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Bussolo, Maurizio

Office of the Chief Economist for Europe and Central Asia
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Income distribution, International trade, Economics of aging, Economics of saving
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Office of the Chief Economist for Europe and Central Asia
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Last updated: September 19, 2023
Biography
Maurizio Bussolo, lead economist in the Chief Economist Office for Europe and Central Asia, has been working on quantitative analyses of economic policy and development both in research and operational departments at the World Bank for more than 12 years. He has led operational teams in the aftermath of the 2008-09 crisis negotiating with LAC governments implementation of reforms to shield the most vulnerable. He previously worked at the OECD, at the Overseas Development Institute in London, and at Fedesarrollo and the Los Andes University in Colombia. He has extensively published in peer-reviewed journals on trade, growth, poverty and income distribution, economics of aging, saving and investment. He holds a PhD in economics from the University of Warwick.

Publication Search Results

Now showing 1 - 10 of 15
  • Publication
    Is the Developing World Catching up? Global Convergence and National Rising Dispersion
    (Washington, DC: World Bank, 2008-09) Bussolo, Maurizio; Medvedev, Denis
    The present study uses the GIDD, a CGE-microsimulation model for Global Income Distribution Dynamics, to understand the ex-ante dynamics of global income distribution. Three main robust results emerge. First, under a set of realistic assumptions, there will be a reduction in global income inequality by 2030. This potential reduction can be fully accounted for by the projected convergence in average incomes across countries, with poor and populous countries growing faster than the rest of the world. Second, this convergence process will be accompanied by a widening of income distribution in two-thirds of the developing countries; the main cause being increasing skill premia. Third, a trend that may counter-balance the potential anti-globalization sentiment is the emergence of a global middle class: a group of consumers who demand access to, and have the means to purchase, international goods and services. The results show that the share of these consumers in the global population is likely to more than double in the next 20 years. These ex-ante trends in global income distribution suggest that the mid-1990s could be seen as a turning point after which global inequality began showing a negative tendency.
  • Publication
    Challenges to MDG Achievement in Low Income Countries : Lessons from Ghana and Honduras
    (World Bank, Washington, DC, 2007-11) Bussolo, Maurizio; Medvedev, Denis
    This paper summarizes the policy lessons from applications of the Maquette for MDG Simulations (MAMS) model to two low income countries: Ghana and Honduras. Results show that costs of MDGs achievement could reach 10-13 percent of GDP by 2015, although, given the observed low productivity in the provision of social services, significant savings may be realized by improving efficiency. Sources of financing also matter: foreign aid inflows can reduce international competitiveness through real exchange appreciation, while domestic financing can crowd out the private sector and slow poverty reduction. Spending a large share of a fixed budget on growth-enhancing infrastructure may mean sacrificing some human development, even if higher growth is usually associated with lower costs of social services. The pursuit of MDGs increases demand for skills: while this encourages higher educational attainments, in the short term this could lead to increased income inequality and a lower poverty elasticity of growth.
  • Publication
    Distributional Effects of the Panama Canal Expansion
    (2011-10-01) Bussolo, Maurizio; Medvedev, Denis
    This paper uses a dynamic macro-micro framework to evaluate the potential distributional effects of the expansion of the Panama Canal. The results show that large macroeconomic effects are only likely during the operations phase (2014 and onward), and income gains are likely to be concentrated at the top of the income distribution. The additional foreign exchange inflows during the construction and operations phases result in the loss of competitiveness of non-Canal sectors (Dutch disease) and in higher domestic prices, which hurt the poorest consumers. In addition, the construction and operation activities increase demand for more educated non-farm formal workers. Although these changes encourage additional labor movement out of agriculture and from the informal to the formal sector, much of the impact is manifested in growing wage disparities and widening income inequality. Using the additional revenues of the Canal expansion in a targeted cash transfer program such as "Red de Oportunidades", the Government of Panama could offset the adverse distributional effects and eradicate extreme poverty.
  • Publication
    The Long-Awaited Rise of the Middle Class in Latin America Is Finally Happening
    (World Bank, Washington, DC, 2014-06) Bussolo, Maurizio; Murard, Elie
    In many developing countries, the supply of skilled workers is likely to continue to be stronger than demand, and this should drive down the skill premium and reduce inequality. Within the limitations of any exercise based on simulations, this paper finds that the recently observed reduction in inequality in Latin America may continue. Building on counterfactual scenarios projecting economic and demographic (including age and education) growth, the paper also highlights that by 2030 the long-awaited rise of the middle class in Latin America will be in full swing, as its share will be 43 percent of the total population, twice the value in 2005. This achievement is not guaranteed, as countries with large initial inequalities will have to achieve very high rates of inclusive growth. At the same time, a larger middle class is likely to exert a stronger influence on international and domestic policy making.
  • Publication
    Remittances and the Real Exchange Rate
    (World Bank, Washington, DC, 2007-04) Lopez, Humberto; Molina, Luis; Bussolo, Maurizio
    Existing empirical evidence indicates that remittances have a positive impact on a good number of development indicators of recipient countries. Yet when flows are too large relative to the size of the recipient economies, as those observed in a number of Latin American countries, they may also bring a number of undesired problems. Among those probably the most feared in this context is the Dutch Disease. This paper explores the empirical evidence regarding the impact of remittances on the real exchange rate. The findings suggest that remittances indeed appear to lead to a significant real exchange rate appreciation. The paper also explores policy options that may somewhat offset the observed effect.
  • Publication
    Population Aging and Households’ Saving in the Russian Federation
    (World Bank, Washington, DC, 2015-10) Bussolo, Maurizio; Matytsin, Mikhail
    Using household data from the Russian Longitudinal Monitoring Survey, this paper assesses how aging affects saving. To overcome a systematic bias against the life-cycle hypothesis of survey data, the paper estimates how the age profile of saving changes when the micro data are corrected to account for the contribution to pensions (as additional saving) and receipt of benefits from pensions (as dissaving). With these corrections, the Russian data support the life-cycle hypothesis. A small decline in the aggregate saving rate, because of aging, can thus be expected. However, since aggregate saving rates result from a combination of age and cohort effects, this decline may not be significant. When extrapolating the rising trends of the cohort effect, the fact that younger generations are earning and saving more than older generation at the same age, the projection shows a growing aggregate saving rate. The changes in saving of future cohorts, for example because of changes in the growth rate of the economy, can affect the aggregate saving rate even more than aging.
  • Publication
    Understanding the Poverty Impact of the Global Financial Crisis in Latin America and the Caribbean
    (Washington, DC: World Bank, 2014-06-18) Grosh, Margaret; Bussolo, Maurizio; Freije, Samuel; Grosh, Margaret; Bussolo, Maurizio; Freije, Samuel
    Any time there is an economic crisis; there is the very real potential that its consequences for human welfare will be severe. Thus when the developed world plunged into such a crisis in 2008 and growth rates in Latin America and the Caribbean (LAC) began to plummet, fears rose that the region will suffer rising unemployment, poverty, malnutrition, and infant mortality, among other things. This study confirms and quantifies many of the sobering links between crisis and poverty, but it also shows how powerful good policy in stable times is in attenuating those links. It thus underscores the need for sound growth policies, good macro prudential care, fiscal balance, low debt, reasonably flexible exchange rates, and the like to help prevent and manage crises. It equally shows how effective social protection responses built on adequate existing programs can be. This study documents the effects of the 2008-09 global financial crisis on poverty in 12 countries in the LAC region, and it comes away with six big picture messages, each with much nuance and many caveats that are explained briefly in this overview.
  • Publication
    Do Remittances Have a Flip Side? A General Equilibrium Analysis of Remittances, Labor Supply Responses, and Policy Options for Jamaica
    (World Bank, Washington, DC, 2007-03) Bussolo, Maurizio; Medvedev, Denis
    Econometric analysis has established a negative relationship between labor supply and remittances in Jamaica. The authors incorporate this ex-post evidence in a general equilibrium model to investigate economywide effects of increased remittance inflows. In this model, remittances reduce labor force participation by increasing the reservation wages of recipients. This exacerbates the real exchange rate appreciation, hurting Jamaica's export base and small manufacturing import-competing sector. Within the narrow margins of maneuver of a highly indebted government, the authors show that a revenue-neutral policy response of a simultaneous reduction in payroll taxes and increase in sales taxes can effectively counteract these potentially negative effects of remittances.
  • Publication
    Capital Will Not Become More Expensive as the World Ages
    (World Bank Group, Washington, DC, 2014-07) Bussolo, Maurizio; Maliszewska, Maryla; Timmer, Hans
    Aging of populations and convergence between developed and developing countries in per capita incomes are shaping the evolution of saving, investment, capital flows, and, in particular, the cost of capital. When considering these trends, the existing literature argues for either continued, low interest rates, or sharply rising ones. This paper presents an alternative view: modest rises in interest rates, which result from a combination of increases in the global weight of high-saving developing economies (limiting declines in global saving), and decelerations in the rate of growth in developing countries (constraining upward pressure in global investment). For the majority of countries, slowing capital demand resulting from decelerating growth, coupled with structural changes that influence its attractiveness as a destination for capital, moderate increases in interest rates. Changes in key assumptions do not alter this view. More specifically, the small rise in interest rates persists even in a scenario where growth in developing countries decelerates more slowly, or when elasticities governing the behavior of saving and investment are varied.
  • Publication
    Challenges of CAFTA : Maximizing the Benefits for Central America
    (Washington, DC : World Bank, 2006) Jaramillo, Carlos Felipe; Lederman, Daniel; Bussolo, Maurizio; Gould, David; Mason, Andrew
    The report provides a preliminary assessment of DR-CAFTA (the Dominican Republic and Central American Free trade Agreement), with particular attention to three key themes: (1) expected trade and non-trade benefits, (2) actions that Central American countries need to pursue to capitalize optimally on the new opportunities, and (3) identification of the population groups that may require assistance to adapt to a more competitive environment. The Introductory Chapter reviews the main findings of the report. Chapter 2 places DR-CAFTA in the historical context of the economic reforms that Central America has been undertaking since the late 1980s. Chapter 3 provides a summary overview of the recently negotiated DR-CAFTA. Chapter 4 reviews various analyses that assess the potential impacts of DR-CAFTA in Central American countries. Chapter 5 focuses on the identification of potentially affected populations from the easing of trade restrictions in sensitive agricultural products and analyzes policy options to assist vulnerable groups. Chapter 6 reviews evidence related to key macroeconomic implications of DR-CAFTA, namely the potential revenue losses and effect on the patterns of business-cycle synchronization. Chapter 7 reviews evidence from each Central American country in the areas of trade facilitation, institutional and regulatory reforms, and innovation and education, in order to identify key priorities for the complementary agenda for DR-CAFTA.