The Fiscal Roots of Financial Underdevelopment

Historical Roots of Its Underdevelopment Emmanuel

Africa poses the development challenge of our time. Once devastated by famine and mired in poverty, India and much of Asia are now growing economically. While Africa’s economies too are now growing, in many African countries, people are just now returning to the levels of per capita income they enjoyed more than a half century ago. 1 Th e current poverty and the widespread economic decline foll...

Landed Interests and Financial Underdevelopment in the United States1

Fiscal Policy and Financial Markets*

We examine the effect of fiscal policy on sovereign risk spreads and investigate whether the interaction of fiscal variables with political institutions affect financial markets. Using panel data from emerging market countries, we find that revenue-based adjustment lowers spreads more than spending-based adjustment. Financial markets also react to the composition of spending. Cuts in current sp...

Fiscal policy, banks and the financial crisis

This paper studies the effectiveness of Euro Area (EA) fiscal policy, during the recent financial crisis, using an estimated New Keynesian model with a bank. A key dimension of policy in the crisis was massive government support for banks—that dimension has so far received little attention in the macroeconomics literature. We use the estimated model to analyze the effects of bank asset losses, ...

The Economic Roots of Political Underdevelopment in the Middle East: A Historical Perspective

Key institutions of the pre-modern Middle Eastern economy, all grounded in Islamic law, blocked the development of democratic institutions. This talk identifies three mechanisms that played critical roles. Islam's original tax system failed to produce lasting and credible constraints on governance. The waqfs (Islamic trusts) founded to provide social services to designated constituencies were p...