Raising capital amid economic policy uncertainty:an empirical investigation

This paper investigates how economic policy uncertainty affects firms’frequency and their choice of financial instruments to raise capital.By applying a three-step sequential framework over a sample of 6834 publicly listed US non-financial firms,we find that during periods of high economic uncertainty,firms raise capital more frequently with a preference toward debt financing.The empirical findings suggest that firms prefer debt financing over equity financing to avoid ownership dilution and high equity premia.The rise in leverage during periods of high economic uncertainty highlights the importance of scrutinizing policy tools used to stabilize the economy during such times.

The Sources of Economic Growth in Sub-Saharan African IDB Member Countries

The economic growth in Sub-Sahara African （SSA） IDB member countries has been encouraging over the last decade; however, it is still not high enough to enable these countries to overcome the persistent poverty. There is thus a need to raise substantially real GDP growth rates on a sustained basis, both through the productivity channel and factor accumulation such as labor and capital. This study focuses on ＂the source of economic growth in SSA IDB member countries＂ with the objective of identifying the main driving factors of economic growth in the region using the growth accounting framework and extending the existing analysis both by country and time coverage. The paper is expected to be useful for the policymakers in the region to have a clear picture on the main sources of growth, and thus help them in identifying strategic reform areas of intervention in line with the most binding factors of growth. The data used in this study cover 20 Sub-Sahara African countries covering the period 1990-2012. The data set includes real GDP, labor force, and capital stock. The source of data is the various version of the World Economic Outlook, IMF. Capital stock is estimated using perpetual inventory method and the base year is 1970. In estimating growth accounting model, a translog production function is applied using panel data and random effects model. Empirical results show that the capital accumulation is the most important individual factor in GDP growth （52%） followed by workforce accumulation （39%） while total factor productivity （TFP） accounts for meagre 8%. This suggests that, on average, real GDP growth in Sub-Sahara African countries was driven primarily by factor accumulation with a low level of TFP. In addition, the elasticity of labor was lower than that of capital indicating that the labor played very little role in GDP growth most likely due to unskilled labor force or mismatch of labor skills with the production process. Furthermore, this also adversely affects both the TFP growth and the share of capital growth to the GDP growth. The results indicate that the critical constraint to the economic growth appears to be poor labor skills that lead to both low labor productivity and under-utilization of capital stock.

Global Income Inequality and Poverty Reduction:Trends and Remedies

There is a global consensus that world economy need not only grow faster,but also grow in a way that the poor receive a greater share of the benefits of that growth.It is well documented that income inequality is on the rise,with the richest 10%earning up to 40%of total global income.The poorest 10%earn only between 2%and 7%of total global income.After long time of neglect,inequality has re-entered the mainstream development policy agenda at both national and global levels indicating that relevant policies should be universal in principle paying attention to the needs of disadvantaged and marginalized populations.As highlighted in almost all SDG’s documents,income inequality is a global problem that requires global solutions.This involves improving the regulation and monitoring of financial markets and institutions,encouraging development assistance and foreign direct investment to regions where the need is greatest.Facilitating the safe migration and mobility of people is also key to bridging the widening divide.SDG 10 encompasses 10 targets with the objective of promoting social,economic,and political inclusion of all,irrespective of age,sex,disability,race,ethnicity,origin,religion,or economic or other status.Achieving SDG 10 reaffirms that the 2030 development agenda will focus not only on eradicating poverty but also on tackling inequalities in all its forms through adopting sound policies to empower the bottom percentile of income earners,and promote economic inclusion of all regardless of sex,race,or ethnicity.This paper analyses the resent status of income inequality and its relationship with economic growth and poverty in selected developing countries.The paper highlights that there is a triangular relationship between income distribution,poverty and economic growth;while accelerated economic growth is a primary factor in reducing poverty,inequalities can constrain poverty reduction significantly.