nep-fdg New Economics Papers
on Financial Development and Growth
Issue of 2014‒11‒28
five papers chosen by
Iulia Igescu
Ministry of Presidential Affairs

  1. Innovation and Economic Growth in European Union. Panel Data Analysis By Andrzej Kacprzyk; Wirginia Doryn; ;
  2. Military Spending and Growth: An Empirical Exploration of Contingent Relationships By Musayev, Vusal
  3. Externalities in Military Spending and Growth: The Role of Natural Resources as a Channel through Conflict By Musayev, Vusal
  4. Making economic growth and well-being compatible: the role of trust and income inequality By Mikucka, Malgorzata; Sarracino, Francesco
  5. Economic erowth and monetary policy: Is there a new normal? By Plosser, Charles I.

  1. By: Andrzej Kacprzyk (University of Lodz, Faculty of Economics and Sociology); Wirginia Doryn (University of Lodz, Faculty of Economics and Sociology); ;
    Abstract: There seems to be a growing consensus among economists and policy makers that investment in knowledge, which is at the center of the endogenous growth process, is a precondition for achieving permanently high economic growth. This paper examines relationship between economic growth and the various indicators of innovative activity that contribute to new knowledge creation. Our study differs from previous analyses, which mainly employed data from OECD countries. To the best of our knowledge, this is the first attempt to test whether the impact of innovative activity on growth differs between old and new European Union member states. Based on the panel data regression model we examine the interaction between economic growth and innovation, the latter proxied by R&D expenditures and patent statistics. We distinguish between publicly and privately-funded R&D and try to answer the question whether private and public R&D investments differ in terms of fostering economic growth. The results are sensitive to the sample analyzed and indicate that the relationship between innovation efforts and growth is more complex and ambiguous than expected.
    Keywords: Economic growth, innovation, R&D, patents, panel data
    JEL: O33 O30 O47
    Date: 2014–10
  2. By: Musayev, Vusal
    Abstract: This analysis clarifies the ambiguous results from military spending and economic growth literature where the impact of military expenditure is frequently found to be non-significant or negative. Investigation re-examines effects of military spending on growth by analysing this relationship contingent on initial income per capita using recent advances in panel estimation methods and unique dataset on military expenditure. The findings reveal that while growth falls with higher levels of military spending, the marginal impact of military spending is increasing in initial income levels. In contrast to previous findings from the literature, this increase is consistent across different income groups and type of economies, and monotonic in direction going towards zero for sufficiently higher income level countries.
    Keywords: Military expenditure; Economic Growth; Contingency
    JEL: H56 O11
    Date: 2013–04
  3. By: Musayev, Vusal
    Abstract: This analysis re-examines the relationship between military spending and economic growth using recent advances in panel estimation methods and a large panel dataset. The investigation is able to reproduce many of results of the existing literature and to provide a new analysis on the relationship between conflict, corruption, natural resources and military expenditure and their direct and indirect effects on economic growth. The analysis finds that the impact of military expenditure on growth is generally negative as in the literature, but that it is not significantly detrimental for countries facing either higher internal or external threats and for countries with large natural resource wealth once corruption levels are accounted for.
    Keywords: Military expenditure; Economic Growth; Conflict; Natural Resources, Corruption
    JEL: H56 O11 Q34
    Date: 2013–04
  4. By: Mikucka, Malgorzata; Sarracino, Francesco
    Abstract: To what extent is economic growth liable to improve people’s subjective well-being in the long run? Recent studies identified three possible answers: economic growth matters a great deal; economic growth does not matter at all; economic growth matters, but other things matter more. Each of these conclusions has different policy implications to promote people’s well-being. Despite the progress of social science research, the disagreement persists for at least two reasons: first, current policy conclusions hinge on weak methodological grounds; second, the literature missed to identify the conditions shaping the relationship between economic growth and well-being. Our paper addresses these issues overcoming some of the methodological shortcomings of previous literature. Additionally, we test the hypotheses that economic growth has a positive effect on subjective well-being in presence of increasing social trust and decreasing income inequality. To this aim we use multilevel regression analysis and the integrated World Values Survey - European Values Study data-set. We confirm previous evidence showing that in the long run economic growth does not increase people’s well-being. We also document that decreasing income inequality and non decreasing social trust allow a long-term positive relationship between economic growth and subjective well-being.
    Keywords: economic growth, subjective well-being, social trust, income inequality, Easterlin paradox, sustainability
    JEL: D60 I0 I1 I31
    Date: 2014–11–04
  5. By: Plosser, Charles I. (Federal Reserve Bank of Philadelphia)
    Abstract: The George Washington University and Princeton University's Griswold Center for Economic Policy Studies Philadelphia, PA President Charles Plosser gives his views on the debate about a new normal for economic growth in the U.S. economy. He will also discuss the question of future productivity growth and highlight research in this area.
    Keywords: Economic growth; Monetary policy; Stagnation; Productivity growth; Innovation;
    Date: 2014–11–13

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