nep-fdg New Economics Papers
on Financial Development and Growth
Issue of 2014‒05‒24
six papers chosen by
Iulia Igescu
Global Insight, GmbH

  1. Competition in the banking sector and economic growth: panel-based international evidence By Edoardo Gaffeo; Ronny Mazzocchi
  2. The relationship between reserves of oil endowment and economic growth from the resource curse viewpoint: a case study of oil producing countries By Mohammadi, Teymour; Jahangard, Fateme; Khani Hoolari, Seyed Morteza
  3. Remittances and Economic Growth: The Role of Financial Development By Unbreen Qayyum; Muhammad Nawaz
  4. A survey on modeling economic growth. With special interest on natural resource use By Voosholz, Frauke
  5. Government Debt and Economic Growth By César Calderón; J. Rodrigo Fuentes
  6. The Effects of Oil Prices On Inflation and Growth: Time Series Analysis In Turkish Economy For 1988:01-2013:04 Period By KARGI, Bilal

  1. By: Edoardo Gaffeo; Ronny Mazzocchi
    Abstract: This paper employs panel techniques to empirically examine the link between the competitiveness of the banking sector and real economic growth, using data from a sample of OECD economies during 1997-2010. We employ a dynamic GMM model to find that an increase in the efficiency of banks driven by fiercer competition is robustly associated with higher real growth. The issue of Granger-causality is then explored by means of a panel- based testing procedure addressing heterogeneity. While there is a strong evidence of causality running from real growth to banking competitiveness, a bi-directional causality appears clearly only for lags higher than 1.
    Keywords: Banking competition, Financial development, Economic growth
    JEL: C33 G21 O16
    Date: 2014
  2. By: Mohammadi, Teymour; Jahangard, Fateme; Khani Hoolari, Seyed Morteza
    Abstract: This research investigated the effective economic growth determinants using a panel data set over the period 1995 to 2010 in oil-rich countries divided by the level of democracy into two groups: countries with low and high democracy. The result of OLS method rejects the curse hypothesis; however, TSLS method reveals the reserves of oil endowment has a negative effect on economic growth of low democracy countries and the curse hypothesis is approved.
    Keywords: Resource curse, Economic growth, Reserves of oil endowment, Panel data set
    JEL: O13 P28 Q43
    Date: 2014–05–07
  3. By: Unbreen Qayyum (Pakistan Institute of Development Economics, Islamabad); Muhammad Nawaz (Pakistan Institute of Development Economics, Islamabad)
    Abstract: Remittances and financial developments have been an important and overgrowing source in accelerating the growth process of many transitional economies. The economies that have enough source of remittance from their expatriate necessitate the well established technology for financial transactions that ultimately result in economic growth. This paper theoretically extends the Ramsey-Cass-Koopmans model by incorporating the remittances and financial developments that has emerged in financial sector. Theoretical results of steadystate indicate that higher amount of migrant remittances along with financial developments increase the consumption level of the domestic residents that results in higher economic growth by inducing more investment. In the long-run, both overseas remittances and financial developments increase the steady-state rate of output growth and capital stock. The findings also highlights that remittance creates the current account surplus and financial developments produce an upward shift in production function that lead to further growth. This research explores the new dimension for policy-maker particularly, working for innovations in the financial sectors.
    Keywords: Financial Development, Remittances, Economic Growth
    JEL: G2 F24 F43
    Date: 2014
  4. By: Voosholz, Frauke
    Abstract: The purpose of this paper is to survey the contributions to economic growth theory. We focus on the basic models and literature that link resource economic and economic growth, in order to reveal the main differences on how the different aspects are incorporated into growth models. As economic science is not a hard science, all economic activities must always be considered against the background of the current economy, the political and social institutions and technical capabilities (as already mentioned by Solow (1985), p. 328). That is why many of the first growth models, fitted to current state when they were developed, are not transferable to remote periods. Furthermore, natural resources as input factors, which influence economic growth, were neglected for a long time, whereas today they are one of the most discussed factors influencing economic growth. --
    Keywords: economic growth,growth theory,historical overview,renewable resources,non-renewable resources
    JEL: O13 O41 O40 Q20 Q32
    Date: 2014
  5. By: César Calderón; J. Rodrigo Fuentes
    Abstract: The growth prospects of a nation are stymied by the burden of government debt. This study has two goals: first, it tests whether public debt hinders growth; and, second, it explores whether economic policy ameliorates this effect. A large panel data of countries for 1970-2010 reveal a negative and robust effect of public debt on growth. Strong institutions, high quality domestic policies, and outward-oriented policies partly mitigate this adverse effect. An enhanced policy environment and its interaction with public debt has helped explain the improved growth performance of industrial and developing countries for the years 2001-05 compared to the years 1991-95. Viewing the actual performance of the Latin America and the Caribbean region, South America encompasses the group of countries more benefited by improvement of economic policies, while Central America and the Caribbean lag considerably. A simultaneous sharp reduction in public debt and an improvement in the policy environment induce an increase in the growth rate per capita of 1.7 percentage points for the Caribbean and 2 percentage points for South America. A more conservative scenario that considers an upgrade in quality of policies and a reduction of public debt leads to lower but still significant growth benefits for the Caribbean and South America, by 0.85 and 1.5 percentage points, respectively.
    Keywords: Public debt, Fiscal Policy, Financial Markets, Investment, Public debt, policy environment, growth
    Date: 2013–10
  6. By: KARGI, Bilal
    Abstract: In this study, the analysis was that the capacity of creating inflation depends on oil prices as the one of energy types that is a major input of aggregate output which becomes a source of economic growth with increasing in costs. The aggregate output is also a function of energy that is the one of production inputs. Moreover, energy is an imported by several countries because it is acquired from the limited sources around the world. It causes inflation of importing countries to exporting countries through oil prices. At the same time, the rises of oil prices causes inflation because it increases the product costs. The second argument is that the increasing of aggregate output is generally affected by energy use, and is privately affected by oil use. In that case, oil import is both efficient on inflation and on growth. Tested hypothesis in the study is that oil prices have an inflationary effect because of its effect on costs, and is that this activity will negatively affect the growth because of its effect on expectations. In this study, the effects of the crude oil import of Turkey for inflation and growth are analysed over the long term. The committed analyses show that GDP was affected by oil imports, and it also caused inflation in the Turkish economy.
    Keywords: Oil Import, Inflation, Economic Growth
    JEL: C32 E31 Q43
    Date: 2014–03

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