Policy Responses to Crises (2009)
Past research on crises, as reviewed in the Knowledge in Development Note “Financial Crises,” points to some generic lessons. These include the importance of understanding incentives in the design of policy responses, and the importance of sound information on what is happening on the ground as the crisis unfolds. However, if there is one generic lesson that stands out it is that the short-term responses to a crisis cannot ignore longer-term implications for economic development. The macroeconomic stabilization response must be consistent with restoring the growth process and (hence) the pace of poverty reduction. Financial sector policies need to balance (understandable) concerns about the fragility of the banking system with the needs for sound longer-term financial institutions. And the social policy response will need to provide rapid income support to those in most need, while preserving the key physical and human assets of poor people and their communities.
Fiscal and monetary policies face difficult tradeoffs in a crisis
In theory, smoothing out the output and employment cost of a crisis invites a counter-cyclical relaxation of macroeconomic policy stance—carefully designed to prevent it from increasing macroeconomic vulnerabilities that could make future crises more likely. In practice, however, policy choices are severely constrained by the fiscal demands imposed by recapitalization of the financial system and the risk that any attempt at macroeconomic relaxation, fiscal or monetary, could weaken investor confidence and fuel deposit and/or currency runs, in effect making the crisis worse.
Indeed, on the fiscal front, most developing countries are unable to engage in countercyclical policy in bad times because they fail to build up (in good times) the credibility, and the fiscal resources, that would be necessary; this is typically a result of weak fiscal institutions. Thus, they are forced to adopt a pro-cyclical fiscal contraction that makes the cost of the crisis even bigger. Further, crisis-induced fiscal austerity is often disproportionately biased against growth-promoting public expenditures, such as infrastructure investment, which then hampers long-term growth prospects.
Monetary policy faces similar dilemmas. In times of crisis, characterized by speculative attacks and sinking currencies, policy makers have often engaged in sharp monetary contractions to defend exchange rates and domestic financial systems. There is little evidence, however, that this strategy is effective. Abrupt monetary tightening can backfire by raising the interest burden on public debt, weakening public finances, and can also have severe adverse effects, both in precipitating the crisis and deepening the real economic downturn, as the asset values of banks fall and the net worth of highly indebted firms quickly erodes. Moreover, these adverse effects can persist even after the interest rate has returned to more normal levels.
Nor is it clear how well countercyclical monetary policies will work when there is stress on the financial system, with investors ready to move their money elsewhere. Moreover, pumping liquidity into the system is unlikely to work well when there is high credit risk; banks will simply hoard the money.
Trade policies pose further challenges
Global trade can be an important part of the adjustment process in response to a crisis. Recent financial crises in the developing world (including the East Asia crisis) have not involved major declines in international trade, either as a cause or a consequence. In the wake of the East Asian crisis, there was a sharp increase in demand from the external sector, with exports rising rapidly and imports falling. In some cases, this increase in demand exceeded 20 percent of GDP, partially offsetting the dramatic falls in domestic demand resulting from the financial crisis.
This is in contrast to the Great Depression of the 1930s, when world trade fell dramatically as beggar-thy-neighbor trade restrictions were introduced. By contrast with the 1930s, the trading system in modern times has been able to cope with large and sustained (post-crisis) increases in net exports from the affected countries, allowing those countries to recover more quickly from these major shocks.
However, as we write, there are clear signs of a decline in world trade in response to the 2008 financial crisis, which will probably lead to balance of payments problems in some developing countries. Protectionist pressures will undoubtedly surface, as they have done in past crises. There is also a risk that trade policy responses at the country level may make matters worse in the longer term—for both the country in question and its trading partners. Research on the macroeconomic adjustment problems of the 1980s and early 1990s showed that imposing restrictions on imports is generally not an effective way of dealing with balance of payments problems—even for the country in question, let alone when one takes account of the adverse impacts on its trading partners. While import restrictions reduced imports, they frequently also reduced exports—particularly of manufactures—by raising costs and by starving the export sector of needed inputs. And if other countries raise barriers in response to their own economic problems, solving the balance of payments problem becomes even more difficult.
A similar collective-action problem emerged during the recent sharp rise in food prices, whereby a number of countries decided to insulate their domestic markets from food price increases by imposing export barriers or reducing trade and consumption taxes. While these policy responses made sense from the point of view of each individual country, the collective effect was to exacerbate the increases in world prices.
Early response is crucial, but political economy plays a role
Because financial crises tend to be systemic, government intervention is unavoidable. Though the fiscal cost of interventions can be quite large, and with corresponding political costs, the cost of an eventual collapse of the financial system is even larger. Similarly, delayed adjustment to macroeconomic imbalances stemming from a financial crisis can be very costly to the poor, as illustrated by Peru’s efforts to delay adjustment in the 1980s. Well-designed policies implemented at the early stages of crises tend to be less costly.
The speed and scope of government intervention are affected by political economy factors. While countries with competitive elections are no less likely to experience financial crises than the rest, in the event of a crisis they are likely to intervene more rapidly in insolvent institutions. They also suffer far smaller growth collapses. The reason that there is no difference in the likelihood of a crisis is that asymmetric information is so great in banking regulation that voters cannot hold politicians responsible for bad decisions prior to the crisis. However, once the consequences of failed regulation become large and visible, politicians exposed to elections are more likely to address them in a way that serves the public interest: they are less likely to prop up existing owners, they are less likely to subsidize large creditors who should have known better, etc., all of which substantially reduce the ultimate fiscal and economic consequences of crisis.
Financial sector responses need to consider incentives and longer-term impacts
Crisis resolution is a very important component of the safety net, and how the current crisis is resolved may sow the seeds of future crises. In one study we have brought together research and first-hand crisis experience to catalog lessons on a variety of issues that regularly arise in crises: containment, resolution, and broader structural reform.
Walter Bagehot’s classic policy advice for managing liquidity during a systemic crisis is for the central bank to lend freely to solvent banks—but to minimize subsidizing risk-taking (moral hazard), the loans should be made at penalty interest rates and only on good collateral. Put differently, the advice is for governments to avoid lending to insolvent banks at all, even on good collateral and certainly not at below-market interest rates.
Advocates of widespread bailouts (including insolvent institutions) to halt a systemic crisis argue that only sweeping guarantees and extensive support can stop the panicky flight of depositors and other creditors. This is of course true if the crisis entails a series of self-fulfilling runs. However, most modern financial crises, including the current one, are driven instead by fundamental weaknesses in economic balance sheets. It must be recognized that the short-term benefits of guarantees will vary with the fiscal strength of the guaranteeing government. To hasten the end of an insolvency-driven banking crisis and to constrain the spread of insolvency in the short term, the government must manifest a substantial capacity for absorbing losses. Depending on the depth of the systemic insolvency such support may not even halt the spread of crisis and delay healthy adjustments. This begs the question of whether social costs and adverse distribution effects described above could be reduced by following an alternative strategy.
However, it must also be recognized that the information for deciding which financial institutions are sound may be weak, especially in developing countries, and the public at large may be suspicious of the true motives in the selection process. When this is the case, it may be preferable to implement more widespread support initially to restore confidence.
Even in the midst of a financial crisis, long-term goals should not be ignored. The manner in which a crisis is resolved affects the frequency and depth of future crises, through the significant impact it has on market discipline. If institutions can count on crisis resolution to be mismanaged, they will be more willing to risk insolvency, and safety-net subsidies will mainly flow to institutions that take excessive risks at the expense of taxpayers. Providing extensive liquidity support and guarantees to insolvent institutions subsidizes gambles for resurrection and distorts risk-taking incentives, undermining market discipline and spawning future crises.
Moreover, the short-term benefits of such bailouts have been oversold. Such policies seldom actually speed the recovery of a nation’s real economy from a financial crisis or lessen the decline in aggregate output. Instead, providing liquidity support for insolvent institutions often prolongs a crisis. It does this by distorting risk-taking incentives so extensively that sound investments and healthy exits are delayed and additional output loss is generated. Our research has measured the impact of different crisis management strategies on the ultimate cost of resolving financial distress in a broad set of countries, finding that not only providing generous support increases the ultimate fiscal cost of resolving crises, but it also does not speed the recovery, instead prolonging the duration of the crisis.
While governments should be prepared to act in a systemic crisis, the approach and the actions they take still need to be designed to reduce conditions for moral hazard and the likelihood of a subsequent crisis. This should be done by imposing real costs on all responsible parties and getting the resources back in productive use as soon as possible.
Crises have given birth to some of the best social protection, and some of the worst
Governments have sometimes introduced generalized food and fuel subsidies that have come at a huge fiscal and economic cost, and are not easily reversed, yet have had at best modest impact on poverty. Yet some developing countries have been able to turn a crisis into an opportunity for dismantling inefficient subsidies in favor of more effective safety net programs.
Social policy needs to respond flexibly to differing needs. If it is to provide effective insurance, it is crucial that the safety net responds to the needs of the poor, and does not rely heavily on administrative discretion. When we look at the “safety nets” found in practice, few appear to serve this insurance function well since they do not have the flexibility needed to adapt to changing circumstances. Relief transfers, workfare, and credit are too often rationed among those in need, and hence provide unreliable insurance. Nor is the rationing necessarily targeted to those in need. Unless the public safety net is genuinely state-contingent it cannot help much in reducing the costs of insurance facing the poor. However, flexibility may come into tension with other goals in the fight against poverty, such as when strict but relatively rigid eligibility criteria for cash transfer programs help reduce leakage to the non-poor or when absorbing large amounts of labor in a relief work program means that the assets created are of less lasting value.
Efforts to assure that social policy responses are well-targeted to the poor can also allow more effective social protection in a crisis. However, our empirical research has confirmed theoretical arguments that finer targeting is not necessarily consistent with a greater impact on poverty, and may even have perverse effects, such as when fine targeting undermines political support for the program. Sustainability depends on having broad political support, which can be at odds with fine targeting. Also coverage of the poor is often weak in finely targeted programs. Avoiding leakage to the non-poor often requires that help is severely rationed even among those in obvious need. Furthermore, better targeted programs are not necessarily more cost-effective. A recent study of a large transfer program in China found that standard measures of targeting performance (including those widely used by the World Bank) are uninformative, or even deceptive, about the impacts on poverty, and cost-effectiveness in reducing poverty. In program design and evaluation, it is better to focus directly on the program’s outcomes for poor people than to rely on prevailing measures of targeting.
Two broad types of social protection (SP) policy responses matter. One is maintaining (“protecting”) public expenditures in the social sectors and the other is transferring resources to households through specific programs. We examine these in turn.
Social protection in a crisis calls for sensitivity in fiscal adjustment
The first element of the SP response must be to protect the programs that matter most to the poor. Social expenditures tend to be pro-cyclical, thus providing scope for public policies to protect households during macroeconomic crises. In addition to direct assistance to households, budgetary processes could be used to establish contingency funds for selected social expenditures during economic downturns. The protection of expenditures is particularly important for nutrition and health outcomes, especially to the most vulnerable to reductions in calorie intake—children under 24 months of age, as well as pregnant and lactating women.
It is often the types of public spending that tend to benefit non-poor people that are most protected at such times—with the brunt of adjustment born by the poor. A study for Argentina found that social spending was not protected historically, although more “pro-poor” social spending was no more vulnerable. The same study found that a relatively well-protected share of the benefits from the country’s main anti-poverty program went to the non-poor. This appears to be a political economy constraint.
The shift in public spending needed to compensate those among the poor who were made worse off need not be large. For example, in a World Bank study of the welfare impacts of Russia’s financial crisis of 1998, and the response of the public safety net, it was found that safety-net spending had contracted (along with other components of spending), but that a seemingly modest expansion in total outlays on the safety net would have avoided the increase in poverty. However, countries experiencing larger shocks than Russia’s will naturally require larger adjustments to the composition of spending.
A crisis can be an opportunity for introducing better social programs
The second strand of the SP response concerns specific programs. Our research has studied the effectiveness of the main SP programs found in practice—often programs set up in a crisis or famine.
One recently popular SP program makes cash transfers to families conditional on the children of the recipient family demonstrating adequate school attendance (and health care in some versions). These are called Conditional Cash Transfer (CCT) programs; the conditions are sometimes called “co-responsibilities.” Early influential examples were the Food-for-Education Program in Bangladesh and Mexico’s PROGRESA program (now called Oportunidades). During the Tequila financial crisis of 1994, the Government of Mexico realized that it lacked an effective safety net for the country’s poor, which led to the PROGRESA program.
There is evidence from impact evaluations that these schemes bring non-negligible benefits to poor households, in terms of both current incomes and future incomes, through higher investments in child schooling and health care. Expanding the coverage and increasing the benefit levels on CCTs has been one response to crises, particularly in Latin America. For example, Mexico was able to help redress the adverse welfare impacts of the recent rise in food prices by implementing a one-time top-up payment to Oportunidades participants.
There has been some evaluative research on specific transfer programs introduced during past crises. One study assessed the impact of Argentina’s main social policy response, Plan Jefes y Jefas, to the severe economic crisis facing the country in 2002-03. The program aimed to provide direct income support for families with dependents for whom the head had become unemployed due to the crisis. The study found that the program reduced aggregate unemployment, although it attracted as many people into the workforce from inactivity as it did people who would have been otherwise unemployed. While there was substantial leakage to formally ineligible families, and incomplete coverage of those eligible, the program did partially compensate many losers from the crisis and reduced extreme poverty.
A common drawback of targeted cash transfer schemes in practice is that they tend to be relatively unresponsive to changes in the need for assistance. A previously ineligible household that is hit by (say) unemployment of the main breadwinner may not find it easy to get help from such schemes. Efforts should be made to re-assess eligibility in the wake of a crisis.
One way to assure that the safety net provides effective insurance—a genuine “safety net”—is to build in design features that only encourage those in need of help to seek out the program and encourage them to drop out of it when help is no longer needed given better options in the rest of the economy. The beauty of this approach is that it elegantly solves the severe information problem of targeting in a crisis (or even in normal times).
Subsidies on the consumption of inferior goods (for which demand falls as incomes rise) are self-targeted to the poor. The problem is that not many goods are inferior, although there have been cases in which this was feasible. Tunisia was able to make its food subsidies more cost-effective in reducing poverty by switching to inferior food items, combined with quality differentiation through packaging. Subsidizing inputs to production by traditional farmers in developing countries can also embody a degree of self-targeting, since farmers tend to be poorer than average, although the benefits may well be higher among the relatively better-off farmers.
The classic example of self-targeting is a “workfare” program (variously called “relief work” or “public works” programs; “food for work” programs also fall under this heading). Workfare has been widely used in crises and by countries at all stages of development. During the East Asian financial crisis of the late 1990s, both Indonesia and Korea introduced large workfare programs, as did Mexico in the 1995 “Peso crisis,” Peru during its recession of 1998-2001, and Argentina in the 2002 financial crisis.
The macroeconomic response and how labor markets work might be expected to influence the weight given to public works programs versus other SP responses. If inflation runs out of control (such as during the Latin American crises of the 1980s) then real wages will probably fall sharply (as they did in Latin America in the 1980s) in which case there may be rather little effect on unemployment rates. On the other hand, if inflation is kept under control then unemployment can be expected to rise sharply, point to a more important role of public works programs. However, such programs have also proved to be a useful SP response in situations in which open unemployment rates are low, such as in rural areas of low-income countries. Nor is it necessarily the case that the program should be targeted to the sector where unemployment rates are highest once general equilibrium effects are taken into account.
Workfare programs can be responsive to differences in need—both between people at one date and over time for a given person—provided the program is designed and implemented well. Public spending on labor-intensive public works projects, such as building rural roads, can combine the benefits of an aggregate fiscal stimulus with those of income support for poor groups. The essential idea is that those seeking relief must work to obtain support, and the work is used to help affected areas rebuild after the disaster, or to develop badly needed public works.
A famous example is the Employment Guarantee Scheme (EGS) in Maharashtra, India, which started in the early 1970s. This aims to assure income support in rural areas by providing unskilled manual labor at low wages to anyone who wants it. The scheme is financed domestically, largely from taxes on the relatively well-off segments of Maharashtra’s urban populations. The employment guarantee is a novel feature of the EGS, which helps support the insurance function, and also helps empower poor people. In 2004, India introduced an ambitious national version of this scheme under the National Rural Employment Guarantee Act (NREGA). This promises to provide up to 100 days of unskilled manual labor per family per year, at the statutory minimum wage rate for agricultural labor, to anyone who wants it in rural India. The scheme was rolled out in phases and now has national coverage.
Our research on these programs has indicated sizeable income gains to participants, net of their foregone incomes from any work they have to give up to join the program. One study of Maharashtra’s EGS found that the foregone income was about one-quarter of the wage rate; by re-allocating work within the household, poor rural families were able to come close to maximizing the net income gain. Research on Argentina’s Trabajar program suggested larger foregone income for participants, around one-half of their earnings. Another study of the same program found that the income losses to those who left the program were sizable, representing about three-quarters of the gross wage on the program within the first six months, though falling to slightly less than one-half over 12 months.
There is less evidence on the benefits to the poor from the assets created, and this can be important to whether or not they dominate cash transfer schemes in terms of their impact on poverty for a given budget outlay. An ex ante assessment of the scheme proposed under India’s NREGA suggested that unless the assets created are of sufficient value to the poor the scheme would be unlikely to dominate even a poll transfer in terms of its poverty impact. It appears likely that the schemes found in practice have given too little weight to asset creation.
Better data are key
Sound information and monitoring and evaluation systems are important for an effective social policy response. The information problems are compounded in a crisis, in which it is hard to know where the short-term impacts are greatest and how well policy responses are working. Various types of data are needed, including household and enterprise surveys and data on public spending. Geographic breakdowns will often be important. Naturally rapid reporting and assessment will be at a premium; here there are some important lessons from the experience with disaster response. An important part of crisis preparedness is having made the investments in data and evaluative research (both quantitative and qualitative) that are needed to have a reasonable idea of which public programs will need to be protected at a time of crisis; naturally that investment brings benefits for policy making at normal times.
Contact: Martin Ravallion, email@example.com, 202-473-6859
Most World Bank research documents cited in this summary are available through the World Bank’s research archives at http://econ.worldbank.org/docsearch or the Bankwide archives at http://www-wds.worldbank.org/.
1. G. Perry, L. Servén and R. Suescún. 2007. Fiscal Policy, Stabilization and Growth: Prudence or Abstinence? Washington, DC: World Bank.
G. Perry and L. Servén. 2004. “The Anatomy of a Multiple Crisis: Why was Argentina Special and What can We Learn from It?” In Currency Unions and Hard Pegs, ed. V. Alexander, G. von Furstenberg, and J. Melitz. Oxford University Press.
2. W. Easterly and L. Servén. 2003. The Limits of Stabilization: Infrastructure, Public Deficits and Growth in Latin America. Stanford University Press.
3. A. Kraay. 2003. “Do High Interest Rates Defend Currencies during Speculative Attacks?” Journal of International Economics 59(2): 297–321.
J. Furman and J. Stiglitz. 1998. “Economic Crises: Evidence and Insights from East Asia.” Brookings Papers on Economic Activity.
4. W. McKibbin and W. Martin. 1999. “The East Asian Crisis: Investigating Causes and Policy Responses.” Policy Research Working Paper 2172, World Bank, Washington, DC.
5. C. Kindleberger. 1975. The World in Depression—1929-1939. University of California Press.
6. For example, tariffs were raised (temporarily) in Chile after the collapse of 1981-82; the Brazil crisis of 1999 and Argentine crisis of 2002 led to shifting waves of protection between Mercosur partners; Argentina’s financial collapse in 2002 led to export taxes.
7. S. Rajapatirana. 1995. “Trade Policies, Macroeconomic Adjustment and Manufactured Exports.” Policy Research Working Paper 1492, World Bank, Washington, DC.
8. M. Ivanic and W. Martin. 2008. “Implications of Higher Global Food Prices for Poverty in Low-income Countries.” Agricultural Economics 39: 405–16.
9. A. de la Torre, E. Levy Yeyati, and S. Schmukler. 2003. “Living and Dying with Hard Pegs: The Rise and Fall of Argentina’s Currency Board.” Economia 3(2): 43–99.
E. Ganapolsky and S. Schmukler. 2001. “Crisis Management in Argentina during the 1994-95 Mexican Crisis: How Did Markets React?” World Bank Economists’ Forum 1: 3–30.
E. Levy Yeyati, S. Schmukler, and N. van Hoen. 2004. “The Price of Inconvertible Deposits: The Stock Market Boom during the Argentine Crisis.” Economic Letters 83(1): 7–13.
E. Levy Yeyati, S. Schmukler, and N. van Horen. 2006. “International Financial Integration through the Law of One Price: The Role of Liquidity and Capital Controls.” Journal of Financial Intermediation 18(3): 431–63.
E. Levy Yeyati, S. Schmukler, and N. van Horen. 2008. “Capital Controls, Crises, and Financial Integration.” Policy Research Working Paper 4770, World Bank, Washington, DC.
10. See the discussion in N. Lustig. 2000. “Crisis and the Poor: Socially Responsible Macroeconomics.” Economia Fall: 1–30.
11. P. Keefer. 2007. “Elections, Special Interests and Financial Crises.” International Organization 61: 607–41.
12. P. Honohan and L. Laeven. 2005. Systemic Financial Crises: Containment and Resolution. Cambridge University Press.
13. For a study of twelve crises between 1991-2001 see Kane and Klingebiel (2004).
E. Kane and D. Klingebiel. 2004. “Alternatives to Blanket Guarantees for Containing a Systemic Crisis.” Journal of Financial Stability 31–63.
Calomiris and others (2005) found that in all but in one case, countries provided extensive liquidity support and guarantees for insolvent institutions:
C. Calomiris, D. Klingebiel, and L. Laeven. 2005. “Financial Crisis Policies and Resolution Mechanisms: A Taxonomy from Cross-Country Experience.” In Systemic Financial Crises: Containment and Resolution, ed. P. Honohan and L. Laeven. Cambridge University Press.
14. However, research shows that attempting to restructure safety nets as a response to crises almost always leads to poor design, see A. Demirgüç-Kunt, E. Kane, and L. Laeven. 2008. Deposit Insurance around the World: Issues of Design and Implementation. MIT Press.
15. E. Kane and D. Klingebiel. 2004. ”Alternatives to Blanket Guarantees for Containing a Systemic Crisis.” Journal of Financial Stability 31–63.
C. Calomiris, D. Klingebiel, and L. Laeven. 2005. “Financial Crisis Policies and Resolution Mechanisms: A Taxonomy from Cross-Country Experience.” In Systemic Financial Crises: Containment and Resolution, ed. P. Honohan and L. Laeven. Cambridge University Press.
16. P. Honohan. 2005. “Fiscal, Monetary and Incentive Implications of Bank Recapitalization.” In Systemic Financial Crises: Containment and Resolution, ed. in P. Honohan and L. Laeven. New York: Cambridge University Press.
S. Claessens, D. Klingebiel, and L. Laeven. 2005. “Crisis Resolution, Policies and Institutions: Empirical Evidence.” In Systemic Financial Crises: Containment and Resolution, ed. P. Honohan and L. Laeven. New York: Cambridge University Press.
17. A. Demirgüç-Kunt. 2008. “Resolution of Systemic Financial Problems.” Viewpoint Note, World Bank, Washington, DC.
World Bank. 2001. Finance for Growth: Policy Choices in a Volatile World. Policy Research Report. Washington, DC: World Bank.
P. Honohan. 2005. “Fiscal, Monetary and Incentive Implications of Bank Recapitalization.” In Systemic Financial Crises: Containment and Resolution, ed. P. Honohan and L. Laeven. New York: Cambridge University Press.
18. J. Gelbach and L. Pritchett. 2000. “Indicator Targeting in a Political Economy: Leakier can be Better.” Journal of Policy Reform 4: 113–45.
19. G. Cornia and F. Stewart. 1995. “Two Errors of Targeting.” In Public Spending and the Poor, ed. D. van de Walle and K. Nead. Johns Hopkins University Press for the World Bank.
20. M. Ravallion. 2009. “How Relevant is Targeting to the Success of an Antipoverty Program?” World Bank Research Observer 24(2): 205–31.
21. C. Paxson and N. Schady. 2005. “Child Health and Economic Crisis in Peru.” World Bank Economic Review 19(2): 203–23.
22. M. Ravallion. 2004. “Who is Protected from Budget Cuts?” Journal of Policy Reform 7(2): 109–22.
23. M. Ravallion. 2002. “Are the Poor Protected from Budget Cuts? Evidence for Argentina.” Journal of Applied Economics 5: 95–121.
24. On these programs see World Bank (2009).
Fiszbein, A., and N. Schady. 2009. Conditional Cash Transfers: Reducing Present and Future Poverty. Policy Research Report.Washington, DC: World Bank.
Also see the discussion in Das, Do, and Ozler (2004).
J. Das, Q. Do Q. and B. Ozler. 2004. “A Welfare Analysis of Conditional Cash Transfer Schemes.” World Bank Research Observer 20 (1): 57–80.
25. A. Fiszbein and N. Schady. 2009. Conditional Cash Transfers: Reducing Present and Future Poverty. Policy Research Report. Washington, DC: World Bank.
26. E. Galasso, and M. Ravallion. 2004. “Social Protection in a Crisis: Argentina’s Plan Jefes y Jefas.” World Bank Economic Review 18(3): 367–99.
27. H. Alderman and K. Lindert. 1998. “The Potential and Limitations of Self-Targeted Food Subsidies.” World Bank Research Observer 13(2): 213–29.
28. M. Ravallion. 1990. “Anti-Hunger Policies in Market Economies: Effects on Wages, Prices and Employment.” In The Political Economy of Hunger, ed. J. Drèze and A. Sen. Oxford University Press.
29. For further discussion of the issues discussed here see Ravallion (1999).
M. Ravallion. 1999. “Appraising Workfare.” World Bank Research Observer 14(1): 31–48.
30. J. Echeverri-Gent. 1988. “Guaranteed Employment in an India State.” Asian Survey 28(12): 1294–1310.
Also see the discussion in J. Drèze and A.K. Sen. 1999. Hunger and Public Action. Clarendon Press: Oxford.
31. Ministry of Rural Development, Government of India, National Rural Employment Guarantee Act, 2004.
32. G. Datt and M. Ravallion. 1994. “Transfer Benefits from Public Works Employment.” Economic Journal 104: 1346–69.
33. J. Jalan and M. Ravallion. 2003. “Estimating the Benefit Incidence of an Anti-Poverty Program by Propensity-Score Matching.” Journal of Business and Economic Statistics 21(1): 19–30.
34. M. Ravallion, E. Galasso, T. Lazo, and E. Philipp. 2005. “What Can Ex-participants Reveal about a Program’s Impact?” Journal of Human Resources 40: 208–30.
35. R. Murgai and M. Ravallion. 2005. “Employment Guarantee in Rural India: What Would it Cost and How Much Would It Reduce Poverty?” Economic and Political Weekly, July 30: 3450–55.
36. S. Amin and M. Goldstein, eds. 2008. Data Against Natural Disasters. Washington, DC: World Bank.