The seminar on 20 September 2017 will feature two 30-minute presentations. Shiqi Guo will present on urban air quality in China and Abrams Tagem will share his findings on foreign aid and domestic revenue mobilization.
Shiqi Guo: Abstract – How does straw burning affect urban air quality in China?
For a long time, straw burning has been blamed for causing the air pollution in the developing countries. However, the magnitude and pattern of its effect on air quality in general are never clearly estimated. In this paper, by combining the datasets of straw burning fire points detected by satellites and urban air quality observed by the ground monitoring stations, we examine for the first time the comprehensive effect of straw burning on the urban air quality in China.
We find the effect is large in scale, persistent in time and long in distance, for the 284 prefectural-level cities from October 2014 to December 2016. On the first day after straw burning in one city, its urban Air Quality Index (AQI) increases by 6.8 (about 10% of the average level). Over time, the effect decreases gradually but remains significant for eleven days. Even for the cities that are 400 km to 600 km away, we can still observe the significant straw burning effects. In addition, the straw burning effects are heterogeneous in many dimensions. For example, among the main air pollutants, most of the effects are on the particle matters PM2.5 and PM10. Across different pollution levels, the effect is larger and lasts longer in the more polluted situations. We also check the robustness of our main results by exploiting different subsamples and models. The placebo test with randomly generated straw burning further rules out the potential bias driven by the unobserved patterns. In the end, we exploit a more flexible panel VAR model where the weather conditions, straw burning and air quality can all influence each other in the lagged terms. The impulse response functions show that even though the meteorological interactions mitigate the straw burning effects to some extent, they are still significant and persistent.
Abrams Tagem: Abstract – The economics and politics of foreign aid and domestic revenue mobilization
The main argument of this paper is that there is considerable heterogeneity in the way aid can shape tax performance in developing countries: through behavioral effects, donor conditionality, recipient policy reform and through technical assistance and these effects are country-specific. Focus is on disentangling these effects using econometric techniques that account for time series properties of fiscal data, cross-country heterogeneity (created by domestic political and economic factors) and the distorting impact of cross-country correlation (induced by global shocks and/or spatial spill-overs). We investigate these effects by applying the dynamic Common Correlated Effects Mean Group (CCEMG) estimator (Chudik and Pesaran, 2015) to a dataset comprising 84 developing countries from 1980 to 2013.
First, we show that aid (and its components) and taxes comprise an equilibrium (cointegrated) relation. Our results provide robust evidence of a positive, long-run association between aid and taxes. Second, in modelling the donor-conditionality and recipient policy effects of aid on taxes, we find that countries with met conditionality in donor-supported programs have a positive relationship between aid and taxes, while technical assistance is essential for policy effects of aid to increase taxes. Third, we address simultaneity and endogeneity using recently developed tests for the direction of long-run causality in panel time series econometrics. We find that long-run causality runs from aid to taxes, suggesting that on average, changes in aid induce permanent changes in taxes.
WIDER Seminar Series
The WIDER Seminar Series showcases recent and ongoing work on key topics in development economics. The weekly sessions held in Helsinki are open to local and visiting researchers, policy makers, and others working on development topics. Click here to read more about the WIDER Seminar Series.