Transcript Coping with Commodity Volatility:Macroeconomic Policies for

Coping with Commodity Volatility:
Macroeconomic Policies
for Developing Countries
Jeffrey Frankel
Harpel Professor of Capital Formation & Growth
June 19, 2015
Prequel: In 2008, the government of Chilean President Bachelet
& her Finance Minister Velasco ranked low in public opinion polls.
By late 2009, they were the most popular in 20 years. Why?
Evolution of approval & disapproval of four Chilean presidents
Presidents Patricio Aylwin, Eduardo Frei, Ricardo Lagos and Michelle Bachelet
Data: CEP, Encuesta Nacional de Opinion Publica, October 2009, www.cepchile.cl.
Source: Engel et al (2011).
2
Commodity prices had big swings over 2005-15.
Oil
Oil = average petroleum spot price
IMF WORLD ECONOMIC OUTLOOK (WEO) Uneven Growth: Short- and Long-Term Factors
April 2015
3
Minerals, hydrocarbons, & agricultural products
have highly variable prices
Major Commodity
Exports in Latin
American countries
and Standard
Deviation of Prices
on World Markets
Frankel (2011)
* World Bank analysis
(2007 data)
Leading
Commodity Export*
ARG
BOL
BRA
CHL
COL
CRI
ECU
GTM
GUY
HND
JAM
MEX
NIC
PAN
PER
PRY
SLV
TTO
URY
VEN
Soybeans
Natural Gas
Steel
Copper
Oil
Bananas
Oil
Coffee
Sugar
Coffee
Aluminum
Oil
Coffee
Bananas
Copper
Beef
Coffee
Natural Gas
Beef
Oil
Standard Deviation of Log
of Dollar Price 1970-2008
0.28
1.82
0.59
0.41
0.76
0.44
0.76
0.48
0.47
0.48
0.42
0.76
0.48
0.44
0.41
0.23
0.48
1.82
0.23
0.76
Price volatility of commodities matters even
for developing countries that don’t export them:
Food & energy have much larger weights in EM
consumption baskets than in Advanced Countries’.
GS Macro Economics Research,
Goldman Sachs,
Nov. 12, 2014
How can developing countries cope
with volatility in their terms of trade?

Choices of macroeconomic policies &
institutions can help manage the volatility.

Too often, historically, they have exacerbated it:

Pro-cyclical macroeconomics
(i) capital flows;
 (ii) money & credit;
 and (iii) fiscal policy.

6
(i) Pro-cyclical capital flows

According to intertemporal optimization theory,
capital flows should be countercyclical:



In practice, it does not always work this way.
Capital flows are more procyclical than countercyclical.


flowing in when exports do badly
and flowing out when exports do well.
Gavin, Hausmann, Perotti & Talvi (1996); Kaminsky, Reinhart & Vegh
(2005); Reinhart & Reinhart (2009); and Mendoza & Terrones (2008).
Theories to explain this involve
capital market imperfections,

e.g., asymmetric information
or the need for collateral.
7
(ii) Pro-cyclical monetary policy

If the exchange rate is fixed,

surpluses during commodity booms can lead to:
Rising reserves,
 Excessive money & credit,
 Excess demand for goods; overheating,
 Inflation,
 Asset bubbles.

8
Macro effects of commodity boom

Inflation shows up especially
in non-traded goods & services,
such as construction.
9
Pro-cyclical real exchange rate
Countries undergoing a commodity boom experience
real appreciation of their currency

The resulting shift of land, labor & capital
out of manufacturing, and into the booming
commodity sector might be
appropriate & inevitable,



to the extent it is expandable,
especially if the commodity boom is permanent.
But the shift out of manufacturing into NTGs can
be an undesirable macroeconomic side effect –

the “disease” part of Dutch Disease.
10
(iii) Procyclical fiscal policy

Fiscal policy has historically tended
to be procyclical in developing countries

especially among commodity exporters:
Cuddington (1989), Gavin & Perotti (1997), Tornell & Lane (1999),
Kaminsky, Reinhart & Végh (2004), Talvi & Végh (2005), Mendoza &
Oviedo (2006), Alesina, Campante & Tabellini (2008), Ilzetski & Végh
(2008), Medas & Zakharova (2009), Medina (2010), Arezki, Hamilton
& Kazimov (2011), Erbil (2011) and Céspedes & Velasco (2014).

Correlation of income & spending mostly positive –

in comparison with industrialized countries.
11
Correlations between Gov.t Spending & GDP
1960-1999
procyclical
Adapted from Kaminsky, Reinhart & Vegh (2004)
countercyclical
G always used to be pro-cyclical
for most developing countries.12
The procyclicality of fiscal policy, continued

A reason for procyclical public spending:
receipts from taxes & royalties rise in booms.
The government cannot resist the temptation
to increase spending proportionately, or more.


Then it is forced to contract in recessions,
thereby exacerbating the swings.
13
Two budget items account for much
of the spending from oil booms:

(i) Investment projects.

Investment in practice may be
“white elephant” projects,

which are stranded without funds
for completion or maintenance
when the oil price goes back down.


Gelb (1986).
Rumbi Sithole took this photo
in “Bayelsa State
in the Niger Delta,in Nigeria.
The state government
received a windfall of money
and didn't have the capacity
to have it all absorbed in
social services so they decided
to build a Hilton Hotel.
The construction company
did a shoddy job, so the tower
is leaning to its right and
it’s unsalvageable..”
(ii) The government wage bill.

Oil windfalls are often spent on public sector wages.


Medas & Zakharova (2009)
Spending rises in booms, but is downward-sticky.

Arezki & Ismail (2013).
14
The procyclicality of fiscal policy, cont.

An important development -some developing countries, including
commodity producers, were able to break
the historic pattern in the most recent decade:

taking advantage of the boom of 2002-2008


to run budget surpluses & build reserves,
thereby earning the ability to expand
fiscally in the 2008-09 crisis.

Chile, Botswana, Malaysia, Indonesia, Korea…

How were they able to achieve counter-cyclicality?
15
Correlations between government spending & GDP 2000-09
procyclical
Adapted from Frankel, Vegh & Vuletin (JDE, 2013)
countercyclical
Last decade,
about 1/3 developing countries
switched to countercyclical fiscal policy:
Negative correlation of G & GDP.
How can countries cope with
high volatility in their terms of trade?
Not by policies that try
to suppress price volatility:




Price controls
Export controls
Stockpiles
Marketing boards




Producer subsidies
Blaming derivatives
Nationalization
Banning foreign
participation
Four policy questions

1. How can a country avoid excessive credit creation
& inflation in a commodity boom ?
& balance of payments crisis in a bust?


Allow some currency appreciation/depreciation.
2. Nominal anchor for monetary policy:
What is it to be, if not the exchange rate? CPI?

3. Fiscal policy:
How can governments be constrained from
over-spending in boom times? Fiscal rule?

4. What microeconomic arrangements
can reduce macroeconomic volatility?
18
How can countries cope with high volatility?
Four ideas that may help manage volatility
Micro
Tried &
tested:
1) Hedging
Untried: 2) Debt
denomination
Macro
3) Fiscal
policy
4) Monetary
policy
1) For financial hedging against fluctuations
in $ price of the export commodity -
Use options to hedge against downside
fluctuations of the commodity price.

Mexico does it annually for oil.


thereby mitigating the 2009 & 2015 downturns, for example.
Why not use the futures or forward market?


Ghana tried it, for cocoa.
But: The minister who sells forward may get
meager credit if the commodity price goes down,
 and lots of blame if the price goes up.


Also the maturity may not go out far enough.
For some commodities, futures contracts are unavailable at long horizons
“Managing Volatility in Low-Income Countries: The Role and Potential for Contingent Financial Instruments,”
21
IMF SPRD & World Bank PREM, approved by Reza Moghadam & Otaviano Canuto, Oct. 2011. Fig.7 p.21.
2) Another idea for hedging against fluctuations
in $ price of the export commodity

For those who borrow,




e.g., an African country developing oil discoveries:
link the terms of the loan, not to $ or €, nor to the local
currency, but to the price of the export commodity.
Then debt service obligations match revenues.
Debt crises



in 1998: Indonesia, Russia & Ecuador
in 2014-15: Nigeria, Ghana & Venezuela:
<= the $ prices of their oil exports fell,



and so their debt service ratios worsened.
Indexation of debts to oil prices might have prevented the crises.
An old idea. Why has it hardly ever been tried?
“Who would buy bonds linked to commodity prices?”

Answer -- There are natural customers:




Power utilities, refiners, & airlines, for oil;
Steelmakers, for iron ore;
Millers & bakers, for wheat;
Etc.

Presumably the firms don’t want the credit risk.

=> The World Bank should intermediate:


Link client-country loans to the oil price;
then lay off the oil risk by selling precisely that amount
of oil-linked World Bank bonds to the private sector.
3. How Can Countries Avoid
Pro-cyclical Fiscal Policy?

“Good institutions.”
24
Who achieves counter-cyclical fiscal policy?
Countries with “good institutions”
”On Graduation from Fiscal Procyclicality,”
Frankel, Végh & Vuletin; J.Dev.Econ., 2013.
25
The quality of institutions varies,
not just across countries, but also across time.
1984-2009
Frankel, Végh
& Vuletin,2013.
26
The comparison
holds not only
in cross-section,
but also across time.
”On Graduation from
Fiscal Procyclicality,”
Frankel, Végh & Vuletin;
J. Devel. Econ., 2013.
27
How can countries avoid fiscal expansion in booms?

What are “good institutions,” specifically?

Rules?

Budget deficits or debt brakes?
 Have
been tried many times. Usually fail.
28
Countries with Balanced Budget Rules
frequently violate them.
BBR: Balanced
Budget Rules
DR:
Debt Rules
ER:
Expenditure
Rules
Compliance
< 50%
International Monetary Fund, 2014
To expect countries to comply with the rules during
recessions is particularly unrealistic
(and not even necessarily desirable).
Bad times: years when
output gap < 0
Compliance
worse in
recession
years
International Monetary Fund, 2014
What specific institutions can help?

Budget rules alone won’t do it.



Rigid Budget Deficit ceilings operate pro-cyclically.
Phrasing the target in cyclically adjusted terms
helps solves that problem in theory;
But in practice, overly optimistic forecasts
by official agencies render rules ineffective.

Frankel & Schreger, 2013, "Over-optimistic Official
Forecasts in the Eurozone and Fiscal Rules," Rev. World Ec.
An institution that others might emulate:
The Chile model

“A Solution to Fiscal Procyclicality: The Structural Budget
Institutions Pioneered by Chile,” 2013, in Fiscal Policy and
Macroeconomic Performance, edited by Luis Felipe Céspedes & Jordi Galí.

I concluded that the key feature was the delegation
to independent committees of the responsibility
to estimate long-run trends in the copper price & GDP,

thus avoiding the systematic over-optimism that
plagues official forecasts in 32 other countries.
Over-optimism in official forecasts

Statistically significant bias among 33 countries




(2011, 2013).
If the boom is forecast to last indefinitely,
there is no apparent need to retrench.
BD rules don’t help.




Frankel
Leads to pro-cyclical fiscal policy:


Worse in booms.
Worse at 3-year horizons than 1-year.
The SGP worsens forecast bias for euro countries.
Cyclically adjusted rules won’t help the bias either.
Frankel & Schreger
(2013).
Solution?
33
The example of Chile’s fiscal institutions


1st rule – Governments
must set a budget target,
2nd rule – The target is structural:
Deficits allowed only to the extent that



(1) output falls short of trend, in a recession, or
(2) the price of copper is below its trend.
3rd rule – The trends are projected by 2 panels
of independent experts, outside the political process.
 Result: Chile avoided the pattern of 32 other governments,

where forecasts in booms were biased toward optimism.
34
Chilean fiscal institutions

In 2000 Chile instituted its structural budget rule.

The institution was formalized into law in 2006.

The structural budget surplus must be…


0 as of 2008 (was higher before, lower after),

where “structural” is defined by output & copper price
equal to their long-run trend values.
I.e., in a boom the government can only spend
increased revenues that are deemed permanent;
any temporary copper bonanzas must be saved.
35
The Pay-off

Chile’s fiscal position strengthened immediately:


Public saving rose from 3 % of GDP in 2000 to 8 % in 2005
allowing national saving to rise from 21 % to 24 %.

Government debt fell sharply as a share of GDP
and the sovereign spread gradually declined.

By 2006, Chile achieved a sovereign debt rating of A,

several notches ahead of Latin American peers.

By 2007 it had become a net creditor.

By 2010, Chile’s sovereign rating had climbed to A+,


ahead of some advanced countries.
=> It was able to respond to the 2008-09 recession.
36

In 2008, with copper prices spiking up,
the government of President Bachelet had been
under intense pressure to spend the revenue.



She & Fin.Min.Velasco held to the rule, saving most of it.
Their popularity fell sharply.
When the recession hit and the copper price came
back down, the government increased spending,
mitigating the downturn.

Bachelet & Velasco’s
popularity reached
historic highs by the time
they left office.
37
Poll ratings
of Chile’s
Presidents
and Finance
Ministers
And the
Finance
Minister?:
August 2009
In August 2009, the
popularity of the
Finance Minister,
Andres Velasco,
ranked behind only
President Bachelet,
despite also having
been low two years
before. Why?
Chart source: Eduardo Engel, Christopher Neilson & Rodrigo Valdés, “Fiscal Rules as Social Policy,” Commodities Workshop, World Bank, Sept. 17, 2009
38
4) The challenge of designing a monetary regime
for countries where trade shocks dominate
Developing countries differ from industrialized economies:
1.

More exposed to terms of trade shocks


especially volatile commodity prices.
And more exposed to supply shocks
a) such as natural disasters
(hurricanes, cyclones, earthquakes, tsunamis…)
b) other weather events (droughts…),
c) social unrest (strikes…),
d) productivity shocks (“Are we the next Tiger economy?”).
Developing countries have more trade shocks
& natural disasters
“Managing Volatility in Low-Income Countries: The Role and Potential for Contingent Financial Instruments,”
IMF SPRD & World Bank PREM, approved by R.Moghadam & O.Canuto, Oct. 2011. Fig.1.
40
Demand vs. supply shocks

An old wisdom regarding the source of shocks:



One set of supply shocks:
natural disasters


Fixed rates work best if shocks are mostly
internal demand shocks (especially monetary);
floating rates work best if shocks tend to be
real shocks (especially external terms of trade).
R.Ramcharan (2007) finds floating works better.
Common source
of real shocks: trade.
Terms-of-trade variability

Prices of crude oil and other agricultural & mineral
commodities hit record highs in 2008 & 2011.

=> Favorable terms of trade shocks for some

=> Unfavorable terms of trade shock for others
(oil producers, Africa, Latin America…);
(oil importers such as Korea, India…).
Prices of oil & gas are the most volatile of all.
1970-2015
A New Ceiling for Oil Prices, Anatole Kaletsky, 1/14/2015
http://www.project-syndicate.org/commentary/oil-prices-ceiling-and-floor-by-anatole-kaletsky-2015-01
The challenge of designing a monetary regime for countries
where terms of trade shocks dominate the cycle, continued

Fixing the exchange rate
leads to pro-cyclical monetary policy:

Money flows in during commodity booms.



Excessive credit creation can lead to inflation.
Example: Saudi Arabia & UAE during the 2003-08 oil boom.
Money flows out during commodity busts.


Credit squeeze can lead to excess supply,
recession & balance of payments crisis.
Example: Exporters of oil & other commodities
in mid-1980s, 1997-98, or 2014-15.
44
Monetary regime,

Floating accommodates terms of trade shocks:

If terms of trade improve,
currency automatically appreciates,


preventing excessive money inflows, overheating & inflation.
If terms of trade worsen,
currency automatically depreciates,


continued
preventing recession & balance of payments crisis.
Disadvantages of floating:


Volatility can be excessive.
One needs a nominal anchor.
45

Textbook theory says a country where trade shocks
dominate should accommodate by floating.

Confirmed empirically:





Developing countries facing terms of trade shocks do better
with flexible exchange rates than fixed exchange rates.
Broda (2004),
Edwards & L.Yeyati (2005),
Rafiq (2011), and
Céspedes & Velasco (2012).
Céspedes & Velasco (2012), IMF Economic Review
“Macroeconomic Performance During Commodity Price Booms & Busts”
** Statistically
significant
at 5% level.
Constant term
not reported.
(t-statistics in
parentheses.)
Across 107 major commodity boom-bust cycles,
output loss is bigger the bigger is the commodity
price change & the smaller is exchange rate flexibility.
47
Monetary regime
If the exchange rate is not
to be the monetary anchor, what is?

Popular choice:
Inflation Targeting.

But CPI targeting can react perversely
to supply shocks
 & terms of trade shocks.

48
Each of the traditional candidates
for nominal anchor has an Achilles heel.

The CPI anchor does not accommodate
terms of trade changes:

IT tightens M & appreciates when import prices rise
not when export prices rise.
 That is backwards.
 Targeting core CPI does not much help.


Commodity exporters need an alternative anchor
that is robust to trade shocks.
49
6 proposed nominal targets and the Achilles heel of each:
Vulnerability
Targeted
variable
Gold standard
Commodity
standard
Price
of gold
Price of agric.
& mineral
basket
Vulnerability
Example
Vagaries of world
1849 boom;
gold market
1873-96 bust
Shocks in
Oil shocks of
imported
1973-80, 2000-11
commodity
Monetarist rule
M1
Velocity shocks
US 1982
Nominal income
targeting
Fixed
exchange rate
Nominal
GDP
$
Measurement
problems
Appreciation of $
Less developed
countries
(or €)
(or € )
CPI
Terms of trade
shocks
Inflation targeting
EM currency crises
1995-2001
Oil shocks of
1973-80,
2000-11
Professor Jeffrey Frankel
Needed:
Nominal anchors that accommodate the shocks
that are common in developing countries


Supply shocks,

e.g., droughts, floods, hurricanes:

Nominal GDP Targeting.
Terms of trade shocks

e.g., fall in price of commodity export.

NGDPT or PEP
PEP
51
PEP
Peg the Export Price
accommodates terms of trade shocks
[1]
Proposal for an oil-exporting country that
attempts to peg to a currency basket:
add a barrel of oil into the basket.
• E.g., Azerbaijan, Kazakhstan or Kuwait.
• With oil in the basket,
• money tightens & the currency appreciates
when the world price of oil rises
• and the currency depreciates when oil falls.
[1] Frankel (2003).
52
Why is PEP better than a fixed exchange rate
for countries with volatile export prices?
PEP

If the $ price of the export commodity rises ,
the currency automatically appreciates,


moderating the boom.
If the $ price of export commodity falls,
the currency automatically depreciates,


moderating the downturn
& improving the balance of payments.
53
Why is PEP better than CPI-targeting
for countries with volatile terms of trade?
PEP

If the $ price of imported commodity goes up,
CPI target says to tighten monetary policy
enough to appreciate the currency.



Wrong response. (E.g., oil-importers in 2007-08.)
PPT does not have this flaw .
If the $ price of the export commodity goes up,
PPT says to tighten money enough to appreciate.


Right response. (E.g., Gulf currencies in 2007-08.)
CPI targeting does not have this advantage.
54
Figure 2: When a Nominal GDP Target
delivers a better outcome than IT
Supply shock is split between output & inflation objectives
rather than falling exclusively on output as under IT (at B).
Figure 3: Can IT Deliver a better outcome
than a Nominal GDP Target?
NGDPT gives exactly the right answer
if equal weights (simple Taylor Rule)
capture what discretion would do.
Even if not exact, the “true”
objective function would have
to put far more weight on P than GDP,
or AS would have to be very steep, for
the P rule to give a better outcome.
…if the Aggregate Supply curve is steep
(b is low, relative to a, the weight on the price stability objective)
.
Mathematical analysis:
Which regime best achieves objectives
of price stability and output stability?

The goal: to minimize a quadratic loss function
Λ=
2
ap +
(y -
2
𝒚)
where p ≡ the inflation rate,
y ≡ the log of real output,
𝒚 ≡ the preferred level of output;
a ≡ the weight assigned to the price stability objective.
.
Which regime best achieves objectives of price & output stability? continued
• Any nominal rule, provided it is credible, can
set expected inflation at the desired level (say, 0),
• e.g., eliminating the inflation bias that discretion brings:
• p e = Ep = (𝒚- 𝒚) b/a in Barro-Gordon (1982) model
of dynamic inconsistency,
• where the Aggregate Supply relationship is
y = 𝒚 + b(p – p e) + u ,
• and 𝒚 ≡ potential output.
Which regime best achieves objectives of price & output stability?

But different rules => different outcomes, when shocks hit

Rogoff
(1985)
& Fischer
(1990).

IT & NGDPT both neutralize AD shocks.

That leaves AS shocks.




continued
NGDP rule dominates IT, if…
a < (2 + b)b;
Example 1: holds if b > a (AS flat, vs. loss-function lines).
Example 2: holds if a = 1 (as in Taylor rule)
and AS slope 1/b < (1+ 2 ) = 2.414.
Under these conditions, the economy looks
more like Figure 2 than like Figure 3:

If inflation were not allowed to rise in response to an AS shock,
the resulting GDP loss could be severe. => NGDPT dominates IT.
Estimating AS equation

I have estimated the AS slope for a few EMs.

E.g., Kazakhstan, over the period 1993-2012.

Exogenous terms of trade shocks: oil price fluctuations.
Exogenous demand shocks:
changes in military spending and
income of major trading partners.

The estimated AS slope is 1.66, statistically < 2.41.



Supports the condition for NGDPT to dominate IT.
Conclusion: middle-size middle-income commodityexporting countries should consider using nominal
GDP as their target, in place of the CPI.
Nominal GDP Targeting

NGDPT is more robust with respect to
supply shocks & terms of trade shocks,


compared to the alternatives of IT
or exchange rate targets.
The logic holds whether the immediate aim is

disinflation (as in 1980s, and again today

monetary stimulus (as among big Advanced Cs

or just staying the course.
among many EM & developing countries);
recently);
How can countries that export commodities
cope with the high volatility in their terms of trade?
Recap: Four ideas that may help
Micro: Hedge Macro: Countercyclical policy
1. Use options 3. Fiscal: protect
(Mexico).
independence of
forecasts (Chile).
4. Monetary:
Untried: 2. Link debt
to commodity target NGDP.
price.
Tried &
tested:
References by the author

Columns




http://www.hks.harvard.edu/fs/jfrankel/
“Escaping the Oil Curse,” Project Syndicate, Dec.9, 2011.
"Barrels, Bushels & Bonds: How Commodity Exporters Can Hedge Volatility," Oct.17, 2011.
“Gulf Countries Urged to Switch Currency Peg to a Basket That Includes Oil,” VoxEU 7/9/08.
“The Natural Resource Curse: A Survey of Diagnoses and Some
Prescriptions,” 2012, in Commodity Price Volatility and Inclusive Growth in Low-Income
Countries , R.Arezki et al., eds. (IMF); HKS RWP12-014.

“How Can Commodity Exporters Make Fiscal and Monetary Policy Less
Procyclical?” in Natural Resources, Finance & Development. R.Arezki, T.Gylfason & A.Sy,
eds. (IMF), 2011. HKS RWP 11-015.

“On Graduation from Fiscal Procyclicality,”

“A Solution to Fiscal Procyclicality: The Structural Budget Institutions Pioneered

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with Carlos Végh & Guillermo Vuletin,
Journal of Development Economics, 100, no.1, 2013; pp.32-47. Summary, VoxEU, 2011.
by Chile,” 2013, in Fiscal Policy and Macroeconomic Performance, L.F. Céspedes &
J. Galí, eds., Central Bank of Chile 2011. Summary: Chile's Countercyclical Triumph," June 2012.
"Nominal GDP Targeting for Developing Countries," with Pranjul
Bhandari; NBER WP 20898, 2015. Summary at VoxEU 8/21/2014.
HKS Summary.
“A Comparison of Product Price Targeting and Other Monetary Anchor
Options, for Commodity-Exporters in Latin America," Economia, 2011.
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References by others

Rabah Arezki and Kareem Ismail, 2013, “Boom-Bust Cycle, Asymmetrical Fiscal
Response and the Dutch Disease,” J. Development Economics, March, 256-67.

Christian Broda, 2004, "Terms of Trade and Exchange Rate Regimes in
Developing Countries," Journal of International Economics, 63(1), 31-58.

Luis Céspedes & Andrés Velasco, 2012, “Macroeconomic Performance During
Commodity Price Booms and Busts,” IMF Economic Review.

Graciela Kaminsky, Carmen Reinhart & Carlos Vegh, 2005, "When It Rains, It
Pours: Procyclical Capital Flows and Macroeconomic Policies," NBER
Macroeconomics Annual 2004, 19, 11-82.

Jeffrey Sachs, 2007, “How to Handle the Macroeconomics of Oil Wealth,”
in
Escaping the Resource Curse, M.Humphreys, J.Sachs & J.Stiglitz,eds. (Columbia U. Press: NY), 173-93.
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