Mthuli Ncube

Global health 2035: a world converging within a generation

Prompted by the 20th anniversary of the 1993 World Development Report a Lancet Commission revisited the case for investment in health and developed a new investment frame work to achieve dramatic health gains by 2035. The report has four key messages each accompanied by opportunities for action by national governments of low-income and middle-income countries and by the international community. Conclusion 1: there is a very large payoff from investing in health. Conclusion 2: a grand convergence is achievable within our lifetime. Conclusion 3: scale-up of low-cost packages of interventions can enable major progress in NCDs and injuries within a generation. Conclusion 4: progressive universalism is an effi cient way to achieve health and fi nancial protection.

Modelling implied volatility with OLS and panel data models

Abstract The paper performs an empirical estimation of time-varying volatility using OLS regression. Error Components, and Dummy Variable models, by regressing the implied volatility on time to maturity, the strike price and a dummy. Both the daily OLS equations and the panel data model provide more accurate estimates of Black and Scholes option prices than the bench-mark standard deviation of log returns. FT-SE 100 Index European options are used for empirical analysis.

Skills and Youth Entrepreneurship in Africa: Analysis with Evidence from Swaziland

The shortages of entrepreneurial skillshave lowered search effectiveness of potential young entrepreneurs and the rate of youth start-ups. Our paper contributes to closing a gap in the entrepreneurship and development literature with a model of costly firm creation and skill differences between young and adult entrepreneurs. The model shows that for young entrepreneurs facing high cost of searching for business opportunities, support for training is more effective in stimulating productive start-ups than subsidies. Further, the case for interventions targeted at youth rises in societies with high cost of youth unemployment. We test the role of skills and training for productive youth entrepreneurship on data from a recent survey of entrepreneurs in Swaziland.

The Making of Middle Class in Africa: Evidence from DHS Data

Abstract This article examines the size and profile of the middle class in Africa using alternative definitions based on pooled unit record data from the Demographic and Health Survey for 37 African countries covering the period 1990–2011. Results suggest that size of the middle class has grown modestly in many countries in the 2000 decade as compared with the 1990s. The article approached the making of the middle class in Africa from institutional and policy perspectives. Quality of institutions, ethnic fractionalisation and education play a significant role in determining the rise of the middle class.

Strategy and activity based costing: a cross national study of process and outcome contingencies

This investigation assesses the associations between strategy and experiences with activity based costing (ABC). Experience with ABC has two elements – processes and outcomes. The study considers strategy based process contingencies in relation to the decision to implement ABC, as well as the extent and speed of implementation. Outcome contingency is considered in terms of the perceived success of ABC implementation. A questionnaire was developed to collect information on corporate costing experiences and strategic orientation across organisations in seven countries. The results of the study suggest the prevalence of outcome based rather than process based dependencies between ABC and corporate strategy orientation.

Monetary Policy and Exchange Rate Shocks on South Africa’s Trade Balance

South African net exports contributed very little towards GDP. Given this context, we attempt to understand clearly the roles of monetary policy and the exchange rate on the trade balance, including its fluctuations on the contribution of economic growth.

The Statistical Properties of the Black-Scholes Option Price

This paper investigates the statistical properties of the Black–Scholes option price, considered as a random variable. The option is conditioned on the current price and/or the estimated volatility of the underlying security. In both cases, some exact results for the distribution functions of the true option price and the predicted option price are derived. Extensions to puts and American contracts are considered. Numerical results are presented for option prices based on parameters appropriate for the FTSE 100 Index.

Auditor Performance, Implicit Guarantees, and the Valuation of Legal Liability

Liability exposure is now such a major concern for auditors that any discussion of equilibrium audit fee structures needs to take account of the expected costs of liability exposure. We develop a model of audit litigation risk and then proceed to apply insights gained from the application of finance theory to show how liability exposure is related to guarantee provision. Given auditors wish to incorporate the expected cost of guarantees when planning and pricing services, we apply contingent claims analysis to derive valuation equations for expected (litigation) costs. We then proceed to consider wider regulatory issues. Whereas the above analysis assumes stable legal liability rules, we subsequently consider the auditor incentive effects of parametric variation in the rules. Since the quality of audits is unobservable, we consider how the rules could be set so as to ensure auditors are not tempted to provide a low degree of care and collude with management. To illustrate the applicability of this approach we also consider whether recent proposals to reform auditor liability to a proportional basis will always provide appropriate incentives.

Public Debt Sustainability in Africa: Building Resilience and Challenges Ahead

The heightened interest of African countries to access international capital markets has put public debt sustainability once again high on the continent’s policy agenda. Applying the ‘stabilizing primary balance approach’ to sustainability shows that the primary balances exceeded those required to keep public debt at the 2007 level in about half of the countries studied. In several cases with higher debt burdens, the balances were also above those needed to reduce public debt-to-GDP to sustainable thresholds. However, in most countries the main driver of sustainability has been the interest rate – growth differential (IRGD), underscoring the importance of maintaining and even accelerating growth as well as utilizing the borrowing space for growth-enhancing outlays. Fiscal policies will need to play a greater role in maintaining debt sustainability in the future, especially since the IRGDs are likely to narrow over the longer term.

Quantitative Easing and Its Impact in the US, Japan, the UK and Europe

1 Introduction.- 2 Transmission Channels for Quantitative Easing and Effects on Interest Rates.- 3 The Central Bank Loss Function and Quantitative Easing as a Stackelberg Game.- 4 The Effect of Quantitative Easing on Interest Rates.- 5 Broader Economic Effects on Quantitative Easing.- 6 Conclusion.