Kraay, Aart

Development Research Group, The World Bank
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Macroeconomics, Debt management, Economic growth, Inequality and shared prosperity
Development Research Group, The World Bank
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Last updated: January 31, 2023
Aart Kraay is Director of Research in the Development Research Group at the World Bank. He joined the World Bank in 1995 after earning a Ph.D. in economics from Harvard University (1995), and a B.Sc. in economics from the University of Toronto (1990). His research interests include international capital movements, growth and inequality, governance, and the Chinese economy. His research on these topics has been published in scholarly journals such as the Quarterly Journal of Economics, the Review of Economics and Statistics, the Economic Journal, the Journal of Monetary Economics, the Journal of International Economics, and the Journal of the European Economic Association. He is an associate editor of the Journal of Development Economics, and co-editor of the World Bank Economic Review. He has also held visiting positions at the International Monetary Fund and the Sloan School of Management at MIT, and has taught at the School of Advanced International Studies at Johns Hopkins University.
Citations 714 Scopus

Publication Search Results

Now showing 1 - 10 of 65
  • Publication
    Predicting Food Crises
    (World Bank, Washington, DC, 2020-09) Spencer, Phoebe; Kraay, Aart; Wang, Dieter; Andree, Bo, Pieter Johannes
    Globally, more than 130 million people are estimated to be in food crisis. These humanitarian disasters are associated with severe impacts on livelihoods that can reverse years of development gains. The existing outlooks of crisis-affected populations rely on expert assessment of evidence and are limited in their temporal frequency and ability to look beyond several months. This paper presents a statistical forecasting approach to predict the outbreak of food crises with sufficient lead time for preventive action. Different use cases are explored related to possible alternative targeting policies and the levels at which finance is typically unlocked. The results indicate that, particularly at longer forecasting horizons, the statistical predictions compare favorably to expert-based outlooks. The paper concludes that statistical models demonstrate good ability to detect future outbreaks of food crises and that using statistical forecasting approaches may help increase lead time for action.
  • Publication
    Toward Successful Development Policies: Insights from Research in Development Economics
    (World Bank, Washington, DC, 2020-01) Artuc, Erhan; Cull, Robert; Dasgupta, Susmita; Fattal, Roberto; Filmer, Deon; Gine, Xavier; Jacoby, Hanan; Jolliffe, Dean; Kee, Hiau Looi; Klapper, Leora; Kraay, Aart; Loayza, Norman; Mckenzie, David; Ozler, Berk; Rao, Vijayendra; Rijkers, Bob; Schmukler, Sergio L.; Toman, Michael; Wagstaff, Adam; Woolcock, Michael
    What major insights have emerged from development economics in the past decade, and how do they matter for the World Bank? This challenging question was recently posed by World Bank Group President David Malpass to the staff of the Development Research Group. This paper assembles a set of 13 short, nontechnical briefing notes prepared in response to this request, summarizing a selection of major insights in development economics in the past decade. The notes synthesize evidence from recent research on how policies should be designed, implemented, and evaluated, and provide illustrations of what works and what does not in selected policy areas.
  • Publication
    A Socioeconomic Disaggregation of the World Bank Human Capital Index
    (World Bank, Washington, DC, 2019-09) D'Souza, Ritika; Gatti, Roberta; Kraay, Aart
    This paper documents inequality in health and education outcomes by constructing an index of human capital disaggregated by quintiles of socioeconomic status (SES) for a sample 51 mostly low- and middle-income countries. The index measures the expected future human capital of children born today, following the methodology of the World Bank Human Capital Index that was launched in October 2018. Within-country disparities in human capital outcomes across SES quintiles are large, accounting for roughly one-third of the total variation. On average, human capital outcomes increase with income at roughly the same rate across socio-economic groups within countries as they do across countries.
  • Publication
    The World Bank Human Capital Index: A Guide
    (Published by Oxford University Press on behalf of the World Bank, 2019-02) Kraay, Aart
    This paper provides a guide to the new World Bank Human Capital Index (HCI), situating its methodology in the context of the development accounting literature. The HCI combines indicators of health and education into a measure of the human capital that a child born today can expect to achieve by her 18th birthday, given the risks of poor education and health that prevail in the country where she lives. The HCI is measured in units of productivity relative to a benchmark of complete education and full health, and ranges from 0 to 1. A value of x on the HCI indicates that a child born today can expect to be only x×100 percent as productive as a future worker as she would be if she enjoyed complete education and full health.
  • Publication
    Methodology for a World Bank Human Capital Index
    (World Bank, Washington, DC, 2018-09) Kraay, Aart
    This paper describes the methodology for a new World Bank Human Capital Index (HCI). The HCI combines indicators of health and education into a measure of the human capital that a child born today can expect to obtain by her 18th birthday, given the risks of poor education and health that prevail in the country where she lives. The HCI is measured in units of productivity relative to a benchmark of complete education and full health, and ranges from 0 to 1. A value of x on the HCI indicates that a child born today can expect to be only x x100 percent as productive as a future worker as she would be if she enjoyed complete education and full health. The methodology of the HCI is anchored in the extensive literature on development accounting.
  • Publication
    Approximating Income Distribution Dynamics Using Aggregate Data
    (World Bank, Washington, DC, 2017-06) Kraay, Aart; Van der Weide, Roy
    This paper proposes a methodology to approximate individual income distribution dynamics using only time series data on aggregate moments of the income distribution. Under the assumption that individual incomes follow a lognormal autoregressive process, this paper shows that the evolution over time of the mean and standard deviation of log income across individuals provides sufficient information to place upper and lower bounds on the degree of mobility in the income distribution. The paper demonstrates that these bounds are reasonably informative, using the U.S. Panel Study of Income Dynamics where the panel structure of the data allows us to compare measures of mobility directly estimated from the micro data with approximations based only on aggregate data. Bounds on mobility are estimated for a large cross-section of countries, using data on aggregate moments of the income distribution available in the World Wealth and Income Database and the World Bank's PovcalNet database. The estimated bounds on mobility imply that conventional anonymous growth rates of the bottom 40 percent (top 10 percent) that do not account for mobility substantially understate (overstate) the expected growth performance of those initially in the bottom 40 percent (top 10 percent).
  • Publication
    Predicting Conflict
    (World Bank, Washington, DC, 2017-05) Celiku, Bledi; Kraay, Aart
    This paper studies the performance of alternative prediction models for conflict. The analysis contrasts the performance of conventional approaches based on predicted probabilities generated by binary response regressions and random forests with two unconventional classification algorithms. The unconventional algorithms are calibrated specifically to minimize a prediction loss function penalizing Type 1 and Type 2 errors: (1) an algorithm that selects linear combinations of correlates of conflict to minimize the prediction loss function, and (2) an algorithm that chooses a set of thresholds for the same variables, together with the number of breaches of thresholds that constitute a prediction of conflict, that minimize the prediction loss function. The paper evaluates the predictive power of these approaches in a set of conflict and non-conflict episodes constructed from a large country-year panel of developing countries since 1977, and finds substantial differences in the in-sample and out-of-sample predictive performance of these alternative algorithms. The threshold classifier has the best overall predictive performance, and moreover has advantages in simplicity and transparency that make it well suited for policy-making purposes. The paper explores the implications of these findings for the World Bank's classification of fragile and conflict-affected states.
  • Publication
    Misunderestimating Corruption
    (MIT Press, 2016) Kraay, Aart
    Corruption estimates rely largely on self-reports of affected individuals and officials. Yet, survey respondents are often reticent to tell the truth about sensitive subjects, leading to downward biases in survey-based corruption estimates. This paper develops a method to estimate the prevalence of reticent behavior and reticence-adjusted rates of corruption using survey responses to sensitive questions. A statistical model captures how respondents answer a combination of conventional and random-response questions, allowing identification of the effect of reticence. GMM and maximum-likelihood estimates are obtained for ten countries. Adjusting for reticence dramatically alters the perceptions of the extent of corruption.
  • Publication
    Weak Instruments in Growth Regressions: Implications for Recent Cross-Country Evidence on Inequality and Growth
    (World Health Organization, 2015-11) Kraay, Aart
    This paper revisits four recent cross-country empirical studies on the effects of inequality on growth. All four studies report strongly significant negative effects, using the popular system generalized method of moments estimator that is frequently used in cross-country growth empirics. This paper shows that the internal instruments relied on by this estimator in these inequality-and-growth regressions are weak, and that weak instrument-consistent confidence sets for the effect of inequality on growth include a wide range of positive and negative values. This suggests that strong conclusions about the effect of inequality on growth— in either direction—cannot be drawn from these studies. This paper also systematically explores a wide range of alternative sets of internal instruments, and finds that problems of weak instruments are pervasive across these alternatives. More generally, the paper illustrates the importance of documenting instrument strength, basing inferences on procedures that are robust to weak instruments, and considering alternative instrument sets when using the system generalized method of moments estimator for cross-country growth empirics.
  • Publication
    Growth Still Is Good for the Poor
    (Elsevier, 2015-06-18) Dollar, David; Kleineberg, Tatjana; Kraay, Aart
    Average incomes in the poorest two quintiles on average increase at the same rate as overall average incomes. This is because, in a global data set spanning 121 countries over the past four decades, changes in the share of income of the poorest quintiles are uncorrelated with changes in average income. The variation in changes in quintile shares is also small relative to the variation in growth in average incomes, implying that the latter accounts for most of the variation in income growth in the poorest quintiles. In addition, we find little evidence that changes in the bottom quintile shares are correlated with country-level factors that are typically considered as important determinants for growth in average incomes or for changes in inequality. This evidence confirms the central importance of economic growth for improvements in living standards at the low end of the income distribution. It also illustrates the difficulty of identifying specific macroeconomic policies that are significantly associated with the growth rates of those in the poorest quintiles relative to everyone else.