DOCSLIB.ORG

Income Distribution in Macroeconomic Models

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Income Distribution in Macroeconomic Models June 17, 2005 14:48 m13-book Sheet number 1 Page number 1 black Income Distribution in Macroeconomic Models June 17, 2005 14:48 m13-book Sheet number 2 Page number 2 black June 17, 2005 14:48 m13-book Sheet number 3 Page number 3 black Income Distribution in Macroeconomic Models Giuseppe Bertola Reto Foellmi Josef Zweimüller princeton university press princeton and oxford June 17, 2005 14:48 m13-book Sheet number 4 Page number 4 black Copyright © 2006 by Princeton University Press. Requests for permission to reproduce material from this work should be sent to Permissions, Princeton University Press. Published by Princeton University Press, 41 William Street, Princeton, New Jersey 08540 In the United Kingdom: Princeton University Press, 3 Market Place, Woodstock, Oxfordshire OX20 1SY All rights reserved ISBN: 0-691-12171-0 British Library Cataloging-in-Publication Data is available This book has been composed in Sabon Printed on acid-free paper. ∞ pup.princeton.edu Printed in the United States of America 13579108642 10987654321 June 17, 2005 14:48 m13-book Sheet number 5 Page number 5 black Contents Introduction x Part One Aggregate Growth and Individual Savings 1 Chapter One Production and Distribution of Income in a Market Economy 3 1.1 Accounting 4 1.2 The Neoclassical Theory of Distribution 8 Chapter Two Exogenous Savings Propensities 14 2.1 A Linear Consumption Function 16 2.2 References and Further Issues 25 Chapter Three Optimal Savings 28 3.1 The Optimal Consumption Path 29 3.2 The Dynamics of Accumulation and Distribution 36 3.3 Welfare Distribution in Complete Markets 41 3.4References and Further Issues 46 3.5 Appendix: HARA Preferences 47 3.6 Review Exercises 48 Chapter Four Factor Income Distribution 51 4.1 Factor Shares and Savings in Early Growth Models 53 4.2 Factor Shares in the Neoclassical Growth Model 57 4.3 Optimal Savings and Sustained Growth 63 4.4 Policy and Political Economy 70 4.5 References and Further Issues 77 4.6 Appendix: Factor Shares in a Two-Sector Growth Model 81 Chapter Five Savings and Distribution with Finite Horizons 88 5.1 Distribution and Growth in the Two-Period OLG Model 90 5.2 Inequality in a Perpetual Youth Model 104 5.3 One-Period Lifetimes and Bequests 115 June 17, 2005 14:48 m13-book Sheet number 6 Page number 6 black 6 • CONTENTS 5.4References and Further Issues 122 5.5 Appendix: Consumption in the Perpetual Youth Model 124 Chapter Six Factor Shares and Taxation in the OLG Model 127 6.1 Factor Shares in the Two-Period Model 128 6.2 Factor Shares and Growth in the Perpetual Youth Model 138 6.3 References and Further Issues 143 Part Two Financial Market Imperfections 145 Chapter Seven Investment Opportunities and the Allocation of Savings 147 7.1 Decreasing Returns to Individual Investment 148 7.2 Increasing Returns and Indivisibilities 158 7.3 Endogenous Factor Prices and “Trickle-Down” Growth 165 7.4References and Further Issues 172 7.5 Review Exercises 177 Chapter Eight Risk and Financial Markets 180 8.1 Optimization under Uncertainty 181 8.2 Rate-of-Return Risk 189 8.3 Portfolio Choice and Risk Pooling 195 8.4References and Further Issues 200 8.5 Review Exercise 202 Chapter Nine Uninsurable Income Shocks 204 9.1 A Two-Period Characterization 205 9.2 General Equilibrium: The CARA Case 210 9.3 General Equilibrium: The CRRA Case 214 9.4Application: Uninsurable Risk in the Labor Markets 226 9.5 References and Further Issues 235 Part Three Many Goods 239 Chapter Ten Distribution and Market Power 241 10.1 Growth through Expanding Product Variety 243 10.2 Variable Elasticities of Substitution 252 10.3 Factor Shares, Taxation, and Political Economy 262 10.4References and Further Issues 264 June 17, 2005 14:48 m13-book Sheet number 7 Page number 7 black CONTENTS • 7 Chapter Eleven Indivisible Goods and the Composition of Demand 266 11.1 Income Distribution and Product Diversity 268 11.2 The Introduction of New Products 275 11.3 Inequality and Vertical Product Differentiation 285 11.4References and Further Issues 298 Chapter Twelve Hierarchic Preferences 302 12.1 A Basic Framework 303 12.2 Growth, Distribution, and Structural Change 313 12.3 References and Further Issues 319 Chapter Thirteen Dynamic Interactions of Demand and Supply 321 13.1 Learning by Doing and Trickle-Down 322 13.2 Demand Composition and Factor Rewards 328 13.3 References and Further Issues 337 Solutions to Exercises 339 References 398 Index 417 June 17, 2005 14:48 m13-book Sheet number 8 Page number 8 black June 17, 2005 14:48 m13-book Sheet number 9 Page number 9 black Income Distribution in Macroeconomic Models June 17, 2005 14:48 m13-book Sheet number 10 Page number x black Introduction This book focuses on two main sets of issues. The first relates to the dynamics of aggregate variables when the population is heterogeneous. Under which conditions are the dynamics of capital accumulation affected by the distribution of income and wealth? When is a more equal distri- bution of income and wealth beneficial or harmful for accumulation and growth? The second set of issues refers to the dynamics of the distribu- tion of income and/or wealth. How does the distribution of income and wealth evolve in a market economy? When does the gap between rich and poor people in market economy increase over time? Conversely, under which conditions will this gap tend to disappear eventually? Issues Interest in the distribution of income used to be central in economics. Classical economists were concerned with the issue of how an economy’s output is divided among the various classes in society, which, for David Ricardo, was even “the principal problem of Political Economy.” While classical economists were primarily interested in the functional distribu- tion of income among factors of production (wages, profits, and land rents), in modern societies distributional concerns focus at least as much on the personal (or size) distribution of income. In contrast to its para- mount importance in nineteenth-century classical economics, however, income distribution became a topic of minor interest in recent decades. Atkinson and Bourguignon (2001, 7265) note that “in the second half of the century, there were indeed times when interest in the distribution of income was at a low ebb, economists appearing to believe that differences in distributive outcomes were of second order importance compared with changes in overall economic performance.” This is especially true regarding macroeconomics and growth theo- ries. While early growth models in the post-Keynesian tradition were still strongly concerned with distributional issues (see, in particular, Kalecki 1954 and Kaldor 1955, 1956), subsequent “new classical” theoretical de- velopments removed distribution from the set of macroeconomic issues of interest. Crucial progress in microfounding behavioral relationships in terms of optimal choices and expectations accompanied heavy reliance on “representative agent” modeling strategies. The distribution of income and wealth across consumers was viewed as a passive outcome of aggre- gate dynamics and market interactions, and little attention was paid to June 17, 2005 14:48 m13-book Sheet number 11 Page number xiblack Introduction • xi feedback effects from distribution into growth and other macroeconomic phenomena. The prominence of economic inequality as a macroeconomic issue is much larger at the beginning of the twenty-first century. Renewed inter- est in issues of whether and how income and wealth inequality interact with production and growth is the result of dramatic changes in the dis- tribution of incomes that have been taking place all over the world in the late portion of the twentieth century. Rising wealthiness coexists with persistent poverty in rich and in poor countries alike. China and India, comprising almost 40 percent of the world’s population, have experienced extraordinarily high growth rates, leading to a strong reduction in (global) poverty (see, e.g., Bourguignon and Morrison 2002; Sala-i-Martin 2002; or Deaton 2004, among others). At the same time, inequality within these countries has been increasing. In other parts of the world, in particular in most countries of sub-Saharan Africa, no such growth has been taking place, and dramatic levels of poverty and excessive inequalities persist. Similarly, growth in many countries of Latin America was sluggish in the past decades, and inequality persisted at high levels. Furthermore, empirical evidence suggests there are interesting links be- tween distribution and long-run growth. For instance, countries in East and Southeast Asia had low inequality levels in the first place and man- aged to catch up quite considerably in terms of per capita incomes. More generally, there is a negative correlation between inequality and long-run growth rates across countries. For instance, in fast-growing countries such as the East Asian Tigers, India, and China, inequality had been much lower than in low-growing countries of Latin America and sub-Saharan Africa. This suggests that excessive inequalities may be an obstacle for growth, whereas low inequality may be growth enhancing. Conversely, it is likely that the process of growth and development brings about systematic changes in the distribution of incomes and wealth. Kuznets (1955) was among the first who speculated about a systematic relation- ship between inequality and the process of development. According to Kuznets, inequality increases in early stages of development (as work- ers move from the traditional to the modern sector) and decreases again (when the modern sector takes over the entire economy), resulting in the famous “Kuznets curve,” an inverse-U relationship between inequal- ity and per capita incomes. However, it is not clear whether this is an appropriate description of the actual inequality experiences across coun- tries.
Load more

Recommended publications
  • The Lorenz Curve
    Charting Income Inequality The Lorenz Curve Resources for policy making Module 000 Charting Income Inequality The Lorenz Curve Resources for policy making Charting Income Inequality The Lorenz Curve by Lorenzo Giovanni Bellù, Agricultural Policy Support Service, Policy Assistance Division, FAO, Rome, Italy Paolo Liberati, University of Urbino, "Carlo Bo", Institute of Economics, Urbino, Italy for the Food and Agriculture Organization of the United Nations, FAO About EASYPol The EASYPol home page is available at: www.fao.org/easypol EASYPol is a multilingual repository of freely downloadable resources for policy making in agriculture, rural development and food security. The resources are the results of research and field work by policy experts at FAO. The site is maintained by FAO’s Policy Assistance Support Service, Policy and Programme Development Support Division, FAO. This modules is part of the resource package Analysis and monitoring of socio-economic impacts of policies. The designations employed and the presentation of the material in this information product do not imply the expression of any opinion whatsoever on the part of the Food and Agriculture Organization of the United Nations concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. © FAO November 2005: All rights reserved. Reproduction and dissemination of material contained on FAO's Web site for educational or other non-commercial purposes are authorized without any prior written permission from the copyright holders provided the source is fully acknowledged. Reproduction of material for resale or other commercial purposes is prohibited without the written permission of the copyright holders.
    [Show full text]
  • Inequality Measurement Development Issues No
    Development Strategy and Policy Analysis Unit w Development Policy and Analysis Division Department of Economic and Social Affairs Inequality Measurement Development Issues No. 2 21 October 2015 Comprehending the impact of policy changes on the distribu- tion of income first requires a good portrayal of that distribution. Summary There are various ways to accomplish this, including graphical and mathematical approaches that range from simplistic to more There are many measures of inequality that, when intricate methods. All of these can be used to provide a complete combined, provide nuance and depth to our understanding picture of the concentration of income, to compare and rank of how income is distributed. Choosing which measure to different income distributions, and to examine the implications use requires understanding the strengths and weaknesses of alternative policy options. of each, and how they can complement each other to An inequality measure is often a function that ascribes a value provide a complete picture. to a specific distribution of income in a way that allows direct and objective comparisons across different distributions. To do this, inequality measures should have certain properties and behave in a certain way given certain events. For example, moving $1 from the ratio of the area between the two curves (Lorenz curve and a richer person to a poorer person should lead to a lower level of 45-degree line) to the area beneath the 45-degree line. In the inequality. No single measure can satisfy all properties though, so figure above, it is equal to A/(A+B). A higher Gini coefficient the choice of one measure over others involves trade-offs.
    [Show full text]
  • Insights from Income Distribution and Poverty in OECD Regions
    How’s life in your region? Insights from income distribution and poverty in OECD regions July 2014 New OECD data show that differences in household income distribution and poverty are large not only among OECD countries but also across regions within a country. The availability of information on household income distribution and poverty at regional level, as well as on other aspects of quality of life, helps policy makers to focus their efforts and enhance the effectiveness of public interventions in a period of tight resources. The forthcoming OECD report How’s life in your region? documents the importance of regional inequalities in many well-being dimensions in OECD countries, provides evidence on the determinants of income inequalities within and between regions, and discusses the links between income inequality and economic growth at regional level. Regional data on the distribution of household income come with various warnings. Household surveys are rarely designed to be representative at the regional level; comparing regions in different countries is tricky, because their size varies; and these income numbers ignore the fact that the cost of living is usually lower in rural areas than in cities, which may have the effect of exaggerating inequality in a country. The new set of indicators of regional income inequality and poverty produced for 28 OECD countries extends the OECD Income Distribution Database (IDD) to NUTS2 regions in Europe and to large administrative regions (e.g. states in Mexico and Unites States) for non-European countries for the year 2010 and providing measures of the statistical reliability of these data.
    [Show full text]
  • Reducing Income Inequality While Boosting Economic Growth: Can It Be Done?
    Economic Policy Reforms 2012 Going for Growth © OECD 2012 PART II Chapter 5 Reducing income inequality while boosting economic growth: Can it be done? This chapter identifies inequality patterns across OECD countries and provides new analysis of their policy and non-policy drivers. One key finding is that education and anti-discrimination policies, well-designed labour market institutions and large and/or progressive tax and transfer systems can all reduce income inequality. On this basis, the chapter identifies several policy reforms that could yield a double dividend in terms of boosting GDP per capita and reducing income inequality, and also flags other policy areas where reforms would entail a trade-off between both objectives. 181 II.5. REDUCING INCOME INEQUALITY WHILE BOOSTING ECONOMIC GROWTH: CAN IT BE DONE? Summary and conclusions In many OECD countries, income inequality has increased in past decades. In some countries, top earners have captured a large share of the overall income gains, while for others income has risen only a little. There is growing consensus that assessments of economic performance should not focus solely on overall income growth, but also take into account income distribution. Some see poverty as the relevant concern while others are concerned with income inequality more generally. A key question is whether the type of growth-enhancing policy reforms advocated for each OECD country and the BRIICS in Going for Growth might have positive or negative side effects on income inequality. More broadly, in pursuing growth and redistribution strategies simultaneously, policy makers need to be aware of possible complementarities or trade-offs between the two objectives.
    [Show full text]
  • The College Wealth Divide: Education and Inequality in America, 1956-2016
    The College Wealth Divide: Education and Inequality in America, 1956-2016 Alina K. Bartscher, Moritz Kuhn, and Moritz Schularick Using new long-run microdata, this article studies wealth and income trends of households with a college degree (college households) and without a college degree (noncollege households) in the United States since 1956. We document the emergence of a substantial college wealth premium since the 1980s, which is considerably larger than the college income premium. Over the past four decades, the wealth of college households has tripled. By contrast, the wealth of noncollege households has barely grown in real terms over the same period. Part of the rising wealth gap can be traced back to systematic portfolio differences between college and noncollege households that give rise to different exposures to asset price changes. Noncollege households have lower exposure to the equity market and have profited much less from the recent surge in the stock market. We also discuss the importance of financial literacy and business ownership for the increase in wealth inequality between college and noncollege households. (JEL I24, E21, D31) Federal Reserve Bank of St. Louis Review, First Quarter 2020, 102(1), pp. 19-49. https://doi.org/10.20955/r.102.19-49 1 INTRODUCTION It is a well-documented fact that the college wage premium has increased substantially since the 1980s (see, e.g., Levy and Murnane,1992; Katz and Autor, 1999; and Goldin and Katz 2007). This trend can be traced back to differences in the growth of the demand for and the supply of college-educated workers that are driven by skill-biased technical change, socio- demographic factors, and institutional features (Card and Lemieux, 2001, and Fortin, 2006).
    [Show full text]
  • Globalization and Income Distribution: Evidence from Pakistan
    Globalization and Income Distribution: Evidence from Pakistan Shahzad Hussain, Dr. Imran Sharif Chaudhry and Mahmood-ul-Hasan* Abstract It is widely believed that income inequality can be reduced through opening up of the economies of developing countries into the world market. But changes in country’s trade exposure and world market can affect negatively the distribution of resources within the country. This paper empirically explores the impact of globalization on income distribution using econometric time series approach for the period 1972- 2005 in Pakistan. The results are in favor of the conventional wisdom that opening up of the economy into the international market has good effects on the distribution of income. Income inequality can be reduced through foreign capital penetration. Huge trade volume with negative trade balance must be controlled. Key Words: Globalization, Income Distribution, Trade Openness, Foreign Direct Investment, Remittances JEL Classification: D31, F10, F21, F24 I. Introduction Nations across the globe have established progressively closer contacts with the passage of time, but recently the pace has dramatically increased. These closer contacts of different forms are welcomed by the politicians, academics, journalists and economists throughout the world. But many also believe that business-driven globalization is uprooting the old ways of life and threatening the cultures and livelihoods of the poor people. Nevertheless globalization is a multi-dimensional phenomenon. Economic globalization can comprehensively defined as a process of rapid economic integration among countries driven by liberalization of trade, investment and capital flows as well as technological change (Torres, 2001).Globalization is also movement across international borders of goods and factors of production.
    [Show full text]
  • The Racial Wealth Divide in Chicago
    The Racial Wealth Divide in Chicago Optimized for Screen Readers Contents Director’s Letter ...................................................................................................................................... 3 The Racial Wealth Divide in Chicago .................................................................................................... 4 Infographic Highlights ........................................................................................................................ 4 Population ....................................................................................................................................... 4 Business Value ................................................................................................................................ 5 Unemployment Rate ....................................................................................................................... 5 Cost-Burdened Owners ................................................................................................................... 5 Immigrants & Assimilation in Chicago .................................................................................................. 5 Households of Color in Liquid Asset Poverty .................................................................................... 5 Population ........................................................................................................................................... 5 Liquid Asset Poverty by Race ............................................................................................................
    [Show full text]
  • Income Inequality and the Persistence of Racial Economic Disparities Robert Manduca
    Income Inequality and the Persistence of Racial Economic Disparities Robert Manduca Harvard University Abstract: More than 50 years after the Civil Rights Act, black–white family income disparities in the United States remain almost exactly the same as what they were in 1968. This article argues that a key and underappreciated driver of the racial income gap has been the national trend of rising income inequality. From 1968 to 2016, black–white disparities in family income rank narrowed by almost one-third. But this relative gain was negated by changes to the national income distribution that resulted in rapid income growth for the richest—and most disproportionately white—few percentiles of the country combined with income stagnation for the poor and middle class. But for the rise in income inequality, the median black–white family income gap would have decreased by about 30 percent. Conversely, without the partial closing of the rank gap, growing inequality alone would have increased the racial income gap by 30 percent. Keywords: income inequality; race; stratification; disparities HE stubborn persistence of racial income disparities has been a core frustration T of American social policy for the past 50 years (Bloome 2014; Bound and Freeman 1992; Wilson and Rodgers 2016). In 1968, shortly after the passage of the Civil Rights Act, the median family income of African Americans was 57 percent that of whites. In 2016, after almost 50 years of anti-discrimination legislation, attempts to equalize access to education, and cultural change, it was 56 percent. The persistence of the racial income gap is puzzling in light of efforts to equalize employment opportunity and progress toward racial equality in other areas.
    [Show full text]
  • Household Income, 2017
    CONGRESS OF THE UNITED STATES CONGRESSIONAL BUDGET OFFICE The Distribution of Household Income, 2017 Average Income, Means-Tested Transfers, and Federal Taxes Thousands of Dollars 400 Highest Quintile 300 200 100 Lowest Quintile 0 Income Before Means−Tested Transfers Federal Taxes Income After Transfers and Taxes + - = Transfers and Taxes OCTOBER 2020 At a Glance The Congressional Budget Office regularly analyzes the distribution of income in the United States and how that distribution has changed over time. As an update to that series, this report presents the distributions of household income, means-tested transfers, and federal taxes between 1979 and 2017 (the most recent year for which tax data were available when this analysis was conducted). • Income. Households at the top of the income distribution received significantly more income than households at the bottom. Between 1979 and 2017, average income, both before and after means-tested transfers and federal taxes, grew for all quintiles (or fifths) of the distribution, but it increased more among the highest quintile than among all others. • Means-Tested Transfers. Means-tested transfers are cash payments and in-kind benefits from federal, state, and local governments designed to assist individuals and families who have low income and few assets. Between 1979 and 2017, households in the lowest quintile received more than half of all means-tested transfers. Average means-tested transfer rates, which are the ratios of total means-tested transfers to total income before transfers and taxes, rose over the 39-year period, primarily driven by an increase in Medicaid spending. • Federal Taxes. In general, higher-income households paid a higher average federal tax rate than lower-income households.
    [Show full text]
  • Race, Ethnicity, and Income Segregation in Los Angeles
    RACE, ETHNICITY, AND INCOME SEGREGATION IN LOS ANGELES Paul Ong, Chhandara Pech, Jenny Chhea, C. Aujean Lee UCLA Center for Neighborhood Knowledge June 24, 2016 DISCLAIMER: The contents, claims, and finding of this report are the sole responsibility of the authors, and do not necessarily represent the opinions of UCLA or its administration. The authors are not liable for misinterpretations of the provided information or policy failures based on analyses provided in this report. ACKNOWLEDGMENTS: We thank the UCLA Ziman Center for Real Estate Howard and Irene Levine Program in Housing and Social Responsibility and Haynes Foundation for their generous funding. We would also like to thank the staff of the UCLA Center for Neighborhood Knowledge for providing support. RACE, ETHNICITY, AND INCOME SEGREGATION IN LOS ANGELES ABSTRACT There is a disagreement amongst scholars about how much income differences play in generating residential segregation. While most social scientists point to individual prejudices and institutional racism, others counter that segregation is a byproduct of systematic economic differences. For example, some minority groups are poorer and are thus disproportionately concentrated in low-income neighborhood. This paper examines 1) the demographic and socio- economic transformation of Los Angeles from 1960 and onward 2) the role of race and ethnicity in the spatial geographic housing patterns, with a specific focus on levels of segregation, and 3) whether racial segregation could be explained by systematic differences in income across racial/ethnic groups. The findings indicate that although black-white segregation has been decreasing steadily, segregation remains high while increasing amongst Hispanics. From comparing these observed dissimilarity indices and census tract majority groups with simulated numbers based on income, this study also finds that income differences alone do not explain residential segregation and that many other factors (including race) come into play.
    [Show full text]
  • Globalization and Income Inequality
    IZA DP No. 2958 Globalization and Income Inequality Elena Meschi Marco Vivarelli DISCUSSION PAPER SERIES DISCUSSION PAPER July 2007 Forschungsinstitut zur Zukunft der Arbeit Institute for the Study of Labor Globalization and Income Inequality Elena Meschi Marche Polytechnic University, Ancona and CSGR Warwick Marco Vivarelli Catholic University of Milan, CSGR Warwick, IPTS (European Commission, Seville) and IZA Discussion Paper No. 2958 July 2007 IZA P.O. Box 7240 53072 Bonn Germany Phone: +49-228-3894-0 Fax: +49-228-3894-180 E-mail: [email protected] Any opinions expressed here are those of the author(s) and not those of the institute. Research disseminated by IZA may include views on policy, but the institute itself takes no institutional policy positions. The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit company supported by Deutsche Post World Net. The center is associated with the University of Bonn and offers a stimulating research environment through its research networks, research support, and visitors and doctoral programs. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. IZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. IZA Discussion Paper No. 2958 July 2007 ABSTRACT Globalization and Income Inequality* This paper discusses the distributive consequences of trade flows in developing countries (DCs).
    [Show full text]
  • Economic Growth and Poverty Reduction Glossary of Important Terms
    Economic growth and poverty reduction Glossary of important terms Absolute poverty: When income levels are inadequate to enjoy a minimum standard of living, for example, minimum requirements for food, clothing or shelter. The dollar-a-day poverty line has been used internationally as a general indicator of absolute poverty. Accountability: Liability of public and private power-holders to answer for their actions in discharge of their duties and to address problems and failures. Accountability means those exercising power are transparent about what they are doing and why; are monitored and have to report on their actions; and are held responsible by a variety of social, political and legal institutions with the ability to enforce compliance with specified rules, norms and policies. Aggregate demand: The total amount of a good or service that people in a given economy are both willing and able to buy. Aid: The words 'aid' and 'assistance' refer to flows which qualify as Official Development Assistance (ODA) or Official Aid (OA). Aid architecture: The set of rules and institutions governing aid flows to developing countries. Aid for trade: Initiatives to enable developing countries to develop trade-related skills and infrastructure to expand their trade. Anti-competitive practices: Practices used by firms or countries to prevent the competitive functioning of markets. Appreciation of currency: When the value of a currency, expressed in terms of another currency, rises. Balance of payments: Account of a country’s international transactions over a given period. Comprises the current account and the capital account. 1 Balanced growth: Growth that is distributed throughout the economy rather than concentrated in the hands of a few participants in economic activities.
    [Show full text]