nep-fdg New Economics Papers
on Financial Development and Growth
Issue of 2013‒08‒05
five papers chosen by
Iulia Igescu
Global Insight, GmbH

  1. Economic Growth, Tax Evasion and Tax Monitoring Expenses: An Empirical Analysis in OECD Countries By Konstantinos Chatzimichael; Pantelis Kalaitzidakis; Vangelis Tzouvelekas
  2. Can Trust Explain Social Capital Effect on Property Rights and Growth? By Hall, Stephen G; Ahmad, Mahyudin
  3. A Contribution of Foreign Direct Investment, Clean Energy, Trade Openness, Carbon Emissions and Economic Growth to Energy Demand in UAE By Sbia, Rashid; Shahbaz, Muhammad; Hamdi, Helmi
  4. Causality between Exports and Economic Growth in South Africa: Evidence from Linear and Nonlinear Tests By Ahdi N. Ajmi; Goodness C. Aye; Mehmet Balcilar; Rangan Gupta
  5. FDI and Total Factor Productivity Growth: New Macro Evidence By Botirjan Baltabaev

  1. By: Konstantinos Chatzimichael (Dept of Economics, University of Crete, Greece); Pantelis Kalaitzidakis (Dept of Economics, University of Crete, Greece); Vangelis Tzouvelekas (Department of Economics, University of Crete, Greece)
    Abstract: Using Kalaitzidakis and Kalyvitis (2004) approach, we extent Roubini and Sala-i-Martin (1993) endogenous growth model to analyse empirically the relationship between economic growth, announced tax rate and tax monitoring expenses using data from OECD countries during the 1999-2007 period. Our results indicate that high announced tax rates above the elasticity of public capital and excess expenses on tax auditing as means of reducing tax evasion are not effective deepening rather recession.
    Keywords: announced tax rate, tax monitoring, tax evasion, GDP growth
    JEL: H21 H26 H54
    Date: 2013–06–29
  2. By: Hall, Stephen G; Ahmad, Mahyudin
    Abstract: The consensus in growth literature has recognized the significant effects of institutions (including social capital and political institutions) towards economic growth. Utilizing the World Value Survey (WVS)’s trust variable that has often been used to represent social capital, and employing panel data technique which hitherto has been very limited in social capital studies, this study shows that WVS’ trust data suffer severe missing observation problem and the panel fixed effect estimation using such data produce highly unrobust results. Future research in social capital therefore needs to expand their measure of social capital beyond the WVS trust indicator. The results also indicate that political institutions effect on growth could possibly occur indirectly via property rights channel.
    Keywords: Trust; Social Capital; Property Rights; Economic Growth;
    JEL: O43 Z13
    Date: 2013–05
  3. By: Sbia, Rashid; Shahbaz, Muhammad; Hamdi, Helmi
    Abstract: This paper investigates the relationship between foreign direct investment, clean energy, trade openness, carbon emissions and economic growth in case of UAE covering the period of 1975Q1-2011Q4. We have tested the unit properties of variables in the presence of structural breaks. The ARDL bounds testing approach is applied to examine the cointegration by accommodating structural breaks stemming in the series. The VECM Granger causality approach is also applied to investigate the causal relationship between the variables. Our empirical findings confirm the existence of cointegration between the series. We find that foreign direct investment, trade openness and carbon emissions decline energy demand. Economic growth and clean energy has positive impact on energy consumption.
    Keywords: Clean Energy, FDI, Emissions, Trade, Income
    JEL: E1
    Date: 2013–07–19
  4. By: Ahdi N. Ajmi (College of Science and Humanities in Slayel, Salman bin Abdulaziz University, Kingdom of Saudi Arabia); Goodness C. Aye (Department of Economics, University of Pretoria); Mehmet Balcilar (Department of Economics, Eastern Mediterranean University, Famagusta, North Cyprus,via Mersin 10, Turkey); Rangan Gupta (Department of Economics, University of Pretoria)
    Abstract: This paper investigates the dynamic causal link between exports and economic growth using both linear and nonlinear Granger causality tests. We use annual South African data on real exports and real gross domestic product from 1911-2011. The linear Granger causality result shows no evidence of significant causality between exports and GDP. The relevant VAR is unstable, which undermines our confidence in the causality result identified by linear Granger causality tests. Accordingly we turn to the nonlinear methods to evaluate Granger causality between exports and GDP. We use both Hiemstra and Jones (1994) and Diks and Panchenko (2005) nonlinear Granger causality tests. For the Hiemstra and Jones (1994) test, we find a unidirectional causality from GDP to exports. However, using the Diks and Panchenko (2005) test, we find evidence of significant bi-directional causality. These results highlight the risk of misleading conclusions based on the standard linear Granger causality tests which neither accounts for structural breaks nor uncover nonlinearities in the dynamic relationship between exports and GDP.
    Keywords: Exports, economic growth, causality, linear, nonlinear
    JEL: C14 C32 F43 O40
    Date: 2013–08
  5. By: Botirjan Baltabaev
    Abstract: Although the role of FDI in facilitating technology transfer is well-known in the literature, empirical evidence regarding the effect of FDI on growth is mixed. The contradictory results in the literature may be due to the failure to account for endogeneity and for the abortive capacity of the hosting countries. Using panel data for 49 countries over the period 1974-2008 and the existence of Investment Promotion Agencies in the receiving countries as an instrument, our results show that increased FDI stock leads to higher productivity growth. We also find a significant positive effect on the interaction between FDI stock and distance to the technological frontier, suggesting that the ability of technologically backward countries in absorbing technologies developed at the frontiers increases as more FDI stock is accumulated.
    Keywords: FDI, TFP growth, technological transfer, technology gap, system GMM
    JEL: F21 F23 O33
    Date: 2013–07

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