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on Financial Development and Growth |
| By: | Mathilde Maurel; Gunther Schnabl (Institute for Economic Policy, University of Leipzig) |
| Abstract: | The 2010 European debt crisis has revived the discussion concerning the optimum adjustment strategy in the face of asymmetric shocks. Whereas Mundell's (1961) seminal theory on optimum currency areas suggests depreciation in the face of crisis, the most recent emergence of competitive depreciations, competitive interest rate cuts or currency wars questions the exchange rate as an adjustment tool to asymmetric economic development. This paper approaches the question from a theoretical perspective by confronting exchange rate based adjustment with crisis adjustment via price and wage cuts. Econometric estimations yield a negative impact of exchange rate flexibility/volatility on growth, which is found to be particularly strong for countries with asymmetric business cycles and during recessions. Based on these findings we support a further enlargement of the European Monetary Union and recommend more exchange rate stability for the rest of the world. |
| Keywords: | Shock Adjustment, Exchange Rate Regime, Growth |
| Date: | 2011–08–22 |
| URL: | http://d.repec.org/n?u=RePEc:hlj:hljwrp:18-2011&r=fdg |
| By: | O.A. Carboni; P. Russu |
| Abstract: | This paper studies the equilibrium dynamics of a growth model with public finance where two different allocations of public resources are considered. The model simultaneously determines the optimal shares of consumption, capital accumulation, taxes and composition of the two different public expenditures which maximize a representative household s lifetime utilities in a centralized economy. The analysis supplies a closed form solution. Moreover, with one restriction on the parameters (?=?) we fully determine the solutions path for all variables of the model and determine the conditions for balanced growth. |
| Keywords: | Growth models; Fiscal policy; Public spending composition |
| JEL: | H50 E13 O40 H20 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:cns:cnscwp:201229&r=fdg |
| By: | Benoit Desmarchelier (CLERSE - Centre lillois d'études et de recherches sociologiques et économiques - CNRS : UMR8019 - Université Lille 1 - Sciences et Technologies); Faridah Djellal (CLERSE - Centre lillois d'études et de recherches sociologiques et économiques - CNRS : UMR8019 - Université Lille 1 - Sciences et Technologies); Faïz Gallouj (CLERSE - Centre lillois d'études et de recherches sociologiques et économiques - CNRS : UMR8019 - Université Lille 1 - Sciences et Technologies) |
| Abstract: | The goal of this paper is to (re)assess the relationship between knowledge intensive busi- ness services (KIBS) and the economic growth. Taking into account various conflicting relationships between KIBS and growth, we build a multi agent-based system involving industrial firms, consumer-services firms, consumers, KIBS firms and a banking system. Our main result is that KIBS can be regarded as an engine for the economic growth and that they operate as a substitute for the material capital accumulation. Nevertheless, material capital accumulation still appears as a significant factor of economic growth. |
| Keywords: | Economic growth, Business services, Structural change |
| Date: | 2012–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-00748661&r=fdg |
| By: | Chatelain, Jean-Bernard; Ralf, Kirsten |
| Abstract: | In multiple regressions, explanatory variables with simple correlation coefficients with the dependent variable below 0.1 in absolute value (such as aid with economic growth) may have very large and statistically significant estimated parameters which are unfortunately "outliers driven" and spurious. This is obtained by including another regressor which is highly correlated with the initial regressor, such as a lag, a square or interaction terms of this regressor. The analysis is applied on the "Botswana outliers driven" Burnside and Dollar [2000] article which found that aid had an effect on growth only for countries achieving good macroeconomic policies. |
| Keywords: | Near-Multicollinearity; Student t-Statistic; Spurious regressions; Ceteris paribus; Parameter Inflation Factor; Growth; Foreign Aid |
| JEL: | F35 C52 C12 P45 |
| Date: | 2012–11–08 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:42533&r=fdg |
| By: | DELL'ANNO, Roberto (CELPE - Centre of Labour Economics and Economic Policy, University of Salerno - Italy); VILLA, Stefania (CELPE - Centre of Labour Economics and Economic Policy, University of Salerno - Italy) |
| Abstract: | This paper analyses the impact of the speed of transition reforms on economic growth in transition countries in the context of the debate big-bang versus gradualist approach. It builds a new indicator for the speed of transition reforms based on a three-way principal component analysis. It shows that: (i) the speed of transition reforms Granger-causes economic growth and there is no reverse causation; (ii) the impact of contemporaneous speed of transition reforms on economic growth is negative but becomes positive in the longer horizon; and (iii) other factors, such as initial conditions and macroeconomic stabilization program, also drive economic growth. While the first two results are robust to different estimators, the impact of control variables depends on the econometric specification. |
| Keywords: | speed of transition; economic growth; three-way principal components analysis |
| JEL: | C33 C82 P21 P24 |
| Date: | 2012–11–14 |
| URL: | http://d.repec.org/n?u=RePEc:sal:celpdp:0122&r=fdg |
| By: | Seidler, Jakub; Gersl, Adam |
| Abstract: | Excessive credit growth is often considered to be an indicator of future problems in the financial sector. This paper examines the issue of how best to determine whether the observed level of private sector credit is excessive in the context of the “countercyclical capital buffer”, a macroprudential tool proposed in the new regulatory framework of Basel II by the Basel Committee on Banking Supervision. An empirical analysis of selected Central and Eastern European countries, including the Czech Republic, provides alternative estimates of excessive private credit and shows that the HP filter calculation proposed by the Basel Committee is not necessarily a suitable indicator of excessive credit growth for converging countries. |
| Keywords: | credit growth; financial crisis; countercyclical capital buffer; Basel II |
| JEL: | G18 G01 G21 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:42541&r=fdg |
| By: | Hübler, Michael; Baumstark, Lavinia; Leimbach, Marian; Edenhofer, Ottmar; Bauer, Nico |
| Abstract: | We introduce endogenous directed technical change into numerical integrated climate and development policy assessment. We distinguish expenditures on innovation (R&D) and imitation (international technology spillovers) and consider the role of capital investment in creating and implementing new technologies. Our main contribution is to calibrate and numerically solve the model and to examine the model's sensitivity. As an application, we assess a carbon budget-based climate policy and vary the beginning of energy-saving technology transfer. Accordingly, China is a main beneficiary of early technology transfer. Herein, our results highlight the importance of timely international technology transfer for efficiently meeting global emission targets. Most of the consumption gains from endogenous growth are captured in the baseline. Moreover, mitigation costs turn out to be insensitive to changes in most of the parameters of endogenous growth. A higher effectivity of energy-specific relative to labor-specific expenditures on innovation and imitation reduces mitigation costs, though. -- |
| Keywords: | endogenous growth,directed technical change,technology transfer,integrated assessment,carbon budget,China |
| JEL: | O11 O30 O44 O47 Q32 |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:12054&r=fdg |
| By: | George W. Evans; Kaushik Mitra |
| Abstract: | Analytical expectational stability results are obtained for both Euler-equation and infinitehorizon adaptive learning in a simple stochastic growth model. The rational expectations equilibrium is stable under both types of learning, though there are differences in the learning dynamics. |
| Keywords: | Euler-equation learning, Infinite-horizon learning, expectational stability. |
| JEL: | E62 D84 E21 E43 |
| Date: | 2012–09–20 |
| URL: | http://d.repec.org/n?u=RePEc:san:cdmawp:1209&r=fdg |
| By: | Mara, Eugenia-Ramona |
| Abstract: | In this study we perform an analysis of the volatility of the budget deficit for EU countries. We address this issue starting from the new requirements of fiscal discipline imposed by the Treaty on Stability, Coordination and Governance adopted by 25 European Union member states and taking into account the economic crisis impact. The major purpose of this study is to identify the most significant determinants of budget deficit volatility in a comparative study for old EU member states and New Member States (NMS). This study aims to test the impact of macroeconomic variables such as public expenditures, economic growth rate, and unemployment on the budget balance volatility, based on panel data. The final purpose of the article is to reveal the strategies to stop the immense increase in fiscal deficits and to regain fiscal stability to fulfill the new rules of fiscal governance. We anticipate that the implementation of this new fiscal discipline requires a more efficient public sector for both old and NMS and a reconsideration of state intervention in the economy. |
| Keywords: | budget deficit; fiscal policy; economic growth |
| JEL: | H62 E62 E61 H3 |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:42555&r=fdg |
| By: | Aizenman, Joshua (Asian Development Bank Institute); Lee, Minsoo (Asian Development Bank Institute); Park, Donghyun (Asian Development Bank Institute) |
| Abstract: | Structural change has a far-reaching impact on inequality. Extensive structural change is both a cause and consequence of the exceptionally rapid economic growth, which enabled developing Asia to raise living standards and reduce poverty at a historically unprecedented rate. The region has already begun the difficult and complex task of addressing inequality arising from structural change. There is a growing recognition that more sustainable growth supported by broad-based political and social support requires a growth strategy, which provides equality of opportunity, especially in education and employment. The newly developing more inclusive growth philosophy envisions expanded social protection systems and social safety nets to protect the poor and the vulnerable. |
| Keywords: | inequality; structural change; developing asia |
| JEL: | O15 O53 P46 |
| Date: | 2012–11–13 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbiwp:0396&r=fdg |