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on Financial Development and Growth |
| By: | Christian Kiedaisch |
| Abstract: | This paper analyzes how changing the expected length of intellectual property right (IPR) protection affects growth and the welfare of rich and poor consumers. The analysis is based on a product-variety model with non-homothetic preferences and endogenous markups in which, in accordance with empirical evidence, rich households consume a larger variety of goods than poorer ones. Unlike in models with homothetic preferences, the effect of intellectual property (IP) protection on growth depends on the distribution of income: when the length of IP protection is (uniformly) increased, growth increases when there is inequality among households consuming IP protected goods, but stays constant when there is no such inequality. When wealth is unequally distributed, reducing the length of IP protection for new but not for previously issued IPRs can increase growth. In the case where increasing the length of IP protection increases growth, poor households prefer a shorter length of protection than richer ones, although they consume fewer IP protected goods. |
| Keywords: | Intellectual property rights, income distribution, endogenous growth, nonhomothetic preferences |
| JEL: | O34 O31 L16 D30 O15 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:zur:econwp:221&r=fdg |
| By: | Luintel, Kul B (Cardiff Business School); Khan, Mosahid; Leon-Gonzalez, Roberto; Li, GuangJie (Cardiff Business School) |
| Abstract: | The existing weight of evidence suggests that financial structure (the classification of a financial system as bank-based versus market-based) is irrelevant for economic growth. This contradicts the common belief that the institutional structure of a financial system matters. We re-examine this issue using a novel dataset covering 69 countries over 1989-2011 in a Bayesian framework. Our results are conformable to the belief - a market-based system is relevant - with sizable economic effects for the high-income but not for the middle-and-low-income countries. Our findings provide a counterexample to the weight of evidence. We also identify a regime shift in 2008. |
| Keywords: | Financial Structure; Economic Growth; Cointegration; Bayesian Model Averaging; Structural Breaks |
| JEL: | G0 O4 O16 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:cdf:wpaper:2016/2&r=fdg |
| By: | Papaioannou, Sotiris |
| Abstract: | This study examines whether differences in monetary policy are associated with diverging effects of public spending on growth. At first stage, we estimate public spending multipliers for each country of the European Union (EU). Their size varies considerably across countries. Then we incorporate in the analysis the role of monetary policy and examine whether real interest rates affect the relationship between public spending and growth. The main result of the econometric analysis is that government spending can affect growth positively only when real interest rates become negative. This result remains robust to several changes in the econometric specification and measures of interest rate. |
| Keywords: | Public spending, Fiscal multipliers, Monetary policy, Economic growth. |
| JEL: | E43 E62 O40 |
| Date: | 2016–03–15 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:70331&r=fdg |
| By: | Kul B Luintel (Cardiff Business School); Khan Mosahid (World Intellectual Property Organization, Geneva); Leon-Gonzalez Roberto (National Graduate Institute for Policy Studies); Li Guangjie (Cardiff Business School) |
| Abstract: | The existing weight of evidence suggests that financial structure (the classification of a financial system as bank-based versus market-based) is irrelevant for economic growth. This contradicts the common belief that the institutional structure of a financial system matters. We re-examine this issue using a novel dataset covering 69 countries over 1989-2011 in a Bayesian framework. Our results are conformable to the belief - a market-based system is relevant - with sizable economic effects for the high-income but not for the middle-and-low-income countries. Our findings provide a counterexample to the weight of evidence. We also identify a regime shift in 2008. |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:ngi:dpaper:15-27&r=fdg |
| By: | Barbara Annicchiarico (DEF, University of Rome "Tor Vergata"); Alessandra Pelloni (DEF, Università di Roma "Tor Vergata") |
| Abstract: | This paper studies the effects of several tax reforms in an economy in which taxes are partially evaded by means of undeclared work. To this purpose, we consider a two-sector dynamic general equilibrium model calibrated to Italy which explicitly accounts for underground production. We construct various tax reform scenarios, such as deductibility of labor costs from business tax, ex-ante budget-neutral tax shifts from direct to indirect taxes, and various tax cuts financed by decreases of government spending. We find the following results. First, neglecting the existence of the underground sector may lead to severely miscalculate the macroeconomic impact effects of tax reforms, especially in the short run, where policy interventions produce direct and indirect effects on the markup. Second, partial deductibility of labor costs from the business tax base proves to be highly expansionary and highly detrimental to the size of the underground sector. Third, the dimension of the underground sector is permanently and considerably reduced by changes in the tax mix that diminish the labor tax wedge. Finally, all the considered tax reforms take the public-debt-to-output ratio toward a prolonged downward path. |
| Keywords: | Endogenous Growth, R&D, Optimal Monetary Policy, Ramsey Problem |
| JEL: | E32 E52 O42 |
| Date: | 2016–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:rtv:ceisrp:376&r=fdg |
| By: | Bharat Diwakar; Gilad Sorek |
| Abstract: | This study shows how the two alternative saving motives, life-cycle consumption smoothing and parental bequests, determine the relation between population growth and R&D-based economic growth, i.e. the sign of the "weak scale-effect". We take a textbook R&D-based growth model of infinitely living agents with no weak-scale effect, and analyze it in an Overlapping Generations framework - with and without bequest saving-motive. We show how the different saving motives determine the relation between population growth and per-capita income growth, which proves to be ambiguous in general, and may also be non-monotonic. Hence, we conclude that the counterfactual weak-scale effect that is present in the second and third generations of R&D-based growth models of infinitely-living agents depends on their specific demographic structure, and thus is not inherent to R&D-based growth theory itself. |
| Keywords: | R&D-based Growth, Weak Scale Effect, Overlapping Generations |
| JEL: | O31 O40 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:abn:wpaper:auwp2016-05&r=fdg |
| By: | Bharat Diwakar; Gilad Sorek |
| Abstract: | We show that non-linear dynastic altruism toward future generations yields non-monotonic relation between population growth and economic prosperity, which is polynomial in general. The exact shape of this non-monotonic relation depends on the concavity of parental altruistic utility. Hence, this work contributes to the recent line of modified R&D-based growth models, aimed to align theory with empirical evidence on non-linear relation between population growth and economic prosperity. |
| Keywords: | Dynastic Altruism; Population Growth; Technological Progress |
| JEL: | O31 O40 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:abn:wpaper:auwp2016-03&r=fdg |