nep-fdg New Economics Papers
on Financial Development and Growth
Issue of 2012‒02‒01
five papers chosen by
Iulia Igescu
Global Insight, GmbH

  1. The Relationship between Inflation, output growth, and their Uncertainties: Evidence from selected CEE countries By Mubariz Hasanov; Tolga Omay
  2. Political Ideology and Economic Growth in a Democracy : The French Experience, 1871 - 2009. By François Facchini; Mickaël Melki
  3. Local Financial Development and Household Welfare: Microevidence from Thai Households By Gloede, Oliver; Rungruxsirivorn, Ornsiri
  4. The Environment and Directed Technical Change: Comment By Jean-Charles Hourcade; Antonin Pottier; Etienne Espagne
  5. Public Banks and the Productivity of Capital By Svetlana Andrianova

  1. By: Mubariz Hasanov (Hacettepe University, Department of Economics); Tolga Omay (Cankaya University, Department of International Trade Management)
    Abstract: In this paper, we examine causal relationships among inflation rate, output growth rate, inflation uncertainty and output uncertainty for ten Central and Eastern European transition countries. For this purpose, we estimate a bivariate GARCH model that includes output growth and inflation rates for each country. Then we use conditional standard deviations of inflation and output to proxy nominal and real uncertainty, respectively, and perform Granger-causality tests. Our results suggest that inflation rate induces uncertainty about both inflation rate and output growth rate, which is detrimental for real economic activity. On the other hand, we find that output growth rate reduces macroeconomic uncertainty. In addition, we also examine and discuss causal relationships among remaining variables.
    Keywords: Inflation; Output growth; Uncertainty; Granger-Causality Tests; Transition Countries
    JEL: C32 C51 C52 E10 E30
    Date: 2012
  2. By: François Facchini (Centre d'Economie de la Sorbonne); Mickaël Melki (Centre d'Economie de la Sorbonne)
    Abstract: This paper examines the influence of political ideology on economic growth in the French democracy since 1871. It does so by addressing three main issues : the property and the reliability of a political ideology index in the long-run, the robustness of the relationship between ideology and growth and the specific channels through which political ideology affects economic performance. The main conclusion is that, compared with right-wing parties in power, left-wing governments have promoted equity at the expense of economic growth. It also appears that the main channel through which political ideology has impacted economic performance all along the French democratic experience is the budgetary tool (i.e. fiscal and redistributive policies) which influenced employment and income inequalities. By contrast, there seems to be less or even no empirical support for explanations based on the monetary policy or regulation, such as trade policies or the labor market regulation.
    Keywords: French economic history, 19th century, 20th century, political ideology, partisanship, growth, government performance, fiscal policy, public spending, unemployment, inequality.
    JEL: E6 O43 H11 N13
    Date: 2012–01
  3. By: Gloede, Oliver; Rungruxsirivorn, Ornsiri
    Abstract: We provide new micro evidence on the discussion about the relationship between financial development and welfare. Relying on the concept of local financial development our analysis focuses on three dimensions of household welfare: vulnerability to poverty, investment, and consumption smoothing. Even though we cannot find a significant effect on vulnerability, we provide evidence that financial development is correlated with higher investment and better possibilities to smooth consumption. The extent of both effects is also economically significant. Our results hold for alternative specifications and variations in the measurement of financial development. --
    Keywords: credit rationing,investment,consumption,consumption smoothing,growth
    JEL: O16 G21 D12 D24
    Date: 2012
  4. By: Jean-Charles Hourcade (CIRED, Centre International de Recherche sur l'Environnement et le Développement); Antonin Pottier (CIRED, Centre International de Recherche sur l'Environnement et le Développement); Etienne Espagne (CIRED, Centre International de Recherche sur l'Environnement et le Développement)
    Abstract: This paper discusses the growth model with environmental constraints recently presented in (Acemoglu et al., 2011) which focuses on the redirection of technical change by climate policies with research subsidies and a carbon tax. First, Acemoglu et al.'s model and chosen parameters yield numerical results that do not support the conclusion that ambitious climate policies can be conducted “without sacrificing (much or any) long-run growth”. Second, they select unrealistic key parameters for carbon sinks and elasticity of substitution. We find that more realistic parameters lead to very different results. Third, the model leads to an unrealistic conclusion when used to analyse endogenous growth, suggesting specification problems.
    Keywords: Technological Change, Endogenous Growth, Climate, Energy Substitutability
    JEL: O30 O33 Q43 Q54 Q56
    Date: 2011–12
  5. By: Svetlana Andrianova
    Abstract: Weak institutions are shown to create scope for public banks to play a growth-promoting role, even if such banks are less efficient than private banks.
    Keywords: Economic growth; governance; regulation
    JEL: O16 G18 G28 K42
    Date: 2011–10

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