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Zonder onderwerpscode: wereldeconomie, ontwikkelingsproblematiek

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The social discount rate measures the rate at which a society would be willing to trade present for future consumption. As such it is one of the most critical inputs needed for cost-benefit analysis. This paper presents estimates of the social discount rates for nine Latin American countries. It is argued that if the recent track record in terms of growth in the region is indicative of future performance, estimates of the social discount rate would be in the 3-4 percent range. However, to the extent that the region improves on its past performance, the social discount rate to be used in the evaluation of projects would increase to the 5-7 percent range. The paper also argues that if the social planner gives a similar chance to the low and high growth scenario, the discount rate should be dependent on the horizon of the project, declining from 4.4 percent for a 25-year horizon to less than 4 percent for a 100-year horizon.

Achieving Shared Growth --- Debt Markets --- Discount rate --- Discount rates --- Economic Theory & Research --- Finance and Financial Sector Development --- Inequality --- International bank --- Opportunity cost --- Poverty Reduction --- Private investment --- Public investment --- Public sector borrowing --- Rate of return --- Tax --- Tax regime

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Zonder onderwerpscode: wereldeconomie, ontwikkelingsproblematiek

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Recent theoretical literature has suggested a variety of mechanisms through which poverty may deter growth and become self-perpetuating. A few papers have searched for empirical regularities consistent with those mechanisms - such as aggregate non-convexities and convergence clubs. However, a seemingly basic implication of the theoretical models, namely that countries suffering from higher levels of poverty should grow less rapidly, has remained untested. This paper attempts to fill that gap and provide a direct empirical assessment of the impact of poverty on growth. The paper's strategy involves including poverty indicators among the explanatory variables in an otherwise standard empirical growth equation. Using a large panel dataset, the authors find that poverty has a negative impact on growth that is significant both statistically and economically. This result is robust to a variety of specification changes, including (i) different poverty lines; (ii) different poverty measures; (iii) different sets of control variables; (iv) different estimation methods; (v) adding inequality as a control variable; and (vi) allowing for nonlinear effects of inequality on growth. The paper also finds evidence that the adverse effect of poverty on growth works through investment: high poverty deters investment, which in turn lowers growth. Further, the data suggest that this mechanism only operates at low levels of financial development, consistent with the predictions of theoretical models that underscore financial market imperfections as a key ingredient of poverty traps.

Capital investment --- Country case --- Credit constraints --- Debt Markets --- Development research --- Economic opportunities --- Economic Theory and Research --- Empirical estimates --- Empirical regularities --- Empirical studies --- Explanatory variables --- Finance and Financial Sector Development --- Financial development --- Growth equation --- Growth process --- Growth rates --- High poverty --- Human capital --- Inequality --- Macroeconomics and Economic Growth --- Negative impact --- Persistent poverty --- Policy research --- Poverty lines --- Poverty Monitoring and Analysis --- Poverty Reduction --- Poverty traps --- Pro-Poor Growth --- Rural Development --- Rural Poverty Reduction --- Services and Transfers to Poor

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Crude oil prices have dramatically increased over the past years and are now at a historical maximum in nominal terms and very close to it in real terms. It is difficult to argue, at least for net oil importers, that higher oil prices have a positive impact on welfare. In fact, the negative relationship between oil prices and economic activity has been well documented in the literature. Yet, to the extent that higher oil prices lead to lower oil consumption, it would be possible to argue that not all the effects of a price increase are negative. Climate change concerns have been on the rise in recent years and fossil fuel consumption is generally viewed as one of the main causes behind it. Thus this paper explores whether higher oil prices contribute to lowering oil intensities (that is, oil consumption per unit of gross domestic product). The findings show that following an increase in oil prices, OECD countries tend to reduce oil intensity. However, the same result does not hold for Latin America (and more generally for middle-income countries) where oil intensities appear to be unaffected by oil prices. The paper also explores why this is so.

Climate change --- Crude oil --- Energy --- Energy Demand --- Energy Production and Transportation --- Environment --- Environment and Energy Efficiency --- Fossil --- Fossil fuel --- Fossil fuel consumption --- Gross domestic product --- Macroeconomics and Economic Growth --- Markets and Market Access --- Net oil --- Oil --- Oil consumption --- Oil prices --- Oil Refining & Gas Industry