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Manasa Patnam and Weijia Yao
Mobile money services have rapidly expanded across emerging and developing economies and enabled new ways through which households and firms can conduct payments, save and send remittances. We explore how mobile money use can impact economic outcomes in India using granular data on transactions from Paytm, one of the largest mobile money service provider in India with over 400 million users. We exploit the period around the demonetization policy, which prompted a surge in mobile money adoption, and analyze how mobile money affects traditional risk-sharing arrangements. Our main finding is that mobile money use increases the resilience to shocks by dampening the impact of rainfall shocks on nightlights-based economic activity and household consumption. We complement these findings by conducting a firm survey around a phased targeting intervention which incentivized firms to adopt the mobile payment technology. Our results suggest that firms adopting mobile payments improved their sales after six-months of use, compared to other firms. We also elicit firms’ subjective expectations on future sales and find mobile payment adoption to be associated with lower subjective uncertainty and greater sales optimism.
Dale Weigel

Unhappy with the present role of multinational corporations, developing countries are pressing hard for a foreign direct investment package that benefits the local economy. Tax incentives are disappearing, fade-out regulations are increasing, and joint ventures are becoming more attractive to developing countries.

Manasa Patnam and Weijia Yao

Mobile money services have rapidly expanded across emerging and developing economies and enabled new ways through which households and firms can conduct payments, save and send remittances. We explore how mobile money use can impact economic outcomes in India using granular data on transactions from Paytm, one of the largest mobile money service provider in India with over 400 million users. We exploit the period around the demonetization policy, which prompted a surge in mobile money adoption, and analyze how mobile money affects traditional risk-sharing arrangements. Our main finding is that mobile money use increases the resilience to shocks by dampening the impact of rainfall shocks on nightlights-based economic activity and household consumption. We complement these findings by conducting a firm survey around a phased targeting intervention which incentivized firms to adopt the mobile payment technology. Our results suggest that firms adopting mobile payments improved their sales after six-months of use, compared to other firms. We also elicit firms’ subjective expectations on future sales and find mobile payment adoption to be associated with lower subjective uncertainty and greater sales optimism.

Hang T. Banh, Mr. Philippe Wingender, and Cheikh A. Gueye
The COVID-19 pandemic has led to an unprecedented collapse in global economic activity and trade. The crisis has also highlighted the role played by global value chains (GVC), with countries facing shortages of components vital to everything from health systems to everyday household goods. Despite the vulnerabilities associated with increased interconnectedness, GVCs have also contributed to increasing productivity and long-term growth. We explore empirically the impact of GVC participation on productivity in Estonia using firm-level data from 2000 to 2016. We find that higher GVC participation at the industry level significantly boosts productivity at both the industry and the firm level. Frontier firms, large firms, and exporting firms also benefit more from GVC participation than non-frontier firms, small firms, and non-exporting firms. We also find that GVC participation of downstream industries has a negative correlation with productivity. Frontier firms and large firms benefit more from GVC participation of upstream industries, while non-frontier firms and small firms benefit more from GVC participation of downstream industries. Our results suggest that policies designed to promote participation in GVCs are important to raise aggregate productivity and potential growth in Estonia.
Hang T. Banh, Mr. Philippe Wingender, and Cheikh A. Gueye

*Large firm (sale) 0.490*** (0.099) GVC Buyer*Large firm (sale) -0.683*** (0.136) GVC Supplier*Large firm (sale) 0.219*** (0.023) GVC*Initial export status 0.305*** (0.076) GVC Buyer*Initial export status -0.276** (0.115) GVC Supplier*Initial export status 0.161*** (0.037) Observations 165,055 165,055 165,055 165,055 107,771 INDUSTRY FE Y Y Y Y Y REGION FE Y Y Y Y Y YEAR FE Y Y Y Y Y FIRM CONTROLS Y Y Y Y Y

Mr. John Kiff and Michael Kisser

confirms the ambiguous implications for total welfare. This paper relates to literature dealing with the interaction between CRT and informational asymmetries. The “lemons problem”, as coined by Akerlof (1970) , shows that markets may break down in the context of informational asymmetries. Leland and Pyle (1977) use a signaling model to show how agency costs can be mitigated in the context of a partial firm sale. They model an entrepreneur with superior information regarding future prospects of assets in place who wants to sell part of his holdings to diversify risk

Mr. John Kiff and Michael Kisser
This paper builds on recent research by Fender and Mitchell (2009) who show that if financial institutions securitize loans, retaining an interest in the equity tranche does not always induce the securitizer to diligently screen borrowers ex ante. We first determine the conditions under which this scenario becomes binding and further illustrate the implications for capital requirements. We then propose an extension to the existing model and also solve for optimal retention size. This also allows us to capture feedback effects from capital requirements into the maximization problem. Preliminary results show that equity tranche retention continues to best incentivize loan screening.
Mr. Bernard J Laurens and Mr. Jaime Cardoso

market environment. Source: IMF, AREAER (various issues). APPENDIX V. Chile: Selected Prudential Measures for Capital Account Transactions Capital Transactions Prudential Requirements Sale or issue abroad by residents of shares and other securities of participating nature Two minimum international risk-rating requirement, for long-term debt of BBB+ for banks and BBB for other firms. Sale or issue abroad by residents of bonds or other debt securities Minimum rating of BBB+ for long term debt for non

International Monetary Fund
Albania’s Third Review Under the Three-Year Arrangement under the Poverty Reduction and Growth Facility is analyzed. Albania has reached a pivotal stage in its economic development. Increasing foreign direct investment and rapid financial sector development point to a faster convergence toward the emerging market income levels. The authorities will take revenue measures and use expenditure savings to fully cover the cost of stabilizing the state-owned electricity company’s financial position in 2007.These measures should ensure that priority expenditure is protected and budgetary safeguards remain adequate.