nep-fdg New Economics Papers
on Financial Development and Growth
Issue of 2012‒03‒28
seven papers chosen by
Iulia Igescu
Global Insight, GmbH

  1. Does Trade Openness Affect Long Run Growth? Cointegration, Causality and Forecast Error Variance Decomposition Tests for Pakistan By Muhammad, Shahbaz
  2. A panel data modelling of agglomeration and growth: cross-country evidence By Leitão, Nuno Carlos
  3. Do fiscal rules matter for growth? By António Afonso; João Tovar Jalles
  4. Economic liberalization and Indian economic growth: What's the evidence? By Ashkok Kotwal; Bharat Ramaswami; Wilima Wadhwa
  5. The impact of trade on economic growth By Leitão, Nuno Carlos
  6. The nexus between economic freedom and growth: Evidence from CEE countries in transition By Gurgul, Henryk; Lach, Łukasz
  7. Trade causes growth in Sub-Saharan Africa By Brückner, Markus; Lederman, Daniel

  1. By: Muhammad, Shahbaz
    Abstract: The study investigates effect of trade openness on economic growth in the long run. We apply the ARDL bounds testing approach to test for a long run relationship and the augmented production function by incorporating financial development as an additional determinant of economic growth using the framework of Mankiw (1992). The results confirm cointegration among the series. In long run, trade openness promotes economic growth. The growth-led-trade hypothesis is vindicated by VECM Granger causality test. The causality is also checked by using the innovative accounting approach.
    Keywords: Trade; Growth; Cointegration; Causality; Pakistan
    JEL: F1
    Date: 2012–01–01
  2. By: Leitão, Nuno Carlos
    Abstract: This manuscript analysis the relationships between urban agglomeration and economic growth. We apply a static and dynamic panel data approach from European Union (EU-27), the United States, Japan, New Zealand and Mexico for the period 1990 to 2008. The results show that growth is highly correlated with urban agglomeration. The econometric models evidence that international trade is an important vehicle to expand the economic growth. The models also indicate that human capital promotes the economic growth.
    Keywords: economic growth; urban agglomeration and panel data approach
    JEL: R12 R11 O4
    Date: 2012–03–20
  3. By: António Afonso; João Tovar Jalles
    Abstract: We study the relevance of fiscal rules for growth in an EU panel. Our results show that they foster growth, while stricter fiscal rules mitigate the adverse impact on growth from big governments. Moreover, more recent EU member states have gained from the implementation of fiscal rules.
    Keywords: fiscal rules, growth, government size, panel analysis
    JEL: C23 E62 H60
    Date: 2012–01
  4. By: Ashkok Kotwal (University of British Columbia); Bharat Ramaswami (Indian Statistical Institute, New Delhi); Wilima Wadhwa (Indian Statistical Institute, New Delhi)
    Date: 2011–09
  5. By: Leitão, Nuno Carlos
    Abstract: The purpose of this article is to investigate the impact of marginal intra-industry trade on economic growth. The manuscript questions the economic growth exogenous models. It introduces new proxies to explain the economic growth as in marginal intra-industry trade, foreign direct investment and globalization index. The results indicate that economic growth is a dynamic process. The change of intra-industry has a positive impact on economic growth. This paper confirms relevant theoretical hypothesis as foreign direct investment and globalization promote the economic growth. The good results obtained with GMM system estimator suggest that the building of dynamic theoretical models will be of interest to academic researchers the link between marginal intra-industry trade and economic growth.
    Keywords: Endogenous models; Panel Data; and United States
    JEL: N1 C23
    Date: 2012–03–18
  6. By: Gurgul, Henryk; Lach, Łukasz
    Abstract: This study sought to examine the causal links between economic freedom and economic growth of new EU members in transition in the period 2000-2009. The empirical results suggest significant causality running from monetary and fiscal freedom, trade openness, regulation of credit, labour, and business, legal structure and security of property rights, and access to sound money to growth, especially in less and moderately developed CEE transition countries. Moreover, we found evidence that economic freedom was one of the factors stimulating the convergence of these economies towards rich EU members. The evidence of causality in the opposite direction was much weaker.
    Keywords: economic growth, economic freedom, CEE transition economies
    JEL: O10 O40
    Date: 2011–12–20
  7. By: Brückner, Markus; Lederman, Daniel
    Abstract: In the 1990s the mainstream consensus was that trade causes growth. Subsequent research shed doubt on the consensus view, as evidence suggested that the identification of the effect of trade on growth was problematic in the existing literature. This paper contributes to this debate by focusing on growth in Sub-Saharan Africa. It estimates the effect of openness to international trade on economic growth with panel data. Employing instrumental variables techniques that correct for endogeneity bias, the empirical evidence suggests that within-country variations in trade openness cause economic growth: a 1 percentage point increase in the ratio of trade over gross domestic product is associated with a short-run increase in growth of approximately 0.5 percent per year; the long-run effect is larger, reaching about 0.8 percent after ten years. These results are robust to controlling for country and time fixed effects as well as political institutions.
    Keywords: Economic Theory&Research,Achieving Shared Growth,Free Trade,Trade Policy,Trade Law
    Date: 2012–03–01

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