Person:
Kraay, Aart

Development Research Group, The World Bank
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Macroeconomics, Debt management, Economic growth, Inequality and shared prosperity
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Development Research Group, The World Bank
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Last updated: January 31, 2023
Biography
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 15
  • Publication
    Government Spending Multipliers in Developing Countries : Evidence from Lending by Official Creditors
    (World Bank, Washington, DC, 2012-06) Kraay, Aart
    This paper uses a novel loan-level dataset covering lending by official creditors to developing country governments to construct an instrument for public spending that can be used to estimate government spending multipliers. Loans from official creditors (primarily multilateral development banks and bilateral aid agencies) are a major source of financing for government spending in developing countries. These loans typically finance public spending projects that take several years to implement, with multiple disbursements linked to the stages of project implementation. The long disbursement periods for these loans imply that the bulk of government spending financed by official creditors in a given year reflects loan approval decisions made in many previous years, before current-year macroeconomic shocks are known. Loan-level commitment and disbursement transactions from the World Bank's Debtor Reporting System database are used to isolate a predetermined component of government spending associated with past loan approvals. This can be used as an instrument to estimate spending multipliers for a large sample of 102 developing countries. The one-year government spending multiplier is reasonably-precisely estimated to be around 0.4, and there is some suggestive evidence that multipliers are larger in recessions, in countries less exposed to international trade, and in countries with flexible exchange rate regimes.
  • Publication
    Doing the Survey Two-Step: The Effects of Reticence on Estimates of Corruption in Two-Stage Survey Questions
    (World Bank, Washington, DC, 2015-05) Karalashvili, Nona; Kraay, Aart; Murrell, Peter
    This paper develops a structural approach for modeling how respondents answer survey questions and uses it to estimate the proportion of respondents who are reticent in answering corruption questions, as well as the extent to which reticent behavior biases down conventional estimates of corruption. The context is a common two-step survey question, first inquiring whether a government official visited a business, and then asking about bribery if a visit was acknowledged. Reticence is a concern for both steps, since denying a visit sidesteps the bribe question. This paper considers two alternative models of how reticence affects responses to two-step questions, with differing assumptions on how reticence affects the first question about visits. Maximum-likelihood estimates are obtained for seven countries using data on interactions with tax officials. Different models work best in different countries, but cross-country comparisons are still valid because both models use the same structural parameters. On average, 40 percent of corruption questions are answered reticently, with much variation across countries. A statistic reflecting how much standard measures underestimate the proportion of all respondents who had a bribe interaction is developed. The downward bias in standard measures is highly statistically significant in all countries, varying from 12 percent in Nigeria to 90 percent in Turkey. The source of bias varies widely across countries, between denying a visit and denying a bribe after admitting a visit.
  • Publication
    Governance Matters VII : Aggregate and Individual Governance Indicators 1996-2007
    (World Bank, Washington, DC, 2008-06) Kaufmann, Daniel; Kraay, Aart; Mastruzzi, Massimo
    This paper reports on the latest update of the Worldwide Governance Indicators (WGI) research project, covering 212 countries and territories and measuring six dimensions of governance between 1996 and 2007: Voice and Accountability, Political Stability and Absence of Violence/Terrorism, Government Effectiveness, Regulatory Quality, Rule of Law, and Control of Corruption. The latest aggregate indicators are based on hundreds of specific and disaggregated individual variables measuring various dimensions of governance, taken from 35 data sources provided by 32 different organizations. The data reflect the views on governance of public sector, private sector and NGO experts, as well as thousands of citizen and firm survey respondents worldwide. The authors also explicitly report the margins of error accompanying each country estimate. These reflect the inherent difficulties in measuring governance using any kind of data. The authors also briefly describe the evolution of the WGI since its inception, and show that the margins of error on the aggregate governance indicators have declined over the years, even though they still remain non-trivial. The authors find that even after taking margins of error into account, the WGI permit meaningful cross-country comparisons as well as monitoring progress over time. In less than a decade, a substantial number of countries exhibit statistically significant improvements in at least one dimension of governance, while other countries exhibit deterioration in some dimensions. These aggregate indicators, spanning more than a decade, together with the disaggregated individual indicators, are available at www.govindicators.org.
  • Publication
    Corruption and Confidence in Public Institutions : Evidence from a Global Survey
    (World Bank, Washington, DC, 2009-12) Clausen, Bianca; Kraay, Aart; Nyiri, Zsolt
    Well-functioning institutions matter for economic development. In order to operate effectively, public institutions must also inspire confidence in those they serve. The authors use data from the Gallup World Poll, a unique and very large global household survey, to document a quantitatively large and statistically significant negative correlation between corruption and confidence in public institutions. This suggests an important channel through which corruption can inhibit development by eroding confidence in public institutions. This correlation is robust to the inclusion of a large set of controls for country and respondent-level characteristics, and they show how it can plausibly be interpreted as reflecting at least in part a causal effect from corruption to confidence. The authors also show that individuals with low confidence in institutions exhibit low levels of political participation, show increased tolerance for violent means to achieve political ends, and have a greater desire to "vote with their feet" through emigration.
  • Publication
    Government Matters III : Governance Indicators for 1996-2002
    (World Bank, Washington, DC, 2003-08) Kaufmann, Daniel; Kraay, Aart; Mastruzzi, Massimo
    The authors present estimates of six dimensions of governance covering 199 countries and territories for four time periods: 1996, 1998, 2000, and 2002. These indicators are based on several hundred individual variables measuring perceptions of governance, drawn from 25 separate data sources constructed by 18 different organizations. The authors assign these individual measures of governance to categories capturing key dimensions of governance and use an unobserved components model to construct six aggregate governance indicators in each of the four periods. They present the point estimates of the dimensions of governance as well as the margins of errors for each country for the four periods. The governance indicators reported here are an update and expansion of previous research work on indicators initiated in 1998 (Kaufmann, Kraay, and Zoido-Lobat 1999a,b and 2002). The authors also address various methodological issues, including the interpretation and use of the data given the estimated margins of errors.
  • Publication
    Measuring Corruption : Myths and Realities
    (World Bank, Washington, DC, 2007-04) Kaufmann, Daniel; Kraay, Aart; Mastruzzi, Massimo
    The report points out that over the past decade measuring corruption has become an ever-growing empirical field. This empirical analysis questions the traditional notion of viewing the firm as an 'investment climate taker' and thus ignoring the view that powerful conglomerates can also shape the business climate and thus become 'investment climate makers'. The study implies that it is warranted to move away from simply blaming government officials for prevailing corruption, and to question the value of popular initiatives such as voluntary-and often un-monitorable-codes of conduct. In this report, some popular notions are espoused, which either lack clarity or are not backed up by rigorous analysis or evidence. In this article the authors highlight some of the main issues in these debates, in the form of seven myths and their associated realities, and conclude by also pointing to some brief implications for the private sector role in fighting corruption.
  • Publication
    The Worldwide Governance Indicators Project : Answering the Critics
    (World Bank, Washington, DC, 2007-03) Kaufmann, Daniel; Kraay, Aart; Mastruzzi, Massimo
    The Worldwide Governance Indicators, reporting estimates of six dimensions of governance for over 200 countries between 1996 and 2005, have become widely used among policymakers and academics. They have also attracted some explicit written criticisms. In this short paper the authors synthesize 11 critiques offered by four recent papers. They then refute them as either conceptually incorrect or empirically unsubstantiated.
  • Publication
    Corruption and Confidence in Public Institutions : Evidence from a Global Survey
    (World Bank, 2011-05-31) Clausen, Bianca; Kraay, Aart; Nyiri, Zsolt
    Well-functioning institutions matter for economic development. In order to operate effectively, public institutions must also inspire confidence in those they serve. We use data from the Gallup World Poll, a unique and very large global household survey, to document a quantitatively large and statistically significant negative correlation between corruption and confidence in public institutions. This suggests an important indirect channel through which corruption can inhibit development: by eroding confidence in public institutions. This correlation is robust to the inclusion of a large set of controls for country and respondent-level characteristics. Moreover we show how it can plausibly be interpreted as reflecting at least in part a causal effect from corruption to confidence. Finally, we provide evidence that individuals with low confidence in institutions exhibit low levels of political participation, show increased tolerance for violent means to achieve political ends, and have a greater desire to “vote with their feet” through emigration.
  • Publication
    Growth without Governance
    (World Bank, Washington, DC, 2002-11) Kaufmann, Daniel; Kraay, Aart
    It is well known that there is a strong positive correlation between per capita incomes and the quality of governance across countries. the authors propose an empirical strategy that allows separation of this correlation into (1) a strong positive causal effect running from better governance to higher per capita incomes, and, perhaps surprisingly at first, (2) a weak and even negative causal effect running in the opposite direction from per capita incomes to governance. The first result confirms existing evidence on the importance of good governance for economic development. The second result is new and suggests the absence of a "virtuous circle" in which higher incomes lead to further improvements in governance. This motivates the authors' choice of title, "Growth Without Governance." They document this evidence using a newly updated set of worldwide governance-indicators covering 175 countries for the period 2000-01, and use the results to interpret the relationship between incomes and governance focusing on the Latin America and Caribbean region-within a worldwide empirical context. Finally, the authors speculate about the potential importance of elite influence and state capture in accounting for the surprising negative effects of per capita incomes on governance, present some evidence on such capture in some Latin American countries, and suggest priorities for actions to improve governance when such pernicious elite influence shapes public policy.
  • Publication
    Governance Matters IV : Governance Indicators for 1996-2004
    (World Bank, Washington, DC, 2005-06) Kaufmann, Daniel; Kraay, Aart; Mastruzzi, Massimo
    The authors present the latest update of their aggregate governance indicators, together with new analysis of several issues related to the use of these measures. The governance indicators measure the following six dimensions of governance: (1) voice and accountability; (2) political instability and violence; (3) government effectiveness; (4) regulatory quality; (5) rule of law, and (6) control of corruption. They cover 209 countries and territories for 1996, 1998, 2000, 2002, and 2004. They are based on several hundred individual variables measuring perceptions of governance, drawn from 37 separate data sources constructed by 31 organizations. The authors present estimates of the six dimensions of governance for each period, as well as margins of error capturing the range of likely values for each country. These margins of error are not unique to perceptions-based measures of governance, but are an important feature of all efforts to measure governance, including objective indicators. In fact, the authors give examples of how individual objective measures provide an incomplete picture of even the quite particular dimensions of governance that they are intended to measure. The authors also analyze in detail changes over time in their estimates of governance; provide a framework for assessing the statistical significance of changes in governance; and suggest a simple rule of thumb for identifying statistically significant changes in country governance over time. The ability to identify significant changes in governance over time is much higher for aggregate indicators than for any individual indicator. While the authors find that the quality of governance in a number of countries has changed significantly (in both directions), they also provide evidence suggesting that there are no trends, for better or worse, in global averages of governance. Finally, they interpret the strong observed correlation between income and governance, and argue against recent efforts to apply a discount to governance performance in low-income countries.