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Attempts to raise a significant percentage of gross domestic product in revenue from a broad-based financial transactions tax are likely to fail both by raising much less revenue than expected and by generating far-reaching changes in economic behavior. Although the side-effects would include a sizable restructuring of financial sector activity, this would not occur in ways corrective of the particular forms of financial overtrading that were most conspicuous in contributing to the crisis.

Banking assets --- Banks & Banking Reform --- Currency --- Debt Markets --- Derivative --- Derivative transactions --- Economic efficiency --- Economic Theory & Research --- Emerging Markets --- Equities --- Finance and Financial Sector Development --- Financial assets --- Financial system --- Fiscal deficits --- Government policy --- Gross domestic product --- International bank --- Macroeconomics and Economic Growth --- Market failures --- Private Sector Development --- Reserve --- Reserve requirements --- Securities --- Securities transactions --- Tax --- Taxation & Subsidies --- Transaction --- Transparency

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May 1999 - Institutional arrangements have helped Colombia manage the fiscal aspects of decentralization, despite the country's political problems. Colombia's political geography contrasts sharply with its economy. Physical characteristics and guerilla war fragment the country geographically, yet it has a long tradition of political centrism and macroeconomic stability. Recently, with political and economic decentralization, there has been some weakening of macroeconomic performance. Dillinger and Webb explore institutional arrangements that have helped Colombia manage the fiscal aspects of decentralization, despite the country's political problems. Fiscal decentralization proceeded rapidly in Colombia. Education, health, and much infrastructure provision have been decentralized to the departmentos and municipios. Decentralization has led to substantial but not overwhelming problems, both in maintaining fiscal balance nationally (as resources are transferred to subnational levels) and in preventing unsustainable deficits by the subnational governments. The problems have arisen because central government interference prevents departments from controlling their costs and because of expectations of debt bailouts. Both are legacies of the earlier pattern of management from the center, and some recent changes-especially about subnational debt-may improve matters. Colombia's traditional political process has had difficulty dealing with problems of decentralization because traditional parties are weak in internal organization and have lost de facto rule over substantial territories. The fiscal problems of subnational government have been contained, however, because subnational governments are relatively weak politically and the central government, for the time being, has been able to enforce restrictions on subnational borrowing. This paper-a product of the Poverty Reduction and Economic Management Sector Unit, Latin America and Caribbean Region-is part of a larger effort in the region to examine the macroeconomic consequences of decentralization. The authors may be contacted at wdillinger@worldbank.org or swebb@worldbank.org.

Bank --- Banks and Banking Reform --- Budget --- Debt --- Debt Markets --- Decentralization --- Decentralization Process --- Deconcentration --- Deficits --- Finance and Financial Sector Development --- Financial Literacy --- Fiscal Decentralization --- Fiscal Deficits --- Interest --- Intergovernmental Relations --- Laws --- Local Governments --- Macroeconomic Stability --- Municipal Financial Management --- Municipalities --- Public and Municipal Finance --- Public Sector Economics and Finance --- Revenue --- Risk --- Subnational Governments --- Transfers --- Urban Development --- Urban Economics --- Value

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March 2000 - Fiscal problems are a key factor behind the inflation that has persisted in Eastern Europe since 1989. Deficits need to be cut back, but by how much for a given inflation target? A simple framework links debt, the deficit, and inflation to assess the fiscal stance of the Romanian economy. Unsustainable fiscal deficits were the chief reason for the inflation that has persisted in Eastern Europe since 1989. Deficits need to be cut back, but by how much for a given inflation target? Budina and van Wijnbergen develop a simple framework for debt, the deficit, and inflation to study the interactions between fiscal and monetary policy in Romania's economy. This framework can be used to 1) determine the financeable deficit and the required deficit reduction for a given rate of output growth, inflation rate, and target for debt-output ratios, and 2) to find the inflation rate for which no fiscal adjustment is needed. They use this framework to assess consistency between inflation, monetary reform, and fiscal policy in Romania. Many of the issues in Romania are similar to those in other countries. But Romania is an interesting case because of its history of unsuccessful stabilization attempts. The authors' results suggest that fiscal problems during 1992-94 were masked by shifting government expenses to the books of the National Bank of Romania so that the government deficit did not fully reflect public spending. In addition, the effects of delayed fiscal adjustment were mitigated by exchange rate overvaluation and favorable debt dynamics. In the late 1990s, however, debt dynamics worsened and the economy experienced significant real depreciation. That exacerbated the fiscal problems and increased the fiscal adjustment needed to restore consistency. This paper - a product of Macroeconomics and Growth, Development Research Group - is part of a larger effort in the group to study transition economies. The authors may be contacted at nbudina@worldbank.org or svw.heas@wxs.nl.

Banks and Banking Reform --- Budget --- Budget Deficits --- Central Bank --- Currencies and Exchange Rates --- Debt --- Debt Markets --- Defic Exchange --- Economic Stabilization --- Economic Theory and Research --- Emerging Markets --- Exchange Rate --- Expenditure --- Finance and Financial Sector Development --- Fiscal Deficits --- Fiscal Policy --- Government Expenditures --- Inflation --- Macroeconomics and Economic Growth --- Monetary Policy --- Private Sector Development --- Public Debt --- Public Investment --- Public Sector Defic Revenues --- Tax --- Transition Economies --- Transition Economy

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The paper analyses how the global economic crisis will affect the economies of the low income Commonwealth of Independent States (CIS) and discusses the fiscal measures which can be taken to help mitigate the adverse impact of the crisis. It focuses on Tajikistan, the poorest member of the CIS but also highlights similarities with the economies of Armenia, the Kyrgyz Republic and Moldova. The main channels through which the global economic crisis will affect the low income CIS economies is through a sharp reduction in remittances from migrant workers in Russia and lower export earnings. The adjustment to this external shock will involve a reduction in imports, private consumption, domestic output and government revenue. Fiscal policy, constrained by very limited macroeconomic and fiscal space, faces acute challenges. Maintaining budget targets for fiscal deficits and domestic borrowing in the face of revenue shortfalls will lead to a tightening of the fiscal stance, exacerbating recessionary pressures and making it very difficult to protect priority social expenditures from cuts. To avoid these outcomes, external support from donors, preferably in the form of quick disbursing budget support, is required. If additional external budget support can be mobilized, the priorities for fiscal policy should be to protect spending on budgeted social sector programs and, if sufficient budget resources are available, to implement a program of labor intensive repair and maintenance of public infrastructure to provide employment for returning migrant workers. Tax cuts are unlikely to be an effective use of scarce budget resources, either to stimulate the economy or protect the incomes of the poor. Up scaling existing social assistance programs may be a feasible way to protect the poor in some low income CIS countries provided they are not as poorly targeted as in Tajikistan.

Access to Finance --- Balance of payments --- Banks and Banking Reform --- Budget --- Currencies and Exchange Rates --- Debt Markets --- Domestic borrowing --- Economic Stabilization --- Economic Theory and Research --- Emerging Markets --- Exchange --- Expenditures --- Finance and Financial Sector Development --- Financial system --- Fiscal Adjustment --- Fiscal deficits --- Fiscal policies --- Fiscal policy --- Foreign exchange --- Government revenue --- Government revenues --- International bank --- Living standards --- Macroeconomics and Economic Growth --- Poverty --- Private Sector Development --- Remittances --- Reserves --- Share --- Tax --- Transition country

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Over the decades leading to the global financial crisis, the world witnessed a deepening integration of world economies, irrespective of a country's geographical location on the spherical space. This process of increasing interdependence of world economies, most notably illustrated by the scale of financial flows and movements of goods and services now termed globalization, has been facilitated by research and development and advances in technology, especially in the area of information and communication technology. In spite of its global nature, its expected benefits have not been uniformly distributed, however. This paper shows that the countries and regions that are driving the process of knowledge creation and production of high-tech and manufactured goods, building on frontier technology, are benefiting the most from globalization, increasingly acting as drivers and relegating Sub-Saharan Africa to the end-user status. In this process, the income gap between Sub-Saharan Africa and the globalizers has increased even more. However, the paper also shows that raising the level of technological endowment in Sub-Saharan Africa to that of developed countries could go a long way to bridge Africa's output gaps and improve its export performance in the new globalization landscape of the post-financial crisis era.

Access to Finance --- Asset prices --- Banks and Banking Reform --- Bond --- Bond markets --- Capital flows --- Capital markets --- Currencies and Exchange Rates --- Debt Markets --- Developing countries --- Development bank --- E-Business --- Economic development --- Economic Theory and Research --- Emerging Markets --- Export performance --- Finance and Financial Sector Development --- Financial crisis --- Financial flows --- Financial shock --- Fiscal deficits --- Foreign direct investments --- Global capital --- Global trade --- Globalization --- International bank --- International Economics & Trade --- Macroeconomics and Economic Growth --- Mortgage --- Portfolios --- Poverty Reduction --- Private Sector Development --- Pro-Poor Growth --- Public Sector Development --- Trade Policy