IMF Releases

New releases of the IMF are:

Policy Papers

• 2008 Triennial Surveillance Review - Overview Paper
  Summary: This triennial surveillance review (TSR) takes place in a time of change, with the Fund in the midst of a major refocusing effort. That surveillance has not been as effective as it should be has been amply documented, notably in previous surveillance reviews and several IEO evaluations. Since the 2004 review of bilateral surveillance (BSR), considerable efforts have been made to enhance its effectiveness, including an overhaul of the policy framework with the adoption of a new Surveillance Decision in 2007. And as part of the refocusing effort, more change is underway to deliver on the Managing Director's vision of an institution making better use of its comparative advantage, to be "more alert to emerging issues, more critical in its assessments (especially in good times), and more assertive in communicating its concerns."
• Progress Report on the Activities of the Independent Evaluation Office
  Summary: The reports provides an update on the activities of the Independent Evaluation Office of the IMF since its last report to the the IMF's policy-guiding body, the International Monetary and Finance Committee, in April 2008.
• Fuel and Food Price Subsidies - Issues and Reform Options
  Summary: Government price subsidies are pervasive in developed, emerging, and low-income countries. A subsidy is a form of government intervention resulting in a deviation of an actual price facing consumers and producers from a specified benchmark price. Subsidies affect consumption and production patterns as well as the distribution of resources, with important implications for the budget, expenditure composition, and long-term growth. They can and often do involve fiscal costs, but not all affect government fiscal accounts in the same way. Price subsidies have spillover effects onto prices and quantities in domestic, regional, or global markets. This paper discusses the key issues and policy options in the reform of subsidies for fossil fuels and selected food commodities, and their implications for the work of the Fund.
• The Fund's Response to the 2007-08 Financial Crisis - Stocktaking and Collaboration with the Financial Stability Forum
  Summary: The present financial crisis is testing the resilience of the global financial system as well as the robustness of national and multilateral policy frameworks. As requested by Executive Directors, this paper reviews recent progress in meeting these challenges, focusing on the role of the Fund and its collaboration with the Financial Stability Forum (FSF). In concert with other international bodies, the Fund has sought to promote appropriate policy responses to the financial turmoil, including through its report on The Recent Financial Turmoil-Initial Assessment, Policy Lessons, and Implications for Fund Surveillance, in the Global Financial Stability Report (GFSR) and the World Economic Outlook (WEO), as well as in recent Article IV consultations and Financial Sector Assessment Programs (FSAPs). The Fund has also responded to the International Monetary and Financial Committee's (IMFC) call for closer collaboration with other international fora, including by supporting the implementation of policy lessons from the crisis, such as the 67 FSF recommendations issued in April 2008.
• Report of the Executive Board Working Group on IMF Corporate Governance
  Summary: On May 21, 2008, the Executive Board discussed the report of the Independent Evaluation Office (IEO) on "Aspects of IMF Corporate Governance - Including the Role of the Executive Board". The Joint Statement issued by the Executive Board and the Managing Director following the Board discussion noted that many of the issues raised by the IEO were complex and interrelated. Furthermore, the follow-up discussion would require the engagement of all parties at many different levels, involving not only the Executive Board and Management, but also the Fund's membership and other stakeholders more broadly.
  This report presents the recommendations of the Working Group, based on work carried out during June-July 2008. The proposed detailed work plan in Table 1 is an integral part of this report. Section II of the report describes the work streams. Section III discusses issues beyond the IEO report and proposes a monitoring process. Section IV presents the recommendations.
• Provisional Agenda for the Eighteenth Meeting of the International Monetary and Financial Committee
  Summary: The following is the provisional agenda for the Eighteenth Meeting of the International Monetary and Financial Committee, which is to be convened on Saturday, October 11, 2008, at the IMF's Headquarters in Washington, D.C.
• Statement by the Managing Director to the International Monetary and Financial Committee (IMFC) on the IMF's Lending Role and Surveillance Priorities
  Summary: IMF staff has done extensive analysis of the crisis and its spillovers drawing on lessons from past crises, and disseminated information, analysis and policy advice through the Executive Board and intensive contacts with our members. We have also stepped up crisis preparedness efforts and are in close touch with individual members experiencing stress, standing ready to help with further advice and financial assistance.
• Report of the Managing Director to the International Monetary and Financial Committee on the IMF's Policy Agenda-IMF Responses to Global Economic Challenges
  Summary: The report provides an update on work in the following areas: global stability, IMF lending, food and fuel price developments, and modernizing the IMF.
• Review of the Fund's Financing Role in Member Countries
  Summary: This paper raises and discusses issues related to how the Fund provides financial assistance to its members. It is part of the strategic review to ensure the Fund remains relevant and effective. The objective is not to increase Fund lending, but to make sure the Fund has the right instruments and policies to help all of its members-with appropriate protection of Fund resources-as they integrate into a world of growing and increasingly complex cross-border flows. Other institutions (including major central banks and the World Bank) also are retooling their lending instruments and in the process grappling with similar issues. The paper offers a high-level view of the issues and does not make specific policy proposals. Policy proposals will be presented in follow-up papers, some of which are planned for Board discussion later in 2008.
• Proposed Reforms to the Exogenous Shocks Facility
  Summary: The review of the ESF is being accelerated in light of experience and worsening global economic conditions, in particular the surge in food and fuel prices. Despite having become effective in 2006, the ESF has yet to be used. Recent discussions with creditors, donors, potential users, and outside observers have highlighted a number of ways to enhance its effectiveness.
• Policy for Country Contributions for Capacity Building
  Summary: This paper proposes a strengthened country contributions policy for capacity-building services. It builds on the recent Executive Board discussions on capacity-building reforms, which included proposals for the use of charges (country contributions) to improve the effectiveness and efficiency of the Fund's capacity-building activities. On the basis of this country contributions policy, management intends to issue a staff guidance note on implementation and to take steps to bring it to the attention of members and other recipients of Fund capacity-building activities.
• The Spending and Absorption of Aid in PRGF Supported Programs
  Author/Editor: Berndt, Markus; Dudine, Paolo; Martijn, Jan Kees; Shonchoy, Abu
  Summary: This paper studies the spending and absorption of aid in PRGF-supported programs, verifies whether the use aid is programmed to be smoothed over time, and analyzes how considerations about macroeconomic stability influence the programmed use of aid. It finds that PRGF-supported programs allow countries to use most or almost all increases in aid within a few years. The paper finds some evidence that the programmed absorption of aid is higher in countries where reserve coverage is above a certain threshold, whereas programmed spending does not seem to depend on inflation. Finally, it shows that the presence of a PRGFsupported program does not constrain the actual spending and absorption of aid.
• Update on the Financing of the IMF's Concessional Assistance and Debt Relief to Low-Income Member Countries
  Summary: This paper provides a semi-annual review of the status of financing for Poverty Reduction and Growth Facility-Exogenous Shocks Facility (PRGF-ESF) lending, subsidization of emergency assistance to PRGF-eligible countries, and Heavily Indebted Poor Countries (HIPC) and Multilateral Debt Relief Initiative (MDRI) debt relief. The last review was completed by the IMF Executive Board on April 21, 2008.
  

Surveys

• IMF Welcomes Euro Zone Plan to Combat Crisis
  IMF Managing Director Dominique Strauss-Kahn welcomes a plan by the 15 European countries that use the euro to halt the financial crisis and says the U.S. rescue plan should be implemented "the sooner the better."
• World Finance Chiefs Back Action Plan to Combat Crisis
  World financial leaders endorsed an action plan announced by the seven leading advanced economies to combat the international financial crisis in what IMF Managing Director Dominique Strauss-Kahn called the "first big success in coordination" to halt the downward spiral in world markets and support the global financial system.
• IMF Presses Four-Step Plan to Halt Financial Spiral
  IMF Managing Director Dominique Strauss-Kahn calls on world financial leaders meeting in Washington to address the crisis of confidence in financial markets with coordinated international action.
• African Growth Eases as Region Responds to Price Shocks
  Growth in sub-Saharan Africa is projected to slow slightly, as the continent's worsening, though still strong performance reflects increases in food and fuel prices, slower world growth, and global financial turmoil.
• Africa Conference to Share Lessons from Economic Successes
  President Jakaya Kikwete of Tanzania and IMF Managing Director Dominique Strauss Kahn will host a high-level international conference in Dar es Salaam on March 10-11, 2009, to discuss how Africa can meet the challenge of sustaining and building on recent economic successes.
• Global Economy Hit by Three Major Shocks
  The IMF's October 2008 World Economic Outlook projects that global growth will slow substantially, hit by three major shocks-illustrated in this series of animated charts based on IMF projections.
• House Prices Compounding Crisis
  Housing prices have begun falling this year in several advanced economies. This decline is amplifying the effects of the current financial turmoil.
• Fair Value Accounting Gathers Interest in Current Turmoil
  The International Monetary Fund weighs in on a complicated and controversial question of how financial institutions should value assets and liabilities on their books.
• Emerging Equity Markets Pulled Into Global Crisis
  After more than a year of small spillovers from financial turmoil in advanced economies, equities in emerging markets succumbed to financial distress. However, unlike in past crises, the size of the spillover has not been uniform, the IMF says in a new report.

Country Reports

• Ghana: Selected Issues
• Morocco: Selected Issues
• St. Lucia: Statistical Appendix
• Bosnia and Herzegovina: Selected Issues
• Georgia: Request for Stand-By Arrangement - Staff Report; Staff Supplement; Press Release on the Executive Board Discussion; and Statement by the Executive Director for Georgia

Working Papers

• Wage-Price Setting in New EU Member States
  Author/Editor: Goretti, Manuela
  Summary: This paper analyzes wage- and price-setting relations in new EU member countries. Panel estimates indicate a strong and significant relationship between real wages and labor productivity, as well as evidence of wage pass-through to inflation. Terms of trade shocks do not feed through to real wages. Country-specific wage developments, beyond differences in labor productivity growth, are mostly explained by real wage catch-up from different initial levels and different labor market conditions. Qualitative evidence also suggests that public sector wage demonstration effects and institutional factors may play a role in wage determination.
• Does Openness to International Financial Flows Raise Productivity Growth?
  Author/Editor: Kose, M. Ayhan; Prasad, Eswar; Terrones, Marco
  Summary: This paper provides a comprehensive analysis of the relationship between financial openness and total factor productivity (TFP) growth using an extensive dataset that includes various measures of productivity and financial openness for a large sample of countries. We find that de jure capital account openness has a robust positive effect on TFP growth. The effect of de facto financial integration on TFP growth is less clear, but this masks an important and novel result. We find strong evidence that FDI and portfolio equity liabilities boost TFP growth while external debt is actually negatively correlated with TFP growth. The negative relationship between external debt liabilities and TFP growth is attenuated in economies with higher levels of financial development and better institutions.
• Household Income As A Determinant of Child Labor and School Enrollment in Brazil: Evidence From A Social Security Reform
  Author/Editor: Carvalho Filho, Irineu E.
  Summary: This paper studies the effects of household income on labor participation and school enrollment of children aged 10 to 14 in Brazil using a social security reform as a source of exogenous variation in household income. Estimates imply that the gap between actual and full school enrollment was reduced by 20 percent for girls living in the same household as an elderly benefiting from the reform. Girls' labor participation rates reduced with increased benefit income, but only when benefits were received by a female elderly. Effects on boys' enrollment rates and labor participation were in general smaller and statistically insignificant.
• International Competitiveness of the Mediterranean Quartet:A Heterogeneous-Product Approach
  Author/Editor: Bennett, Herman Z.; Zarnic, Ziga
  Summary: The real effective exchange rate (REER) is the most commonly used measure for assessing international competitiveness. We develop a methodology to estimate the REER that incorporates two distinctive elements that are not considered in the current literature and apply it to the Mediterranean Quartet (MQ) of Greece, Italy, Portugal, and Spain, whose common pattern of real appreciation has created concern in policy and academic circles. The two elements that we add to the existing literature are (i) product heterogeneity when identifying each country's international competitors and their weights and (ii) a comprehensive treatment of services exports. Our refined measure suggests a modest reduction in the observed REER gap between the MQ countries and the other euro area countries. In particular, considering product heterogeneity and services exports implies a lower real appreciation from 1998 to 2006 on the order of 2-3 percent for all MQ countries. These are differenc!
  e-in-difference estimates relative to the results obtained for the rest of the euro area countries using the same methodology.
• Latin America: Highlights from the Implementation of the System of National Accounts 1993 (1993 SNA)
  Author/Editor: Ramos, Roberto Olinto; Pastor, Gonzalo C.; Rivas, Lisbeth
  Summary: This paper reviews the Latin American experience with the implementation of 1993 SNAand the updating of the national accounts' base year. It also makes a preliminary assessment of the possible estimation biases in nominal GDP estimates stemming from the use of outdated national accounts base years, downwards biases with household final consumption estimates, and an overestimation of gross fixed capital formation in construction activities.
• A Theory of International Crisis Lending and IMF Conditionality
  Author/Editor: Jeanne, Olivier; Ostry, Jonathan D.; Zettelmeyer, Jeromin
  Summary: We present a framework that clarifies the financial role of the IMF, the rationale for conditionality, and the conditions under which IMF-induced moral hazard can arise. In the model, traditional conditionality commits country authorities to undertake crisis resolution efforts, facilitating the return of private capital, and ensuring repayment to the IMF. Nonetheless, moral hazard can arise if there are crisis externalities across countries (contagion) or if country authorities discount crisis costs too much relative to the national social optimum, or both. Moral hazard can be avoided by making IMF lending conditional on crisis prevention efforts-"ex ante" conditionality.
• The Costs of Sovereign Default
  Author/Editor: Borensztein, Eduardo; Panizza, Ugo
  Summary: This paper evaluates empirically four types of cost that may result from an international sovereign default: reputational costs, international trade exclusion costs, costs to the domestic economy through the financial system, and political costs to the authorities. It finds that the economic costs are generally significant but short-lived, and sometimes do not operate through conventional channels. The political consequences of a debt crisis, by contrast, seem to be particularly dire for incumbent governments and finance ministers, broadly in line with what happens in currency crises.
• Growing Apart? A Tale of Two Republics: Estonia and Georgia
  Author/Editor: Gylfason, Thorvaldur; Hochreiter, Eduard
  Summary: We compare and contrast the economic growth performance of Estonia and Georgia since the collapse of the Soviet Union in 1991 in an attempt to understand better the extent to which the growth differential between the two countries can be traced to increased efficiency in the use of capital and other resources (intensive growth) as opposed to brute accumulation of capital (extensive growth). On the basis of a simple growth accounting exercise, we infer that advances in education at all levels, good governance, and institutional reforms have played a more significant role in raising economic output and efficiency in Estonia than in Georgia which remains marred by various problems related to weak governance in the public and private spheres.

World Economics Outlook

• Financial Stress, Downturns, and Recoveries, October 2008
• IMF Global Financial Stability Report -- October 2008
  With financial markets worldwide facing growing turmoil, internationally coherent and decisive policy measures will be required to restore confidence in the global financial system. The process of restoring an orderly system will be challenging, as a significant deleveraging is both necessary and inevitable. It is against this challenging and still evolving backdrop that the October 2008 Global Financial Stability Report frames recent events to suggest potential policy measures that could help address the current circumstances.

Finance of HE in SA 2007 report

copyright: yirsh

StatsSA has just released P9103.1 - Financial statistics of higher education institutions, 2007 This statistical release provides information on the sources and uses of cash of higher education institutions for the financial years 2006 and 2007, classified economically and functionally.

Here are some of the highlight:

Net change in the stock of cash from higher education institutions amounted to R1 480 million for the 2007 financial year.


The net change in the stock of cash from higher education institutions amounted to R1 480 million for the 2007 fiscal year. The amount has increased from R900 million in 2006.

Major Influences

• The major contributors to the amount of R1 480 million of the net change in the stock of cash of higher education institutions for the financial year 2007 are the cash receipts from operating activities, R30 217 million (2006: R26 925 million)
• cash payments for operating activities, R24 012 million, (2006: R21 316 million)
• purchases of non-financial assets, R2 325 million, (2006: R1 557 million); sales of non-financial assets, R88 million (2006: R37 million)
• net acquisition of financial assets other than cash, R2 640 million (2006: R3 091 million)
• net incurrence of liabilities, R152 million (2006: -R98 million), (see Table A, p.5).

OECD releases

New reports released:

Improving cost effectiveness in the health care sector in Iceland
Health outcomes and the quality of health care in Iceland are very good by international comparison, while income related health inequality appears to be smaller than in most other countries. However, the health care system is costly and, according to OECD estimates, public expenditure on health and long term care could reach 15% of GDP by 2050 if no restraining measures are taken.

The challenges of monetary policy in Turkey
Monetary policy has been one of the main pillars of the post-2001 stabilisation programme. Encouraged by its success, the central bank shifted from implicit to explicit inflation targeting in 2006 and set a medium-term inflation target of 4%, applicable from end 2007.

Understanding Russian regions' economic performance during periods of decline and growth – an extreme bound analysis approach
This article uses “extreme-bound”-type analysis to revisit the determinants behind widely differing economic growth in Russian regions. Using data of 77 regions for 1993-2004, it separately examines the growth drivers for the phase of economic decline up to 1998, and for the period of strong growth afterwards.

Do tax structures affect aggregate economic growth? Empirical evidence from a panel of OECD countries
This paper examines the relationship between tax structures and economic growth by entering indicators of the tax structure into a set of panel growth regressions for 21 OECD countries, in which both the accumulation of physical and human capital are taken into account.

The Economics of Education

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The World Bank has released their newest report on HE in Sub-Saharan Africa, Accelerating Catch-Up: Tertiary Education for Growth in Sub-Saharan Africa and reports that African governments must invest more in tertiary education--and those investments must be smarter-- if their graduates are to succeed in today’s intensely competitive global environment.

A new Bank study, launched at the roundtable, titled Accelerating Catch-up: tertiary education for growth in Sub-Saharan Africa, highlights some of the options available for countries to develop reform strategies towards more efficient, more relevant and higher quality tertiary education systems.

Economics Down Under

The Australian economy, which is in its 17th consecutive year of growth, has benefited from remarkable results. But difficult challenges lie ahead.

How to balance inflation threats and risks of a strong downturn? How to strengthen labour supply? How to enhance education performance? What reforms are needed for labour and product markets? How to implement climate change policy and sustainable water management?

These are some of the questions addresses by the OECD Economic Survey of Australia 2008.

FDI spillovers report

Copyright:majeye

The OECD has released their newest report on Foreign direct investment (FDI).

Here is the abstract from the report:

Foreign direct investment (FDI) represents an increasingly important dimension of international economic integration with global FDI flows growing faster than output over the past two decades. FDI is a particular form of investment, as it transfers knowledge as well as finance that may otherwise be unavailable in the domestic economy.



This paper uses firm-level data to identify FDI spillovers across countries, sectors and time. The analysis suggests that knowledge-related spillovers from FDI vary considerably across sectors. Services industries enjoy the strongest productivity-enhancing effects of FDI, particularly through backward linkages.

There is no strong evidence of horizontal productivity spillovers at the aggregate level. The results also indicate a significant and positive correlation between the degree of trade openness and output when measuring the impact of foreign presence in the domestic economy.

A positive interaction is found between trade liberalisation and productivity spillovers. Thus, trade liberalisation can be seen as an important component of any reform package designed to help countries maximise the benefits of FDI.

Credit crunch impacting retailers

Copyright: svilen001

The credit squeeze that culminated in a major financial meltdown last week has been impacting U.S. consumers, as well as retail businesses, throughout 2008.

According to a telephone survey of 100 CFOs at leading chains nationwidstudy by BDO Seidman, LLP, one of the USA’s leading accounting and consulting organizations:

• Nearly half (41%) of CFOs at U.S. retailers have experienced a tightening of credit by their lenders
• More than a third (37%) of the CFOs report a reduction of planned inventory purchases for 2008, further illustrating a difficult lending and economic environment
• One-in-four (24%) of the retail CFOs cite that they have had, or plan to have, significant staff reductions in 2008. When looking at the top 100 retailers specifically, 32 percent of those CFOs are experiencing layoffs this year
• 36 percent of the retail CFOs say that they have, or will, close stores in 2008, with 27 percent citing that they will close more stores this year than they did in 2007.
• three quarters (77%) of CFOs have not or do not plan to delay store opening plans in 2008.
• nearly a third (28%) of the retail CFOs stated that they are evaluating, or considering changing from U.S. accounting standards to IFRS
• The majority (91%) of retail CFOs reported that the weak U.S. dollar has not increased their concern of being acquired by an international entity

October is in the Pink!

October is not just the "mooiste, mooiste maand" as Leipoldt referred to it, it is also International Breast Cancer awareness month.

Breast cancer is the 4th biggest cancer cause of death of South Africans, the 2nd biggest for women and the 18th biggest for men (remember 1% of breast cancer patients are men) and has overtaken cervical cancer as the most common cancer among women in South Africa.

As a survivor of a breast cancer scare last year, when I was diagnosed with a non cancerous tumor, I want to urge all my lecturers to regularly check your body for lumps and consult with your doctors immediately, because it is the only way to get peace of mind and the necessary treatment.

Here are a few websites with more information:

• CANSA
• Breastcancer.org
• Dept. of Health

ERSA's new papers

The Economic Research Southern Africa (ERSA) has released three new working papers:

Working Paper 94
Title: Nonparametric estimation when income is reported in bands and at points
Author(s): Martin Wittenberg
Abstract

We show how to estimate kernel density functions of distributions in which some of the responses are provided in brackets, by inverse probability weighting. We consider two cases, one where the data are CAR and where the data are not CAR. We show how the selection probabilities can be estimated by means of the EM algorithm without specifying a parametric distribution function for the variable. A Monte Carlo experiment shows that this procedure estimates the selection parameters fairly precisely. We apply these techniques to earnings data from South Africa’s first post-apartheid nationally representative survey, the 1994 October Household Survey.

Working Paper 95

Title: Perceptions regarding Entrepreneurship in an Emerging and Culturally Diverse Economy: A South African Survey
Author(s): John Luiz and Martine Mariotti
Abstract
Of all the developing countries that participated in the Global Entrepreneurship Monitor survey, South Africa was ranked the lowest, in terms of entrepreneurial activity. It is clear that South Africa is not producing a sufficiently entrepreneurial economy and this needs to be addressed so as to create employment, expand markets, increase production and revitalise communities. This paper examines the entrepreneurial traits of a diverse group of young adults in South Africa. It looks at their attitudes towards and perceptions of entrepreneurship, entrepreneurial opportunities and the broader environment.

Working Paper 96
Title: On the Real Exchange Rate Effects of Higher Electricity Prices in South Africa
Author(s): Jan van Heerden, James Blignaut and André Jordaan
Abstract
The paper uses a static Computable General Equilibrium (CGE) model of South Africa and simulates various shocks to the price of electricity. We attempt different closures to the model and compare their respective effects on the Consumer Price Index. In a CGE model, this is measuring the real appreciation of the exchange rate, or international trade competitiveness. In general, we conclude that electricity prices per se does not significantly influence the real exchange rate, regardless of which closure is used.

Support for IASB's reaction on the financial crisis

At their meeting in Beijing today, the Trustees of the IASC Foundation announced their unanimous support for the approach that the International Accounting Standards Board (IASB) laid out last Friday to accelerate its response to the credit crisis.
Under this approach, the IASB will seek appropriate language to eliminate any differences in how International Financial Reporting Standards (IFRSs) and US generally accepted accounting principles (GAAP) address the issue of reclassification of financial instruments. The Trustees support the IASB’s intention to complete this work by the end of next week. Read More

New books

For Finance & Investment:

1. Advanced capital budgeting : refinements in the economic analysis of investment projects / Harold Bierman, Jr. and Seymour Smidt. New York, N.Y. : Routledge, 2007.

As always, if you want to take out this title, please let me know.

University news from the West

In Study Abroad, Dispute Over Roaming
Students and parents sue cell phone provider popular among study abroad participants, alleging unfair billing practices

Understanding Students Who Were 'Born Digital'
Authors of a new book talk about technology in the classroom, digital literacy and changes in the library.

Trickle-Down Economic Duress
Months of national fiscal strain have had little direct impact on colleges so far. As liquidity crisis intensifies, a few signs of actual distress begin to emerge in higher education.

Border-Crossing Universities
Europe is seeing new models for foreign institutions. In Britain, a Malaysian university opens to serve immigrant students.


The long and the short of it
Britain's one-year masters is proving a sticking point in the Bologna Process, but the equivalence issue is raising difficult questions about length of study for other degrees, too.

Lecturers fear anti-terror laws
Academics instruct students not to download sensitive material

Pass the exam hall to enter Dragons’ Den
Innovative assessment techniques are being used to challenge students.

REF could penalise those working across disciplines
Study says interdisciplinary researchers might lose out as their work is less cited

US: Poor students miss out in some universities
A new study by researchers at the University of California, Berkeley, has found that selective institutions in America differ markedly in the number of low-income students they admit. John Douglass and Gregg Thomson investigated the divide between poor and rich students, comparing a group of selective institutions and their number and percentage of Pell Grant recipients.

UK: Widening participation debate heats up Diane Spencer
The debate on widening participation in Britain's universities heated up last week with the publication of a report on special schemes to encourage pupils from poorer backgrounds to enter higher education, and inflammatory remarks by the Chancellor of Oxford University. Lord (Chris) Patten told a conference of independent school heads that his university should not be treated "like a social security office" to help disadvantaged pupils from state schools.

ROMANIA: Investment boost for higher education Karen MacGregor
Higher education in Romania has undergone huge changes in the past two decades, from a small and stifled sector during the communist era to a competitive system with seven times more students, more than 100 institutions and burgeoning research. There are challenges, including raising quality, but investment in higher education has increased 30-fold in the past seven years, says Professor Paul Serban Agachi, president of the academic council of Babes-Bolyai University and a member of a team that crafted reforms

JAPAN: University crime experts on call Gavin Blair
The second article in a special series on how universities are helping fight crime. Though the number of academic specialists in commercial crime in the Asia-Pacific region may be fewer than in the US or Europe, many of the leading figures are willing to work with corporate clients and have a great deal of experience outside the ivory towers.

FRANCE: Higher education and research are budget priorities Jane Marshall
Higher education and research are the government's chief priority in the 2009 budget. Next year's allocation will rise by EUR1.8 billion (US$2.57 billion) to a total of EUR24.16 billion, up 6.5% compared with 2008. But the sector has not escaped 900 job cuts although these are proportionally less severe than those imposed on other ministries.

UK: Teacher gender gap widens Diane Spencer
Despite government efforts to attract men into teaching, the latest figures show the gender gap is widening. The Higher Education Statistics Agency found that males made up less than a quarter of all teaching qualifications obtained from higher education institutions in 2006-07, the lowest number for five years.

EUROPE: Young scientists promise a bright future Alan Osborn
Three young researchers, from Poland, Slovakia and Britain, were awarded the top prizes in the EU Contest for Young Scientists in Copenhagen on 25 September, against competition from national scientific prize-winners from 39 European countries plus Brazil, Canada, China, Mexico, New Zealand and the US.


Economic Crisis Rapidly Changes MBA Education steven bell
Business schools are responding with counseling, classroom analysis, curriculum changes, and case studies to the convulsions that have led to the bankruptcy or fire sales of leading US financial firms and a federal bailout. At schools that have long funneled graduating MBAs to Wall Street, professors are teaching about the crisis, even as their students ponder what it will mean for their careers. Many longtime faculty members and administrators say they have never seen a series of events with greater potential to transform the focus of business education - and the career trajectories of their students.

iTunes University Lets IHEs Spread Their Messages steven bell
To keep up with the growing presence of all things online, universities are now aiming to reach students, prospective students, and anyone else with a love of learning through a forum that is both popular and recognizable. In other words, they're looking to iTunes. Conceived as a collaboration between Apple and various universities in 2004, iTunes U launched in the spring of 2006. The site, which began with only 16 institutions, has ballooned in recent months as more schools join up to post their content. Usage, too, is growing quickly.

Researchers Say Partial Lecture Notes Are Better For Students Than Full Notes steven bell
Course management software programs make it especially easy for instructors to provide students with a set of complete lecture notes. It seems that more instructors are doing this, as witnessed in the regularity with which students ask that the instructor’s notes be posted. But is giving students a complete set of notes a good idea? Based on their findings, these researchers recommend providing students with partial notes.

IMF releases

Here are the latest releases from the IMF:

Surveys

• IMF Head Urges Greater Regulation of Financial Sector
  IMF Managing Director Dominique Strauss-Kahn welcomes the $700 billion rescue plan for U.S. financial markets to "put out the fire" engulfing the banking system, but says a broader global solution to the crisis is needed.
• IMF to Launch Trust Funds to Support Technical Assistance
  The IMF plans to launch a series of trust funds to channel its technical assistance to specific policy topics. The menu-based Topical Trust Funds approach is designed to augment IMF resources already allocated to technical assistance.
• Inflation Risks Remain Despite Slowing Growth
  Commodity prices will likely remain high and volatile, contributing to risks of second-round effects-such as wage hikes-across a range of emerging and developing economies, and further monetary policy tightening may be still relevant to contain these inflationary pressures, according to new IMF research.
• Making Fiscal Stimulus Effective During Downturns
  A new IMF study finds that although fiscal policy is a potentially valuable tool for stimulating growth, it can easily do more harm than good if it is not implemented well. Tax cuts or spending increases that make debt unsustainable are likely to cause output to fall, not rise
• Financial Stress Likely to Hit Real Economy Hard
  Episodes of financial turmoil that are characterized by stress in commercial and investment banks are more likely to be associated with severe and protracted economic downturns, according to new IMF research.
• Lessons From Cross-Regional Analysis
  A new IMF study explores the patterns of current account balances of emerging economies-especially in Asia and Europe-and asks why they have become much more diverse in recent years and what those differences mean for external vulnerability.
• Financial Crisis Likely to Worsen Economic Downturn
  The current financial market meltdown in the United States and other advanced economies will likely lead to longer and deeper economic downturns in some of these countries, according to new IMF research on the impact of the shocks on the world economy.

Working Papers

• Working Paper No. 08/233: Rapid Current Account Adjustments: Are Microstates Different?

Summary: We describe unique aspects of microstates-they are less diversified, suffer from lumpiness of investment, they are geographically at the periphery and prone to natural disasters, and have less access to capital markets-that may make the current account more vulnerable, penalizing exports and making imports dearer. After reviewing the "old" and "new" view on current account deficits, we attempt to identify policies to help reduce the current account. Probit regressions suggest that microstates are more likely to have large current account adjustments if (i) they are already running large current account deficits; (ii) they run budget surpluses; (iii) the terms of trade improve; (iv) they are less open; and (v) GDP growth declines. Monetary policy, financial development, per capita GDP, and the de jure exchange rate classification matter less. However, changes in the real effective exchange rate do not help drive reductions in the current account deficit in microstate!

• Working Paper No. 08/234: Inflation Targeting and Communication: It Pays Off to Read Inflation Reports

Summary: Inflation-targeting central banks have a respectable track record at explaining their policy actions and corresponding inflation outturns. Using a simple forward-looking policy rule and an assessment of inflation reports, we provide a new methodology for the empirical evaluation of consistency in central bank communication. We find that the three communication tools-inflation targets, inflation forecasts, and verbal assessments of inflation factors contained in quarterly inflation reports-provided a consistent message in five out of six observations in our 2000-05 sample of Chile, the Czech Republic, Hungary, Poland, Thailand, and Sweden.

• Working Paper No. 08/232: Bank Losses, Monetary Policy and Financial Stability-Evidence on the Interplay from Panel Data
• Working Paper No. 08/231: Beyond Macroeconomic Stability: The Quest for Industrialization in Uganda

Summary: Uganda has registered one of the most impressive economic turnarounds of recent decades. The amelioration of conflict and wide ranging economic reforms kick-started rapid economic growth that has now been sustained for some 20 years. But there is a strong sense in policy making circles that despite macroeconomic stability and reasonably well functioning markets, economic growth has not translated into significant structural transformation. This paper considers (i) Uganda's record of economic transformation relative to the high growth Asian countries and (ii) the contending explanations as to why more transformation and higher growth has proved elusive.

• Working Paper No. 08/228: Determinants of Government Efficiency
  Summary: We compile the first large cross-country panel dataset of public sector performance and efficiency, encompassing 114 countries on all income levels from 1980 to 2006, with about 1,800 country-year observations for the education sector and about 900 observations for health. We regress these indicators on potential economic, institutional, demographic, and geographic determinants. Our most resounding conclusion is that higher government expenditure relative to GDP tends to be associated with lower efficiency in the respective sector. Moreover, we find that richer countries exhibit better public sector performance and efficiency, and that institutional and demographic factors also play a significant role.
• Working Paper No. 08/229: Banks and Labor as Stakeholders: Impact on Economic Performance
  Summary: Traditionally, the impacts of the rights of financial institutions and workers on corporate performance have been analyzed independently. Yet, theory clearly indicates that the combination of relative powers of different stakeholders affects a firm overall performance. Using U.S. state level and state-industry level data, we investigate how output growth is affected by bank branch deregulation and employment protection occurring over 1972-1993. We find that financial liberalization positively impact overall state growth but greater workers' rights affects it ambiguously. At the industry level, however, employment protection promotes those industries that are more knowledge intensive, while the effect of financial liberalization does not differ across industries that vary in external financing dependency. The results hold controlling for changes in shareholders' rights, which itself is not significant. The findings suggest that financial liberalization operates mostl!
  y through an efficiency channel, better reallocating resources across sectors, while employment protection creates higher incentives and encourages more sector-specific, human capital investments. Overall, the results show that the strength of stakeholders' protection affects performance through efficiency channels and provide support for a stakeholders' view of corporate governance.
• Working Paper No. 08/230: Garbage In, Gospel Out? Controlling for the Underreporting of Remittances
  Summary: Empirical studies that use self-reported data on remittances to measure the latter's impact on microeconomic incentives mostly ignore the potential errors associated with reporting/measurement issues. An econometric procedure to control for these errors is developed and applied to household-level data from Armenia. We find evidence of systematic under-reporting of remittances. After controlling for this, we find a strong negative impact of remittances on incentives to work.
• Working Paper No. 08/226: An Anatomy of Credit Booms: Evidence From Macro Aggregates and Micro Data
  Summary: We study the characteristics of credit booms in emerging and industrial economies. Macro data show a systematic relationship between credit booms and economic expansions, rising asset prices, real appreciations and widening external deficits. Micro data show a strong association between credit booms and leverage ratios, firm values, and banking fragility. We also find that credit booms are larger in emerging economies, particularly in the nontradables sector; most emerging markets crises are associated with credit booms; and credit booms in emerging economies are often preceded by large capital inflows but not by financial reforms or productivity gains.
• Working Paper No. 08/225: Current and Proposed Non-Oil Tax System in Azerbaijan
  Summary: This paper analyzes developments in non-oil tax policy, administration, and revenues in Azerbaijan, and suggests measures for further improvement. The main finding is that Azerbaijan's non-oil tax revenues increased significantly as a share of non-oil GDP in the last five years, but remain below potential. The non-oil tax revenue shortfall is mainly due to widespread exemptions, but there is scope for strengthening tax and customs administration. In the short term, expanding the tax base and better tax and customs administration will yield more revenues. In the medium term, more far-reaching reforms including reducing some direct tax rates, should be considered. The overall reform package could be made broadly revenue neutral by improving taxpayers' compliance and reducing exemptions.
• Working Paper No. 08/227: Tax Reforms, "Free Lunches", and "Cheap Lunches" in Open Economies
  Author/Editor: Ganelli, Giovanni ; Tervala, Juha
  Summary: This paper focuses on the macroeconomic and budgetary impact of tax reforms in a New Keynesian two-country model. Our results show that both income and consumption unilateral tax rate reductions do not constitute a "free lunch", in the sense that they have negative budgetary consequences for the country which implements them. In addition, the degree of self-financing implied by our model is in the 8½-24 percent range. Since the degree of self-financing estimated in previous literature was larger, we conclude that in our model not only the "lunch" is not "free", but is also not that "cheap". A comparison of alternative (income-tax versus consumption-tax based) fiscal stimulus packages shows that consumption tax cuts imply a larger short-run impact on domestic output but the income tax cuts stimulate the domestic economy more in the long run. We also look at the implications of a revenue-neutral tax reform in which consumption taxes are increased to compensate for low!
  er income tax collection.
  

Country Reports

• The Gambia: Selected Issues and Statistical Appendix and Article IV Consultation
• Portugal: 2008 Article IV Consultation
• Qatar: Detailed Assessment Report on Anti-Money Laundering and Combating the Financing of Terrorism and Report on the Observance of Standards and Codes - FATF Recommendations for Anti-Money Laundering and Combating the Financing of Terrorism

Policy Paper

• The Macroeconomics of Scaling-up Aid: the Cases of Benin, Niger, and Togo
  Summary: In September 2007, the UN Secretary General launched the Millennium Development Goals (MDG) Africa Steering and Working Groups. The Steering Group brings together the leaders of multilateral institutions to identify practical steps needed for Africa to achieve the MDGs. The Managing Director of the IMF is a member of the Steering Group. The Working Group supports the Steering Group and is comprised of thematic groups in education, agriculture, health, infrastructure and trade facilitation, statistics, aid predictability, and MDG operationalization at the country level.
  The following three notes assess the macroeconomic implications of the spending of scaled-up aid to Benin, Niger, and Togo in line with that promised by the G-8 at Gleneagles, Scotland in 2005.

Extra

• IMF Financial Activities -- Update September 25, 2008
• Currency Composition of Official Foreign Exchange Reserves (COFER) -- Updated COFER tables include second quarter 2008 data. September 30, 2008

The Structure of Financial Supervision: Approaches and Challenges in a Global Marketplace

In July 2007, the Group of Thirty decided to launch a review of various national supervisory
and regulatory approaches and place them within the context of the changing global
financial system.

The study set out to look at the changes evident in the financial markets and the evolution of the national supervisory architecture at a time when central banks and supervisory agencies have been seeking to improve their supervisory processes in light of the blurring of lines between different financial sectors and businesses.

The review of 17 major national supervisory systems has confirmed that while dealing with similar problems and challenges, such systems are fashioned through a process that includes a myriad of political, cultural, economic, and financial influences.

Despite the many differences from country to country and market to market, the central bankers, supervisors, and government ministries are charged with overseeing financial institutions and dealing with threats to the stability of the financial system.

The Group of Thirty that assessed the strengths and weaknesses of a number of international regulatory systems. The conclusions of the study can serve as a framework for the coming debate over how best to reform our regulatory framework to mitigate and withstand future shocks.

As the discussion over financial services regulatory reform deepens, financial industry experts need to stay informed about the direction and future shape of their industry’s changing regulatory structure.

Africa's best books

Africa’s 100 best books of the 20th century is an exhibition currently on display the 6th floor foyer exhibition area of the Kingsway library.

Are you familiar with top 12 authors Naguib Mahfouz (Egypt), Meshack Asare (Ghana), Tsitsi Dangarembga (Zimbabwe), Ngugi wa Thiong’o (Kenya), Thomas Mofolo (Lesotho)?

Visit our exhibition and extend your knowledge and understanding of the great wealth of fiction and non-fiction written by Africans about their lives and societies in the 20th century.

SARB release

The SARB has released the following information:

• Monthly Release of Selected Data No 235 - September 2008

M-banking in Africa

Copyright: kipcurry

According to an article published in Forbes, mobile banking in Africa have been revived by the extraordinary success of Kenyan cellphone operator Safaricom's M-Pesa money transfer facility
mobile banks in Africa faces some challenges:

--Take-up
Far from reaching the unbanked, m-banking services have largely been targeted at existing customers, and even in this case takeup rates have been low. Moreover, active use of accounts has tended to drop off and most customers limit their usage to airtime top-ups and person-to-person payments.
--Complex transactions
Despite the considerable technological advances in the past decade, using a mobile handset to conduct transactional banking remains considerably more complex than using an ATM. Easier technology and more customer education would be required for m-banking to develop mass appeal.
--Regulatory compliance
In developing new financial payments systems, cellphone operators have escaped the regulatory burden faced by banks because they do not, strictly speaking, take deposits. Any attempt by cellphone operators to move beyond cash transfers or purchases of prepaid products into providing a wider range of financial services would encounter this regulatory burden.

In addition to meeting liquidity reserves to protect depositors, cellphone operators would also have to comply with a bewildering and costly array of secondary legislation, including:
--know your customer (KYC) rules
--anti-money laundering regulations
--countering the finance of terrorism legislation

Electricity generated during August 2008

copyright: Scyza

StatsSA released the Electricity generated and available for distribution, August 2008 report.

Here are the main findings:

• The estimated consumption of electricity in August 2008 decreased by 2,8% compared with August 2007.
• Electricity consumed for the three months ending August 2008 decreased by 1,9% compared with the same three months a year ago.
• In the first eight months of 2008, consumption of electricity was affected by numerous factors that led to reduced levels of consumption, such as load shedding and a continuous drive from Eskom in encouraging users to save on electricity consumption.
• Furthermore, the estimated production of electricity in August 2008 decreased by 3,2% compared with August 2007.
• The estimated production of electricity during the latest three months ending August 2008 decreased by 2,6% compared with the same period of 2007.

Corporate taxes and productivity/investments

The OECD released a paper Do corporate taxes reduce productivity and investment at the firm level? Cross-country evidence from the Amadeus dataset that uses a stratified sample of firms across OECD economies over the period 1996-2004 to analyse the effects of corporate taxes on productivity and investment.

Applying a differences-in-differences estimation strategy which exploits differential effects of corporate taxes on firms with different profitability, it is found that corporate taxes have a negative effect on productivity at the firm level.

The effect is negative across firms of different size and age classes except for the small and young, which may be attributable to the relatively low profitability of small and young firms.

The negative effect of corporate taxes is particularly pronounced for firms that are catching up with the technological frontier.

In the investment analysis, the results suggest that corporate taxes reduce investment through an increase in the user cost of capital. This may partly explain the negative productivity effects of corporate taxes if new capital goods embody technological change.

AISB responds to the credit crunch

The IASB is closely monitoring developments in the United States and other jurisdictions to avoid unnecessary inconsistencies in accounting treatments under IFRSs and US generally accepted accounting principles (GAAP).

In doing so, the IASB commits to undertake the following:
1. Consistency of fair value measurement guidance between IFRSs and US GAAP:
On 16 September, the IASB staff issued draft guidance on fair value measurement of financial instruments in markets that are no longer active.

The IASB notes the recent clarification made by the Office of the Chief Accountant of the US Securities and Exchange Commission (SEC) and the staff of the Financial Accounting Standards Board (FASB). The clarification is not an amendment of SFAS 157 Fair Value Measurements, but rather provides additional guidance for determining fair value in inactive markets.

The IASB staff has reviewed the clarification by the SEC and FASB staff and considers it consistent with IAS 39 Financial Instruments: Recognition and Measurement. (See here for the clarification made by the Office of the Chief Accountant of the US SEC and the FASB staff.)

The IASB will continue to ensure that any IFRS guidance is consistent with the clarification that has been provided by the US SEC staff and the FASB staff for those companies using US GAAP. This will help ensure comparability across borders.

2. Consideration of the possible impact of the US Emergency Economic Stabilization Act of 2008 and other similar programmes internationally on the valuation of assets and liabilities:
The IASB will work closely with the FASB to develop a common approach to issues related to the valuation of financial assets and liabilities resulting from purchases made through the US Emergency Economic Stabilization Act of 2008 and any other similar programmes internationally, if and when these programmes are initiated.

3. Immediate consideration of the ability to reclassify financial instruments:
The IASB notes that US GAAP permits entities, in rare circumstances, to reclassify financial instruments that are in the form of securities from their trading portfolio (measured at fair value with changes through the income statement) to ‘held to maturity’ (measured at amortised cost and subject to testing for impairment).

The IASB also notes that US GAAP permits some loans that are not securities to be transferred from Held for Sale (measured at lower of cost or market with changes through the income statement) to Held for Investment (measured at amortised cost and subject to testing for impairment). Provisions aimed at counteracting abuse apply to these reclassifications.

The IASB will assess immediately any inconsistencies in how IAS 39 and US GAAP practice address the issue of reclassifications and whether to eliminate any differences. The IASB will discuss these matters and will decide its position as part of its public meeting during the week of 13-17 October.

At that meeting the IASB will assess the suitability of adopting the US GAAP approach and whether adapting IFRSs will provide relevant information to users of financial statements. The IASB will also consider the potential need to counteract abuse resulting from the ability to reclassify financial instruments and related areas of accounting to ensure consistency between practice in the United States and in those jurisdictions using IFRSs.

4. Willingness to participate in any study on the impact of accounting in the credit crisis: The IASB recognises the need to continue to examine IFRS accounting principles for financial instruments. Earlier this year, the IASB published a discussion paper, Reducing Complexity in Reporting Financial Instruments . This discussion paper is the starting point for considering a possible replacement for IAS 39.

Working with regulators, investors, and industry, the IASB will draw lessons from the credit crisis as it moves forward with its project to reconsider IAS 39. Consistent with discussions in the United States, the IASB will be willing to assist in any study that examines the quality of existing fair value information provided to investors and any impact of financial reporting on the credit crisis.