nep-fdg New Economics Papers
on Financial Development and Growth
Issue of 2015‒10‒25
three papers chosen by
Iulia Igescu
Ministry of Presidential Affairs

  1. Drivers of Growth in Fast Emerging Economies: A Dynamic Instrumental Quantile Approach By Asongu, Simplice
  2. Growth, Slowdowns, and Recoveries By Howard Kung; Francesco Bianchi
  3. Consensus forecasters: How good are they individually and why? By Franses, Ph.H.B.F.; Maassen, N.

  1. By: Asongu, Simplice
    Abstract: This study complements the scarce literature on growth determinants in fast emerging economies of the BRICS and MINT by assessing the determinants throughout the conditional distributions of the growth rate and real GDP output for the period 2001-2011. An instrumenal variable (IV) quantile regression approach is complemented with Two-Stage-Least Squares and IV Least Absolute Deviations. The instrumentation process is dynamic. The following findings are established. First, while Gross FDI has a negative effect on economic growth, the impact of Net FDI is positive, with a higher magnitude in top quantiles of the distributions. Second, the positive effect of natural resources is more apparent in countries with low initial growth levels. Third, the impact of telecommunications infrastructure is not very significant. Fourth, whereas the incidence of bank credit is positive for GDP growth, it is negative for real GDP output. Fifth, while trade openness is positive in bottom quantiles of GDP growth, but for the highest quantile in real GDP output, it is consistently negative on real GDP output. Sixth, while the incidence of political stability is negative on GDP growth, it is positive on real GDP output, with the negative (positive) effect apparent only in top (bottom) quantiles of GDP growth (real GDP output). Policy implications are discussed.
    Keywords: Economic Growth; Emerging countries; Quantile regression
    JEL: C52 F21 F23 O40 O50
    Date: 2015–03–01
  2. By: Howard Kung (London Business School); Francesco Bianchi (Cornell University)
    Abstract: We construct and estimate a model that features endogenous growth and technology diffusion. The spillover effects from research and development provide a link between business cycle fluctuations and long-term growth. Therefore, productivity growth is related to the state of the economy. Shocks to the marginal efficiency of investment explain the bulk of the low-frequency variation in growth rates. Transitory inflationary shocks lead to persistent declines in economic growth. During the Great Recession, technology diffusion dropped sharply, while long-term growth was not significantly affected. The opposite occurred during the 2001 recession. The growth mechanism induces positive comovement between consumption and investment.
    Date: 2015
  3. By: Franses, Ph.H.B.F.; Maassen, N.
    Abstract: We analyze the monthly forecasts for annual US GDP growth, CPI inflation rate and the unemployment rate delivered by forty professional forecasters collected in the Consensus database for 2000M01-2014M12. To understand why some forecasters are better than others, we create simple benchmark model-based forecasts. Evaluating the individual forecasts against the model forecasts is informative for how the professional forecasters behave. Next, we link this behavior to forecast performance. We find that forecasters who impose proper judgment to model-based forecasts also have highest forecast accuracy, and hence, they do not perform best just by luck.
    Keywords: macroeconomic forecasts, expert adjustment
    JEL: E27 E37
    Date: 2015–10–12

This nep-fdg issue is ©2015 by Iulia Igescu. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.