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on Financial Development and Growth |
| By: | Kodama, Masahiro |
| Abstract: | This research sheds light on the negative correlation between economic growth and business cycle in less developed economies. Whereas many previous studies explain the negative correlation from a viewpoint in which business cycle affects economic growth, we attempt to present a hypothesis based on the other influence direction in which economic growth affects business cycle. We investigate the validity of the hypothesis using two methods: econometric analysis and numerical analysis. We find that the econometric analysis supports our hypothesis. The numerical analysis shows that the effect of the proposed hypothesis produces the negative correlation between economic growth and business cycle. |
| Keywords: | Developing countries, Economic growth, Economic development, Business cycles, Growth, Less Developed Economies |
| JEL: | E32 O40 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:jet:dpaper:dpaper387&r=fdg |
| By: | Barañano Mentxaka, Ilaski; Romero-Avila, Diego |
| Abstract: | Previous research has shown a strong positive correlation between short-term persistence and long-term output growth as well as between depreciation rates and long-term output growth. This evidence, therefore, contradicts the standard predictions from traditional neoclassical or AK-type growth models with exogenous depreciation. In this paper, we first confirm these findings for a larger sample of 101 countries. We then study the dynamics of growth and persistence in a model where both the depreciation rate and growth are endogenous and procyclical. We find that the model s predictions become consistent with the empirical evidence on persistence, long-term growth and depreciation rates. |
| Keywords: | real business cycle models, endogenous growth, stochastic trends, persistence, capital utilization, dynamic panel data models |
| JEL: | C22 C23 E32 O40 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:ehu:ikerla:9547&r=fdg |
| By: | Chu, Angus C.; Cozzi, Guido |
| Abstract: | R&D investment has well-known liquidity problems, with potentially important consequences. In this paper, we analyze the effects of monetary policy on economic growth and social welfare in a Schumpeterian model with cash-in-advance (CIA) constraints on consumption, R&D investment, and manufacturing. Our results are as follows. Under the CIA constraints on consumption and R&D (manufacturing), an increase in the nominal interest rate would decrease (increase) R&D and economic growth. So long as the effect of cash requirements in R&D is relatively more important than in manufacturing, the nominal interest rate would have an overall negative effect on R&D and economic growth as documented in recent empirical studies. We also analyze the optimality of Friedman rule and find that Friedman rule can be suboptimal due to a unique feature of the Schumpeterian model. Specifically, we find that the suboptimality or optimality of Friedman rule is closely related to a seemingly unrelated issue that is the overinvestment versus underinvestment of R&D in the market economy, and this result is robust to alternative versions of the Schumpeterian model. |
| Keywords: | Economic growth, R&D, quality ladders, cash-in-advance, monetary policy, Friedman rule |
| JEL: | O30 O40 E41 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:usg:econwp:2013:08&r=fdg |
| By: | Prettner, Klaus |
| Abstract: | We introduce publicly funded education in R&D-based economic growth theory. The framework allows us to i) incorporate a realistic process of human capital accumulation for industrialized countries, ii) reconcile R&D-based growth theory with the empirical evidence on the relationship between economic prosperity and population growth, iii) revise the policy invariance result of semi-endogenous growth frameworks, and iv) show that the transitional effects of an education reform tend to be qualitatively different from its long-run impact. -- |
| Keywords: | human capital accumulation,technological progress,scale-free economic growth,public education policy |
| JEL: | I25 J24 O11 O31 O41 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cegedp:149&r=fdg |
| By: | Walid Oueslati (Centre for Rural Economy, Newcastle University) |
| Abstract: | This paper examines the macroeconomic effects of an environmental tax reform in a growing economy. A model of endogenous growth based on human capital accumulation is used to numerically simulate the growth effects of different environmental tax reforms and compute their impact on welfare in the short and the long-term. Our results suggest that the magnitude of these effects depends on the type of tax reform. Thus, only environmental tax reform that aims to use the revenue from environmental tax to reduce wage tax and increase the proportion of public spending within GDP, enhances both growth and welfare in the long-term. However, the short-term effect remains negative. |
| Keywords: | Tax reform, Endogenous Growth, Human Capital, Environmental Externality, Transitional Dynamics, Welfare cost |
| JEL: | E62 I21 H22 Q28 O41 D62 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2013.09&r=fdg |
| By: | Ekrame Boubtane (Centre d'Economie de la Sorbonne et CERDI - Université d'Auvergne); Dramane Coulibaly (EconomiX - Université de Paris Ouest Nanterre); Christophe Rault (LEO - Université d'Orléans et Toulouse Business School - France) |
| Abstract: | This paper examines empirically the interaction between immigration and host country economic conditions. We employ a panel VAR techniques to use a large annual dataset on 22 OECD countries over the period 1987-2009. The VAR approach allows to addresses the endogeneity problem by allowing the endogenous interaction between the variables in the system. Our results provide evidence of migration contribution to host economic prosperity (positive impact on GDP per capita and negative impact on aggregate unemployment, native-and foreign-born unemployment rates). We also find that migration is influenced by host economic conditions (migration responds positively to host GDP per capita and negatively to host total unemployment rate). |
| Keywords: | Immigration, growth, unemployment, panel VAR. |
| JEL: | E20 F22 J61 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:13012&r=fdg |
| By: | Philippe Aghion; Ufuk Akcigit; Peter Howitt |
| Abstract: | Schumpeterian growth theory has operationalized Schumpeter's notion of creative destruction by developing models based on this concept. These models shed light on several aspects of the growth process which could not be properly addressed by alternative theories. In this survey, we focus on four important aspects, namely: (i) the role of competition and market structure; (ii) firm dynamics; (iii) the relationship between growth and development with the notion of appropriate growth institutions; (iv) the emergence and impact of long-term technological waves. In each case Schumpeterian growth theory delivers predictions that distinguish it from other growth models and which can be tested using micro data. |
| JEL: | O10 O11 O12 O30 O31 O33 O40 O43 O47 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:18824&r=fdg |
| By: | Ekrame Boubtane (Centre d'Economie de la Sorbonne et CERDI - Université d'Auvergne); Dramane Coulibaly (EconomiX - Université de Paris Ouest Nanterre); Christophe Rault (LEO - Université d'Orléans et Toulouse Business School - France) |
| Abstract: | This paper examines the causality relationship between immigration, unemployment and economic growth of the host country. We employ the panel Granger causality testing approach of Kónya (2006) that is based on SUR systems and Wald tests with country specific bootstrap critical values. This approach allows to test for Granger-causality on each individual panel member separately by taking into account the contemporaneous correlation across countries. Using annual data over the 1980-2005 period for 22 OECD countries, we find that, only in Portugal, unemployment negatively causes immigration, while in any country, immigration does not cause unemployment. On the other hand, our results show that, in four countries (France, Iceland, Norway and the United Kingdom), growth positively causes immigration, whereas in any country, immigration does not cause growth. |
| Keywords: | Immigration, growth, unemployment, causality. |
| JEL: | E20 F22 J61 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:13014&r=fdg |
| By: | Abdilahi Ali (School of Social Sciences, University of Manchester, UK); Katsushi S. Imai (Economics, School of Social Sciences, University of Manchester (UK) and RIEB, Kobe University (Japan)) |
| Abstract: | In the past few decades, many African countries have implemented policies of trade and financial liberalisation. As a result, Africa is today more integrated into the global economic system than it was a few decades ago. Yet, like developing countries in other regions, African economies have also encountered their share of economic and financial crises. The objective of this paper is to explore the (independent) effects of crises and openness on a large sample of African countries. Focusing on sudden stops, currency, twin and sovereign debt crises, the paper shows that crises are associated with growth collapses in Africa. In contrast, openness is found to be beneficial to growth. More specifically, we find that, consistent with standard Mundell-Flemming type models, greater openness to trade and financial flows mitigates the adverse effects of crises. These findings are robust to various measures of both openness and crises as well as to endogeneity concerns. |
| Keywords: | Financial crises, Economic integration, Growth, Africa |
| JEL: | G01 F15 F43 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:kob:dpaper:dp2013-07&r=fdg |
| By: | Raouf Boucekkine (AMSE - Aix-Marseille School of Economics - Aix-Marseille Univ. - Centre national de la recherche scientifique (CNRS) - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole Centrale Marseille (ECM), IRES-CORE - Université Catholique de Louvain); Natali Hritonenko (Prairie View - A&M University); Yuri Yatsenko (School of business, Houston Baptist University - Houston Baptist University) |
| Abstract: | We prove that the introduction of endogenous indivisible labor supply into the vintage capital growth model does not rule out the turnpike and optimal permanent regime properties, notably the non- monotonicity properties of optimal paths, inherent in this model. |
| Keywords: | Optimal control; integral equations with delays and advances; vintage capital; endogenous labor supply |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-00796184&r=fdg |
| By: | Jensen, Christian |
| Abstract: | Assuming a production process with returns to scale that vary with the intensity it is operated at, an AK-model of endogenous growth with constant returns to scale in production is shown to arise due to replication driven by profit-maximization. If replication occurs at the efficiency-maximizing scale, the result applies also when the number of production processes must be discrete, thus overcoming the so-called integer problem. When competition is imperfect, there is only convergence toward the AK-model for large enough input use, so an economy is more prone to stalling in a steady-state without growth, the smaller and less competitive it is. Inefficient scaling also raises the risk of stalling. |
| Keywords: | Economic growth; AK-model; Replication; Returns to scale in production; Integer problem |
| JEL: | O11 O40 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:44487&r=fdg |
| By: | Ekrame Boubtane (Centre d'Economie de la Sorbonne et CERDI - Université d'Auvergne); Jean-Christophe Dumont (Organisation for Economic Cooperation and Development - OECD) |
| Abstract: | This paper presents a reappraisal of the impact of migration on economic growth for 22 OECD countries between 1986 and 2006. It is based on a unique dataset that enables to distinguish net migration of the native-born and foreign-born by skill level. Migration is introduced in an augmented Solow-Swan model and the results are obtained using a GMM estimation, in order to deal with the potential endogeneity of the migration variables. In this framework, we identify a positive impact of the human capital brought by migrants on economic growth. The contribution of immigrants to the human capital accumulation tends to dominate the mechanical dilution effect, but the net effect is fairly small, including in countries which have highly selective migration policies. |
| Keywords: | International migration, human capital, economic growth, generalized methods of moments. |
| JEL: | C23 F22 J24 J61 O41 O47 |
| Date: | 2013–02 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:13013&r=fdg |