How Concessional is Aid Lending?

The method used by Development Assistance Committee countries for measuring the concessionality of aid loans has remained unchanged for nearly 20 years. It was designed to measure the net cost of aid to donors not the net benefit to recipients. The discount rate used takes no account of changes in the value of the currency of the loan or of changes in prices for goods traded by recipient countries. Furthermore, it does not consider the implications of tying of aid or of policy conditionality. This paper suggests an alternative measure that shows the real net benefit of aid finance to recipients. It argues that the discount rate used by the Development Assistance Committee is too high and that changes in the value of the currency in which a loan is taken out can be important. Nevertheless, real rates of interest for developing countries remain surprisingly high despite low nominal rates due to falling prices of traded goods. This finding has implications for the future real cost of debt service to recipients.     

Evolving countystate relations: From servant to partner?

The relationship between counties and states is central to county wellbeing. This article examines contemporary countystate relations within a framework of institutions and processes where the most critical interactions occur: state associations of counties, state legislatures, governors, state agencies and state high courts. Countystate relations are further described through perceptual data gathered in interviews with county association directors during the Summer of 1991.

County officials favorably view their relations with state legislatures but perceive their treatment to be more like that of special interest group rather than valued partner. Even so, the vast majority of state legislatures is granting new powers to counties, expanding old ones, or extending some kind of relief in fiscal matters. Gubernatorial relations are also viewed favorably, but perceptions of state agency relations vary according to type of agency and personnel. A majority of counties also indicates that state high courts have handed down rulings with significant impact on counties, mostly in funding matters. Courts seem to have broadened their traditionally restrictive view of local powers, partly because county officials have been more willing to challenge burdensome rulings aggressively.

Though states retain ultimate authority over county governments, counties have been whittling away at state supremacy and asserting themselves through a variety of strategies and institutional arrangements. The old subserviency model of countystate relations appears outdated. Actual legislative outcomes indicate that the relationship is moving toward that of valued partner, and both the fiscal crises of states and the growing trend of counties to deliver services regionally have created an opportunity for counties to propel such a shift. However, this positive development is tempered by the trend in states to mandate without funds, making illusory any real gains in powers.     

How bad is the federal budget deficit?

This paper describes two views on the economic effects of government budget deficits. According to the traditional view, deficits have a variety of adverse economic consequences. In particular, they cause domestic residents to save less and eventually to have a lower standard of living than would have occurred if the same level of government spending had been financed entirely with current taxes. A competing view, known as the Ricardian view, holds that the economy is little affected by whether a given level of government spending is financed entirely by current taxes or by some feasible combination of taxes and borrowing. Most of the empirical research on the economic consequences of deficits has failed to isolate the effects predicted by the traditional view. The paper also discusses why the conventional methods of measuring the government budget deficit are not the most economically meaningful ones.     

How Strong is the Evidence for the Existence of Poverty Traps? A Multicountry Assessment

Introducing this special collection on asset dynamics and poverty traps, this article assesses evidence on these issues across eight panel data sets in six countries generally not previously considered in this perspective. It examines the importance of assets in relation to chronic poverty and uses parametric and non-parametric methods to test for dynamic asset-based poverty traps. The article finds that chronically poor households have lower levels of assets than others, though does not find evidence of the non-convexities which would imply a multiple dynamic poverty trap. From this base the article introduces the remainder of the articles in this collection which set out many promising approaches to further develop and improve methods and approaches for looking at poverty traps in future.