nep-fdg New Economics Papers
on Financial Development and Growth
Issue of 2014‒03‒15
twelve papers chosen by
Iulia Igescu
Global Insight, GmbH
  1. Endogenous growth with capital in R&D production functions By Fernando Sánchez-Losada
  2. Policy Duration Effects, Quantitative Monetary Easing Policy, and Economic Growth: Evidence from Japanese Time Series Data By Masafumi Kozuka
  3. Natural Resources, R&D and Economic Growth By Thanh Le; Cuong Le Van
  4. Knowledge Licensing in a Model of R&D-driven Endogenous Growth By Vahagn Jerbashian
  5. The Long-Term Effects of Protestant Activities in China By Yuyu Chen; Hui Wang; Se Yan
  6. Economic growth and crime against small and medium sized enterprises in developing economies By Islam, Asif
  7. Trapped Factors and China's Impact on Global Growth By Nicholas Bloom; Paul Romer; Stephen Terry; John Van Reenen
  8. Diffusion of Technology and Convergence of Income among Countries By Sumru Oz
  9. TECHNOLOGICAL SPECIALIZATION,TECHNOLOGICAL CONVERGENCE AND GROWTH By NURIA ESTHER LAGUNA MOLINA; ANA URRACA RUIZ
  10. A contribution to the empirics of convergence in real GDP growth: The role of financial crises and exchange-rate regimes By Amalia Morales-Zumaquero; Simón Sosvilla-Rivero
  11. ENDOGENOUS LABOR EFFORT AND WAGE DIFFERENTIALS IN A DYNAMIC MODEL OF CAPACITY UTILIZATION AND ECONOMIC GROWTH By JAYLSON JAIR DA SILVEIRA; GILBERTO TADEU LIMA
  12. EVALUATING MULTIPLE SPATIAL DIMENSIONSOF ECONOMIC GROWTH IN BRAZIL USING SPATIAL PANEL DATA MODELS, 1970-2000 By ALEXANDRE XAVIER YWATA DE CARVALHO; GUILHERME MENDES RESENDE; PATRÍCIA ALESSANDRA MORITA SAKOWSKI
  1. By: Fernando Sánchez-Losada (Facultat d'Economia i Empresa; Universitat de Barcelona (UB))
    Abstract: In this paper we claim that capital is as important in the production of ideas as in the production of final goods. Hence, we introduce capital in the production of knowledge and discuss the associated problems arising from the public good nature of knowledge. We show that although population growth can affect economic growth, it is not necessary for growth to arise. We derive both the social planner and the decentralized economy growth rates and show the optimal subsidy that decentralizes it. We also show numerically that the effects of population growth on the market growth rate, the optimal growth rate and the optimal subsidy are small. Besides, we find that physical capital is more important for the production of knowledge than for the production of goods.
    Keywords: knowledge, public good, growth.
    JEL: O30 O40 O41
    Date: 2014
    URL: http://d.repec.org/n?u=RePEc:ewp:wpaper:306web&r=fdg
  2. By: Masafumi Kozuka (Faculty of Policy Studies, University of Marketing and Distribution Sciences)
    Abstract: In this paper, we examine the influences of policy duration effects and quantitative monetary easing policy (QMEP) brought into effect by Bank of Japan from 2001-2006 on economic growth toward future periods. We employed a simple equation with the term spread explaining economic growth and obtained the following results. The positive effects of the term spread on economic growth over the subsequent 21 and 24 months decreased in 2001. And the estimated coefficients on term spread are negative and significant after the shift in both cases. Then, we conclude that the QMEP and policy duration effects in 2000s worked on economic growth in Japan to some extent.
    Keywords: term spread, zero interest rate policy, quantitative easing policy, policy duration effects, economic growth
    JEL: E44 E52 G10
    Date: 2014–03
    URL: http://d.repec.org/n?u=RePEc:koe:wpaper:1410&r=fdg
  3. By: Thanh Le; Cuong Le Van
    Abstract: This paper studies the long-run economic impact of natural resources by constructing a Schumpeterian endogenous growth model that incorporates an upstream resource intensive sector. Natural resources are extracted, processed and utilized to produce intermediate capital goods which are essential inputs for producing a ffnal consumption good. R&D activities are targeted at improving the quality of existing intermediate products. In this context, we characterize balanced growth paths and examine the issues of sustainability and long-run growth associated with these compet- itive equilibrium solution trajectories. The analysis is conducted through the comparison of the two natural resource types: renewable versus non- renewable and two optimal equilibrium conditions: social versus private. We show that negative growth is possible, however, only applied to an economy that is endowed with non-renewable resources. In addition, we derive conditions under which an economy experiences permanent stag- nant growth. We also show that having a strong innovative sector is essential for escaping this stagnant growth trap. We then identify condi- tions under which growth is larger under renewable resources as compared to their non-renewable counterpart and vice versa.
    Keywords: non-renewable resources, renewable resources, R&D-based growth,stagnant growth, vertical innovation.
    JEL: O13 O31 O41
    Date: 2014–02–25
    URL: http://d.repec.org/n?u=RePEc:ipg:wpaper:2014-112&r=fdg
  4. By: Vahagn Jerbashian (Facultat d'Economia i Empresa; Universitat de Barcelona (UB))
    Abstract: In this paper I present an endogenous growth model where the engine of growth is in-house R&D performed by high-tech firms. I model knowledge (patent) licensing among high-tech firms. I show that if there is knowledge licensing, high-tech firms innovate more and economic growth is higher than in cases when there are knowledge spillovers or there is no exchange of knowledge among high-tech firms. However, in case when there is knowledge licensing the number of high-tech firms is lower than in cases when there are knowledge spillovers or there is no exchange of knowledge.
    Keywords: Knowledge Licensing, Intra-firm R&D, Competitive Pressure,Endogenous Growth.
    JEL: O30 O41 L16
    Date: 2014
    URL: http://d.repec.org/n?u=RePEc:ewp:wpaper:304web&r=fdg
  5. By: Yuyu Chen; Hui Wang; Se Yan
    Abstract: Does culture, and in particular religion, exert an independent causal effect on long-term economic growth, or do culture and religion merely reflect the latter? We explore this issue by studying the case of Protestantism in China during the late nineteenth and early twentieth centuries. Combining county-level data on Protestant presence in 1920 and socioeconomic indicators in 2000, we find that the spread of Protestantism has generated significant positive effects in long-term economic growth, educational development, and health care outcomes. To better understand whether the relationship is causal, we exploit the fact that missionaries purposefully undertook disaster relief work to gain the trust of the local people. Thus, we use the frequency of historical disasters as an instrument for Protestant distribution. Our IV results confirm and enhance our OLS results. When we further investigate the transmission channels over the long historical period between 1920 and 2000, we find that although improvements in education and health care outcomes account for a sizable portion of the total effects of missionaries' past activities on today's economic outcomes, Protestant activities may have also contributed to long-term economic growth through other channels, such as through transformed social values. If so, then a significant amount of China's growth since 1978 is the result not just of sudden institutional changes but of human capital and social values acquired over a longer historical period.
    Keywords: Protestantism, Economic Growth, Education, Health Care, China
    JEL: I25 N15 N35 O11 O43 Z12
    Date: 2014–02
    URL: http://d.repec.org/n?u=RePEc:auu:hpaper:025&r=fdg
  6. By: Islam, Asif
    Abstract: Several studies have explored the relationship between economy-level crime rates or individual-level crime and economic growth. However, few studies have examined the relationship between economic growth and crime against firms. This study uses data for about 12,000 firms in 27 developing countries and finds that economic growth is negatively associated with crime. This relationship is stronger for small and medium firms than large firms. The study also explores several economy-wide factors and their influence on the growth-crime relationship for small and medium enterprises. The results are robust to various sensitivity checks.
    Keywords: Governance Indicators,Public Sector Corruption&Anticorruption Measures,Achieving Shared Growth,Population Policies,Gender and Law
    Date: 2014–02–01
    URL: http://d.repec.org/n?u=RePEc:wbk:wbrwps:6768&r=fdg
  7. By: Nicholas Bloom; Paul Romer; Stephen Terry; John Van Reenen
    Abstract: In a general equilibrium product-cycle model, lower trade barriers in-crease Southern purchasing power, which lifts long-run growth by increasing the profit from innovation. In the short run, factors of production must be reallocated inside firms, which lowers the opportunity cost of innovation, generating an additional "trapped factor" effect. Starting from a baseline OECD growth rate of 2% we find that trade integration with low-wage countries in the decade around China's WTO accession could have increased long-run growth to 2.4%. There is an additional short-run trapped factors effect, raising growth to 2.7%. China accounts for about half of these growth increases.
    Keywords: Innovation, trade, China, endogenous growth
    JEL: D92 E22 D8 C23
    Date: 2014–03
    URL: http://d.repec.org/n?u=RePEc:cep:cepdps:dp1261&r=fdg
  8. By: Sumru Oz (Koc University-TUSIAD Economic Research Forum)
    Abstract: Theoretical models of growth reveal that either exogenous or endogenous, technology is the main driving force behind the long-run economic growth. Furthermore, in the endogenous growth framework, diffusion of technology is the basic mechanism of per capita income convergence among countries. This paper analyzes the per capita income convergence implications of foreign direct investment (FDI), considering that the latter is an international technology diffusion channel. Although FDI appears to be an important channel in the diffusion of technology models theoretically, empirical evidence related to the effect of FDI on growth is ambiguous. By applying the approach of Ben-David (1996), which focuses on convergence among countries grouped with respect to their mutual trade, this paper presents evidence that per capita income convergence exists among FDI home and host countries using three different convergence measures. The relatively higher speed of convergence prevailed among countries linked by FDI justifies the technological spillovers accompanied by FDI and provides evidence that FDI inflow is a mechanism of per capita income convergence among countries by allowing the diffusion of technology.
    Keywords: Economic Growth; FDI; Economic Integration; Technology Diffusion; Income Convergence.
    JEL: O47 O33 F43 F15 F21
    Date: 2014–03
    URL: http://d.repec.org/n?u=RePEc:koc:wpaper:1407&r=fdg
  9. By: NURIA ESTHER LAGUNA MOLINA; ANA URRACA RUIZ
    Date: 2014
    URL: http://d.repec.org/n?u=RePEc:anp:en2012:093&r=fdg
  10. By: Amalia Morales-Zumaquero (Departamento de Teoría e Historia Económica, Facultad de Ciencias Económicas y Empresariales, Universidad de Málaga); Simón Sosvilla-Rivero (Department of Quantitative Economics, Universidad Complutense de Madrid)
    Abstract: This paper investigates the convergence in real Gross Domestic Product (GDP) growth focusing on the impact of financial crises (i.e. banking crises, currency crises and debt crises) and nominal exchange rate regimes (i.e. fixed, intermediate and flexible) on convergence. To that end, we compute four convergence indicators (s-convergence, g- convergence, absolute b-convergence and conditional b-convergence), for 163 countries classified into four income groups during the 1970-2011 period. Results suggest that: (i) There is evidence in favor of -convergence and -convergence only for high income countries; (ii) absolute and conditional -convergence are presented in each of the four income groups of countries under study; (iii) exchange-rate regimes seem to play some role in upper-middle and lower-middle income countries; and (iv) financial crises have a negative and significant impact on GDP growth independently of the level of income of countries.
    Keywords: Convergence indicators, financial crises, nominal exchange-rate regimes
    JEL: O47 G15 F33
    Date: 2014–02
    URL: http://d.repec.org/n?u=RePEc:aee:wpaper:1406&r=fdg
  11. By: JAYLSON JAIR DA SILVEIRA; GILBERTO TADEU LIMA
    Date: 2014
    URL: http://d.repec.org/n?u=RePEc:anp:en2013:095&r=fdg
  12. By: ALEXANDRE XAVIER YWATA DE CARVALHO; GUILHERME MENDES RESENDE; PATRÍCIA ALESSANDRA MORITA SAKOWSKI
    Date: 2014
    URL: http://d.repec.org/n?u=RePEc:anp:en2012:179&r=fdg
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