nep-fdg New Economics Papers
on Financial Development and Growth
Issue of 2014‒08‒09
seven papers chosen by
Iulia Igescu
Ministry of Presidential Affairs

  1. A Human Capital Theory of Growth: New Evidence for an Old Idea By Theodore R. Breton
  2. World Total Factor Productivity Growth and the Steady-State Rate in the 20th Century By Theodore R. Breton
  3. Non-linear effects of the U.S. Monetary Policy in the Long Run By Olmos, Lorena; Sanso Frago, Marcos
  4. Institutions and Economic Growth in the MENA Countries: An Empirical Investigation by Using Panel data model By Becherair, Amrane
  5. Economic Convergence and Structural Change: the Role of Transition and EU Accession By Rumen Dobrinsky; Peter Havlik
  6. The effect of climate change on economic growth: Evidence from Sub-Saharan Africa By Alagidede, Paul; Adu, George; Frimpong, Prince Boakye
  7. Development Aid and Growth in Transition Economies By Zohid Askarov; Hristos Doucouliagos

  1. By: Theodore R. Breton
    Abstract: In 1960 Theodore Schultz expounded a human capital theory of economic growth that includes three elements: 1) Countries without much human capital cannot manage physical capital effectively, 2) Economic growth can only proceed if physical capital and human capital rise together, and 3) Human capital is the factor most likely to limit growth. I specify Schultz’s theory mathematically and test it in periods when global financial capital was highly mobile. I find that in 1870, 1910, and 2000, the average schooling attainment of the adult population largely determined the stock of physical capital/capita and GDP/capita in 42 market economies.
    Keywords: Human Capital, Schooling, Capital Investment, Economic Growth, Solow Model, Market Economies
    JEL: E13 I21 O11 O15 O41
    Date: 2014–01–01
  2. By: Theodore R. Breton
    Abstract: I estimate a Solow model augmented with human capital in 42 countries for 1910-2000. Estimated TFP growth is 0.3%/year, and the steady-state rate for GDP/capita is 1.0%/year. Implicitly for high-income countries maintaining growth above this rate will be increasingly difficult.
    JEL: O41 O47
    Date: 2013–03–02
  3. By: Olmos, Lorena; Sanso Frago, Marcos
    Abstract: We find non-linearities in the U.S. long-run relationships among trend inflation, growth rate and financial frictions. Moreover, our results show that mismeasurements of the natural rate of interest deviate the trend inflation from its target, which is especially clear when monetary policy reacts preventively against inflation deviations. The long-run growth rate, the trend inflation and the natural rate of interest, specified as time-varying, are jointly estimated over the period 1960:Q1-2013:Q2 by applying the Kalman filter, following mainly Laubach and Williams (2003).
    Keywords: Kalman Filter; Trend Inflation; Financial frictions; Growth
    JEL: C32 E31 E52
    Date: 2014
  4. By: Becherair, Amrane
    Abstract: This paper will investigate the impact of institution on economic growth rates in MENA nations, Using panel data model over the period 1995-2012. Within the framework of the neoclassical growth model, this study integrates a broad set of institutional variables such. Security of property rights, governance, political freedom and size of government are the indicators used in the study, facilitating identification of the most important institutions that account for the observed variations in economic growth rates among nations. We find that, The sign and significance of all of the variables are qualitatively similar to the results obtained by MRW (1992). We also find The human capital is highly significant at 99% with initial income and Investment Share in MENA countries. The Results indicate that the dummy variable for oil exporters is positive and significant, indicating that other things being equal, oil exporters would be expected to have higher economic growth rates in MENA Countries. Basic OLS results, as well as a variety of additional evidence, suggest that (a) security of property rights, is the most significant institutions that explain the variations in economic growth rates, (b) The significant and negative sign on the government consumption, indicating that smaller governments are "better" in MENA countries.
    Keywords: MENA Countries – Economic Growth – Institutions- Panel Data Model
    JEL: C23 C87 O4 O43 O53 O55
    Date: 2014–08–03
  5. By: Rumen Dobrinsky (The Vienna Institute for International Economic Studies, wiiw); Peter Havlik (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: Summary This paper analyses the speed and patterns of economic convergence in the new EU Member States of Central and Eastern Europe during transition and the first years of EU membership. After a brief discussion of measurement and data issues, the paper provides stylised facts on growth and convergence in Europe, and explores various convergence measures proposed in the growth literature. It employs several analytical approaches in order to reveal convergence speed and patterns univariate growth regressions, multivariate econometric analysis, including the testing of convergence models and running different growth regressions. The aim is to look at various aspects of convergence processes by using alternate approaches and then, by putting those together, to seek common and distinct features. We confirm that the one-off direct negative effects of the crisis on GDP growth were considerably stronger in the case of NMS. The growth patterns were interrupted and the convergence process slowed down. The paper underlines the significant, sometimes even increasing, heterogeneity of growth, pointing more generally to uneven economic convergence within the EU. This concerns not only the lasting differences between the NMS and the rest of the EU, but also significant dissimilarities between the growth patterns among individual countries within each of these subgroups.
    Keywords: economic growth, growth determinants, real convergence, European Union, Central and Eastern Europe
    JEL: C21 C23 O11 O40 O52 O57 F43
    Date: 2014–07
  6. By: Alagidede, Paul; Adu, George; Frimpong, Prince Boakye
    Abstract: This paper is a contribution to the empirics of climate change and its effect on sustainable economic growth in Sub-Saharan Africa. Using data on two climate variables, temperature and precipitation, and employing panel cointegration techniques, we estima
    Keywords: climate change, Sub-Saharan Africa, sustainable growth, panel cointegration
    Date: 2014
  7. By: Zohid Askarov; Hristos Doucouliagos
    Abstract: Empirical studies normally analyze diverse and heterogeneous groups of countries, producing very mixed evidence on the effectiveness of development aid in promoting growth. We focus on whether aid promotes economic growth in transitional economies. We find that aid, on average, has had a positive impact on growth for this specific group of countries. This result is robust to samples, estimators, and the use of alternate instruments to address endogeneity. Aid effectiveness is not conditional on good policy and there is little evidence of non-linear growth effects arising from aid.
    Date: 2014–08–04

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