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on Financial Development and Growth |
| By: | Jun, Bogang; Hwang, Won-Sik |
| Abstract: | Against the background of inconclusive evidence about the inequality–growth relation, this paper suggests that the level of inequality increases via the human capital channel with credit market imperfections and that this increasing inequality negatively affects economic growth. We expand the model presented by Galor and Zeira (1993) to represent the fact that the economy benefits from endogenous technological progress and that the government provides financial aid to reduce the financial hurdles for human capital accumulation. The presented empirical results, using Korean data from 1998 to 2008, imply that education plays a significant role in the divergence of household wealth over time and that the government’s financial aid package in the form of the new student loans program positively influences equality and short-run economic growth by promoting the number of skilled workers. |
| Keywords: | Human Capital, Growth, Inequality |
| JEL: | I24 I25 O15 |
| Date: | 2012–12–31 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:46317&r=fdg |
| By: | Bastin, Georges |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:ner:louvai:info:hdl:2078.1/123860&r=fdg |
| By: | Fosu, Augustin Kwasi |
| Abstract: | Recent evidence from an exhaustive political economy study of growth of African economies.the growth project of the African Economic Research Consortium (AERC) suggests that .policy syndromes. have substantially contributed to the generally poor growth in |
| Keywords: | growth of African economies, productivity, policy syndromes, institutions |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp2013-005&r=fdg |
| By: | Ageli, Dr Mohammed Moosa |
| Abstract: | This paper investigates the Keynesian Relations and Education Expenditure in Saudi Arabia during the period (1970-2012) for real Oil GDP and Non Oil GDP. Keynesian Relations investigated that fundamental economic growth is validity to the education growth. In the previous tudies have been tested the three versions of Keynesian Relations to support the existence of long-run relationship between education expenditure and economic growth. We used a method as a time series econometrics techniques to examine how far Keynesian Relations validity can be applied in Saudi economy. The results obtained from the analyses find that the Keynesian proposition can explain the growth of education in Saudi Arabia, which holds for both the Oil and Non Oil income cases. The findings also note that the existence of strong causality for all of Keynesian Relations versions in the long run. |
| Keywords: | Keynesian Relations, Ordinary Least Square (OLS), Co integration, Granger Causality, Error Correction Model (ECM), Augmented Dickey Fuller (ADF), Education Expenditure, Economic Growth, Saudi Arabia |
| JEL: | C22 E62 H52 I21 |
| Date: | 2013–04–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:46673&r=fdg |
| By: | Benno Ferrarini (Asian Development Bank); Pasquale Scaramozzino (University of Rome "Tor Vergata" and SOAS) |
| Abstract: | This paper analyzes the role of complexity in production on the level of output and on its rate of growth. We develop an endogenous growth model with human capital accumulation, where increased complexity could exert either a positive or a negative effect on the level of output but always a positive effect on its rate of growth. Our empirical measure of complexity is derived from net trade flows, and is based on the product space description of production sectors in the global economy. The evidence from a broad cross-section of countries is consistent with the main theoretical predictions of the model, and supports the view that production complexity is important in order to account for differences in economic performance. An indicator of the intensity of vertical trade among countries is also shown to be relevant to explain output performance |
| Keywords: | International Trade Flows, Vertical Trade, Economic Growth, Complexity |
| JEL: | F43 O11 O14 O15 O33 |
| Date: | 2013–04–30 |
| URL: | http://d.repec.org/n?u=RePEc:rtv:ceisrp:275&r=fdg |
| By: | Azizi, Karim; Canry, Nicolas; Chatelain, Jean-Bernard; Tinel, Bruno |
| Abstract: | This paper investigates the relevance of the No-Ponzi game condition for public debt (i.e. the public debt growth rate has to be lower than the real interest rate, a necessary assumption for Ricardian equivalence) and of the transversality condition for the GDP growth rate (i.e. the GDP growth rate has to be lower than the real interest rate). First, on the unbalanced panel of 21 countries from 1961 to 2010 available in OECD database, those two conditions were simultaneously validated only for 29% of the cases under examination. Second, those two conditions were more frequent in the 1980s and the 1990s when monetary policies were more restrictive. Third, in tune with the Keynesian view, when the real interest rate is higher than the GDP growth, it corresponds to 75% of the cases of the increases of the debt/GDP ratio but to only 43% of the cases of the decreases of the debt/GDP ratio (fiscal consolidations). -- |
| Keywords: | Government solvency,Austerity,Fiscal consolidation,No-Ponzi game condition,transversality condition,budgetary policy,monetary policy,economic growth |
| JEL: | E43 E5 E6 H6 O4 |
| Date: | 2013–04–29 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:72550&r=fdg |
| By: | Karim Azizi (Centre d'Economie de la Sorbonne); Nicolas Canry (Centre d'Economie de la Sorbonne); Jean-Bernard Chatelain (Centre d'Economie de la Sorbonne - Paris School of Economics); Bruno Tinel (Centre d'Economie de la Sorbonne) |
| Abstract: | This paper investigates the relevance of the No-Ponzi game condition for public debt (i.e. the public debt growth rates has to be lower than the real interest rate, a necessary assumption for Ricardian equivalence) and of the transversality condition for the GDP growth rate (i.e. the GDP growth rate has to be lower than the real interest rate). First, on the unbalanced panel of 21 countries from 1961 to 2010 available in OECD database, those two conditions were simultaneously validated only for 29% of the cases under examination. Second, those two conditions were more frequent in the 1980s and the 1990s when monetary policies were more restrictive. Third, in tune with the Keynesian view, when the real interest rate is higher than the GDP growth, it corresponds to 75% of the cases of the increases of the debt/GDP ratio but to only 43% of the cases of the decreases of the debt/GDP ratio (fiscal consolidations). |
| Keywords: | Government solvency, austerity, fiscal consolidation, No-Ponzi game condition, transversality condition, Keynesian countercyclical budgetary policy, monetary policy, economic growth. |
| JEL: | E43 E5 E6 H6 O4 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:mse:cesdoc:13042&r=fdg |
| By: | Asongu , Simplice A.; Kodila-Tedika, Oasis |
| Abstract: | The paper extends Breggren et al. (2008, EE) on ‘trust and growth: a shaky relationship” by incorporating recent developments in the trust-growth literature and using a robust methodological underpinning that accounts for the presence of outliers. The empirical evidence is based on 63 countries. Two main findings are established. Firstly, the substantially documented positive trust-growth nexus is broadly confirmed. Secondly, when initial levels of growth come into play in determining the relationship, only 0.25 and 0.90 quantiles confirm the positive nexus. The results suggest that the trust-growth nexus cannot be generalized for all countries as some previous studies have concluded. Accordingly, blanket trust-growth policies may not succeed unless they are contingent in existing levels of development and tailored differently across rich and poor countries. |
| Keywords: | Trust; Growth; Conditional Effects |
| JEL: | A13 O40 Z13 |
| Date: | 2013–05–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:46865&r=fdg |
| By: | Shouyong, Shi; Berentsen, Aleksander; Rojas Breu, Mariana |
| Abstract: | Many countries simultaneously suffer from high rates of inflation, low growth rates of per capita income and poorly developed financial sectors. In this paper, we integrate a microfounded model of money and finance into a model of endogenous growth to examine the effects of inflation and financial development. A novel feature of the model is that the market for innovation goods is decentralized. Financial intermediaries arise endogenously to provide liquid funds to the innovation sector. We calibrate the model to address two quantitative issues. One is the effects of an exogenous improvement in the productivity of the financial sector on welfare and per capita growth. The other is the effects of inflationonwelfareandgrowth.Consistent with the data but in contrast to previous work, reducing inflation generates large gains in the growth rate of per capita income as well as in welfare. Relative to reducing inflation, improving the efficiency of the financial market increases growth and welfare by much smaller amounts. |
| Keywords: | Money; Growth; Innovation; Financial intermediation; |
| JEL: | O4 E1 G00 |
| Date: | 2012–12 |
| URL: | http://d.repec.org/n?u=RePEc:ner:dauphi:urn:hdl:123456789/7354&r=fdg |
| By: | Kang Liu; N. Lubbers; W. Klein; J. Tobochnik; B. Boghosian; Harvey Gould |
| Abstract: | We investigate the relation between economic growth and equality in a modified version of the agent-based asset exchange model (AEM). The modified model is a driven system that for a range of parameter space is effectively ergodic in the limit of an infinite system. We find that the belief that "a rising tide lifts all boats" does not always apply, but the effect of growth on the wealth distribution depends on the nature of the growth. In particular, we find that the rate of growth, the way the growth is distributed, and the percentage of wealth exchange determine the degree of equality. We find strong numerical evidence that there is a phase transition in the modified model, and for a part of parameter space the modified AEM acts like a geometric random walk. |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1305.0794&r=fdg |
| By: | Zeynalov, Ayaz |
| Abstract: | The purpose of this paper is to test whether institutional governance and its performance is a main driving force to achieve a positive relationship between natural resources and economic growth in the long run. The main objective is to ascertain what kind of institutional governance would be needed to distribute natural resource wealth in such a way so as to achieve economic stability, and what specific policies are needed to avoid the curse in resource-rich developing countries. The research makes an attempt to interpret the role of institutional governance, as reflected by the indicators, in the context of resource-rich, post-Soviet countries. The main finding is that an abundance of natural resources does not guarantee economic growth, where sustainable economic growth can be guaranteed, only if the resource-rich country has good institutional governance. |
| Keywords: | economic growth, natural resources, institutional governance, post-Soviet countries |
| JEL: | O11 O43 O53 Q32 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:46850&r=fdg |
| By: | Bergerhoff, Jan (University of Bonn); Borghans, Lex (Maastricht University); Seegers, Philipp K. (Maastricht University); van Veen, Tom (Maastricht University) |
| Abstract: | In recent years international student mobility increased. While net hosting countries are in a better position to win highly educated students for their labour force, they face the additional cost of providing the education. In much of continental Europe these costs are not levied on students, but are borne by the national tax payers, making them an active topic of debate. Borrowing some fundamental equations from the Lucas growth model, this paper addresses the question whether countries benefit from educating international students. We derive conditions under which international education has a positive effect on economic growth, overall and in each specific country. Based on empirically motivated parameter values to calibrate our two-country model we find that international student mobility increases steady state growth for both countries on average by 0.013 percentage points. A small country that is favoured by the inflows of a larger country could experience an extra growth of 0.049 percentage points. The benefits from international education increase when a country tunes its education and migration policy. |
| Keywords: | international education, economic growth, economics of education |
| JEL: | I25 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7354&r=fdg |
| By: | Mustafa Caglayan (School of Management and Languages, Heriot-Watt University, UK); Ozge Kandemir Kocaaslan (Department of Economics, Hacettepe University, Ankara, Turkey); Kostas Mouratidis (Department of Economics, University of Sheffield, UK) |
| Abstract: | This paper examines the asymmetric impact of monetary policy shocks on real output growth considering the role of financial depth. We carry out our examination using quarterly US data over 1980:q1-2011:q4 and implement an instrumental variables Markov regime switching methodology to account for the endogeneity between monetary policy and output growth. Our investigation shows that the impact of monetary policy shocks on output growth is stronger during recessions than expansions. More interestingly, we show that financial depth dampens the real effects of monetary policy shocks. We show that the results are robust to several alternative financial depth measures. |
| Keywords: | Output growth; asymmetric effects; monetary policy; financial depth; Markov switching; instrumental variables |
| JEL: | E32 E52 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:shf:wpaper:2013007&r=fdg |
| By: | Onaran Özlem (University of Greenwich); Giorgos Galanis (University of Warwick) |
| Abstract: | This paper estimates the effects of a change in the wage share on growth at a national and global level in the G20 countries. A decrease in the wage share leads to lower growth in the euro area, Germany, France, Italy, UK, US, Japan, Turkey, and Korea, whereas it stimulates growth in Canada, Australia, Argentina, Mexico, China, India, and South Africa. However, a simultaneous decline in the wage share in all these countries leads to a decline in global growth. Furthermore, Canada, Argentina, Mexico, and India also contract when they decrease their wage-share along with their trading partners. |
| Keywords: | wage share, growth, global multiplier, consumption, investment, exports, imports, G20, developed and developing countries |
| JEL: | E21 E22 E25 F43 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:pke:wpaper:pkwp1304&r=fdg |