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on Financial Development and Growth |
| By: | Koumparoulis, Dimitrios |
| Abstract: | The aim of this paper is to emphasize on the importance of human capital as variable for a better understandinh of economic growth models |
| Keywords: | economic growth models; human capital |
| JEL: | O40 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:25045&r=fdg |
| By: | Koichi Futagami; Takeo Hori; Ryoji Ohdoi (Asian Development Bank Institute) |
| Abstract: | In this paper, we examine the effects of introducing constraints on government borrowing using a continuous-time overlapping generations model of a small open economy. We consider government placing constraints on the amount of government bonds outstanding by establishing an upper limit, or target level, for the ratio of government bonds to gross domestic product. We first show that there exist multiple steady states in the model small open economy. One is a steady state with high growth, the other a steady state with low growth. We next examine how changes in the target level for bonds affect economic growth rates at the steady states. If the economy has a positive amount of asset holdings, we obtain the following results. When the government runs budget surpluses, an increase in the target level for government bonds reduces the growth rate of the low-growth economy, but raises the growth rate of the high-growth economy. However, when the government runs budget deficits, an increase in the target level for government bonds raises the growth rate of the low-growth economy, but reduces the growth rate of the high-growth economy. If the economy has a negative amount of asset holdings, the results are ambiguous. |
| Keywords: | continuous-time overlapping generations model, government bonds, steady-state model |
| JEL: | E00 E21 E40 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:eab:macroe:2263&r=fdg |
| By: | Koumparoulis, Dimitrios |
| Abstract: | The Solow growth model presents a theoretical framework for understanding the sources of economic growth, and the consequences for long-run growth of changes in the economic environment and in economic policy. But suppose that we wish to examine economic growth in a freer framework, without necessarily being bound to adopt in advance the conclusions of our economic theories. In order to conduct such a less theory-bound analysis, economists have built up an alternative framework called growth accounting to obtain a different perspective on the sources of economic growth. |
| Keywords: | Solow residual; total factor productivity; growth accounting |
| JEL: | O40 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:25041&r=fdg |
| By: | Karl-Johan Lundquist; Lars-Olof Olander |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwsre:sre-disc-2010_04&r=fdg |
| By: | Jose M. Berrospide; Rochelle M. Edge |
| Abstract: | The effect of bank capital on lending is a critical determinant of the linkage between financial conditions and real activity, and has received especial attention in the recent financial crisis. We use panel-regression techniques--following Bernanke and Lown (1991) and Hancock and Wilcox (1993, 1994)--to study the lending of large bank holding companies (BHCs) and find small effects of capital on lending. We then consider the effect of capital ratios on lending using a variant of Lown and Morgan's (2006) VAR model, and again find modest effects of bank capital ratio changes on lending. These results are in marked contrast to estimates obtained using simple empirical relations between aggregate commercial-bank assets and leverage growth, which have recently been very influential in shaping forecasters' and policymakers' views regarding the effects of bank capital on loan growth. Our estimated models are then used to understand recent developments in bank lending and, in particular, to consider the role of TARP-related capital injections in affecting these developments. |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2010-44&r=fdg |
| By: | Danquah, Michael; Ouattara, Osman; Speight, Alan |
| Abstract: | Using the Malmquist productivity index and panel data methods, we study the role of total human capital and its composition in the technological "catch-up" process and productivity growth via the channels of innovation and adoption of technology in a panel of 19 sub -Saharan African countries between 1960 and 2003. Our findings indicate different roles played by the composition of human capital and a follow-on consistent and significant contribution of total human capital to productivity growth. Primary and secondary school attainment (unskilled labour) contribute significantly to the adoption of technology(the main source of productivity growth in sub-Saharan Africa) whilst tertiary school attainment (skilled labour) plays a significant role in local innovation. Total human capital on the other hand, contribute more significantly to the adoption of technology and innovation. Technological "catch-up" remains a significant element in productivity growth in sub-Saharan Africa and economies with higher tertiary school attainment(skilled labour) and higher total human capital tend to contribute significantly to productivity growth through the channel of technological "catch-up". Our results rather point towards a circuitous depiction of the symbiotic characteristics of the composition of human capital in enhancing productivity growth in sub-Saharan Africa and hence efforts in scaling- up investments in human capital by governments, development partners etc should not be too concentrated on one composition of human capital. -- |
| Keywords: | Productivity growth,Human capital,Sub-Saharan Africa |
| JEL: | D24 O47 O55 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:gdec10:54&r=fdg |
| By: | Ferreira , Francisco H. G. |
| Abstract: | The joint determination of aggregate economic growth and distributional change has been studied empirically from at least three different perspectives. A macroeconomic approach that relies on cross-country data on poverty, inequality, and growth rates has generated some interesting stylized facts about the correlations between these variables, but has not shed much light on the underlying determinants."Meso-"and microeconomic approaches have fared somewhat better. The microeconomic approach, in particular, builds on the observation that growth, changes in poverty, and changes in inequality are simply different aggregations of information on the incidence of economic growth along the income distribution. This paper reviews the evolution of attempts to understand the nature of growth incidence curves, from the statistical decompositions associated with generalizations of the Oaxaca-Blinder method, to more recent efforts to generate"economically consistent"counterfactuals, drawing on structural, reduced-form, and computable general equilibrium models. |
| Keywords: | Rural Poverty Reduction,Achieving Shared Growth,Inequality,Services&Transfers to Poor,Economic Theory&Research |
| Date: | 2010–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:5424&r=fdg |
| By: | Volker Nannen |
| Abstract: | We consider a heterogeneous agent-based economic model where economic agents have strictly bounded rationality and where income allocation strategies evolve through selective imitation. Income is calculated by a Cobb-Douglas type production function, and selection of strategies for imitation depends on the income growth rate they generate. We show that under these conditions, when an agent adopts a new strategy, the effect on its income growth rate is immediately visible to other agents, which allows a group of imitating agents to quickly adapt their strategies when needed. |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1009.2721&r=fdg |
| By: | Reinhart, Carmen; Reinhart, Vincent |
| Abstract: | In our recent paper, (Reinhart and Reinhart, 2010) we examine the behavior of real GDP (levels and growth rates), unemployment, inflation, bank credit, and real estate prices in a twenty one-year window surrounding selected adverse global and country-specific shocks or events. In this note, we summarize some of the main findings of that paper, including that economic growth is notably slower in the decade following a macroeconomic disruption. We extend those results to provide evidence of several post-crisis “double dips” in the years following the crisis. A faltering of economic recovery is not uncommon after a severe financial shock, although this can often be ascribed to exogenous events. |
| Keywords: | recession; unemployment; financial crisis; growth; external shocks |
| JEL: | N1 F3 E6 |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:24969&r=fdg |
| By: | Daniel Halter; Manuel Oechslin; Josef Zweimüller |
| Abstract: | The empirical literature on the relationship between inequality and growth offers a contradictory assessment: Estimators based on time-series (differences-based) variation indicate a strong positive link while estimators (also) exploiting the cross-sectional (levelbased) variation suggest a negative relationship. Using an expanded dataset, the presentpaper confirms this conflicting pattern — and reconciles it on the basis of a simple model. We argue that the differences-based methods are prone to reflect the mostly positive shortor medium-run implications of inequality while the level-based estimators also incorporate more negative long-term consequences. Thus, the latter estimates come close to reflecting the adverse overall impact of inequality in the long run. |
| Keywords: | Inequality, growth, medium-run effects, long-run effects |
| JEL: | O11 O15 O43 C23 |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:zur:iewwpx:507&r=fdg |
| By: | Koumparoulis, Dimitrios |
| Abstract: | Modern growth theory, which built on the Harrod-Domar model, was born in 1956 with Robert Solow's famous papers and will turn 50 this year. Even the "new" growth theory, born with Paul Romer's papers, is now in its 20s. Why is it that with aptness, if poetic ineptness, many economists feel they could replace "words" with "growth research" in T. S. Eliot's refrain above about his "middle way?" This article is a brief retrospective and prospective on growth research in three parts: growth theory (old and new), empirical growth research (short and long), and the way forward. The theme that runs through all three parts is the tension between the logics of academic interest and the needs of the policy practitioner. The typical policymaker or advisor—whether politico or technocrat—wants to know the likely consequences of concrete public sector actions (not necessarily limited to policies) over their relevant time horizon. If growth research is a quest to satisfy this need, the journey is far from over. |
| Keywords: | growth theory; empirical growth research |
| JEL: | O40 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:25165&r=fdg |
| By: | Joonkyung Ha; Jong-Wha Lee; Lea Sumulong (Asian Development Bank Institute) |
| Abstract: | The current account surplus of the Republic of Korea (henceforth Korea) increased significantly in the immediate recovery period after the 1997–1998 Asian financial crisis. Since then the surplus has gradually diminished, and from 2006 to 2008, the current account was close to being balanced. Econometric analysis reveals that the effect of exchange rate changes on Korea's trade is not robust during non-crisis periods. Exchange rates only significantly affect trade when observations during crisis periods are included. This suggests that exchange rate adjustments alone will not solve the imbalance issue. Korea's external imbalances are not only caused by external factors; they also reflect internal and policy factors such as: (i) saving-investment imbalances; (ii) export-oriented policies; and (iii) the unbalanced structure of manufacturing and services. These internal imbalances result from domestic distortions and structural imbalances arising from market inefficiencies and public policies. These must be addressed to ensure balanced and sustained economic growth. |
| Keywords: | current account surplus, Asian financial crisis, Korea, saving-investment imbalances, export-oriented policies |
| JEL: | E2 E6 F4 O1 O2 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:eab:macroe:2285&r=fdg |
| By: | Christiane Nickel (European Central Bank, Directorate General Economics, Kaiserstrasse 29, D-60311 Frankfurt am Main, Germany.); Philipp Rother (European Central Bank, Directorate General Economics, Kaiserstrasse 29, D-60311 Frankfurt am Main, Germany.); Lilli Zimmermann (Center for European Studies (CEUS) at WHU – Otto Beisheim School of Management, Burgplatz 2, D-56179 Vallendar, Germany.) |
| Abstract: | The financial crisis of 2008/2009 has left European economies with a sizeable public debt stock bringing back the question what factors help to reduce these fiscal imbalances. Using data for the period 1985-2009 this paper identifies factors determining major public debt reductions. On average, the total debt reduction per country amounted to almost 37 percentage points of GDP. We estimate several specifications of a logistic probability model. Our findings suggest that, first, major debt reductions are mainly driven by decisive and lasting (rather than timid and short-lived) fiscal consolidation efforts focused on reducing government expenditure, in particular, cuts in social benefits and public wages. Second, robust real GDP growth also increases the likelihood of a major debt reduction because it helps countries to "grow their way out" of indebtedness. Third, high debt servicing costs play a disciplinary role strengthened by market forces and require governments to set up credible plans to stop and reverse the increasing debt ratios. JEL Classification: C35, E62, H6. |
| Keywords: | Fiscal policy, public debt, binary choice models. |
| Date: | 2010–09 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbwps:20101241&r=fdg |