nep-fdg New Economics Papers
on Financial Development and Growth
Issue of 2013‒11‒16
six papers chosen by
Iulia Igescu
Global Insight, GmbH

  1. Public Education Spending, Sectoral Taxation and Growth By Marion Davin
  2. Positive and Negative Population Growth and Long-Run Trade Patterns: A Non-Scale Growth Model By Hiroaki Sasaki
  3. Economic growth and balance of payments constraint in Vietnam By Rieber, Arsène; Bagnai, Alberto; Tran, Thi Anh-Dao
  4. Causal Linkages between Financial Development, Trade Openness and Economic Growth: Fresh Evidence from Innovative Accounting Approach in Case of Bangladesh By Mohamed Arouri; Gazi Salah Uddin; Kishwar Nawaz; Muhammad Shahbaz; Frédéric Teulon
  5. Structural Reforms and Growth in Transition: A Meta-Analysis By Jan Babecky; Tomas Havranek
  6. This Time They’re Different: Heterogeneity and Nonlinearity in the Relationship between Debt and Growth By Markus Eberhardt; Andrea F. Presbitero

  1. By: Marion Davin (Aix-Marseille University (Aix-Marseille School of Economics), CNRS & EHESS)
    Abstract: This paper examines the interplay between public education expenditure and economic growth in a two-sector model. We reveal that agents’ preferences for services, education and savings play a major role in the relationship between growth and public education expenditures, as long as production is taxed at a different rate in each sector.
    Keywords: Public education, Two-sector model, Sectoral taxes, Endogenous growth.
    JEL: E62 I25 O41
    Date: 2013–10
  2. By: Hiroaki Sasaki
    Abstract: This paper builds a two-country, two-sector, non-scale growth model and investigates the relationship between trade patterns and the growth rate of per capita real consumption. We consider negative population growth as well as positive population growth. We show that, as long as the population growth rates of the two countries are different, if the country that accumulates capital stock has negative population growth, no trade patterns are sustainable in the long run. This is true irrespective of the population growth rate of the other country. Moreover, we show that, if the country that accumulates capital stock has positive population growth, two trade patterns are sustainable in the long run. In this case, either each country's per capita growth is determined by the population growth of the capital-accumulating country or the population growth of both countries, depending on which of the two trade patterns is realized.
    Keywords: positive/negative population growth, trade patterns, non-scale growth model
    JEL: F10 F43 O11 O41
    Date: 2013–10
  3. By: Rieber, Arsène; Bagnai, Alberto; Tran, Thi Anh-Dao
    Abstract: Our paper examines the long run relationship 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: 2013–06
  4. By: Mohamed Arouri; Gazi Salah Uddin; Kishwar Nawaz; Muhammad Shahbaz; Frédéric Teulon
    Abstract: This paper contributes to the literature by exploring the relationship between financial development, economic growth and trade openness in case of Bangladesh over the period 1975Q1-2011Q4. The ARDL bounds testing approach to cointegtaion and the innovative accounting approach for causality are used. Our results show that financial developpemnt, trade openness and economic growth are likned over the long-run. We find evidence in favor of the supply-side hypothesis while financial development and economic growth cause exports. Economic growth causes imports and feedback effect exists between trade openness and economic growth.
    Keywords: Financial development, Growth, Trade openness, Bangladesh
    Date: 2013–10–15
  5. By: Jan Babecky (Czech National Bank, Prague, Czech Republic); Tomas Havranek (Czech National Bank, Prague, Czech Republic)
    Abstract: The present fiscal difficulties of many countries amplify the call for structural reforms. To provide stylized facts on how reforms worked in the past, we quantitatively review 60 studies estimating the relation between reforms and growth. These studies examine structural reforms carried out in 26 transition countries around the world. Our results show that an average 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 others in both the short and long run. The findings hold even after correction for publication bias and misspecifications present in some primary studies.
    Keywords: Structural reforms, growth, transition economies, meta-analysis, Bayesian model averaging
    JEL: C83 O11 P21
    Date: 2013–10
  6. By: Markus Eberhardt; Andrea F. Presbitero
    Abstract: We study the long-run relationship between public debt and growth in a large panel of countries. Our analysis takes particular note of theoretical arguments and data considerations in modelling the debt-growth relationship as heterogeneous across countries. We investigate the issue of nonlinearities (‘debt thresholds’) in both the cross- and within-country dimensions, employing novel approaches and diagnostics from the time-series literature adapted for use in the panel. Our findings suggest that whatever the shape and form of the debt-growth relationship, it differs across countries, so that appropriate policies for one country may be seriously misguided in another.
    Keywords: economic growth; public debt; common factor model; nonlinearity; summability, balance and co-summability; asymmetric ARDL
    Date: 2013

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