nep-fdg New Economics Papers
on Financial Development and Growth
Issue of 2014‒03‒01
ten papers chosen by
Iulia Igescu
Global Insight, GmbH

  1. The Role of Natural Gas Consumption and Trade in Tunisia’s Output By Mohamed Arouri; Sahbi Farhani; Muhammad Shahbaz; Frédéric Teulon
  2. Semi-Endogenous R&D Growth Model with Negative Population Growth By Sasaki, Hiroaki; Hoshida, Keisuke
  3. Exchange-rate regimes and economic growth: An empirical evaluation By Simón Sosvilla-Rivero; María del Carmen Ramos-Herrera
  4. Financial Stress, Sovereign Debt and Economic Activity in Industrialized Countries: Evidence from Dynamic Threshold Regressions By Christian R. Proaño; Christian Schoder; Willi Semmler
  5. Economic Growth Elasticity of Structural Changes: Case of Thailand By durongkaveroj, wannaphong
  6. The effect of regulatory institutions on macroeconomic growth in Russia By Nikiforova, Vera; Valahov , Dmitriy; Nikiforov , Aleksandr
  7. Industry Concentration, Knowledge Diffusion, and Economic Growth Without Scale Effects By Colin Davis; Ken-ichi Hashimoto
  8. FDI inflows and outflows, intellectual property rights, and productivity growth By Sasatra, Sudsawasd; Santi, Chaisrisawatsuk
  9. JOEG Comments on "Have we missed the right version of the standard Ramsey Growth model?" By Khelifi, Atef
  10. The Growing Dependence of Britain on Trade during the Industrial Revolution By Gregory Clark; Kevin Hjortshøj O'Rourke; Alan M. Taylor

  1. By: Mohamed Arouri; Sahbi Farhani; Muhammad Shahbaz; Frédéric Teulon
    Abstract: This paper examines the impact of natural gas consumption, real gross fixed capital formation and trade on the real GDP in the case of Tunisia over the period 1980-2010. We use an Autoregressive Distributed Lag (ARDL) bounds testing approach to test the existence of a longterm relationship between the variables. The Vector Error Correction Method (VECM) Granger approach is applied to test the direction of the causal relation between the series. Our findings indicate the existence of a long-term relationship among the variables. Natural gas consumption, real gross fixed capital formation and trade add in economic growth. Natural gas consumption, real gross fixed capital formation and real trade Granger-cause real GDP. These findings open up new insights for policymakers to formulate a comprehensive energy policy to sustain economic growth in the long term.
    Keywords: Natural gas consumption, Economic growth, ARDL approach
    JEL: C7 D8
    Date: 2014–01–06
  2. By: Sasaki, Hiroaki; Hoshida, Keisuke
    Abstract: This paper investigates the rates of technological progress, total output growth, and per capita output growth when population growth is negative by using a semi-endogenous R&D growth model. The analysis shows that within finite time, the employment share of the final goods sector reaches unity, the employment share of the R&D sector reaches zero, and accordingly, the rate of technological progress leads to zero. In this case, the growth rate of per capita output asymptotically approaches a positive value.
    Keywords: technological progress; semi-endogenous growth; negative population growth
    JEL: O11 O31 O41
    Date: 2014–02–21
  3. By: Simón Sosvilla-Rivero (Department of Quantitative Economics, Universidad Complutense de Madrid); María del Carmen Ramos-Herrera (Department of Quantitative Economics, Universidad Complutense de Madrid)
    Abstract: Based on a dataset of 123 economies, this paper empirically investigates the relation between exchange-rate regimes and economic growth. We find that growth performance is best under intermediate exchange rate regimes, while the smallest growth rates are associated with flexible exchange rates. Nevertheless, this conclusion is tempered when we analyze the countries by income level: even though countries that adopt intermediate exchange-rate regimes are characterized by higher economic growth, the higher the level of income, less difference in growth performance across exchange rate regimes.
    Keywords: Exchange rate regime; economic growth
    JEL: E42 F31
    Date: 2014–01
  4. By: Christian R. Proaño (Department of Economics, The New School for Social Research); Christian Schoder (Department of Economics, Vienna University of Economics and Business); Willi Semmler (Department of Economics, The New School for Social Research)
    Abstract: We analyze how the impact of a change in the sovereign debt-to-GDP ratio on economic growth depends on the level of debt, the stress level on the financial market and the membership in a monetary union. A dynamic growth model is put forward demonstrating that debt affects macroeconomic activity in a non-linear manner due to amplifications from the financial sector. Employing dynamic country-specific and dynamic panel threshold regression methods, we study the non-linear relation between the growth rate and the debt-to-GDP ratio using quarterly data for sixteen industrialized countries for the period 1981Q1-2013Q2. We find that the debt-to-GDP ratio has impaired economic growth primarily during times of high financial stress and only for countries of the European Monetary Union and not for the stand-alone countries in our sample. A high debt-to-GDP ratio by itself does not seem to necessarily negatively affect growth if financial markets are calm.
    Keywords: financial stress, sovereign debt, economic growth, dynamic panel threshold regression
    JEL: E20 G15 H63
    Date: 2014–02
  5. By: durongkaveroj, wannaphong
    Abstract: Thailand's economic base was gradually shifted from agricultural-based to industrial and service country for the last 30 years. The purpose of this study was to investigate the effect of those structural changes on economic performance using Cochrane - Orcutt and Newey-West Model. For the result, an incremental employment in agricultural sector yielded the negative effect on economy. Also, an increase in employment in service sector was better than industrial sector in supporting economic growth. Thus, government of Thailand should no longer support agricultural sector but service-based economy instead.
    Keywords: economy, structural changes,economic growth
    JEL: O13 O14 P2 P27 P51
    Date: 2014–02–16
  6. By: Nikiforova, Vera; Valahov , Dmitriy; Nikiforov , Aleksandr
    Abstract: The paper analyses common Russian practice. The structural changes in the Russian economy are further stimulated by the improvement of the government regulation policy. The paper examines the factors and effects of the general economic growth and the integration processes. The paper examines the institutional changes in the government policy of economic regulation aimed at improving the country’s performance in the world financial system.
    Keywords: economic growth; government regulation; integration processes; institutional changes
    JEL: E4 E40 E44 G1 G18
    Date: 2014–02–16
  7. By: Colin Davis (The Institute for Liberal Arts, Doshisha University); Ken-ichi Hashimoto (Graduate School of Economics, Kobe University)
    Abstract: This paper develops a two region model of trade to study the relationship between geographic patterns of industry and economic growth without scale effects. With transport costs, imperfect knowledge diffusion, and perfect capital mobility, firms locate production, process innovation, and product development independently in their lowest cost regions, leading to the partial concentration of production and the full agglomeration of innovation in the region with the largest market. A rise in industry concentration increases knowledge spillovers from production to innovation, resulting in a fall or a rise in the level of market entry depending on whether productivity increases more for process innovation or for product development. As a result, the rate of economic growth may rise or fall, depending on the effects of industry concentration on market entry.
    Keywords: Industry Concentration, Industry Share, Knowledge Diffusion, Productivity Growth, Scale Effect
    JEL: F43 O30 O40 R12
    Date: 2014–02
  8. By: Sasatra, Sudsawasd; Santi, Chaisrisawatsuk
    Abstract: Using panel data of 57 countries during the period of 1995-2012, this study investigates the impact of intellectual property rights (IPR) processes on productivity growth. The IPR processes are decomposed into three stages, innovation process, commercialization process, and IPR protection process. Our results suggest that better IPR protection is directly associated with productivity improvement only in developed economies. In addition, the contribution of IPR processes on growth through foreign direct investment (FDI) appears to be very limited. Only FDI inflows in developed countries which help to create a better innovative capability lead to a higher growth. And in connection with FDI outflows, only IPR protection and commercialization processes are proven to improve productivity in the case of developing countries, particularly when the country acts as the investing country.
    Keywords: Developing countries, Developed countries, Intellectual property, Foreign investments, Productivity, International business enterprises, Foreign Direct Investment (FDI), Intellectual property rights, Productivity growth
    JEL: F23 O34
    Date: 2014–02
  9. By: Khelifi, Atef
    Abstract: The goal of this note is to expose an important discussion with the highly ranked “Journal of Economic Growth” (Referees and Editors), on the paper titled: “Have we missed the right version of the standard Ramsey Growth model?” (Drafts of October 2013 and January 2014). This paper which is still under improvement today has been selected for a presentation in several conferences, and is already winner of a “Best Paper Award”. The distinguished author Peter Ireland who provided helpful comments, and who confirmed the importance of this contribution, is pleased to be acknowledged. The paper discussed has for goal to alert all Economists and Professionals on the fact that the widely used Ramsey model is most likely a misleading version. Indeed, it has been misunderstood historically that savings could in some cases enter directly the Utility function, and this has been seriously impacting for the resulting dynamics of the model.
    Keywords: Ramsey model; Optimal Growth; Optimal control; Dynamic programming; Savings decision
    JEL: D00 D91 E0 O40 O41
    Date: 2014–02
  10. By: Gregory Clark; Kevin Hjortshøj O'Rourke; Alan M. Taylor
    Abstract: Many previous studies of the role of trade during the British Industrial Revolution have found little or no role for trade in explaining British living standards or growth rates. We construct a three-region model of the world in which Britain trades with North America and the rest of the world, and calibrate the model to data from the 1760s and 1850s. We find that while trade had only a small impact on British welfare in the 1760s, it had a very large impact in the 1850s. This contrast is robust to a large range of parameter perturbations. Biased technological change and population growth were key in explaining Britain’s growing dependence on trade during the Industrial Revolution.
    JEL: F11 F14 F43 N10 N70 O40
    Date: 2014–02

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