nep-fdg New Economics Papers
on Financial Development and Growth
Issue of 2010‒05‒15
five papers chosen by
Iulia Igescu
Global Insight, GmbH

  1. Growth and economic crises in Turkey: leaving behind a turbulent past? By Mihai Macovei
  2. Economic Growth and the Volatility of Foreign Aid By Michal Chervin; Sweder van Wijnbergen
  3. A model-based analysis of the impact of Cohesion Policy expenditure 2000-06: simulations with the QUEST III endogenous R&D model By Janos Varga; Jan in 't Veld
  4. Gauging by numbers: A first attempt to measure the quality of public finances in the EU By Salvador Barrios; Andrea Schaechter
  5. Economic Growth, Energy demand and Atmospheric Pollution: Challenges and Opportunities for China in the future 30 years By Jie He; David Roland-Holst

  1. By: Mihai Macovei
    Abstract: Turkey's performance in the current crisis shows that it has managed to weather the global stormy conditions relatively well and avoid collapsing into a full-fledged currency and financial crisis. On the face of it, one could conclude economic reforms introduced since 2001 have paid off and today's performance marks a clean break with the past. But there are also indications that the Turkish economy still retains some of its old vulnerabilities. By determining how resilient Turkey's economy has become to domestic and international economic volatility, one can better assess the sustainability of the accelerated economic convergence process on which Turkey embarked after the 2001 crisis.
    Keywords: Economic crisis, external vulnerabilities, growth, economic convergence, fiscal consolidation, structural reforms, enlargement, boom-bust growth pattern, Macovei
    JEL: E32 E63 F33 P17
    Date: 2009–10
  2. By: Michal Chervin (University of Amsterdam); Sweder van Wijnbergen (University of Amsterdam)
    Abstract: Foreign aid’s effectiveness in promoting economic growth remains mired in controversy.We examine the impact of the volatility of aid on economic growth, controlling for the level of aid. A four-year panel analysis is conducted encompassing 155 countries over the period 1966-2001. We find that once the volatility of aid is controlled for, aid has a positive impact on economic growth. Correspondingly, volatility of aid flows is found to be negatively related to growth. We found no significant link between investment and foreign aid, but a positive correlation between aid and consumption and a negative link between aid volatility and consumption. But our results also indicate that aid has become a source of volatility rather than insuring against it, and in that way may have become inimical to economic growth.
    Keywords: foreign aid; volatility; economic growth
    JEL: O4 O11 O19
    Date: 2010–01–04
  3. By: Janos Varga; Jan in 't Veld
    Abstract: More than a third of the EU budget is devoted to Cohesion Policy with the objective to foster economic and social cohesion in the European Union. Large-scale fiscal transfers are used to support investment in infrastructure, R&D and human capital. This paper provides a model-based assessment of the potential macro-economic impact of these fiscal transfers using a DSGE model with semi-endogenous growth (Jones, 1995) and endogenous human capital accumulation. The simulations show the potential benefits of Structural Funds with significant output gains in the long run due to sizeable productivity improvements.
    Keywords: A Model-based Analysis of the Impact of Cohesion Policy Expenditure 2000-06, Cohesion Policy, endogenous growth, dynamic general equilibrium modelling, Varga, in 't Veld,
    JEL: C53 E62 O30 O41
    Date: 2009–10
  4. By: Salvador Barrios; Andrea Schaechter
    Abstract: Ensuring high quality of public finances (QPF) with a view to supporting long-term economic growth has gained new urgency as the room for fiscal manoeuvre has shrunk in light of the current crisis. To more systematically analyse QPF and compare developments across countries and over time, a greater focus on identifying and developing comparable QPF indicators is needed. This paper provides a first attempt in this respect. Based on the view that QPF is a multi-dimensional concept, it creates composite indicators for twelve areas of public finances that are linked to long-term economic growth. While the proposed alternative calculation methods yield relatively robust results and findings are in line with conventional wisdom, due to data problems the composite indicators should only be seen as a useful starting point for identifying a country's main strengths and weaknesses in QPF. This would need to be complemented by qualitative analysis that also accounts for country and other specificities. JEL classification: E62, H11, H50, H52, H60
    Keywords: Quality of public finances, public finances, fiscal policy, long-term economic growth, public expenditure, public revenue, fiscal governance, Barrios, Schaechter
    JEL: E62 H11 H50 H52 H60
    Date: 2009–08
  5. By: Jie He (GREDI, Faculte d'administration, Université de Sherbrooke); David Roland-Holst (Mills College, UC Berkeley, and RDRC)
    Abstract: This paper uses a dynamic CGE model, calibrated to detailed Chinese emissions data, to assess two important questions. What can we reasonably expect Chinese emissions trends to look like over the next three decades? Secondly, what would be the appropriate policy interventions to flatten Chinese emissions trajectories and reduce the risk of local, regional, and even global adversity? This research is original in its direct use of the new industrial sector-level emissions and energy using data from China to estimate the energy-specific emission effluent rate and its detailed treatment of policies taking account of the three main determinants of pollution intensity: growth, output composition, and technological change. Our results indicate that, without further effective emission control measures, China’s economic growth over the next two decades will contribute significantly to SO2 emission problems, in which the emission firstly increase from the rapid expansion of the transportation service sectors until 2018, then from the heavy industrialization process after 2018. With the potential technical progress, the emission burden will be centralized back to two energy sectors: electricity generation and petrol and coke refining during these two periods. Detailed examination of the structural and technological components of pollution shows that efficient pollution mitigation can be realized by focused abatement activities, cleaner production, and advances in cleaner fuel products and their use technologies.
    Keywords: China, Global warming, CGE modeling
    JEL: Q53 D58 Q54 Q58
    Date: 2010–04–26

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