This study examines the medium-term effects of the Great Recession on school finances in New Jersey using detailed school district panel data and an interrupted time series analysis. The authors find that the recession led to sharp cuts in school funding and expenditure, in spite of the federal stimulus. These cuts deepened as the stimulus abated. An analysis of variations by metropolitan area reveals that the Camden metro area, the highest poverty area reviewed, experienced considerably larger cuts in expenditures when the stimulus receded compared with other areas. The findings are important for understanding how recessions and fiscal policy affect school finances. They show particular relevance for the current pandemic-driven recession as state and local funding shortages threaten education financing despite a federal relief package. Two key implications are that funding cuts can widen inequalities in school spending and that adverse effects may deepen as the relief dissipates.
This article studies the mid-September 2019 stress in U.S. money markets: On September 16 and 17, unsecured and secured funding rates spiked, and on September 17, the effective federal funds rate broke the ceiling of the Federal Open Market Committee (FOMC) target range. We highlight two factors that may have contributed to these events. First, reserves may have become scarce for at least some depository institutions, in the sense that these institutions’ reserve holdings may have been close to, or lower than, their desired level. Moreover, frictions in the interbank market may have prevented the efficient allocation of reserves across institutions, so that although aggregate reserves may have been higher than the sum of reserves demanded by each institution, they were still scarce given the market’s inability to reallocate reserves efficiently. Second, we provide evidence that some large domestic dealers likely experienced an increase in intermediation costs, which led them to charge higher spreads to ultimate cash borrowers. This increase was due to a temporary reduction in lending from money market mutual funds, including through the Fixed Income Clearing Corporation’s sponsored repo program.
Over the course of 2018, economic activity in major advanced foreign economies and emerging markets—including the Euro area and China—decelerated noticeably. In parallel, foreign growth projections for 2019 and 2020 were revised down, signaling potentially large headwinds for the U.S economy over the medium term. In this article, we use a multi-country simulation model to quantify economic spillovers to the United States from a slowdown originating in the Euro area. Next, we compare these results with spillovers from a slowdown originating in China. We find that spillovers to the U.S. economy from a slowdown in the Euro area are sizable, mainly due to lack of monetary policy space in the region along with greater financial integration between Europe and the United States. Standard trade-related spillovers from a slowdown in China to the United States, instead, are quantitatively limited.
Official Chinese GDP growth rates have been remarkably smooth over the past decade, in contrast with alternative Chinese economic data. To better identify Chinese business cycles, we construct a sparse partial least squares (PLS) factor from a wide array of Chinese higher-frequency data, targeted toward variables that are highly correlated with important aspects of the Chinese economy. Our resulting alternative growth indicator clearly identifies Chinese business cycle fluctuations and it performs well both in out-of-sample testing for China as well as when applied to other economies. Using this indicator, we decompose deviations from growth trends into global growth, credit supply, and monetary policy components, and this decomposition suggests that, in contrast to China’s 2015-16 slowdown, the country’s 2018-19 slowdown was mainly due to deteriorating domestic credit conditions.
Policymakers, academics, and market participants have raised many questions in recent years over the accuracy of China’s official economic growth rates, both in terms of levels and volatility. This issue is of considerable importance for policymakers because fluctuations in China’s economic activity can have significant impacts on growth, employment, inflation, and other policy objectives, given China’s large shares of world output, trade, and commodity demand, and its rapidly growing role in global financial markets. This study addresses the question of growth volatility using a set of alternative growth indicators and concludes that China’s official growth rate most likely has been implausibly smooth. Moreover, growth slowdowns during 2014-15 and 2017-19 were about twice as large as officially reported, while a growth rebound in 2016 was scarcely reported at all; the 2017-19 downturn was also shallower than that of 2014-15, by alternative measures. We argue that this picture fits reasonably well with other indicators of the global economy, China’s own domestic data, and policy developments in China. Economic cycles in the period after the global financial crises have shown much shorter upturns and much longer downturns compared with the first decade after China joined the World Trade Organization. These cycles are likely to continue around a substantial slowdown in trend growth.
Can China build on its development success to achieve high-income status in the decades ahead? To shed light on this question, we examine the past and prospective future sources of growth in China through the lens of the neoclassical growth model. Our key finding is that China would need to sustain total factor productivity growth at the top end of the range achieved by its high-income Pacific Rim neighbors in order to match their success in raising living standards. While fast-growing working-age populations boosted per capita income growth elsewhere in the Pacific Rim, a rapidly aging population will act as a powerful drag on income growth in China’s case. Moreover, China's already capital-intensive production structure will make it difficult to match those countries' gains from capital deepening. These restraints mean that a sustained and exceptionally high pace of productivity growth will be needed for Chinese per capita incomes to reach even 50 percent of the U.S. level by 2040. We argue that lagging institutional development represents the chief obstacle to the needed productivity gains.
The aim of this article is to assess the efficacy of the Paris Agreement to generate policies and incentivize actions that can contribute to halt climate change significantly. The article shows tha ...
This paper investigates gendered trends in income inequality in Denmark, Finland, Norway and Sweden, posing questions such as: Is the income dispersion higher or lower among men than among women? H ...
The U.S. mortgage finance system was one of the focal points of the 2007-08 financial crisis, yet legislative decisions about the appropriate role of the federal government in the system remain unsettled. Policy deliberations have focused on Fannie Mae and Freddie Mac?the two enormous government-sponsored enterprises that were placed into federal conservatorship in September 2008. The two GSEs have long been the centerpieces of a mortgage finance system that relies on capital market financing of U.S. residential mortgages. This volume contains eight articles that touch on several key components of housing finance reform. We hope that the insights offered here will assist legislative efforts aimed at promoting a more efficient, equitable, and financially sound mortgage system in the future.
The study tested the equality of the expected mean retirement outcomes of the cash balance, dened contribution and dened benet pension plans in three workplace scenarios in Nigeria that differed only on how monthly wages of employees are computed at entry into the schemes but contingent on employee's experience and desirable skills. The analyses are based upon the values obtained from the actuarial valuation models that incorporate assumptions that satisfy Nigerian pension statutory requirements. The results show that the cash balance mean gratuity and the cash balance mean pension are individually higher than those of the traditional schemes in all the three cases studied. We therefore conclude that cash balance plan offers the most rewarding retirement benets to participants, and thus it deserves introduction into the Nigerian pension market. Keywords: cash balance plan, dened benet plan, dened contribution plan, gratuity, pension, pension replacement rate
Apart from the abundance of natural and human resources, Nigeria represents the largest economy in Africa with equally huge market given its population size-180 million. Despite these comparative advantages, the country has underperformed in charting an inclusive and sustainable growth strategy over the decades. A cursory look at the structure of the Nigerian economy reveals that one of the leading sectors in Nigeria driving national output, employment and export is agriculture sector. The sector, which currently accounts for about 24% of GDP, has been acclaimed to have the potential of contributing about 65% to employment generation and 50% export share if its vast and enormous value-adding opportunities in agro-industry are explored. Nigeria has the largest resource of goatskin and kidskin in Africa representing 46% and 18% of total in West Africa and Africa, respectively. There is need for value addition in Nigeria's leather value chain to upgrade its position in the regional and global trade of leather commodities with varying implications on intra- and intertrade, backward integration, employment generation, industrial deepening, increased productivity and competitiveness. However, the lingering challenges in the industry such as structural barriers, poor visibility and lack of government intervention have led to revenue loss of about $300 million annually. Given the focus of the government towards economic diversication and support for the implementation of an agriculture-led industrialization as specied in the Economic Recovery and Growth Plan (ERGP), the government needs to explore the inherent opportunities in the leather industry through promoting public-private partnership, providing scal incentives as well as enhancing technology and human capital development in the industry.
This paper investigates the relationship between CO2 emissions, energy consumption, population growth and economic growth in Nigeria during the period 1980-2012. The paper adopts autoregressive distributed lag (ARDL) bounds testing approach for cointegration with structural breaks and Toda-Yamamoto non-granger causality approach. Based on the result, there is no evidence of unidirectional causality running from CO2 emissions and energy consumption to economic growth and strong unidirectional causality running from CO2 emissions, energy consumption and economic growth to population growth was found. The long run and short run estimates show that energy consumption and population growth have strong and positive impact on CO2 emissions in the long-run and short run whereas economic growth impact weakly and negatively on CO2 emissions in the short-run. The inverted U-shaped environmental Kuznets curve (EKC) hypothesis is supported graphically and analytically in the long run with a turning point of 4.87. This means Nigeria has reached the required level of per capita real GDP to get an inverted U-shaped EKC. The main policy prescriptions among others is that Nigeria government should increase environmental taxation in order to reduce the rate of fossil fuel used by individuals which may lead to a reduction in per capital CO2 emissions.
This paper examines the impact of ination on economic growth in Sub-Saharan Africa in order to provide an empirical evidence whether ination hinders or boost economic activities in the region. The paper found that ination exhibits a reducing-growth effect in both short-term and long-term periods using Panel Autoregressive Distributed Lag (PARDL) model. Therefore, the study recommends that African government needs to address the issues of ination especially imported ination in order to stimulate sustainable economic growth in the region. In addition, strengthening political commitment to ensure conducive business environment has to be paramount rather than depending on the traditional model of bring your own infrastructure. Keywords: Ination, Sub-Sahara Africa, Panel Autoregressive Distributed Lag
Nigeria's huge infrastructure decit remains a major obstacle to improved living standards, enterprise development and sustained economic growth. Among many other nancing models, Public-Private Partnerships (PPPs) present a preferred option for long term infrastructure provision and development adopted by many countries. Over the past decade, Nigeria has experienced poor execution of PPP projects caused by fundamental bottlenecks such as lack of strategic direction for infrastructure, weak political will, political interests/interference, lack of transparency and weak legal and regulatory frameworks amongst others. This Policy Brief delves into special cases and experiences of PPPs while reviewing critical challenges and proffering solutions to making PPPs work in Nigeria. Overall, the Brief recommends the review of the National Integrated Infrastructure Master Plan (NIIMP), enactment of PPP legislation and implementation support policies to de-risk execution of PPPs in Nigeria.
Nigeria has one of the greatest energy access challenges in the world, with an un-electrified population of 75 million people. Likewise, the cost of the energy access deficit is huge, and is borne by households, businesses and the government. This article emphasizes the need for cheaper, modern sources of energy to improve energy access, boost the economy and reduce government subsidy bills. With the electricity grid unlikely to reach the entire population anytime soon, decentralized renewable energy (DRE) stands out as the best solution in bridging the gap, and ensuring that the entire population gains access to energy as quickly and efficiently as possible.
Nigeria’s harsh economic situation in 2016 has led major industries to look inwards to resolve supply deficits occasioned majorly by foreign exchange scarcity. In the electricity sector, however, the influx of imported electrical components leaves so much to be desired and hurts domestic companies. This article argues that potentials exist in the Nigerian electricity market, and with the right mix of research, policy and investments, Nigeria would be positioned to fulfil these potential and ensure job creation in the process.
This work examines the relationship if any that exists between tax incentives, “Made in Nigeria” concept and Companies that engage in made in Nigeria goods. It will explore how tax incentives can accelerate the growth of companies engaged in manufacturing of such made in Nigeria goods. From this paper, written primarily to evaluate the relationship between the two within the context of made in Nigeria goods, it has been explained that tax incentives would enhance economic growth and development in Nigeria, if such incentives are well focused and available to only deserving companies and sectors. Indeed, it is generally perceived that incentives complicate the tax system due to the additional cost and time required to monitor the beneficiaries of such incentives in order to avoid possible abuse; and may not be beneficial to the economy especially where the tax forgone exceeds the anticipated benefits from granting the incentives.
This article examines Nigeria’s trade profile, with a detailed look at the imports bill, which consists majorly of manufactured and value added products and export bill, which consists majorly of crude oil. It points out that this trade composition is a huge challenge facing the economy and therefore, conscious efforts are required to rebalance the country’s trade profile. The article suggests that Nigeria needs to key into an export-driven industrialization model, which is crucial for the survival and relevance of the Nigerian economy in the global environment.
Welfare services are an important part of the Nordic welfare states both financially and for welfare state redistribution. Baumols cost disease, Wagners law, and population ageing are often said to bring challenges for the future provision of welfare services. While none of the three poses an immediate threat against the financial sustainability of the welfare state, they have important implications for distribution and for the political support for the welfare state. The combination demographic change, a higher relative price of welfare services and increasing demand for welfare services may force politicians to make a difficult choice between increasing taxes, allowing people to top up publicly financed services with additional private financing, or risk eroding support for the welfare state.
