nep-fdg New Economics Papers
on Financial Development and Growth
Issue of 2013‒11‒09
six papers chosen by
Iulia Igescu
Global Insight, GmbH

  1. Economic growth and balance of payments constraint in Vietnam By A. Bagnai; A. Rieber; T.A.D. Tran
  2. Financial Development and Economic Growth: A Meta-Analysis By Tomas Havranek; Roman Horvath; Petra Valickova
  3. Structural Reforms and Economic Growth: A Meta-Analysis By Jan Babecky; Tomas Havranek
  4. Measuring Economic Growth from Outer Space: A Comment By Berliant, Marcus; Weiss, Adam
  5. Geographical factors, Growth and Divergence By Nguyen Thang DAO; Julio DÁVILA
  6. International Resource Tax Policies Beyond Rent Extraction By Lucas Bretschger; Simone Valente

  1. By: A. Bagnai (Department of Economics, University ‘Gabriele D’Annunzio’, Chieti, Italy); A. Rieber (Department of Economics, University of Rouen, France); T.A.D. Tran (DIAL, Institute of Research for Development, Vietnam)
    Abstract: Our paper examines the long run relationship in Vietnam between economic growth and the current account balance equilibrium by relying on the BoP constrained growth model. We find that Vietnam grew less than the rate predicted when the period 1985 to 2010 as a whole is considered, but with different behavior for the 1998-2010 sub-period. The relative price effect is neutral, allowing the volume effects to dominate in setting the BoP constraint. The high income elasticities of exports enable growth in the advanced countries to have a multiplier effect on the Vietnamese economy. However, this effect is hindered by a high ‘appetite’ for imports coming from Asia. We also assess the impact of the current crisis on Vietnam’s growth for the period 2011 to 2017.
    Keywords: Economic growth, BoP constrained growth model, Multi country model, Asia, Vietnam
    JEL: E12 F43 O11 O53
    Date: 2013
  2. By: Tomas Havranek; Roman Horvath; Petra Valickova
    Abstract: We analyze 1334 estimates from 67 studies that examine the effect of financial development on economic growth. Taken together, the studies imply a positive and statistically significant effect, but the individual estimates vary widely. We find that both research design and heterogeneity in the underlying effect play a role in explaining the differences in results. Studies that do not address endogeneity tend to overstate the effect of finance on growth. While the effect seems to be weaker in less developed countries, the effect decreases worldwide after the 1980s. Our results also suggest that studies using stock-market-oriented measures as a proxy for financial development tend to report larger positive effects on growth. We find little evidence of publication bias in the literature.
    Keywords: Development, finance, growth, meta-analysis.
    JEL: C83 G10 O40
    Date: 2013–07
  3. By: Jan Babecky; Tomas Havranek
    Abstract: This paper evaluates the impact of structural reforms, mainly liberalization and privatization, on economic growth. To provide stylized facts on how such reforms worked in the past, we quantitatively review 60 studies that estimate the relation between reforms and growth empirically. These studies examine structural reforms carried out in 26 transition and post-transition countries around the world. Our results show that a typical reform caused substantial costs in the short run, but had strong positive effects on long-run growth. Reforms focused on external liberalization proved to be more beneficial than other types of reform in both the short and long run. The findings hold even after correction for publication bias and misspecifications present in some primary studies.
    Keywords: Bayesian model averaging, growth, meta-analysis, structural reforms, transition economies.
    JEL: C83 O11 P21
    Date: 2013–08
  4. By: Berliant, Marcus; Weiss, Adam
    Abstract: We examine econometric and elementary economic theory issues arising from the model specification in Henderson, Storeygard and Weil (2012), that uses night light data to proxy for missing or unreliable GDP growth data. An alternative approach based on the expenditure function is outlined. It can accommodate prices as well as quantity information from other commodity markets.
    Keywords: GDP, Night light data, Omitted variable, Expenditure function, Spatial autocorrelation
    JEL: D11 D61 O47 O57
    Date: 2013–10–29
  5. By: Nguyen Thang DAO (CORE, Université catholique de Louvain, B-1348 Louvain-la-Neuve, Belgium and Vietnam Centre for Economic and Policy Research (VEPR), Hanoi, Vietnam); Julio DÁVILA (CORE, Université catholique de Louvain, B-1348 Louvain-la-Neuve, Belgium and Paris School of Economics, Paris, France)
    Abstract: This paper develops a unied growth model capturing issues of endogenous economic growth, fertility, and technological progress considering the effects of geographical conditions to interpret the long transition from Malthusian stagnation, through demographic transition to modern sustained growth, and the great divergence in GDP per capita across societies. The paper shows how the interplay of size of "land" and its "accessibility" and technological progress play a very important role for an economy to escape Malthusian stagnation and to take off. Thus differences in these geographical factors lead to differences in take off timings, generating great divergence across societies.
    Keywords: Geographical land, land accessible, level of technology, human capital, fertility
    JEL: J11 O11 O33
    Date: 2013
  6. By: Lucas Bretschger (ETH Zurich, Switzerland); Simone Valente (The Norwegian University of Science and Technology)
    Abstract: We study the incentives of selfish governments to tax tradable primary inputs un- der asymmetric trade. Using an empirically-consistent model of endogenous growth, we obtain explicit links between persistent gaps in productivity growth and the observed tendency of resource-exporting (importing) countries to subsidize (tax) domestic resource use. Assuming uncoordinated maximization of domestic welfare, national governments wish to deviate (i) from inefficient laissez-faire equilibria as well as (ii) from efficient equilibria in which domestic distortions are internalized. The incentive of resource-rich countries to subsidize hinges on slower productivity growth and is disconnected from the typical incentive of importers to tax resource inflows. i.e., rent extraction. The model predictions concerning the impact of resource taxes on relative income shares are supported by empirical evidence.
    Keywords: Productivity Growth; Exhaustible Resources; International Trade.
    JEL: F43 O40
    Date: 2013–11

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