws between 1910 and 1920; five
more followed in the 1920s. The spatial variation in welfare generosity
common in the
Professor Moehling is currently
engaged in a joint project with Timothy Guinnane and Cormac Ó Gráda (University
College Dublin) on Irish fertility in the early twentieth century. The
Irish were quite reluctant participants in the fertility transition. In
most of Western Europe, the decline in marital fertility was well underway by
the 1880s; but for
The tenacity of this demographic
pattern to survive the crossing of the Atlantic makes the changes taking place
in the early 1900s in
ROHINI PANDE
Professor Rohini Pande’s research has been focused on the economic analysis of the politics and consequences of different forms of redistribution, principally in developing countries. Her work examines two closely related questions. The first is how do citizens' preferences and political institutions shape policy outcomes?; the second is what is the economic impact of specific public policies when implemented in low-income countries?
Policies enacted by electorally accountable governments often fail to reflect the interests of socially and economically disadvantaged minorities. In her paper, “Can Mandated Political Representation Provide Disadvantaged Minorities Policy Influence? Theory and Evidence from India,” American Economic Review, Vol. 93, No. 4, pp. 1132-1151, September 2003, Pande shows that mandated political representation for these minorities in India has increased their political voice and raised the levels of state transfers they receive. This research suggests that group identity, be it of legislators or voters, is an important determinant of public policy and that policies aimed at improving service delivery to the rural poor should be sensitive to the political context within which service delivery occurs.
Current
research, largely based on field surveys that Pande has been conducting in
In a paper with
Lena Edlund (
The second
strand of Pande’s research examines the economic impact of publicly provided
goods in low-income environments. In a recent paper, Pande and co-author
Robin Burgess (London School of Economics) show that a state-led rural bank
branch expansion program significantly lowered rural poverty in
Finally,
research on large dams conducted jointly with Esther Duflo emphasizes the
importance of examining the distributional implications of a public investment
as well as its average returns (“Dams,” Economic Growth Center Discussion Paper
No. 923, July 2005). The authors show that large dams in
GUSTAV RANIS
Professor Gustav
Ranis spent the period from 1996 to 2004 serving as the Henry R. Luce Director
of the
Named a Carnegie Scholar for the two-year period 2004-2006, Professor Ranis has continued to work on analyzing the two-way relationship between human development and economic growth, both theoretically and with the help of empirical cross-section analysis of the performance of all developing countries over four decades. With various co-authors, Professor Ranis has also focused specifically on Latin American and Asian successes and failures in this regard. A number of his published works on this topic have been released as Economic Growth Center Reprints, namely “Economic Growth and Human Development,” with Frances Stewart and Alejandro Ramirez, World Development, Vol. 28, pp. 197-219, 2000 (Center Reprint No. 546) and “Strategies for Success in Human Development,” with Frances Stewart, Journal of Human Development, Vol. 1, no.1, pp. 49-69, 2000 (Center Reprint No. 558). In addition, several papers have been released as Economic Growth Center Discussion Papers, specifically: “Growth and Human Development: Comparative Latin American Experience,” with Frances Stewart (No. 826, May 2001, and in The Developing Economies, December 2001, pp. 333-365); and “Paths to Success: The Relationship Between Human Development and Economic Growth,” with Michael Boozer, Frances Stewart and Tavneet Suri (No. 874, December 2003).
With respect to
his work on dualism and surplus labor, Professor Ranis made a presentation at
the Sir Arthur Lewis Anniversary Conference at the Institute for Development
Policy and Management at the
Professor Ranis’s research interests are broad. He presented a paper on “The Evolution of Development Thinking: Theory and Policy” at the 2004 World Bank ABCDE Conference (Economic Growth Center Discussion Paper No. 886, May 2004), and also continues to work on decentralization, the contribution of NGOs to development, the political economy of development assistance, conditionality and debt relief.
T. PAUL SCHULTZ
The research of Professor T. Paul Schultz has dealt with three issues: social
welfare program evaluation; economic consequences of health and education; and
life-cycle effects of policy-induced declines in fertility. The first
line of work involved an evaluation of the Mexican conditional cash transfer
program called Progresa (Journal of Development Economics, Vol.
74, No. 1, June 2004, pp. 199-250; Center Paper No. 597). This program
provided poor mothers in rural
Schultz’s second area of research involves measuring worker productivity effects of schooling and health in low-income countries. A consensus is growing that the recent period of sustained growth in total factor productivity and reduced fertility is closely associated with improvements in children’s nutrition, adult health, and schooling. The estimates of the productive return from these forms of human capital investment are nonetheless limited by our analytical methods and data. Indeed, most of the evidence relies on the choice of an exclusion restriction or an instrumental variable (IV) that is assumed exogenous to the worker’s wage or labor supply, but correlated with the accumulation of human capital. In most cases these instruments are regional price, infrastructure, or environmental condition in an individual’s location of residence or birthplace and are arguably related to other omitted variables which could influence the adult’s productive performance. Many studies relying on such regional instruments imply larger effects of health human capital on labor productivity than when these proxies for health human capital are treated as exogenous endowments in estimating the wage equation. Schultz has hypothesized that the error in measuring health human capital may be particularly large, biasing downward the OLS estimates of the wage return to health human capital. However, this process may not fit the conventional classical measurement error framework. Anthropometric indicators of health human capital, such as height, contain multiple sources of variation; they are predominantly determined by genetic variation, and perhaps only a modest component of the variation in height across adults can be explained by socioeconomic human capital investments in nutrition, preventive and curative medical care. If the socially reproducible component of adult height (i.e., the human capital component) were several times more important for adult productivity per centimeter than the genetic component, IV estimates of these anthropometric measures of health human capital would capture that policy-relevant payoff in wages due to changing the socioeconomic conditions conducive to investment in health human capital. In countries at various levels of development, variations in adult height that are instrumented by regional and family origin variables are much more highly correlated with wages than with height itself (“Wage Gains Associated With Height as a Form of Health Human Capital,” The American Economic Review, Vol. 92, No. 2, May 2002, pp. 349-353, Center Reprint No. 586). According to IV estimates of height, in a country such as Brazil from 1930s to 1960s, a cohort of youth born about ten years later would achieve one more year of schooling, which was associated with 15 percent more lifetime earnings, whereas an increase in their adult height of a centimeter per decade was associated with an earning increase of about 5 percent. More research using instruments is needed to predict Brazilian schooling and height as a result of policies that vary across region of birth and can be assumed not to affect other determinants of adult productivity across these regions and generations.
Schultz’s third area of research seeks to understand how the recent decline in fertility in many parts of the world has affected growth in output per worker through possibly increased participation in the market economy, increased worker productivity, and increased savings in the form of human and physical capital (“Population Policies, Fertility, Women’s Human Capital, and Child Quality,” 2005). If one accepts the argument that some part of this decline in fertility reflects a behavioral choice, then the question for policymakers is somewhat different: what has been the contribution of policy-induced declines in fertility on economic development? Most studies of fertility present only correlations between fertility and family outcomes, two endogenous variables. Only a few studies analyze the effects of exogenous variation in fertility and isolate the effects of policies on lifetime fertility, but almost none assess how fertility affects family welfare. Instrumental variable methods imply that these “cross effects” of fertility change on women’s labor supply and on child quality tend to be about half as large as OLS estimates, but these cross effects are rarely estimated for poor rural populations where population programs are likely to be most cost effective.
In 2005, Schultz and Shareen Joshi started investigating the long-run family
effects of an experimental family planning-child and maternal health program in
T.N. SRINIVASAN
For a number of years, Professor T. N. Srinivasan has been conducting research, writing, and teaching on the subjects of developing countries and the multilateral trading system (with a particular focus on South Asian countries) and globalization. His research focuses on the removal of barriers to free trade as a means to obtain sustained economic growth and thereby alleviate poverty in developing countries. Some of his published works on this topic have been released as Economic Growth Center Reprints in recent years. They are: “WTO and the Developing Countries,” Journal of Social and Economic Development, Vol. II, no.1, January-June 1999, pp.1-32 (Center Reprint No. 548); “Strengthening the International Financial Architecture,” Asian Development Review, Vol. 16, No. 2, 1998, pp. 1-17 (Center Reprint No. 559); “Trade and Human Rights,” Constituent Interests and U.S. Trade Policies, Alan V. Deardorff and Robert M. Stern, editors, pp. 225-253, University of Michigan Press, 1998 (Center Reprint No. 563); “Developing Countries in the World Trading System: From GATT 1947 to the Third Ministerial Meeting of the WTO 1999,” The World Economy, Vol. 22, No. 8, 1999, pp. 1047-1064 (Center Reprint No. 566); “Attacking Poverty: A Lost Opportunity – World Development Report 2000-2001,” South Asia Economic Journal, Vol. 2, No. 1, 2001, pp. 123-28 (Center Reprint No. 568); and “Trade, Development and Growth,” Essays in International Economics, No. 225, December 2001 (Center Reprint No. 582). Another paper, “Developing Countries and the Multilateral Trading System After Doha,” was released as an Economic Growth Center Discussion Paper (No. 842, February 2002).
Srinivasan’s
book, Reintegrating India with the World Economy (co-authored with
Suresh Tendulkar), was published by the Institute for International Economics
in 2003, and a version was published in
Professor
Srinivasan has worked closely with Ernesto Zedillo, Director of the Yale Center
for the Study of Globalization, and presented a paper at the conference
entitled, “The Future of Globalization: Explorations in Light of Recent
Turbulence.” That paper, “The Future of the Global Trading System:
CHRISTOPHER UDRY
Over the past five years, Professor Christopher Udry has been working on a broad set of questions concerned with the interactions between rural institutions and patterns of economic activity. Recently, there has been a remarkable revival of interest in the broad correlations that can be found between coarse measures of institutions and macroeconomic growth. Chris Udry’s work explores the pathways through which specific institutions influence and are influenced by particular economic activities. An overview of the relationship between empirical work relying on cross-country variation and the microeconomic approach is provided in the paper with Rohini Pande, “Institutions and Development: A View from Below,” forthcoming in Advances in Economic Theory and Econometrics.
One dimension of
this research program involves imperfect financial markets. In
“Consumption Smoothing? Livestock, Insurance and Drought in Rural Burkina
Faso,” Journal of Development Economics, forthcoming, Udry and Harounan
Kazianga (Earth Institute, Columbia University) show that households in Burkina
Faso suffered dramatic consumption declines during severe droughts in the
1980s. Neither financial nor real assets served any significant
consumption-smoothing purpose during the crises. There was no more than
trivial risk-sharing across households against the idiosyncratic components of
income variation. Highly imperfect financial markets in this context were
associated with extremely costly fluctuations in consumption for households
already in extreme poverty. “The Return to Capital in
A second dimension of this work involves property rights and agricultural investments. In a series of papers with Markus Goldstein (The World Bank), the main paper being “The Profits of Power: Land Rights and Agricultural Investment in Ghana,” Economic Growth Center Discussion Paper No. 929), Udry shows that individuals with high positions in local political hierarchies have more secure land rights, and as a consequence invest more in land fertility and thus obtain higher output. The papers examine the political economy of land allocation and the consequences of changes in population density and technology for the evolution of land rights.
A third aspect
of Udry’s research examines the economic organization of households. In
“Intrahousehold Resource Allocation in Côte d’Ivoire: Social Norms, Separate
Accounts and Consumption Choices” (Economic Growth Center Discussion Paper No.
857), Udry and Esther Duflo (MIT) show that risk is not fully pooled within
households: shocks to individual income are associated with shifts in the composition
of expenditure that violate the null hypothesis of Pareto efficiency, and that
correspond to ethnographic descriptions of gender-specific roles.
“Households and the Social Organization of Consumption in
A final
dimension of Udry’s recent research (joint with Tim Conley,
CONFERENCES
Forward-Looking Econometric Modeling
On November 20 and 21, 2000, a conference on “Forward-Looking Econometric Modeling” was held at Yale. The conference was organized by Professor Koichi Hamada and sponsored by the Economic Planning Agency of the Japanese government. Six papers were presented on the first day of the conference: “ERI Asian Link Model, The Model Structure and Some Simulation Results,” Kanemi Ban, Institute for Social and Economic Research, Osaka University; “A Structure of Macroeconometric Model and the Modern View of Macroeconomics,” Ray Fair, Cowles Foundation for Research in Economics, Yale University; “Interest Rates Linkages: Identifying Structural Relations,” Stephan Hall, Imperial College, University of London; “Simulation Analysis by the Forward-Looking Models,” Jan Int’veld, the European Union; “Why is the Euro Weak and the Dollar Strong?,” Andrew Levin, Federal Reserve Bank; and “Monetary Rules and Fiscal Policy,” Ray Barrell, NIESR.
The second day of the conference included the following papers: “OECD Exercise for Small Link Model,” Pete Richardson, Organization for Economic Cooperation and Development; “Some Simulation Results of OLG Model and Others,” Ryuta Kato, ERI, Shiga University; “Demographic Uncertainty: Simulation Results and Public Policy Implications,” Michael Orszag, Birbeck College, University of London; and “An Analysis of the Effect of IT Innovation to the Japanese Economy by AGE Model,” Mantarou Matsuya and Kanemi Ban, Institute for Social and Economic Research, Osaka University. Other conference participants included Gerald Holtham, Norwich Credit Union; Ralph Bryant, Brookings Institute; and Hiromi Kato, ERI.
Can
Also in November 2000, a policy
roundtable sponsored by the
The Future of American Banking: Historical, Theoretical, and Empirical Perspectives
Professor Timothy Guinnane and William English (Senior Economist, Board of Governors of the Federal Reserve System) were co-organizers for a conference entitled “The Future of American Banking: Historical, Theoretical, and Empirical Perspectives” held at Yale on November 9-10, 2001. Approximately thirty participants from Yale, other universities, the Federal Reserve System, the Bank for International Settlements, and The World Bank presented and discussed papers on the broad topics of “Runs and Crises” and “Regulation and Risk.”
On the first day of the conference, six papers were presented: “Liquidity Shortages and Bank Crises,” Douglas Diamond, Graduate School of Business, University of Chicago; “Who Panics During Panics?,” Eugene White, Rutgers University; “The Costs and Benefits of Moral Suasion: Evidence from the Rescue of Long-Term Capital Management,” Craig Furfine, Bank for International Settlements; “Causes of U.S. Bank Distress During the Depression,” Charles Calomiris, Columbia University Business School; “Financial Fragility,” Douglas Gale, New York University; and “Bank Panics and the Endogeneity of Central Banking,” Gary Gorton, Wharton School of Business, University of Pennsylvania.
An additional eight papers were
presented on the second day of the conference: “Bank Regulation and
Supervision: What Works Best?,” Gerard Caprio, The World Bank; “Measures
of the Riskiness of Banking Organizations: Subordinated Debt Yields,
Risk-Based Capital, and Examination Ratings,” Douglas Evanoff, Federal Reserve
Bank of Chicago; “Fear and Greed: The Evolution of Double Liability in
American Banking, 1865-1930,” Richard Grossman, Wesleyan University; “A
Policymaker’s Guide to Choosing Absolute Bank Capital Requirements,” Mark
Carey, Board of Governors of the Federal Reserve System; “Throwing Good Money
After Bad? Board Connections and Conflicts in Bank Lending,” Randy
Krozner, Graduate School of Business, University of Chicago; “Technological
Progress and the Geographic Expansion of the Banking Industry,” Allen Berger,
Board of Governors of the Federal Reserve System; “Does Function Follow
Organizational Form? Evidence from the Lending Practices of Large and Small
Banks,” Raghuram Rajan,
Conference discussants included Isabel Goedde, University of Mannheim; Richard Sylla, Stern School, New York University; Larry Wall, Federal Reserve Bank of Atlanta; Jürgen Eichberger, University of Heidelberg; and Amil Dasgupta, Ben Polak, Stephen Morris, William Brainard, Stefan Krieger, and Christopher Udry, Yale University.
SIMON KUZNETS MEMORIAL LECTURE SERIES
In 1986, faculty members of the
Center began the Simon Kuznets Memorial Lecture Series in honor of the late
Simon Kuznets who was instrumental in the creation of the
Stanley Fischer, then First
Deputy Managing Director of the International Monetary Fund, presented the 14th
Annual Simon Kuznets Memorial Lectures on October 24 and 25, 2000.
Fischer’s topic, “The International Financial System: Crises and Reform,” was
covered in two lectures: “The First Financial Crises of the Twenty-first
Century: From Mexico, 1994 to
In 2001, Joel Mokyr of
The 16th Annual
Lectures were given by Philippe Aghion of
The format of the lecture series was changed for the 17th Annual Lectures which were presented on February 17-19 and 23-24, 2004 by Abhijit Banerjee of the Massachusetts Institute of Technology. Instead of a series of public lectures, Banerjee presented one research seminar and taught a series of three classes. The classes focused on the general topic of “Growth Theory through the Lens of Development Economics.” Banerjee’s seminar topic was “Inequality, Growth and Trade Policy.”
Robert Townsend of the
International and Development Economics
The International and Development Economics Program (IDE), which is
administered by the
The global economic environment has become increasingly complex and poses a myriad of new challenges for policymakers and professionals in all fields. Change in both the political and economic arenas has been rapid, and policymakers must be able to respond quickly and appropriately to new conditions. The ability to respond requires that leaders have a detailed understanding of the economic forces that affect economic growth, influence international trade, and shape the world. The curriculum of the IDE program is designed to help students develop a solid core of analytic skills that will be of value in meeting such challenges in subsequent professional work. While the IDE program does not have a research component, such as a thesis requirement, it is designed to produce graduates who are aware of, and able to process, leading edge academic and policy research.
IDE students are
diverse, and the background of the students has evolved over the years.
In the past, many of the students entering the IDE program were early career
professionals in the public or private sectors in developing countries. In the
past five years, however, approximately three-quarters of each class come
directly to Yale from undergraduate schools and have little or no work
experience. The remaining one-quarter of students have some graduate training
and/or early career experience. While the majority of IDE students are
from non-developed countries, students from the
There is one joint degree option that is available to students in addition to the regular IDE program. The joint IDE/F&ES program allows students to earn both the Master of Arts degree in Economics and one of four degrees from the School of Forestry & Environmental Studies (Master’s of Environmental Management, Environmental Science, Forestry, or Forest Science). This joint degree program entails two and one-half years of study. The IDE program is expected to be completed in one academic year, and there are no provisions for part-time study.
Since its
founding in 1955 as the Foreign Economic Administration Program, the program
has awarded degrees to over 700 students representing more than 75
countries. In 2000-01, there were 26 students in the program from
The class of
2004-05 was the program’s 50th, and to honor this class and the
program, a special celebration was held on April 29 and 30, 2005. The
highlight of the event was a reception at President Levin’s house followed by a
dinner for IFEA/IDE alums, students in the class of 2005, IDE faculty and
staff, and friends at the Quinnipiack Club. The keynote speaker at the
dinner was Madame Yoriko Kawaguchi, IFEA class of 1972. Madame Kawaguchi,
a former Minister of Foreign Affairs for
Visiting Scholars
Visiting scholars have always enhanced the intellectual environment of the
Economics of the Family in Low-Income Countries
Since 1988, the Rockefeller Foundation has funded a research and training
program on the economics of the family. The program has supported use of the
tools of microeconomics and household economics to study gender differences in
low-income countries. The work of the program has emphasized, in particular, the
differences in wages and productivity, labor supply, time allocation, health and
schooling between men and women and analyzed the ways in which these differences
are influenced by technical change and development policy. Since the program
began, financial support and training has been provided to both predoctoral and
postdoctoral fellows. The last Rockefeller Postdoctoral Fellow was
appointed in 2005; the program itself will end in December 2007.
VISITING SCHOLARS AND POSTDOCTORAL FELLOWS
2000-01 THROUGH 2005-06
2000-2001
Awudu Abdulai, Visiting Fellow, Swiss Federal Institute of
Technology,
Siegfried Bender, Visiting Fellow,
Tim Conley, Visiting Fellow, Northwestern University,
Dante Contreras, Rockefeller Postdoctoral Fellow, Universidad de
Chile,
Alan Dye, Visiting Faculty,
Ashok Guha, Visiting Faculty,
Sunil Kanwar, Fulbright Scholar,
Yasunari Koshino, Visiting Fellow, University of the Ryukyus,
Anandi Mani, Visiting Fellow,
Cem Mete, Population Council Postdoctoral Fellow
Jai-Won Ryou, Visiting Fellow,
Shiniji Takagi, Visiting Fellow,
Taek-Dong Yeo, Visiting Fellow,
2001-2002
Adebayo Aromolaran, Rockefeller Postdoctoral Fellow,
Xavier
Giné, Postdoctoral
Associate/Lecturer,
Stefan Klonner, Postdoctoral Fellow, South Asia Institute,
Takashi Kurosaki, Visiting Fellow, Institute of Economic Research,
Mary MacKinnon, Visiting Faculty,
Yaw Nyarko, Visiting Faculty,
Jai-Won Ryon, Visiting Fellow,
Nistha Sinha, Rockefeller Postdoctoral Fellow,
Bart