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This paper assesses whether the Indonesia Early Childhood Education and Development project had an impact on early achievement gaps as measured by an array of child development outcomes and enrollment. The analysis is based on longitudinal data collected in 2009 and 2010 on approximately 3,000 four-year-old children residing in 310 villages located in nine districts across Indonesia. The study begins by documenting the intent-to-treat impact of the project. It then compares the achievement gaps between richer and poorer children living in project villages with those of richer and poorer children living in non-project villages. There is clear evidence that in project villages, the achievement gap between richer and poorer children decreased on many dimensions. By contrast, in non-project villages, this gap either increased or stayed constant. Given Indonesia's interest in increasing access to early childhood services for all children, and the need to ensure more efficient spending on education, the paper discusses how three existing policies and programs could be leveraged to ensure that Indonesia's vision for holistic, integrated early childhood services becomes a reality. The lessons from Indonesia's experience apply more broadly to countries seeking to reduce early achievement gaps and expand access to pre-primary education.
Achievement Gaps --- Childhood Education --- Childhood Services --- Communities & Human Settlements --- Education --- Educational Sciences --- Governance --- Government Budget --- Housing & Human Habitats --- Primary Education --- Socioeconomic Development --- Street Children --- Urban Development --- Youth & Governance
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Mckenzie econometrically ascertains the determinants of default to the International Bank for Reconstruction and Development (IBRD) through panel logit analysis. Creditworthiness with a lag of one period is determined by the extent of arrears to private creditors, the proportion of total debt service that is being paid, the government budget deficit, the extent of military involvement in the government of a country, and by the G7's current account balance. Default to the IBRD falls into a graduated hierarchy, whereby default occurs first to Paris Club and commercial bank creditors, with subsequent default triggered by portfolios with high proportions of IBRD and short-term debt, as well as the factors mentioned above. Default to these other creditor groups can be explained by more traditional country risk variables, although Mckenzie's analysis highlights the importance of political and external factors in explaining default to all creditors studied. He finds sovereign default to be a state-dependent process, whereby the repayment behavior of a country changes once it enters into default. Operationally, Mckenzie arrives at a model that can be used to assess short-term creditworthiness, although data imperfections and availability still limit the usefulness of the model for some countries. Longer-term risk assessment proves more difficult, which raises operational questions for the IBRD. This paper-a product of the Credit Risk Division, Office of the Senior Vice President and Chief Financial Officer-is part of a larger effort in the Bank to monitor the creditworthiness of IBRD borrowers. The author may be contacted at mcken@stanford.edu.
Arrears --- Bank Creditors --- Bank Policy --- Borrowers --- Commercial Bank --- Country Risk --- Creditor --- Creditworthiness --- Debt Markets --- Debt Service --- Default --- Exchange --- Finance and Financial Sector Development --- Financial Literacy --- Government Budget --- Government Budget Defic International Bank --- Portfolio --- Private Creditors --- Repayment --- Short-Term Debt --- Sovereign Default --- Total Debt
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In light of the proliferation of exceptionally large fiscal stimuli to ward off the recession triggered by the 2008 global economic and financial crisis in most advanced economies, this paper revisits the fiscal adjustment and growth nexus in Sub-Saharan Africa. Using transfer functions, it quantifies expected losses in terms of aggregate output largely attributed to a systematic implementation of pro-cyclical expenditure switching and reducing policies to achieve low deficit targets throughout the decades of adjustments. The results consistently highlight a much higher predicted aggregate output under the hypothesized counter-cyclical fiscal expansion option. This consistent outcome suggests that the output gap would have been significantly smaller in the region if countries had drawn on stop-and-go policies of fiscal expansion to sustainably raise the stock of capital investments.
Balance of payments --- Balance of payments crisis --- Capital investments --- Current account deficits --- Debt Markets --- Developing countries --- Economic Stabilization --- Economic Theory & Research --- Expenditure --- Finance and Financial Sector Development --- Financial crisis --- Fiscal Adjustment --- Fiscal deficit --- Fiscal policy --- Government budget --- Government budget deficits --- Government budgets --- Government deficits --- Government spending --- International Bank --- Living standards --- Macroeconomic stabilization --- Macroeconomics and Economic Growth --- Negative shocks --- Public investments --- Public Sector Development --- Public Sector Expenditure Policy --- Tax
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Although many studies indicate that both the level and composition of public spending are significant for economic growth, the results in the empirical literature are still mixed. This paper studies the importance of country sample selection and expenditure classification in explaining these conflicting results. It investigates a set of fast-growing countries versus a mix of countries with different growth patterns. The regression specifications include different components of public expenditure and total fiscal revenues, always considering the overall government budget constraint. Total public spending is first disaggregated using a definition that classifies public spending as productive versus unproductive components, an a priori criterion that is based on the expected impact of public spending items on the private sector production function. After empirically confirming the validity of this definition in the panel analysis, the authors suggest and test an alternative definition of "core" public spending that may be more appropriate for developing countries. The empirical analysis shows that the link between growth and public spending, especially the productive and "core" components, is strong only for the fast-growing group. In addition, macroeconomic stability, openness, and private sector investment are significant in the fast-growing group, which points to the existence of an economic policy environment more conducive to growth in the first group of countries. The authors conclude that public spending can be a significant determinant of growth for countries that are capable of using funds for productive purposes.
Achieving Shared Growth --- Business cycles --- Composition of public spending --- Debt Markets --- Economic growth --- Economic policy --- Expenditure --- Expenditure classification --- Expenditures --- Finance and Financial Sector Development --- Fiscal affairs --- Fiscal policy --- Government budget --- Government budget constraint --- Macroeconomic stability --- Macroeconomics and Economic Growth --- Poverty Reduction --- Private sector --- Private sector investment --- Public disclosure --- Public expenditure --- Public expenditures --- Public Sector Development --- Public Sector Economics --- Public Sector Expenditure Policy --- Public spending --- Subnational Economic Development --- Total public spending
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In light of the proliferation of exceptionally large fiscal stimuli to ward off the recession triggered by the 2008 global economic and financial crisis in most advanced economies, this paper revisits the fiscal adjustment and growth nexus in Sub-Saharan Africa. Using transfer functions, it quantifies expected losses in terms of aggregate output largely attributed to a systematic implementation of pro-cyclical expenditure switching and reducing policies to achieve low deficit targets throughout the decades of adjustments. The results consistently highlight a much higher predicted aggregate output under the hypothesized counter-cyclical fiscal expansion option. This consistent outcome suggests that the output gap would have been significantly smaller in the region if countries had drawn on stop-and-go policies of fiscal expansion to sustainably raise the stock of capital investments.
Balance of payments --- Balance of payments crisis --- Capital investments --- Current account deficits --- Debt Markets --- Developing countries --- Economic Stabilization --- Economic Theory & Research --- Expenditure --- Finance and Financial Sector Development --- Financial crisis --- Fiscal Adjustment --- Fiscal deficit --- Fiscal policy --- Government budget --- Government budget deficits --- Government budgets --- Government deficits --- Government spending --- International Bank --- Living standards --- Macroeconomic stabilization --- Macroeconomics and Economic Growth --- Negative shocks --- Public investments --- Public Sector Development --- Public Sector Expenditure Policy --- Tax
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Although many studies indicate that both the level and composition of public spending are significant for economic growth, the results in the empirical literature are still mixed. This paper studies the importance of country sample selection and expenditure classification in explaining these conflicting results. It investigates a set of fast-growing countries versus a mix of countries with different growth patterns. The regression specifications include different components of public expenditure and total fiscal revenues, always considering the overall government budget constraint. Total public spending is first disaggregated using a definition that classifies public spending as productive versus unproductive components, an a priori criterion that is based on the expected impact of public spending items on the private sector production function. After empirically confirming the validity of this definition in the panel analysis, the authors suggest and test an alternative definition of "core" public spending that may be more appropriate for developing countries. The empirical analysis shows that the link between growth and public spending, especially the productive and "core" components, is strong only for the fast-growing group. In addition, macroeconomic stability, openness, and private sector investment are significant in the fast-growing group, which points to the existence of an economic policy environment more conducive to growth in the first group of countries. The authors conclude that public spending can be a significant determinant of growth for countries that are capable of using funds for productive purposes.
Achieving Shared Growth --- Business cycles --- Composition of public spending --- Debt Markets --- Economic growth --- Economic policy --- Expenditure --- Expenditure classification --- Expenditures --- Finance and Financial Sector Development --- Fiscal affairs --- Fiscal policy --- Government budget --- Government budget constraint --- Macroeconomic stability --- Macroeconomics and Economic Growth --- Poverty Reduction --- Private sector --- Private sector investment --- Public disclosure --- Public expenditure --- Public expenditures --- Public Sector Development --- Public Sector Economics --- Public Sector Expenditure Policy --- Public spending --- Subnational Economic Development --- Total public spending
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This paper surveys fiscal policy in developing countries from the point of view of long-run growth. The first section reviews existing methodologies to estimate the effects of fiscal policy shocks and of systematic fiscal policy, with time series or with cross-sectional methods, and their applicability to developing countries. The second section surveys optimal fiscal policy in developing countries, by considering the role of the intertemporal government budget, and sustainability and solvency. It also reviews the fuzzy debate on "fiscal space" and "macroeconomic space" - and the usefulness (or lack thereof) of these terms for policy analysis. The third section asks what theory tells us about the optimal cyclical behavior of fiscal policy in developing countries. It shows that it very much depends on the assumptions about the interactions between credit market imperfections at the individual, firms, or government level, and on the supply of external funds to the country. Different sets of assumptions lead to different implications about optimal cyclical behavior. The available evidence on the cyclical behavior of fiscal policy, and possible reasons for the observed prevalence of a procyclical behavior in developing countries, is also reviewed. If one agrees that fiscal policy is indeed less countercyclical than we think is optimal, the issue is how to correct the problem. One obvious question is why government do not self-insure, id est why they do not accumulate assets in upturns and decumulate them in downturns. This leads to the analysis of fiscal rules and stabilization funds, in the fourth section. The last section concludes with what the author considers important research and policy questions in each part.
Debt Markets --- Economic Stabilization --- Economic Theory and Research --- Finance and Financial Sector Development --- Fiscal Adjustment --- Fiscal policies --- Fiscal Policy --- Fiscal rules --- Government budget --- Government consumption --- Government spending --- Macroeconomics and Economic Growth --- Monetary authorities --- Public sector --- Public Sector Expenditure Analysis and Management --- Social security --- Stabilization policies
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This paper has been prepared for policy makers interested in establishing or strengthening financial strategies to increase the financial response capacity of governments of developing countries in the aftermath of natural disasters, while protecting their long-term fiscal balances. It analyzes various aspects of emergency financing, including the types of instruments available, their relative costs and disbursement speeds, and how these can be combined to provide cost-effective financing for the different phases that follow a disaster. The paper explains why governments are usually better served by retaining most of their natural disaster risk while using risk transfer mechanisms to manage the excess volatility of their budgets or access immediate liquidity after a disaster. Finally, it discusses innovative approaches to disaster risk financing and provides examples of strategies that developing countries have implemented in recent years.
Banks & Banking Reform --- Capital market development --- Debt Markets --- Developing countries --- Disbursement --- Emergency financing --- Environment --- Finance and Financial Sector Development --- Financial institutions --- Financial instruments --- Global capital --- Global capital market --- Government budget --- Hazard Risk Management --- Indebtedness --- Insurance --- Insurance & Risk Mitigation --- International bank --- International financial markets --- Liquidity --- Natural disaster --- Natural Disasters --- Public investment --- Returns --- Risk management --- Risk neutral --- Urban Development
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In nearly every industrialized country, large aging populations and increased life expectancy have placed enormous pressure on social security programs-and, until recently, the pressure has been compounded by a trend toward retirement at an earlier age. With a larger fraction of the population receiving benefits, in coming decades social security in many countries may have to be reformed in order to remain financially viable. This volume offers a cross-country analysis of the effects of disability insurance programs on labor force participation by older workers. Drawing on measures of health that are comparable across countries, the authors explore the extent to which differences in the labor force are determined by disability insurance programs and to what extent disability insurance reforms are prompted by the circumstances of a country's elderly population.
Disability insurance. --- Older people --- Retirement --- Social security. --- Health and hygiene. --- Economic aspects. --- social security, retirement, disability insurance, mortality, health, employment, labor, economics, finance, reform, poverty, class, industrialization, aging, seniors, increased life expectancy, older workers, elderly, united kingdom, sweden, spain, italy, denmark, belgium, germany, pension, france, canada, japan, netherlands, nonfiction, policy, government, budget, taxes, wealth.
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This paper surveys fiscal policy in developing countries from the point of view of long-run growth. The first section reviews existing methodologies to estimate the effects of fiscal policy shocks and of systematic fiscal policy, with time series or with cross-sectional methods, and their applicability to developing countries. The second section surveys optimal fiscal policy in developing countries, by considering the role of the intertemporal government budget, and sustainability and solvency. It also reviews the fuzzy debate on "fiscal space" and "macroeconomic space" - and the usefulness (or lack thereof) of these terms for policy analysis. The third section asks what theory tells us about the optimal cyclical behavior of fiscal policy in developing countries. It shows that it very much depends on the assumptions about the interactions between credit market imperfections at the individual, firms, or government level, and on the supply of external funds to the country. Different sets of assumptions lead to different implications about optimal cyclical behavior. The available evidence on the cyclical behavior of fiscal policy, and possible reasons for the observed prevalence of a procyclical behavior in developing countries, is also reviewed. If one agrees that fiscal policy is indeed less countercyclical than we think is optimal, the issue is how to correct the problem. One obvious question is why government do not self-insure, id est why they do not accumulate assets in upturns and decumulate them in downturns. This leads to the analysis of fiscal rules and stabilization funds, in the fourth section. The last section concludes with what the author considers important research and policy questions in each part.
Debt Markets --- Economic Stabilization --- Economic Theory and Research --- Finance and Financial Sector Development --- Fiscal Adjustment --- Fiscal policies --- Fiscal Policy --- Fiscal rules --- Government budget --- Government consumption --- Government spending --- Macroeconomics and Economic Growth --- Monetary authorities --- Public sector --- Public Sector Expenditure Analysis and Management --- Social security --- Stabilization policies
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