Human Capital, the Structure of Production, and Growth

Recent decisions by the Spanish national competition authority (TDC) mandate payment systems to include only two costs when setting their domestic multilateral interchange fees (MIF): a fixed processing cost and a variable cost for the risk of fraud. This artificial lowering of MIFs will not lower consumer prices, because of uncompetitive retailing; but it will however lead to higher cardholders fees and, likely, new prices for point of sale terminals, delaying the development of the immature Spanish card market. Also, to the extent that increased cardholders fees do not offset the fall in MIFs revenue, the task of issuing new cards will be underpaid relatively to the task of acquiring new merchants, causing an imbalance between the two sides of the networks. Moreover, the pricing scheme arising from the decisions will cause unbundling and underprovision of those services whose costs are excluded. Indeed, the payment guarantee and the free funding period will tend to be removed from the package of services currently provided, to be either provided by third parties, by issuers for a separate fee, or not provided at all, especially to smaller and medium-sized merchants. Transaction services will also suffer the consequences that the TDC precludes pricing them in variable terms.

Growth, Democracy, and Civil War

Does economic growth affect the likelihood of civil war? Answering this question requires dealing with reverse causation. Our approach exploits that international commodity prices have a significant effect on the income growth of Sub-Saharan African countries. We show that lower income growth makes civil war more likely in non-democracies. This effect is significantly weaker in democracies; as a result, we find no link between growth and civil war in these countries. Our reducedform results also indicate that lower international commodity price growth has no effect on civil war in democracies, but raises the likelihood of civil war incidence and onset in nondemocracies.

Productivity Growth during the English Industrial Revolution: A Dual Approach

This paper presents new estimates of total factor productivity growth in Britain for the period 1770-1860. We use a dual technique recently popularized by Hsieh (1999), and argue that the estimates we derive from factor prices are of similar quality to quantity-based calculations. Our results provide further evidence, derived from this independent set of sources, that productivity growth during the British Industrial Revolution was relatively slow. During the years 1770-1800, TFP growth was close to zero, according to our estimates. The period 1800-1830 experienced an acceleration of productivity growth. The Crafts-Harley view of the Industrial Revolution is thus reinforced. We also consider alternative explanations of slow productivity growth, and reject the interpretation that focuses on the introduction of steam as a general purpose technology.

Financial Development, Financial Fragility, and Growth

This paper studies the apparent contradiction between two strands of the literature on the effects of financial intermediation on economic activity. On the one hand, the empirical growth literature finds a positive effect of financial depth as measured by, for instance, private domestic credit and liquid liabilities (e.g., Levine, Loayza, and Beck 2000). On the other hand, the banking and currency crisis literature finds that monetary aggregates, such as domestic credit, are among the best predictors of crises and their related economic downturns (e.g., Kaminski and Reinhart 1999). The paper accounts for these contrasting effects based on the distinction between the short- and long-run impacts of financial intermediation. Working with a panel of cross-country and time-series observations, the paper estimates an encompassing model of short- and long-run effects using the Pooled Mean Group estimator developed by Pesaran, Shin, and Smith (1999). The conclusion from this analysis is that a positive long-run relationship between financial intermediation and output growth co-exists with a, mostly, negative short-run relationship. The paper further develops an explanation for these contrasting effects by relating them to recent theoretical models, by linking the estimated short-run effects to measures of financial fragility (namely, banking crises and financial volatility), and by jointly analyzing the effects of financial depth and fragility in classic panel growth regressions.

What do women do? World population growth and fertility patterns, 1960-2000

In this paper we attempt to describe the general picture reasons behind the world population explosion during the 20th century. In general we comment that if, according to some, at the end of the 20th century there were too many people, this was has a consequence of scientific innovation, circulation of information, and economic growth, leading to a dramatic improvement in life expectancies. Nevertheless, a crucial variable shaping differences in demographic growth is fertility. In this paper we identify as important exogenous variables affecting fertility female education levels, infant mortality, and racial identity and diversity. It is estimated that three additional years of schooling for mothers leads on average (at the world level ) to one child less per couple. Even if we can identify a worldwide trend towards convergence in demographic trends, the African case needs to be given more attention, not only because of its different demographic patterns, but also because this is the continent where the worldwide movement towards a higher quality of life has not yet been achieved for an important share of the world's population.

Earthquake impacts in old-growth Nothofagus forests in New Zealand

Six stands located on different land forms in mixed old-growth Nothofagus forests in the Matiri Valley (northwest of South Island. New Zealand) were sampled to examine the effects of two recent large earthquakes on tree establishment and tree-ring growth, and how these varied across land forms. 50 trees were cor ed in each stand to determine age structure and the cores were cross-dated to precisely date unusual periods of radial growth. The 1968 earthquake (M = 7.1, epicentre 35 km from the study area) had no discernible impact on the sampled stands. The impact of the 1929 earthquake (M = 7.7, epicentre 20 kin from the study area) varied between stands, depending on whether or not they had been damaged by soil or rock movement. In all stands, the age structures showed a pulse of N. fusca establishment following the 1929 earthquake, with this species dominating establishment in large gaps created by landslides. Smaller gaps, created by branch or tree death, were closed by both N. fusca and N. menziesii. The long period of releases (1929-1945) indicates that direct earthquake damage was not the only cause of tree death, and that many trees died subsequently most likely of pathogen attack or a drought in the early 1930s. The impacts of the 1929 earthquake are compared to a storm in 1905 and a drought in 1974-1978 which also affected forests in the region. Our results confirm that earthquakes are an important factor driving forest dynamics in this tectonically active region, and that the diversity of earthquake impacts is a major source of heterogeneity in forest structure and regeneration.