Financial liberalisation and industrial development in Malawi

It has been suggested that financial liberalisation may be a key policy to promote industrialisation as it removes the credit access constraint on firms, especially small and medium ones. We investigate the effect of credit expansion in the wake of liberalisation on the structure of the industrial sectors in Malawi and find that, in contrast to the hypothesis above, it resulted in an increase in industrial concentration and a decrease in net firm entry, especially in sectors that are more finance dependent. The case of Malawi is interesting because financial liberalisation has been justified precisely as a means for industrial development and because the implementation of the policy has been regarded as relatively successful.

Infrastructure Finance and Industrial Takeoff in England

That financial matters did not constrain industrial takeoff in the UK is generally accepted in the historical literature; in contrast, contemporary empirical analyses have found evidence that financial development can be a causal determinant of economic growth. We look to reconcile these findings by concentrating on a particular aspect of industrialising UK where inefficiencies in finance could have had bite: The finance of physical infrastructures. We document the historical record and develop the importance of spatial disaggregation and spillovers in both technological and financial development. We develop a simple model that captures the nature of infrastructure finance within a theory of endogenous growth where financial costs are endogenous. We argue that the conception of the finance-growth nexus as a largely static, aggregative phenomenon misses out a good deal of complexity and we relate that complexity to a number of implications for regulation of both financial systems and the emergence of infrastructures

Pareto or log-normal? A recursive-truncation approach to the distribution of (all) cities

Traditionally, it is assumed that the population size of cities in a country follows a Pareto distribution. This assumption is typically supported by nding evidence of Zipf's Law. Recent studies question this nding, highlighting that, while the Pareto distribution may t reasonably well when the data is truncated at the upper tail, i.e. for the largest cities of a country, the log-normal distribution may apply when all cities are considered. Moreover, conclusions may be sensitive to the choice of a particular truncation threshold, a yet overlooked issue in the literature. In this paper, then, we reassess the city size distribution in relation to its sensitivity to the choice of truncation point. In particular, we look at US Census data and apply a recursive-truncation approach to estimate Zipf's Law and a non-parametric alternative test where we consider each possible truncation point of the distribution of all cities. Results con rm the sensitivity of results to the truncation point. Moreover, repeating the analysis over simulated data con rms the di culty of distinguishing a Pareto tail from the tail of a log-normal and, in turn, identifying the city size distribution as a false or a weak Pareto law.

Human capital, social mobility and the skill premium

This paper develops a dynamic general equilibrium model to highlight the role of human capital accumulation of agents differentiated by skill type in the joint determination of social mobility and the skill premium. We first show that our model captures the empirical co-movement of the skill premium, the relative supply of skilled to unskilled workers and aggregate output in the U.S. data from 1970-2000. We next show that endogenous social mobility and human capital accumulation are key channels through which the effects of capital tax cuts and increases in public spending on both pre- and post-college education are transmitted. In particular, social mobility creates additional incentives for the agents which enhance the beneficial effects of policy reforms. Moreover, the dynamics of human capital accumulation imply that, post reform, the skill premium is higher in the short- to medium-run than in the long-run.