Delano Villanueva

Private Investment in Developing Countries: An Empirical Analysis

The effects of several policy and other macroeconomic variables on the ratio of private investment to gross domestic product in developing countries during 1975-87 is analyzed. Econometric evidence indicates that the rate of private investment is positively related to real GDP growth, level of per capita GDP, and the rate of public sector investment, and negatively related to real interest rates, domestic inflation, the debt-service ratio, and the ratio of debt to GDP. The impact of most variables was greatest before the 1982 debt crisis, but the ratio of debt to GDP has since become more important.

Testing the Neoclassical Theory of Economic Growth: A Panel Data Approach

Recent empirical studies have examined the determinants of economic growth using country-average (cross-sectional) data. By contrast, this paper employs a technique for using a panel of cross-sectional and time series data for 98 countries over the 1960-85 period to determine the quantitative importance for economic growth of both country-specific and time-varying factors such as human capital, public investment, and outward-oriented trade policies. The empirical results support the view that these factors exert a positive and significant influence on growth. They also provide estimates of the speed at which the gap between the real per capita incomes of rich and poor countries is likely to be reduced over the longer term.

Long-term growth in developing countries and its determinants: An empirical analysis

Abstract This paper provides empirical evidence on the determinants of long-term growth performance in a sample of 55 developing countries grouped by income levels. The evidence indicates that a model incorporating the savings rate, export performance, expenditures on human capital development, population growth, and the real interest rate on external debt explains the growth performance of these countries remarkably well. The model also suggests policies that would lead to higher long-run rates of growth.

Strategies for Financial Reforms: Interest Rate Policies, Stabilization, and Bank Supervision in Developing Countries

Economic stability, effective bank supervision, and an appropriate sequencing of stabilization, banking regulations, and interest rate policies are identified as common characteristics of the relatively successful experiments in financial sector liberalization. Recent theoretical developments help to explain why interest rates in free markets may fall short of market-clearing levels, or may rise to risky levels, with adverse consequences for financial institutions and the economy at large. To prevent such outcomes, economic stabilization and improved bank supervision should generally precede complete removal of control on interest rates.

Theoretical Aspects of Growth in Developing Countries: External Debt Dynamics and the Role of Human Capital

A simple aggregate growth model, capable of assessing the impact of macroeconomic policies on the long-term performance of a developing country, is formulated. The model emphasizes expenditures on the improvement of human capital and the dynamics of external debt, and it yields empirically testable hypotheses on the relative importance of various determinants of long-term growth performance. The analytical results have several implications relevant to strategies of economic growth.

Independent Currency Authorities: An Analytic Primer

This paper provides an analytic overview of independent currency authorities (ICAs), sometimes called currency boards. ICAs issue and redeem domestic currency on demand against an exchange standard and back such operations through a 100 percent marginal foreign reserve cover. They also impose significant constraints on the banking system and the budget of the country that operates them. When supporting institutions have been put in place, ICAs appear to promote price stability, foreign trade, saving, and investment.

Operation of selective credit policies in less developed countries: Certain critical issues

Abstract This paper focuses mainly on the nature, scope and significance of selective credit policies, especially in the context of economic development. While such policies are being increasingly adopted in developed countries, when the impact of aggregative monetary policy on investment and consumption is found to be differential, recourse to selective credit policies is imperative in less developed countries where development implies a total change in economic relationships, and furthermore, where the dominant goals of their economic policies have come to be income distribution and greater employment through less capital-intensive techniques.

A Money Multiplier Model for a Developing Economy: The Venezuelan Case

Se analizan en este articulo los determinantes del multiplicador monetario en una economia en vias de desarrollo, abierta al exterior y con un tipo de cambio fijo, tomandose como ejemplo el caso de Venezuela. La apertura al exterior de una economia como la venezolana, donde la inversion puede financiarse con prestamos internos o externos sin gran obstaculo, implica que el principal costo de oportunidad de mantener activos financieros nacionales es el tipo de interes extranjero, no el interno, porque no se han desarrollado suficientemente los instrumentos del mercado monetario nacional. Se estima un modelo anual del multiplicador monetario para los periodos muestrales 1950-70 (Modelo A) y 1950-72 (Modelo B). El Modelo A se utiliza para verificar la eficiencia predictiva fuera del periodo muestral en los anos 1971 y 1972. Los resultados indican que la prediccion de la razon del exceso de reservas es bastante precisa, con una pequena subestimacion en 1972, mientras que la subestimacion de la razon caja-depositos es algo mas grave (resultando en una sobrestimacion del multiplicador monetario en 1971 y 1972 que, sin embargo, cae dentro del error de estimacion del modelo). Tambien se efectua una simulacion simple del efecto de una modificacion del coeficiente de reserva obligatoria sobre el multiplicador monetario en los anos 1971 y 1972. Como podria esperarse, los resultados indican que un incremento del coeficiente de reserva obligatoria reduce el valor del multiplicador en ambos anos.Mr. Galbis, an economist in the Central Banking Service, is a graduate of the Universities of Barcelona (Spain) and Wisconsin. He was an economist in the Western Hemisphere Department before joining the Central Banking Service. Mr. Villanueva, an economist in the Central Banking Service, is a graduate of the Universities of the Philippines and Wisconsin. He is the author of several articles on mathematical growth models and econometric models of the monetary sector.

Relative economic efficiency of banking systems in a developing country

Abstract Duality between profit functions and transformation functions is applied to a subset of the banking system in the Philippines. By estimating the restricted profit functions of two groups of banks, hypothesis testing of their relative economic efficiency is carried out. By duality a complete characterization of the transformation function representing the two banking systems studied is obtained. Cobb-Douglas and quadratic profit functions are estimated. The mathematical properties of the functions allow a derivation of systems of supply functions for bank services, bank demand functions for resources, and measures of long-term profitability of banking. The regulatory environments impact on bank efficiency may also be assessed.

A Behavioral Theory of the Money Multiplier in the United States: An Empirical Test

En la presentacion corriente del multiplicador del dinero no se intenta explicar las variaciones de su valor como resultado de variaciones en el comportamiento de factores tales como la demanda de moneda por parte del publico, la demanda de reservas en exceso y reservas tomadas a prestamo por parte de los bancos, y los desplazamientos entre los depositos a plazo y a la vista. Este estudio tiene por objeto especificar y estimar esas relaciones de comportamiento en un modelo integrado del multiplicador del dinero. El modelo teorico que se presenta en este trabajo es una version ampliada del modelo de Warren Smith, formulado para explicar la demanda de reservas disponibles, de dinero y de depositos a plazo, en la economia de EE. UU. No obstante, el modelo aqui presentado tiene en cuenta explicitamente las determinantes de variables tales como las funciones de demanda de reservas en exceso, de reservas tomadas a prestamo, de depositos a la vista, de moneda y divisas, que quedan excluidas del modelo de Smith. Aunque el modelo teorico construido de esta manera es suficientemente general como para constituir una indicacion de la tendencia del comportamiento del multiplicador del dinero, tanto en los paises desarrollados como en los menos desarrollados, se ha adaptado y comprobado empleando solamente datos trimestrales de EE. UU. El multiplicador del dinero calculado a partir del modelo lo da la expresion siguiente: