David Vines

The World Bank: Structure and Policies

List of figures List of tables List of contributors Acknowledgements Introduction Joseph E. Stiglitz 1. The World Bank: an overview of some major issues Christopher L. Gilbert and David Vines Part I. The World Banks Structure: The Bank as an Institution: 2. Positioning the World Bank Christopher L. Gilbert, Andrew Powell and David Vines 3. The World Bank and poverty reduction: past, present and future Ravi Kanbur and David Vines 4. Why the World Bank should be involved in development research Lyn Squire 5. The challenges of multilateralism and governance Ngaire Woods Part II. The Effectiveness of World Bank Assistance: 6. The World Bank and structural adjustment: lessons from the 1980s Francisco H. G. Ferreira and Louise C. Keely 7. The implications of foreign aid fungibility for development assistance Shantayanan Devarajan and Vinya Swaroop 8. Aid, growth, the incentive regime and poverty reduction Craig Burnside and David Dollar 9. How policies and institutions affect project performance: microeconomic evidence on aid, policies and investment productivity Jonathan Isham and Daniel Kaufmann 10. Increasing aid effectiveness in Africa? The World Bank and sector investment programmes Stephen Jones 11. The World Bank, conditionality and the Comprehensive Development Framework Raul Hopkins, Andrew Powell, Amlan Roy and Christopher L. Gilbert 12. Conditionality, dependence and coordination: three current debates in aid policy Paul Collier Index.

Macroeconomic Policy : Inflation, Wealth and the Exchange Rate

Part 1 Theory: a new Keynesian framework for macroeconomic policy the linkages between financial weapons and financial targets - a comparative static analysis the dynamics of price stabilization. Part 2 Application: a stock-flow model with model-consistent or regressive expectations macroeconomic policy rules for economic stabilization counterfactual simulation with forward-looking expectations a simulation of the cost-push economy the controlled economy with reformed wages. Part 3 Method: the derivation and use of linear model the design of economic policy rules. Part 4 Conclusion: summary of results and conclusions.

North-South Growth and the Terms of Trade: A Model on Kaldorian Line s

This paper examines equilibrium growth and stability in the world economy using a North-South model in which there is assumed to be surplus labor in both North and South at an exogenously determined level of real wages. The model allows for substitution in consumption between primary commodities and industrial goods in the North. It treats the cases of both surplus and scarce land in the South. In the case of an exogenous shock to the model, the North-South terms of trade may overshoot its equilibrium value and/or converge to this value along a cyclical path: there is no guarantee that the adjustment path is stable.

The IMF and its critics : reform of global financial architecture

The IMF is the first economic institution in line to protect countries from the effects of financial crises and to insulate the world economy from possible systemic risk. However, many argue that the IMF is insufficiently equipped to do this job, while others argue almost the opposite: the IMFs well-intentioned actions induce other countries to take risks which increase their exposure from both universities and the multilateral agencies, combines rigourous economic analysis with insider perspectives on key policy debates. It analyses the Asian and Argentine financial crises of the late 1990s, issues of policy ownership, the more general quest for financial stability and governance of the IMF. It is an essential reference for anyone interested in the role of international financial institutions in our globalised economy.

Macroeconomic interactions between North and South

This volume contains the proceedings of a September 1987 conference organised by the Centre for Economic Policy Research and the International Economics Study Group. The contributors in this volume explore the North–South macroeconomic interactions. The volume will interest those involved in policy debates concerning international debt, the global consequences of macroeconomic policy choices in the North, commodity markets and the economic policies of the less developed countries. It will also form a valuable addition to undergraduate and postgraduate reading lists in trade, finance, international macroeconomics and the economics of developing countries.

Debt Stabilization Bias and the Taylor Principle: Optimal Policy in a New Keynesian Model with Government Debt and Inflation Persistence

Leith and Wren-Lewis (2007) have shown that government debt is returned to its pre-shock level in a New Keynesian model under optimal discretionary policy. This has two important implications for monetary and fiscal policy. First, in a high-debt economy, it may be optimal for discretionary monetary policy to cut the interest rate in response to a cost-push shock - thereby violating the Taylor principle - although this will not be true if inflation is significantly persistent. Second, the optimal fiscal response to such a shock is more active under discretion than commitment, whatever the degree of inflation persistence.

Is The WTO's Article XXIV a Free Trade Barrier?

Why is further multilateral trade liberalisation proving so difficult to achieve? This paper shows that Article XXIV itself, the set of WTO rules governing trade block formation, undermines the multilateral liberalisation process. Trade block formation under Article XXIV can be thought of as a coalition formation game with negative externalities. We suppose that the usual mechanism through which block formation exerts a negative externality on non-members - a rise in external tariffs - is precluded by Article XXIV. But essentially the same effect is created by internal tariff reduction. From this it follows that free trade is not an equilibrium.

Strategic Interactions Between An Independent Central Bank And A Myopic Government With Government Debt

We analyse optimal discretionary games between a benevolent central bank and a myopic government in a New Keynesian model. First, when lump-sum taxes are available and public debt is absent, we show that a Nash game results in too much government spending and excessively high interest rates, while fiscal leadership reinstates the cooperative outcome under discretion. Second, we show that this familiar result breaks down when lump-sum taxes are unavailable. With government debt, the Nash equilibrium still entails too much public spending but leads to lower interest rates than the cooperative policy, because debt has to be adjusted back to its pre-shock level to ensure time consistency. A setup of fiscal leadership does not avoid this socially costly outcome. Imposing a debt penalty onto the myopic government under either Nash or fiscal leadership raises welfare substantially, while appointing a conservative central bank is less effective.

Inflation Bias with Dynamic Phillips Curves and Impatient Policy Makers

We generalize the analysis of inflation bias with dynamic Phillips curves in three respects. First, we examine the discretionary (time consistent) solution in cases where the Phillips curve has both a backward-looking and forward-looking component. Second, we show that the commitment (time inconsistent) solution does not normally involve zero inflation and output at its natural rate. Instead, with a purely forward-looking Phillips curve and positive discounting, it will involve a dynamic path for inflation in which steady state inflation is below its target. In this sense, we obtain negative inflation bias. Third, we show that the timeless perspective policy has the same steady state as the commitment case, but without any short-term output gains.

Inflation Persistence, Fiscal Constraints and Non-cooperative Authorities Stabilization Policy in a Monetary Union

This paper investigates the importance of fiscal policy in providing macroeconomic stabilisation in a monetary union. We use a microfounded New Keynesian model of a monetary union which incorporates persistence in inflation, and examine non-cooperative interactions of fiscal and monetary authorities. We find that particularly when inflation is persistent, the use of fiscal policy for stabilisation can significantly improve welfare over and above that which arises through the working of automatic stabilisers. We conclude that a regulatory framework for fiscal policy in a monetary union should allow a role for active fiscal stabilisation.