nep-fdg New Economics Papers
on Financial Development and Growth
Issue of 2014‒09‒05
three papers chosen by
Iulia Igescu
Ministry of Presidential Affairs

  1. Stock Market and Economic Growth in China By Baotai Wang; D. Ajit
  2. Export-led growth in Europe: Where and what to export? By Ana Paula Ribeiro; Paula Gracinda Teixeira Santos; Vitor Carvalho
  3. How large are fiscal multipliers? An empirical assessment for the Euro Area By Vitor Carvalho; Ricardo Silva; Ana Paula Ribeiro

  1. By: Baotai Wang; D. Ajit
    Abstract: This study investigates the impact of stock market development on economic growth in China. To this end, the quarterly data from 1996 to 2011 are used and the empirical investigation is conducted within the unit root and the cointegration framework. The results show that the relationship between the stock market development, proxied by the total market capitalization, and economic growth is negative. This result is consistent with Harris’ (1997) finding that the stock market development generally does not contribute positively to economic growth in developing countries if the stock market is mainly an administratively-driven market. See above See above
    Keywords: China, Finance, Growth
    Date: 2013–06–21
  2. By: Ana Paula Ribeiro; Paula Gracinda Teixeira Santos; Vitor Carvalho
    Abstract: From the late 70s onwards, the literature has produced numerous studies, mostly for developing countries, relating exports and economic growth. Since several European Union (EU) countries face strong recessions in the sequence of the economic crisis and the related fiscal consolidation measures, exports emerge as a meaningful source of growth for developed countries with rather stagnant domestic markets. In this context, we assess if and how the product and the destination structures of exports shape the growth dynamics for the EU countries. Estimation of fixed effects model using panel data of 23 European Union (EU) members over the period 1995-2010. We find that economic growth is foster through export specialization in high value-added products, such as manufactures and high-technology. Moreover, we find evidence that higher growth is fostered by export diversification across partners while enlarging the portfolio of partners, mainly to less developed and more distant countries, has negative impacts on European growth. Unambiguously, relative concentration of exports should be directed towards higher growth countries.
    Keywords: European Union (EU)., Growth, Macroeconometric modeling
    Date: 2013–06–21
  3. By: Vitor Carvalho; Ricardo Silva; Ana Paula Ribeiro
    Abstract: In the current context where the limited role for monetary policy instruments apparently endows fiscal policy with higher effectiveness, European fiscal policy authorities are rather constrained by the fact of most countries being struggling against recessions together with the need to put public finances in a sustainable path. In this context, we assess how large are fiscal multipliers in Europe, for both aggregated and disaggregated spending and revenue variables. Moreover, we analyze how cycle phases and fiscal consolidation episodes shape the size of fiscal multipliers. We present evidence for the Euro area, relying on a VAR model with pooled annual data from 1998 to 2008. Estimation results show that, on average, transfers are the main driving force for the overall expenditure dynamics; moreover, wages exhibit negative impacts on output while positive effects are strongly driven by shocks in public investment and, to a lesser extent, by intermediate consumption. On the revenue side, all items impinge negatively on output growth. Additionally, our results show that public spending multiplier is positive in recessions while in expansions is smaller, inclusively, negative. Similarly, the effectiveness of the tax multiplier is, also, higher in recessions. Finally, we have found that consolidation phases affect negatively the size of multipliers.
    Keywords: Euro Area, Public finance, Macroeconometric modeling
    Date: 2013–06–21

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