nep-fdg New Economics Papers
on Financial Development and Growth
Issue of 2009‒09‒11
seven papers chosen by
Iulia Igescu
Global Insight, GmbH

  1. Human Capital and Economic Growth in Spain, 1850-2000 By Leandro Prados de la Escosura; Joan R. Roses
  2. Financial Services Sector as a Driver of Productivity Growth in Hong Kong By Frank Leung; Gaofeng Han; Kevin Chow
  3. Inequality of Opportunity and Growth By Gustavo A. Marrero; Juan G. Rodríguez
  4. U.K. World War I and interwar data for business cycle and growth analysis By Manuel Adelino; Kristopher Gerardi; Paul S. Willen
  5. Do Remittances Impact the Economy? Some Empirical Evidences from A Developing Economy By Hrushikesh Mallick
  6. How much of South Korea's growth miracle can be explained by trade policy? By Michelle Connolly; Kei-Mu Yi
  7. Culture Values Entrepreneurship and Growth By Jellal, Mohamed

  1. By: Leandro Prados de la Escosura; Joan R. Roses
    Abstract: We investigate human capital accumulation in Spain using alternative approaches based on the concept of ‘labor quality’ and on the idea of education. We, then, assess the effect of human capital accumulation on labor productivity growth and discuss the implications of the different measures for TFP growth. While long-run trends in human capital are similar with either measure, the skill premium approach fits better Spanish historical experience. Human capital provided a positive albeit small contribution to labor productivity growth facilitating technological innovation. Broad capital accumulation and efficiency gains appear complementary in Spain’s long-term growth.
    Keywords: Human Capital, Growth, Labor Productivity, Total Factor
    JEL: E24 J24 O47 N33 N34
    Date: 2009–08
  2. By: Frank Leung (Research Department, Hong Kong Monetary Authority); Gaofeng Han (Research Department, Hong Kong Monetary Authority); Kevin Chow (Research Department, Hong Kong Monetary Authority)
    Abstract: Hong Kong has seen strong growth in labour productivity since 2002. Sectoral breakdown shows that the advance in output per labour has been mainly supported by the expansion in financial and trade related activities attributable to the vibrant increase in offshore trade and exports of financial services. Using the data envelopment analysis (DEA) method, we find that the observed increase in labour productivity has been underpinned by the rise in total factor productivity (TFP). Based on a panel dataset of major economic sectors, regression analysis suggests that exports of services and the China factor are the two key determinants of TFP growth in Hong Kong.
    Keywords: Total factor productivity, labour productivity, economic integration
    JEL: D24 F15
    Date: 2009–08
  3. By: Gustavo A. Marrero; Juan G. Rodríguez
    Abstract: Theoretical and empirical studies exploring the effects of income inequality upon growth reach a disappointing inconclusive result. This paper postulates that one reason for this ambiguity is that income inequality is actually a composite measure of at least two different sorts of inequality: inequality of opportunity and inequality of effort. These two types of inequality affect growth through opposite channels, so the relationship between income inequality and growth is positive or negative depending on which component is larger. We test this proposal using inequality-of- opportunity measures computed from the PSID database for 23 states of the U.S. in 1980 and 1990. We find robust support for a negative relationship between inequality of opportunity and growth, and a positive relationship between inequality of effort and growth.
    Date: 2009–07
  4. By: Manuel Adelino; Kristopher Gerardi; Paul S. Willen
    Abstract: This article contributes new time series for studying the U.K. economy during World War I and the interwar period. The time series are per capita hours worked and average tax rates of capital income, labor income, and consumption. Uninterrupted time series of these variables are provided for an annual sample that runs from 1913 to 1938. We highlight the usefulness of these time series with several empirical applications. We use per capita hours worked in a growth accounting exercise to measure the contributions of capital, labor, and productivity to output growth. The average tax rates are employed in a Bayesian model averaging experiment to reevaluate the Benjamin and Kochin (1979) regression.
    Date: 2009
  5. By: Hrushikesh Mallick
    Abstract: The study attempts to examine the impact of remittances on macroeconomic activities (private consumption and investment) and its implications on economic growth in India for the period from 1966-67 to 2003-04. Estimating a general consumption model, the results indicate that remittances along with debt, money supply (net of bank demand deposits) and income, consistently have a positive influence on private consumption. [WP no. 407].
    Keywords: income, emigrant workers, economy, debt, money supply, bank, demand deposits, bank, bank demand deposits, Remittances, consumption, Investment, Growth, Interest Rates, Government Borrowings, Openness of the economy, macroeconomic activities, consumption, investment, private consumption,
    Date: 2009
  6. By: Michelle Connolly; Kei-Mu Yi
    Abstract: South Korea's growth miracle has been well documented. A large set of institutional and policy reforms in the early 1960s is thought to have contributed to the country's extraordinary performance. In this paper, the authors assess the importance of one key set of policies, the trade policy reforms in Korea, as well as the concurrent GATT tariff reductions. They develop a model of neoclassical growth and trade that highlights two forces by which lower trade barriers can lead to increased per worker GDP: comparative advantage and specialization, and capital accumulation. The authors calibrate the model and simulate the effects of three sets of tariff reductions that occurred between the early 1962 and 1995. Their main finding is that the model can explain up to 32 percent of South Korea's catch-up to the G7 countries in output per worker in the manufacturing sector. The authors find that the effects of the tariff reductions taken together are about twice as large as the sum of each reduction applied individually.
    Keywords: Trade ; Tariff ; Economic policy
    Date: 2009
  7. By: Jellal, Mohamed
    Abstract: We integrate a social norm which associates status to accumulation of capital and consumption into a simple model of endogenous growth. We show that societies which place a greater weight of cultural values on stock of accumulated capital as opposed to consumption will experience fast growth. Our results are consistent with those obtained by Baumol (1990) in the context of entrepreneurship and by Fershtman and Weiss (1991).
    Keywords: Entrepreneurship;Culture Values;Social Status;Growth
    JEL: O1 A13 Z13
    Date: 2009–09–03

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