Irrationality in Middle East

Quitting Smoking is not easy

Today, 21 percent of Americans smoke, down from 28 percent in 1988. Off-again-on-again smoking and serial quitting are common, as is the long-term use of nicotine gum and patches.

“It takes the average smoker 8 to 10 times before he is able to quit successfully,” said Dr. Steven A. Schroeder, director of the Smoking Cessation Leadership Center at the University of California, San Francisco.

-Lessons for Other Smokers in Obama’s Efforts to Quit

A Happy New Year???

“These people are nothing but thugs,” Gordon Johndroe, White House spokesman, said yesterday in comments to reporters in Crawford, Texas, where President George W. Bush is vacationing at his ranch. “Israel is going to defend itself against people like Hamas.”

via Angry Arab

MTEF Presentation Formats- Tanzania

For Discussion: How can it be improved?

Performance Budgeting in Mauritius

2009 Budget Circular

Manual for Programme-Based Budgeting (PBB)

Feasibility study of PFM regional training center

For the MENA region

MTEFs in the Pacific

Strengthening Public Financial Management in Pacific Developing Member Countries;

These and other efforts have produced positive results in several aspects of PFM. For instance, public auditing in the Pacific region overall has advanced substantially in the past decade, with numerous audit backlogs cleared and a significant improvement in audit quality. Likewise, the application in the Pacific of the Public Expenditure and Financial Accountability (PEFA) PFM Assessment Framework reveals that planning and budget processes are rated satisfactorily (B+ average). Given their potential to better link policy with budgets and to enable better decision-making, it is not surprising that emphasis has been placed on developing medium-term expenditure frameworks (MTEFs), but some reviews caution countries to implement MTEFs only when basic financial controls and annual budgeting are working well. However, Pacific island countries rate poorly in terms of budget execution, with payroll controls scoring a C- average and internal audit scoring a D+ average. A Pacific auditor-general reported recently to their public accounts committee that “Put simply, sometimes there is nothing to audit because the records are non-existent” … “there was a lack of bank reconciliations, poor documentation supporting the transactions, lack of physical stocktakes … and ineffective budget controls. [… Moreover, the Office has been] auditing accounts and records that are sometimes six years old.”15 The situation described is not uncommon in the Pacific.

USD700k for Enhancing Aid Effectiveness

What would Easterly say?

Lao People’s Democratic Republic:Capacity Strengthening for Enhancing Aid Effectiveness

Principal Aid-Effectiveness Functions in Government
• National planning (National Socio-Economic Development Plan and Public Investment Program)
• Sector Assistance Program Planning
• Local Government Investment Planning
• National Aid Coordination
• Sector Aid Coordination
• Provincial Aid Coordination
• Aid Policy Reform
• Aid Policy Reform Tracking
• Aid Information and Reporting Systems
• Aid Program Evaluation
• Project and Program Design
• Project and Program Implementation
• Project and Program Monitoring
• Project and Program Evaluation

The ideal macro-fiscal policy department?

IMF gives some suggestions for institutional strengthening of Armenian Ministry of Finance;

The Armenian authorities are taking steps to establish a strategic, coordinated, and multi-year approach to macro-fiscal policy. Recent measures include strengthening public financial management systems, further institutionalizing the MTEF, and adopting performance-based budgeting over the next few years. In the last few months, macroeconomic projections and analysis have been strengthened with the use of fiscal impulse indicators for macro-fiscal analysis during the budget preparation. However, macrofiscal policy-making could benefit from a more elaborated analytical approach within an enhanced and supportive institutional environment.

28. Many countries have relied on strong macro-fiscal policy departments to strengthen their policy framework. Best international practice suggests that an effective macro-fiscal policy department should “own” its country’s fiscal framework by helping:

-Develop the fiscal framework, through forecasting, analysis, and monitoring of other
short- and medium-term fiscal policy developments;
-Monitor the implementation of the fiscal framework, by assessing budget execution and by linking it to developments in other macroeconomic areas such as growth and inflation; and
-Protect the fiscal framework, by advising the Minister on emerging near and mediumterm risks; flagging the need to undertake corrective actions; and identifying possible alternatives.

29. The core tasks of the department should be well coordinated and carried out in close cooperation with other units within the Ministry of Finance, and relevant institutions with related responsibilities. The value added of the department would come from adopting a topdown or big-picture perspective, thus helping the work of other units in related areas:

- By performing macroeconomic analysis the department should ensure an internally consistent macroeconomic framework.

- By performing fiscal modeling, forecasting and impact analysis, the department should develop multi-year fiscal projections under the baseline of unchanged policies that allows to superimpose the impact of any expected or potential policy change, all of which could be included in budget documents. This task requires sound fiscal forecasting to examine the linkages from the real, monetary, and external sectors into the fiscal sector.

- By aligning all aspects of fiscal policy toward the achievement of the government’s economic objectives, the department should help create a consistent framework in which policies and objectives are clearly linked. The appropriate path for the fiscal aggregates within a specific time horizon can be chosen to attain objectives such as macroeconomic stability, medium-term growth, poverty reduction, and fiscal and debt sustainability. The impact of these targets on macroeconomic stability can be examined through macroeconomic analysis, while the appropriateness of the fiscal path’s financing implications can be assessed through debt and fiscal sustainability analysis. Once a consistent set of policies is determined, revenue, expenditures and debt targets can be refined. A macro-fiscal policy department plays a key role in assessing this consistency, and also in identifying fiscal risks associated with the proposed policies, through the examination of alternative scenarios and stress tests.

- By monitoring fiscal performance, the department should analyze in-year budget outcomes—financing, revenues, and expenditures; help explain deviations of outturns from plans; assess the implications of such deviations for end-year forecasts; and determine whether some in-year corrective measures are required. It should also participate in the design of such corrective policies from the analysis of their impact on the short- and medium-term. Close coordination with other departments is required to avoid duplication.

Related;
Armenia MTEF

It's the policies that matter?

Institutions vs. Policies: A Tale of Two Islands;

Recent work emphasizes the primacy of differences in countries' colonially-bequeathed property rights and legal systems for explaining differences in their subsequent economic development. Barbados and Jamaica provide a striking counter example to this long-run view of income determination. Both countries inherited property rights and legal institutions from their English colonial masters yet experienced starkly different growth trajectories in the aftermath of independence. From 1960 to 2002, Barbados' GDP per capita grew roughly three times as fast as Jamaica's. Consequently, the income gap between Barbados and Jamaica is now almost five times larger than at the time of independence. Since their property rights and legal systems are virtually identical, recent theories of development cannot explain the divergence between Barbados and Jamaica. Differences in macroeconomic policy choices, not differences in institutions, account for the heterogeneous growth experiences of these two Caribbean nations.

Quotes of the Year

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.
—Department of the Treasury's proposed Emergency Economic Stabilization Act, Sept. 2008

It's not based on any particular data point, we just wanted to choose a really large number.
—Treasury spokeswoman explaining how the $700 billion number was chosen for the initial bailout, quoted on Forbes.com, Sept. 23, 2008

Source: Quotable Moments of '08

Assorted

Fedthink

Using economics to fight AIDS

$70/hour Auto Workers

How to conduct a quantitative easing

Self-discovery in practice

PQRS and the mechanics of growth

Bernanke Is the Best Stimulus Right Now

Some unpalatable pension arithmetic

A Primer on Quantitative Easing

Corruption's cost, beyond Blagojevich

Leadership Advice

Greenspan roundtable: The future of regulation

Thank Goodness for Government…Work

Recently from Fund

Mauritius: Financial System Stability Assessment-Update

Enhancing Fiscal Policy in Armenia

Washing-machine model of addiction treatment

Every year, state and federal governments spend more than $15 billion, and insurers at least $5 billion more, on substance-abuse treatment services for some four million people. That amount may soon increase sharply: last year, Congress passed the mental health parity law, which for the first time includes addiction treatment under a federal law requiring that insurers cover mental and physical ailments at equal levels...

“What we have in this country is a washing-machine model of addiction treatment,” said A. Thomas McClellan, chief executive of the nonprofit Treatment Research Institute, based in Philadelphia. “You go to Shady Acres for 30 days, or to someclinic for 60 visits or 60 doses, whatever it is. And then you’re discharged and everyone’s crying and hugging and feeling proud — and you’re supposed to be cured.”

He added: “It doesn’t really matter if you’re a movie star going to some resort by the sea or a homeless person. The system doesn’t work well for what for many people is a chronic, recurring problem.”

-Drug Rehabilitation or Revolving Door?

Three Questions

1. In assessing risk in financial models, how effective are current modeling methodologies in incorporating model error or model uncertainty? Specifically, have these models appropriately captured the implications for underlying statistical relationships of the impacts of aggregate shocks?
2. Do we have adequate tools and methodologies to stress test these models? This is particularly challenging in the area of consumer credit portfolios and their dependence on expected loss distributions.
3. How should we evaluate the trade-off, if any, between undertaking policy interventions aimed at combating short-run financial instability and the potential financial market distortions and moral hazard that could result from those interventions?

-Importance of Financial Econometrics for Financial Innovation and Financial Stability

Dubai Fact of the Day

Despite the increasing numbers of women moving to the gulf countries, the labor migration patterns of the last 20 years have left the Emirates with a male-female ratio that is more skewed than anywhere else in the world; in the 15-to-64 age group, there are more than 2.7 men for every woman.

-Some Arab Women Find Freedom in the Skies

China quote of the day

It would be a historic irony if the Chinese Communist party was thrown into crisis, not by the collapse of communism in 1989 – but by the convulsions of capitalism in 2009.

-China’s economy hits the wall

North and South Korea - a comparison

-Economic Survey of Korea 2008: Priorities for Macroeconomic Policy

Sub-prime economic advisors?

White House Philosophy Stoked Mortgage Bonfire

Economic Advisory Councils become fashionable

Canada forms one;

"In this time of unprecedented economic turmoil, I am bringing some of Canada’s best minds together to find solutions and help launch a timely recovery," said Minister Flaherty. "I will look to this group for advice on Budget 2009, and will continue to consult them in the months ahead."

How many models do you need for effective fiscal policy?

A recent TA from ADB for Indonesia;
Indonesia: Social Security Reform and Economic Modeling Capacity Building;

-enhance and develop an analytical framework for each macroeconomic sector,including real, monetary, external (balance of payments), and fiscal;
- based on (ii), develop an analytical macro model to produce a macroeconomic
outlook;

-upgrade the computable general equilibrium model of the Indonesian economy, previously built in FPO to quantify economywide effects of introducing SJSN programs and improved labor market flexibility;

-work with the international macroeconomist to refine the budget model to assess the
macroeconomic risks affecting the budget;

-work with the social security policy specialist to develop pension models and
analyze the fiscal impact of social security reform

Assorted

Fiscal policy and the burden of proof

The Real Great Depression

Federal Reserve Assets

The Basel capital agreements

We Are Live on Economist Free Exchange at the Greenspan Roundtable

Parliaments and Budgeting: Understanding the Political Economy of the Budget in Latin America

Common Errors in English

Carnival of Podcasts

Guha Says Indian Muslim Response to Mumbai Terrorism `Heroic'

Marvin Goodfriend Says Fed to Focus on Inflation After Crisis

Goodhart Recommends `Aggressive' Bank of England Policy

Meghnad Desai Says India `Unprepared' For Terrorist Attacks

UC's Hamilton Says Global Economy Is `Deteriorating Quickly'

AIG's Frenkel Says Global Collaboration Needed in Crisis

Navigating Global Economic and Financial Change
Speaker: Mohamed A El-Erian; Chair: Professor Willem Buiter

The Conceptions of Social Policy: Universalism vs. Targeting

Global Cooperation and Sustainable Development-Sachs

A Discussion of the Global Financial Crisis


The history of trade

William Bernstein in his new book A Splendid Exchange - how trade shaped the world argues that while most history is about raiding, in the form of wars, it ought to pay more attention to trading.

Economic gangsters

Enron's Spectacular Collapse

Controlling pornography

Universal Declaration of Human Rights turns 60

Iceland's Meltdown

Taking liberties: John Milton and the English language

Teaching children to be philosophers
How young is too young to think philosophically? Philosophers like Philip Cam from the University of New South Wales say there's no developmental reason why primary school age children can't be taught to think and to reason, and that developing these skills has a significant effect on their lives both in and out of the classroom.

Doing without a ruler: in defence of anarchism

Public sector whistleblowers

Freeman Dyson
Prof Freeman Dyson of Princeton has long been a critic of climate change orthodoxies. Here he talks of his life as a daring proposer of ideas - such as the genetically modified trees to soak up carbon dioxide and kites flying in Antarctica to cause more snowfall and abate sea level rise

How Nations Prosper: Economic Freedom and Doing Business around the World

Future Imperfect: Technology and Freedom in an Uncertain World

Let Failing African Governments Collapse: A Radical Solution to Underdevelopment

The Anti-Greenspan

But there was also another factor, perhaps the most important of all. India had a bank regulator who was the anti-Greenspan. His name was Dr. V. Y. Reddy, and he was the governor of the Reserve Bank of India. Seventy percent of the banking system in India is nationalized, so a strong regulator is critical, since any banking scandal amounts to a national political scandal as well. And in the irascible Mr. Reddy, who took office in 2003 and stepped down this past September, it had exactly the right man in the right job at the right time.

“He basically believed that if bankers were given the opportunity to sin, they would sin,” said one banker who asked not to be named because, well, there’s not much percentage in getting on the wrong side of the Reserve Bank of India. For all the bankers’ talk about their higher lending standards, the truth is that Mr. Reddy made them even more stringent during the bubble.

Unlike Alan Greenspan, who didn’t believe it was his job to even point out bubbles, much less try to deflate them, Mr. Reddy saw his job as making sure Indian banks did not get too caught up in the bubble mentality. About two years ago, he started sensing that real estate, in particular, had entered bubble territory. One of the first moves he made was to ban the use of bank loans for the purchase of raw land, which was skyrocketing. Only when the developer was about to commence building could the bank get involved — and then only to make construction loans. (Guess who wound up financing the land purchases? United States private equity and hedge funds, of course!)

Then, as securitizations and derivatives gained increasing prominence in the world’s financial system, the Reserve Bank of India sharply curtailed their use in the country. When Mr. Reddy saw American banks setting up off-balance-sheet vehicles to hide debt, he essentially banned them in India. As a result, banks in India wound up holding onto the loans they made to customers. On the one hand, this meant they made fewer loans than their American counterparts because they couldn’t sell off the loans to Wall Street in securitizations. On the other hand, it meant they still had the incentive — as American banks did not — to see those loans paid back.

Seeing inflation on the horizon, Mr. Reddy pushed interest rates up to more than 20 percent, which of course dampened the housing frenzy. He increased risk weightings on commercial buildings and shopping mall construction, doubling the amount of capital banks were required to hold in reserve in case things went awry. He made banks put aside extra capital for every loan they made. In effect, Mr. Reddy was creating liquidity even before there was a global liquidity crisis.

Did India’s bankers stand up to applaud Mr. Reddy as he was making these moves? Of course not. They were naturally furious, just as American bankers would have been if Mr. Greenspan had been more active. Their regulator was holding them back, constraining their growth! Mr. Parekh told me that while he had been saying for some time that Indian real estate was in bubble territory, he was still unhappy with the rules imposed by Mr. Reddy. “We were critical of the central bank,” he said. “We thought these were harsh measures.”

-How India Avoided a Crisis

Clifornia's Fiscal mess

California Governor Arnold Schwarzenegger declared a fiscal emergency on Friday to call lawmakers into another special session to tackle the state’s weakening finances, and separately ordered state officials to prepare to furlough and lay off employees to cut costs.

His two actions mark a dramatic escalation in the budget battle waged in recent weeks in Sacramento, the capital of the most populous US state and world’s eighth-largest economy, as its revenues fall harder and faster than expected.

California’s state government now faces a $40 billion budget shortfall over its current and next fiscal years and is on track to run out of cash in February.

-California declares fiscal emergency

Fed - a public hedge fund?

The financial sector’s debts grew even faster as banks sought to bolster their returns on equity by “levering up”. According to one recent estimate, the total leverage ratios (on- and off-book assets and exposure divided by tangible equity) for the two biggest US banks were 88:1 for Citibank and 134:1 for Bank of America. The bursting of the property bubble caused such ratios, which were already too high on the eve of the crisis, to explode as off-balance-sheet commitments and pre-arranged credit lines came home to roost. Only by borrowing from the Federal Reserve on an unprecedented scale have the banks been able to stay in business....

The result has been an explosion of the Fed’s balance sheet and of the monetary base. With assets approaching $2,263bn and capital of less than $40bn, the Fed increasingly resembles a public hedge fund, leveraged at more than 50:1.

-Niall Ferguson

Irish reading for the Day- PRSP of Ireland?

Building Ireland’s Smart Economy

Mankiw's advice to Obama team

In general, I think economists need a large dose of humility when evaluating alternative proposals to deal with the current downturn, as there is still a lot we do not understand.

-Stimulus Spending Skeptics

Basics- Finding binding constraints to growth

One economics, many recipes, -Rodrik interview

Photo of the Day

After 30 Years, Economic Perils on China’s Path

Open Government beta version

Tech Agenda 2009: 21st Century Economy

Tech Agenda 2009: Open Government


Tech Agenda 2009: Open Government" (2/2)

Related;
Federal Funding Accountability and Transparency Act of 2006
Sunlight Foundation

How to be a Mindful Leader

"The Mindful Leader: Ten Principles for Bringing Out the Best in Ourselves and Others'

Social Policy After the Economic Crisis

Social Policy After the Economic Crisis;

Maya MacGuineas, Director of the Fiscal Policy Program at New America and President of the Committee for a Responsible Federal Budget, argued that the economic crisis is revealing the deep cracks in our existing social insurance system. Although the focus right now is on stimulus and economic growth, we must start talking about our institutions and how to update them. The federal budget deficit will reach at least $1 trillion next year, MacGuineas said, and policymakers need to review the budget line-by-line and think hard about how we are going to pay for it all. Because most of our money currently goes towards “mandatory spending programs,” these programs cannot be ignored when we rethink the budget. MacGuineas would like to link stimulus and long-term entitlement reform. The sums of current stimulus proposals are so large as to enable major, lasting investments in our economy. We should borrow money now, MacGuineas argued, but offset costs once the economy is stabilized. Without neglecting the importance of greater individual responsibility, we must think about vulnerable populations in our country right now--children and those hurt by globalization. Government must become more progressive, and focus its limited resources on those that need them most. The current economic climate demands major reforms, MacGuineas concluded, and the national discussion about the most appropriate policy choices is just beginning.

Bernanke Quote of the Day

I would like to say to Milton and Anna: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again.

-On Milton Friedman's Ninetieth Birthday

Writing Deficiency Fact of the Day

American companies spend more than $3.1 billion each year to remedy writing deficiencies.

- Improve Your Writing Skills

*Determine Your Writing's Objective or Goal: Are you seeking a consensus on a project plan? Asking a client to clarify a concern? Knowing your goal will help you determine how to approach a piece of writing.
*Identify Your Audience: Is this for your boss? A colleague? Or, as sometimes happens, colleagues with both technical and nontechnical backgrounds? Your tone and message will likely differ depending on your audience, and you may need to revise your writing to address specific audiences. Iacone recommends crafting different summaries for different readers.
* Spell Out Words: Shorthand may be appropriate when IMing a colleague, but it's not in a client email.
*Edit: Read and reread your messages, especially those to managers and clients.
*Define Technical Terms in the Document: Placing definitions in parentheses, rather than in a separate glossary, will help maintain your document's flow.
*Use Headings, Subheads and Bulleted Lists: These help you organize your writing and guide readers.
*Get Help: Professional associations may offer writing courses, while community colleges and universities often provide business-writing classes suitable as well. And business writing references can help you learn the basics of syntax, grammar and good business writing.

Related;
Effective Technical Writing course

Books;

The Business Style Handbook: An A-to-Z Guide for Writing on the Job with Tips from Communications Experts at the Fortune 500
by Helen Cunningham and Brenda Greene

Effective Business Writing: A Guide for Those Who Write on the Job
by Maryann V. Piotrowski

The Elements of Business Writing: A Guide to Writing Clear, Concise Letters, Memos, Reports, Proposals, and Other Business Documents
by Gary Blake and Robert W. Bly

Eats, Shoots & Leaves: The Zero Tolerance Approach to Punctuation
by Lynne Truss

The Elements of Style
by William Strunk and E. B. White

The New Well-Tempered Sentence: A Punctuation Handbook for the Innocent, the Eager, and the Doomed
by Karen Gordon

The Gregg Reference Manual: A Manual of Style, Grammar, Usage, and Formatting
by William A. Sabin

Dept of Why Not?

Now the cellphone industry is trying its own approach. The theory is that you will browse for deals when you are at the store, or maybe receive deal alerts when you are nearby, and simply use the phone as a virtual coupon when you are at the cashier.

The idea has lots of promise. Whether it’s worth your while depends on where you live, how much you use the products featured by these coupon services and how much work you’re willing to do for a bargain.

Of the services emerging in the nascent cellular-coupon industry, two — Cellfire and 8Coupons — offer good examples of the state of the art. Both are free, and will work on virtually any phone, but the experience can be disappointing if you use one of the services in the wrong place.

-Cents-Off Coupons and Other Special Deals, via Your Cellphone

Bonus vs Profit

On Wall Street, Bonuses, Not Profits, Were Real

Obama's benchmarks

When voters look at your Administration two years from now, in the off-year election, how will they know whether you’re succeeding?

I think there are a couple of benchmarks we’ve set for ourselves during the course of this campaign. On [domestic] policy, have we helped this economy recover from what is the worst financial crisis since the Great Depression? Have we instituted financial regulations and rules of the road that assure this kind of crisis doesn’t occur again? Have we created jobs that pay well and allow families to support themselves? Have we made significant progress on reducing the cost of health care and expanding coverage? Have we begun what will probably be a decade-long project to shift America to a new energy economy? Have we begun what may be an even longer project of revitalizing our public-school systems so we can compete in the 21st century? That’s on the domestic front.

On foreign policy, have we closed down Guantánamo in a responsible way, put a clear end to torture and restored a balance between the demands of our security and our Constitution? Have we rebuilt alliances around the world effectively? Have I drawn down U.S. troops out of Iraq, and have we strengthened our approach in Afghanistan — not just militarily but also diplomatically and in terms of development? And have we been able to reinvigorate international institutions to deal with transnational threats, like climate change, that we can’t solve on our own?

And outside of specific policy measures, two years from now, I want the American people to be able to say, “Government’s not perfect; there are some things Obama does that get on my nerves. But you know what? I feel like the government’s working for me. I feel like it’s accountable. I feel like it’s transparent. I feel that I am well informed about what government actions are being taken. I feel that this is a President and an Administration that admits when it makes mistakes and adapts itself to new information, that believes in making decisions based on facts and on science as opposed to what is politically expedient.” Those are some of the intangibles that I hope people two years from now can claim.

-
The President-elect on his goals and agenda in a time of crisis

Would this experiment work in Taiwan

Premier Liu Chao-shiuan announced Tuesday a government plan to distribute NT$82.9 billion (US$2.51 billion) in consumption vouchers to Taiwan's citizens in a bid to stimulate domestic spending and economic growth....

Chen said the Central Bank is still studying in what face value the vouchers should be issued.

While issuing small-face-value vouchers will increase costs and prolong the printing time, vouchers that have too large face value will cause inconvenience to their users, he noted.

-Consumption voucher program to boost economic growth: premier

Dept. of Parliament of Whores

But what caught my eye is a provision that would create a “Commission on Cross-Sector Solutions.” This commission would explore “ways in which the Federal Government interacts with nonprofit organizations, philanthropic organizations, and business to address national and local challenges.”

The legislation states that “The Commission shall conduct a thorough study of all matters relating to ways in which the Federal Government can work more efficiently and effectively with non-profit organizations and philanthropic organizations to assist the organizations described in this subparagraph, and the Federal Government, in achieving better outcomes with regard to addressing pressing national and local challenges, and improving accountability and utilization of resources, and relating to assisting the Federal Government, such organizations, and business in improving their collaboration to achieve such outcomes.” The commission would have 18 months to report its findings and recommendations.

-Reorganizing Goverment — A Commission?

Interesting Assorted

Year of the Potato report

The President-elect on his goals and agenda in a time of crisis


Google Flu Trends

The Rabbi and the Norse King

Julian Zelizer Answers Your Political-History Questions

Can you explain to a nonacademic why political science and economics are considered different areas of study?

Survey of Literature on Boards of Directors

Prowling the Ponzi Archives

Efficiency of Public Investments

From a workshop at KDI- Efficiency Enhancement in Public Investment Management
;

Public Investment in Chile - Building the Future

Measuring the Efficiency of Public Expenditure - Evaluation on the Government Program in Korea

Thailand Monitoring and Evaluation System

Planning, Programming and Public Investment Experience in Turkey

In all presentations were made concerning 10 countries: Australia, Belarus*, Chile*, China*, Ireland*, Japan, Korea*, Thailand, Turkey and Vietnam . These presentations and the accompanying papers provided insights into aspects of public investment management in these countries. Some participants drew particular attention to one case which was able to consolidate a great deal of data concerning the operation of public investment management, including the operation of PPPs, which have become increasingly important.

Other highlighted themes

A number of common themes emerged during the discussions:

* The role of central guidelines: Guidelines, which are then rigorously applied, were seen as a particularly critical aspect of a well functioning PIM system. Examples of such guidelines include: Guidelines for Total Project Cost Management System, Korea, 2007, and Guidelines for the Appraisal and Management of Capital and Expenditure Proposals in the Public Sector, Ireland, 2005. It was noted that the actual use of Guidelines was not always assured, thereby highlighting the need to see how systems actually work, rather than how they are designed to work. This was particularly the case for some developing countries, where there remains a need to develop guidelines.
* Evidence based research: Availability of good data was seen as a critical component in the evaluation of the efficiency of specific public investment projects, as well as for reviewing the performance of PIM systems as a whole. Some countries, most notably Chile and Korea, were able to assemble and publish a great deal of investment related data, which assisted the conference in understanding the mechanics of their PIM systems. Yet participants remained somewhat cautious of the ability to estimate efficiency of public projects, given data issues. Notwithstanding, there was general support to attempting to measure efficiency both ex ante and ex post.
* Increasing interest in and role of PPPs: There was general acceptance that PPPs can, for a number of reasons, accelerate the delivery of highly valued social services and infrastructure. Participants also agreed that the availability of PPP-related financing and use may need to be considered in the context of the availability of relevant expertise to assess PPP arrangements, the potential for optimal risk transfer, and value for money considerations. The Australian case usefully highlighted a number of the technical issues associated with managing a PPP portfolio.

Assorted Madoff

If Only the S.E.C. Had Taken Madoff’s Advice

Madoff's Innocent Victims

Podcast of the Day

Goodhart Recommends `Aggressive' Bank of England Policy

Assorted Research

Inflation Targeting and Real Exchange Rates in Emerging Markets;

We examine the inflation targeting (IT) experiences of emerging market economies, focusing especially on the roles of the real exchange rate and the distinction between commodity and non-commodity exporting nations. In the context of a simple empirical model, estimated with panel data for 17 emerging markets using both IT and non-IT observations, we find a significant and stable response running from inflation to policy interest rates in emerging markets that are following publically announced IT policies. By contrast, central banks respond much less to inflation in non-IT regimes. IT emerging markets follow a "mixed IT strategy" whereby both inflation and real exchange rates are important determinants of policy interest rates. The response to real exchange rates is much stronger in non-IT countries, however, suggesting that policymakers are more constrained in the IT regime--they are attempting to simultaneously target both inflation and real exchange rates and these objectives are not always consistent. We also find that the response to real exchange rates is strongest in those countries following IT policies that are relatively intensive in exporting basic commodities. We present a simple model that explains this empirical result.

What is a Company Really Worth? Intangible Capital and the "Market to Book Value" Puzzle

"What is a company really worth?" is a question asked repeatedly during the recent financial crisis. Attention has been focused on short-term valuation issues, like the "mark-to-market" controversy. Sorting out these issues is complicated by the fact that the market puts a value on shareholder equity that is consistently more than twice the reported book value of a company. Numerous observers have pointed to the absence of most intangible assets from financial statements as an important source of this puzzle. We use Compustat financial data for 617 R&D intensive firms to test this possibility. We find that conventional book value alone explains only 31 percent of the market capitalization of these firms in 2006, and that this increases to 75 percent when our estimates of intangible capital are included. The debt-equity ratio also falls from 1.46 to 0.61. These findings suggest that financial reports tend to substantially understate the long-run intrinsic value of corporate America.

Bankruptcy: Past Puzzles, Recent Reforms, and the Mortgage Crisis

Improving Educational Outcomes for Poor Children


Dealing with the Financial Turmoil: Contingent Risks, Policy challenges, and the Role of the IMF

Another Indicator of the Financial Crisis

A List a Landlord Doesn’t Want to Be On

Back to Basics on Keynesian

New Age Politics

The changing relationship between internet and politics?

Open for Questions: Participation, from campaigning to governing

Advice to a pyramid schemer

'Take the human being out of the equation'- Madoff



On MIT Math graduates;

not much use, 'They spend too much time thinking'

Full transcript of the event

Assorted

Two Ways to Revamp U.S. Housing Policy

Graph of lobbying and bailout funds

German economy: growth forecast 2009

Principles for reforming higher education in Australia: will Bradley be brave enough?

Challenges that the Recent Financial Market Turmoil Places on our Macroeconomic Modeling Toolkit

What's the difference between a good Ponzi scheme and a bad Ponzi scheme?

DIW-Präsident fordert Stopp von Konjunkturprognosen

Positionng the WBI as a global knowledge leader on development

Interesting Job from World Bank;

The World Bank Institute (WBI) is embarking upon an exciting, major renewal process to scale up its development impact, play a key catalytic role in the Bank's knowledge and learning agenda, and help position the Bank as a global knowledge leader on development. With the appointment of a new Vice President, WBI is looking to recruit three Directors who will constitute the new senior leadership team to lead this renewal and scale up WBI's impact.

The new vision for WBI is as a dynamic catalyst for development, which inspires policymakers to undertake innovative reforms in frontier areas, wholesales cutting-edge global knowledge and learning informed by local conditions through regional centers of excellence, connects practitioners across regions for knowledge exchange around shared problems, and facilitates transformative learning including multi-stakeholder consensus-building, change management processes and leadership capacity building to help achieve results on the ground.

WBI is a microcosm of the World Bank, supporting knowledge and learning across regions in all the key sectors of Bank work, including poverty reduction and economic management, finance and private sector development, governance, human development and sustainable development. WBI also houses a pedagogical and e-learning unit, including the Global Development Learning Network (GDLN) and multimedia services, as well as units for regional coordination, external partnerships, monitoring and evaluation, scholarships, communications and resource management. WBI has 200 staff and a Bank budget of $55 million.

Job Description
The three Director positions being advertized are: Director, Innovation and Change Management, the Director, Knowledge and Learning, and the Director, Operations and Partnerships. The three Directors will work in tandem with the Vice President as WBI's senior management team to manage the business of WBI.
• The Director, Innovation and Change Management, will be responsible for managing the business lines of incubation (including the Development Marketplace) and change management, including mainstreaming governance and political economy, multi-stakeholder consensus building and leadership capacity building in traditional learning programs to foster transformative learning for stronger results on the ground.
• The Director, Knowledge and Learning will be responsible for the principal business line of developing and delivering state-of-the-art global knowledge and learning programs in key areas of strategic priority, including macro, finance and private sector development, and sustainable development.
• The Director, Operations and Partnerships will be responsible for managing the business line of facilitating knowledge exchange integrating cutting-edge pedagogical methodologies (e-learning, multimedia) in traditional knowledge and learning programs; mobilizing and managing finance, including fee-for-service, programmatic donor support, scholarship programs and overseeing vital fiduciary functions.

Lithuana- fiscal tightening

A sizeable upfront fiscal adjustment is necessary. Global financial markets are effectively closed and domestic borrowing options are severely limited by a lack of liquidity- constraining fiscal policy options. The recent surge in domestic demand also needs to be partially unwound in line with external stability requirements: fiscal policy is the most readily available policy tool for this purpose. Upfront fiscal adjustment, supported by a sustainable restructuring of taxes and spending, can signal the government's commitment to macroeconomic stability and thus underpin confidence in the currency board arrangement. For these reasons, Lithuania does not have the scope for fiscal stimulus available to some other countries to counter the downturn.

The fiscal deficit target of 2.1 percent of GDP represents a major policy tightening. This is consistent with an adjustment of nearly 4 percentage points of GDP. Revisions to the draft public budgets for 2009 include a well-crafted package of measures as the basis for adjustment. The increase in the standard VAT rate-and the removal of preferential VAT rates and exemptions-will increase revenues, broaden the tax base, and remove costly distortions. The impact of higher VAT on households will be partly compensated by a reduction in personal income tax rates. Moreover, the delay in the removal of the preferential VAT rate on heating fuel and targeting of the `tax-free' amount under the personal income tax to low-income families will help protect socially vulnerable groups. The increase in excises will complete the convergence to EU requirements in this area. On the expenditure side, the significant adjustment to wage costs will not only generate needed savings, but also will signal the need for downward flexibility in private sector wages, which had increased rapidly-ahead of productivity growth-in recent years. Financial conditions also necessitate some scaling back of the investment program.

Budget financing and revenue performance will require close monitoring. The difficult economic outlook increases the degree of uncertainty surrounding the budget forecasts. The government should plan to review budget implementation mid-year and identify contingency measures that would address any shortfalls in budget resources. These could include further increases in indirect tax rates or additional expenditure cuts. It would be prudent to backload major spending projects until the financing has been secured, and to manage carefully the commitment of expenditure under the treasury plan. If financing becomes available later in the year, it would then be feasible to scale up budget implementation accordingly. Nonetheless, sustainable adjustment in expenditure will require longer-term structural reforms to address the imbalances in the SoDra and health fund finances.

-Lithuania-December 2008 Staff Visit Concluding Statement of the IMF Mission

An Arab good bye kiss

Shoe-Hurling Iraqi Becomes a Folk Hero

Deception, waste and poor planning

Anti-Corruption Efforts Abandoned

Anti-corruption efforts were abandoned by both American and Iraqi officials, opening the door to waste, fraud and abuse.
“Grafted on to the existing Iraqi legal system and inadequately supported by their U.S. creators, the CPI [Iraq's Commission on Public Integrity" and the IGs [Iraqi Ministry Inspector Generals] have struggled to find their footing in the new Iraq. Anticorruption efforts by the CPA and the U.S. Embassy must be seen in this context, but the absence of progress in fighting corruption in Iraq is disappointing.

One (Iraqi Inspector General) noted: "If we're too active, our minister will fire us," and the chilling, "if I do my job, they'll kill me."

4.8 miles of Electric Beds

Hard Lessons: The Iraq Reconstruction Experience

Official History Spotlights Iraq Rebuilding Blunders

The Organizational Chart for Iraq's Reconstruction


Parking Lot as Situation Room
As a socialist regime, Iraq had millions of state employees and pensioners. Rebuilding officials had no idea how much to pay them. They picked a figure out of the air over a debate in a parking lot, according to the review.

“The decision about emergency payments to Iraqi civil servants took place around a concrete pillar in the parking lot of the Kuwait Hilton. "Having read various background papers, we started talking about if we could do it at five bucks, or we could do it at 50 bucks," David Nummy remembers. "We decided that a good midpoint was 20 bucks. And that's how we established $20 emergency payments."

4.8 miles of Electric Beds
The violence greatly impeded execution, leading to confusion and unfinished projects.

“When finally finished, the waste-water treatment system—which was supposed to serve the entire population of Falluja—will serve just over a third of the city's population, will have cost three times its original price, and will have been completed three years later than originally planned. Moreover, serious questions remain about whether the Iraqis can sustain it after transfer to their control.

It turned out that the U.S. imported a lot of (hospital) beds for Iraq. A representative of the Canadian company that produced them all told (Jack) Holly, (the former logistics chief for the reconstruction effort) that he had received "4.8 miles of electric hospital beds." Over time, the embassy distributed them to various hospitals and clinics—to be operated manually in many cases because of the inadequate power supply.

Descartes' Bones: A Skeletal History of the Conflict Between Faith and Reason

Descartes' Bones: A Skeletal History of the Conflict Between Faith and Reason by Russell Shorto

Well-Behaved Women Seldom Make History

WELL-BEHAVED WOMEN SELDOM MAKE HISTORY
By Laurel Thatcher Ulrich.

NYT's review;

Ulrich, a Harvard historian whose “Midwife’s Tale” won the 1991 Pulitzer Prize for history, uses “three classic works in Western feminism” as a springboard for examining the theme of “bad” behavior. Could the popularity of her slogan, she wondered, be explained by “feminism, postfeminism or something much older?” The answer emerges in Ulrich’s choice of texts: Christine de Pizan’s “Book of the City of Ladies,” written in 1405; Elizabeth Cady Stanton’s “Eighty Years and More,” published in 1898; and “A Room of One’s Own,” based on two lectures Virginia Woolf gave in 1928 — all works by women who “turned to history as a way of making sense of their own lives.” History, Ulrich reminds us, “isn’t just what happens in the past,” but what we choose to remember. As much invention as discovery, history attempts to make the chaotic present into a coherent picture by comparing it to images, equally artificial, fashioned from events long past.

Pizan, Stanton, Woolf: three women with “intellectual fathers” and “domestic mothers,” who were “raised in settings that simultaneously encouraged and thwarted their love of learning” and “married men who supported their intellectual ambitions.” For each, her “moment of illumination came through an encounter with an odious book” expressing man’s “disdain” for women. Pizan responded to a 15th- century satire containing “diatribes” against her sex, Stanton to law tomes that set forth the rights of husbands and fathers over their wives and daughters, Woolf to “The Mental, Moral and Physical Inferiority of the Female Sex,” an imagined history representing what she discovered in the reading room of the British Museum.

Ulrich’s new book is a work of selection and synthesis; she finds common archetypes in far-flung sources, making connections that are sometimes distant but never tenuous. The “Amazons” chapter is illustrated by examples from archaeological digs in Kazakhstan, South American folk tales and her own cultural backyard, which yields “an Olympic athlete, a female soldier, a lesbian separatist, a comic-book heroine.” Her associative logic reveals how A prefigures Q or even Z rather than ordering A before B before C, and brings a female sensibility to what is more typically the linear, cause-and-effect formula of history, a majority of which, Ulrich points out, is written by men.

Hot, Flat, and Crowded

Just How Stupid Are We?

Rick Shenkman at Google

Assorted Explainers

Errors and omissions in the balance of payments

The current account deficit in an international and historical context

How Law and Economics was Marketed in a Hostile World: A Very Personal History

A New Political Science;

Last week’s victory by President Elect Barack Obama unleashed a global groundswell of positive vibes. Most of the emotional outpouring was directed at the striking achievement of this U.S. election, but it might as well have been a moving tribute to the powerful advances in social engagement marketing, as deployed by Obama’s campaign.

Beginning with his February 2007 meeting with Netscape founder and Facebook board member Marc Andreessen, Obama has displayed an impressive ability to harness the forces of burgeoning new social media. Quite remarkable, because Facebook, Twitter and YouTube were barely a glimmer in their founders’ eyes during the 2004 election.

Mind Manager Tip of the Day

Podcast of the Day

The Growth Report: Strategies for Sustained Growth and Inclusive Development

The panel discussion featured two members of the Commission, Robert Solow, Nobel Laureate and MIT Professor Emeritus, and Danny Leipziger, Vice-President of the World Bank. Columbia professors Jagdish Bhagwati and Guillermo Calvo hosted the guests and provided comments and discussion.

Related;
The Catch-Up Game;
F&D: The Growth Report says that "sustainable high growth is catch-up growth and the global economy is the essential resource." What do you mean by that?

Spence: We called it catch-up growth because of the global economy's contribution to growth—which we found was an essential element after looking at the dynamics of the successful high-growth cases. It is pretty well understood from trade theory and modern growth theory that global markets are big and a country can grow pretty fast without expanding its market share much—and if it has the terms of trade. But the other part, which is emphasized by Paul Romer and other distinguished leaders in the area of growth theory, is that catch-up growth is really about learning. It's about knowledge transfer. It's expanding your potential output based on what the economy—both the private and public sector sides—comes to have expertise in doing, and that is the catch phrase, no pun intended, for catch-up growth. This is what, we believe, more than anything else enables countries to grow at rates in the 7–10 percent range, and nobody else can do that. You can't do it in isolation and you can't do it as an advanced country with no counterexamples because you have to invent all the technology that moves the production possibility out, whereas developing economies can, at least for a period of time, import it. You have to import it and adapt it so it takes a considerable amount of ingenuity, innovation, and adaptation.

Mohieldin: The 13 successful cases [in The Growth Report] of sustained high growth since the Second World War used their integration with the world in a very successful way through the vehicles of knowledge—obtaining it either directly by sending people to get educated abroad, or getting them through training programs—or even through foreign direct investment.

I am from a generation that was taught that the three pillars of any economic activity were land, labor, and capital, and when you added them together with an entrepreneur, you would see the marvels of economic activity. Today those three pillars have been replaced. In an interesting piece of work, Professor Romer discusses endogenous growth, and—according to him—the three new aspects of development are, first, learning, innovation, and the transfer of ideas. Second, labor has been replaced by "people," not just those who are in the workplace but those who could be in the workplace as well as those who are communicating with them. Third, to be safe, they added "other things," which could be anything such as capital, additional resources, etc. So today the three pillars are ideas, people, and other things.

The success stories of Singapore, Malaysia, Korea, China, and, more recently, India and Vietnam are based on these new pillars, rather than the traditional ones. And further integration with the rest of the world can benefit countries even more. This means globalization is going to remain relevant, even though I'm saying so at a time when people might be questioning the very merits of globalization.

The Ingredients of Sustained High Growth

Design and Banks

HSBC Private Bank Lounge by Campana Brothers

Teaching Taxation in Developing Countries

What are good books for teaching taxation in developing countries?

The Theory and Practice of Tax Reform in Developing Countries
Etisham Ahmad, Nicholas Stern
Tax Policy Handbook
Economics of Taxation (syllabus)

Illicit from Madagascar

Illicit sex tourism in Madagascar

What do they teach at University of Illinois Econ Dept.

President Rafael Correa has declared his country in default on foreign debt as his government grapples with falling oil income and a decline in remittances from Ecuadoreans living abroad. Calling the debt “immoral and illegitimate,” Mr. Correa said his government would not make a $31 million interest payment, a move heightening concern in global markets over Ecuador’s $10 billion in foreign debt. The decision by Mr. Correa, an American-educated economist, could have far-reaching impact in Ecuador, which risks being shut off from foreign credit markets even as the move temporarily frees up funds for social welfare projects.

-Ecuador: President Orders Debt Default

Correa did his Economics PhD at University of Illinois at Urbana-Champaign

Related;
Ecuador defaults on sovereign bonds;

Ecuador’s refusal to meet the $30.6m payment on the country’s Global 2012 bond, despite the fact that it has $5.65bn in cash reserves, sent dollar-denominated debt prices down sharply.

”I gave the order not to pay the interest and to go into default,” Mr Correa said. ”We know very well who we are up against - real monsters.”...

Alberto Bernal, Head of emerging market macroeconomic Strategy at Bulltick Capital Markets, said the move was a prelude to a decision to exit dollarisation.

”Dollarisation is popular in Ecuador. Yet president Correa does not believe in dollarisation, and he needs further tools to pump the economy, because he will never receive the support of the private sector to generate employment,” Mr Bernal said. ”We think that a 60 per cent to 70 per cent devaluation is likely to take place at some point in the near future, unless oil prices recover fast.”

Ecuador abandoned the sucre for the dollar in 2000 after the collapse of its banking sector, which effectively leaves Mr Correa with no monetary policy of his own...

Mr Correa, a US –trained economist and a close ally of Hugo Chávez, Venezuela’s president, has pledged an ambitious programme of social spending or on the implementation of a new constitution.

”The big problem with dollarisation is that if you don’t take it seriously, and you keep a loose fiscal policy as we have seen in the past few years, you have to provide an alternative for an overappreciated and uncompetitive economy,” a former Ecuadorean minister told the FT. ”If we didn’t have the commodities boom we could have very easily seen a collapse of the real sector and the financial sector in Ecuador much earlier.”

Quote of the Day

“They say that the only way to get to paradise without dying is to be governor of a central bank. This has not been true in Iceland.”-David Oddsson, governor of Central Bank of Iceland

-Lessons from Iceland; Cracks in the crust

Economic Policy Team's Brian Deese responds

Podcast of the Day- Tim Harford

Presenter Tim Harford considers the risks of eating Irish sausages contaminated with dioxin; why the latest retail sales figures are not as bad as the retailers' make them sound; the quirks of British street numbering; and he witnesses the most important numbers in the world being calculated: the London Interbank Offered Rate - LIBOR.

Download the podcast

India and Africa

Mittal, Sanjiv Ahuja, Dr Mohamed Ibrahim

Why is Africa poor and what (if anything) can the West do about it?

Want to know more, follow this course.

How Seinfeld motivates himself

He revealed a unique calendar system he uses to pressure himself to write. Here’s how it works.

He told me to get a big wall calendar that has a whole year on one page and hang it on a prominent wall. The next step was to get a big red magic marker.

He said for each day that I do my task of writing, I get to put a big red X over that day. “After a few days you’ll have a chain. Just keep at it and the chain will grow longer every day. You’ll like seeing that chain, especially when you get a few weeks under your belt. Your only job next is to not break the chain.”

“Don’t break the chain,” he said again for emphasis.

via Nudge;

An alternative might be research on differences in decision making when facing isolated options versus sequences. The frame of a sequence typically enables individuals to make more farsighted decisions, which is exactly what happened in Seinfeld’s case. In much of this research - the best of it done by George Loewenstein - individuals typically postpone objectively “better” outcomes until the end of a sequence (like French food versus McDonalds). Though in the Seinfeld story, the sequence itself seems to differentiate the value of initially identical products (a self-produced joke).

India book recommendation

Imagining India: Ideas for the new century, Nandan Nilekani

A very rich Fed

Assets on the Fed’s balance sheet have more than doubled over the past year, reaching $2.14 trillion on Dec. 3, and may increase more as the Fed buys up to $600 billion of housing- finance debt and securities...

“The creation of excess reserves is the least desirable form of central bank balance-sheet expansion during periods when bank balance sheets are a critical to bottleneck to financial flows,” said Lou Crandall, chief economist at Wrightson ICAP LLC. “You have your choice then: Either the Fed can issue liabilities to the general public, or you can issue Treasury liabilities. The preferred option is Treasuries.”

-Fed Explored Starting Sales of Bonds as Balance Sheet Grows

Advice of the Day

Robert Lawrence;

Congress should put their mouths where their money is. They should make binding commitments to ensure higher US oil prices and thereby sufficient demand for fuel-efficient cars and trucks in the future.

Mankiw;

My advice to Team Obama: Do not be intellectually bound by the textbook Keynesian model. Be prepared to recognize that the world is vastly more complicated than the one we describe in ec 10. In particular, empirical studies that do not impose the restrictions of Keynesian theory suggest that you might get more bang for the buck with tax cuts than spending hikes.

A book by the worst central banker in the world?

'Zimbabwe's Casino Economy: Extraordinary Measures for Extraordinary Challenges', Gideon Gono

via Todd Moss;

Gideon Gono, certainly the worst central banker in the world, not only crows about his adept handling of the economy, but adds:

'Just as I was being dragged to the UN Security Council to be put on the sanctions list, I was offered a job by the World Bank as senior vice president," Dr. Gono told guests who attended the official launch of the book. “This was with the full blessings of none other than George W. Bush himself and the U.S. Secretary of State, Condoleezza Rice.” In response to the offer, Dr. Gono said he wrote a letter to the World Bank, asking how the bank, controlled by the U.S. and its European allies, would offer him a job when he was on its targeted sanctions list. Dr Gono said the WB promised it would remove him from the list and "see what to do with his friends already on the sanctions list.