The dynamics of spending and absorption of aid : panel data analysis

In September 1999, the International Monetary Fund (IMF) established the Poverty Reduction and Growth Facility (PRGF) to make the reduction of poverty and the enhancement of economic growth the fundamental objectives of lending operations in its poorest member countries. This paper studies the spending and absorption of aid in PRGF-supported programs, verifies whether the use of aid is programmed to be smoothed over time, and analyzes how considerations about macroeconomic stability influence the programmed use of aid. The paper shows that PRGF-supported programs permit countries to utilize all increases in aid within a few years, showing smoothed use of aid inflows over time. Our results reveal that spending is higher than absorption in both the long-run and short-run use of aid, which is a robust finding of the study. Furthermore, the paper demonstrates that the long-run spending exceeds the injected increase of aid inflows in the economy. In addition, the paper finds that the presence of a PRGF-supported program does not influence the actual absorption or spending of aid.

Report of the National Advisory Council on International Monetary and Financial Problems. : Message from the President of the United States, transmitting report of the National Advisory Council on International Monetary and Financial Problems for the period of the last 6 months.

Caption title.

Essays on international lending and increasing returns to scale

Standard economic theory suggests that capital should flow from rich countries to poor countries. However, capital has predominantly flowed to rich countries. The three essays in this dissertation attempt to explain this phenomenon. The first two essays suggest theoretical explanations for why capital has not flowed to the poor countries. The third essay empirically tests the theoretical explanations.^ The first essay examines the effects of increasing returns to scale on international lending and borrowing with moral hazard. Introducing increasing returns in a two-country general equilibrium model yields possible multiple equilibria and helps explain the possibility of capital flows from a poor to a rich country. I find that a borrowing country may need to borrow sufficient amounts internationally to reach a minimum investment threshold in order to invest domestically.^ The second essay examines how a poor country may invest in sectors with low productivity because of sovereign risk, and how collateral differences across sectors may exacerbate the problem. I model sovereign borrowing with a two-sector economy: one sector with increasing returns to scale (IRS) and one sector with diminishing returns to scale (DRS). Countries with incomes below a threshold will only invest in the DRS sector, and countries with incomes above a threshold will invest mostly in the IRS sector. The results help explain the existence of a bimodal world income distribution.^ The third essay empirically tests the explanations for why capital has not flowed from the rich to the poor countries, with a focus on institutions and initial capital. I find that institutional variables are a very important factor, but in contrast to other studies, I show that institutions do not account for the Lucas Paradox. Evidence of increasing returns still exists, even when controlling for institutions and other variables. In addition, I find that the determinants of capital flows may depend on whether a country is rich or poor.^

Finding solutions to the debt problems of developing countries: report of the Executive Committee on Economic and Social Affairs of the United Nations (New York, 20 May 1999)

Includes bibliography

Unfinished business in the international dialogue on debt

Includes bibliography

The international scene and Latin America's external debt

Includes bibliography

Efficacy of brief motivational intervention at army conscription to address alcohol use and related problems: a randomized controlled trial

Objectives: The aim of this study was to evaluate the efficacy of brief motivational intervention (BMI) in reducing alcohol use and related problems among binge drinkers randomly selected from a census of 20 year-old French speaking Swiss men and to test the hypothesis that BMI contributes to maintain low-risk drinking among non-bingers. Methods: Randomized controlled trial comparing the impact of BMI on weekly alcohol use, frequency of binge drinking and occurrence of alcohol-related problems. Setting: Army recruitment center. Participants: A random sample of 622 men were asked to participate, 178 either refused, or missed appointment, or had to follow military assessment procedures instead, resulting in 418 men randomized into BMI or control conditions, 88.7% completing the 6-month follow-up assessment. Intervention: A single face-to-face BMI session exploring alcohol use and related problems in order to stimulate behaviour change perspective in a non-judgmental, empathic manner based on the principles of motivational interviewing (MI). Main outcome measures: Weekly alcohol use, binge drinking frequency and the occurrence of 12 alcohol-related consequences. Results: Among binge drinkers, we observed a 20% change in drinking induced by BMI, with a reduction in weekly drinking of 1.5 drink in the BMI group, compared to an increase of 0.8 drink per week in the control group (incidence rate ratio 0.8, 95% confidence interval 0,66 to 0,98, p = 0.03). BMI did not influence the frequency of binge drinking and the occurrence of 12 possible alcohol-related consequences. However, BMI induced a reduction in the alcohol use of participants who, after drinking over the past 12 months, experienced alcohol-related consequences, i.e., hangover (-20%), missed a class (-53%), got behind at school (-54%), argued with friends (-38%), engaged in unplanned sex (-45%) or did not use protection when having sex (-64%). BMI did not reduce weekly drinking in those who experienced the six other problems screened. Among non-bingers, BMI did not contribute to maintain low-risk drinking. Conclusions: At army conscription, BMI reduced alcohol use in binge drinkers, particularly in those who recently experienced alcohol-related adverse consequences. No preventive effect of BMI was observed among non-bingers. BMI is an interesting preventive option in young binge drinkers, particularly in countries with mandatory army recruitment.

Dynamic adverse selection and debt

This paper argues that the strategic use of debt favours the revelationof information in dynamic adverse selection problems. Our argument is basedon the idea that debt is a credible commitment to end long term relationships.Consequently, debt encourages a privately informed party to disclose itsinformation at early stages of a relationship. We illustrate our pointwith the financing decision of a monopolist selling a good to a buyerwhose valuation is private information. A high level of (renegotiable)debt, by increasing the scope for liquidation, may induce the highvaluation buyer to buy early at a high price and thus increase themonopolist's expected payoff. By affecting the buyer's strategy, it mayreduce the probability of excessive liquidation. We investigate theconsequences of good durability and we examine the way debt mayalleviate the ratchet effect.