nep-fdg New Economics Papers
on Financial Development and Growth
Issue of 2016‒06‒25
seven papers chosen by
Iulia Igescu
Ministry of Presidential Affairs

  1. Macroeconomic Regimes, Technological Shocks and Employment Dynamics By Tommaso Ferraresi; Andrea Roventini; Willi Semmler
  2. 'Growth and Welfare Effects of Macroprudential Regulation' By Pierre-Richard Agénor
  3. Macroeconomic Imbalances and Business Cycle Synchronization. Why Common Economic Governance is Imperative for the Eurozone By Elizaveta Lukmanova; Gabriele Tondl
  4. Join to Prosper? By Andersen, Thomas Barnebeck; Barslund, Mikkel; Vanhuysse, Pieter
  5. Institutional differences across resource-based economies By Utku Teksoz; Katerina Kalcheva
  6. Aging, Pensions, and Growth By Tetsuo Ono
  7. Social capital, institutions and policymaking By M. Savioli; R. Patuelli

  1. By: Tommaso Ferraresi (Università degli Studi di Firenze [Firenze]); Andrea Roventini (Laboratory of Economics and Management (Pisa) (LEM)); Willi Semmler (New School for Social Research)
    Abstract: In this work we investigate the interrelations among technology, output and employment in the different states of the U.S. economy (recessions vs. expansions). More precisely, we estimate different threshold vector autoregression (TVAR) models with TFP, hours, and GDP, employing the latter as threshold variable, and we assess the ensuing generalized impulse responses of GDP and hours as to TFP shocks. We find that positive productivity shocks, while spurring GDP growth, display a negative effect on hours worked at least on impact, independently of the state of the economy. In the 1957-2011 period, the effects of productivity shocks on employment are abundantly negative in downturns, but they are not significantly different from zero in good times. However, the impact of TFP shocks in different business cycle regimes depends on the chosen sample: after the mid eighties (1984-2011), productivity shocks increase hours during recessions. Finally, we express and test some conjectures that might have caused the changes in the responses in different time periods.
    Keywords: Technology shocks; Employment; Threshold vector autoregression; Generalized impulse response functions
    JEL: E32 O33 C32 E63
    Date: 2016–06
  2. By: Pierre-Richard Agénor
    Abstract: This paper studies the growth and welfare effects of macroprudential regulation in an overlapping generations model of endogenous growth with banking and agency costs. Indivisible investment projects combine with informational imperfections to create a double moral hazard problem à la Holmström-Tirole and a role for bank monitoring. When the optimal monitoring intensity is endogenously determined, an increase in the reserve requirement rate (motivated by systemic risk considerations) has conflicting effects on investment and growth. The trade-off between ensuring financial stability and promoting economic growth can be internalized by choosing the reserve requirement rate that maximizes growth and welfare. However, the risk of disintermediation means that financial supervision may also need to be strengthened, and the perimeter of regulation broadened, if the optimal required reserve ratio is too high.
    Date: 2016
  3. By: Elizaveta Lukmanova (Department of Economics, Vienna University of Economics and Business); Gabriele Tondl (Department of Economics, Vienna University of Economics and Business)
    Abstract: This paper investigates a new category of influential factors on business cycle synchronization (BCS), so far hardly regarded in the BCS literature: It provides an empirical assessment of the impact of macroeconomic imbalances, as monitored by the European Commission by the scoreboard indicators since 2011, on BCS in the Euozone. We use a quarterly data set covering the period 2002-2012 and estimate the direct and indirect effects of macroeconomic imbalances in the pre- and post-crisis period in a simultaneous equations model. Business cycle correlation between EA members is measured by the recently proposed dynamic conditional correlation of Engle 2002 which can better identify synchronous and asynchronous behaviour of BC than the commonly used measures. We find that appearing differences between EA members in the current account, in government deficit and public debt, in private debt and unit labor cost developments have reduced BCS in the EA, even more in the post-crisis period than before. Moreover, these explanatory factors of BCS, generally reinforce each other and are also influenced by other critical macro imbalances. Since BCS is essential in a monetary union, this paper provides clear support that a stronger, common economic governance would be important for the functioning and survival of the Eurozone.
    Keywords: Business cycle synchronization, Macroeconomic imbalances, Monetary union, Euro Area, Simultaneous equations model, Panel data
    JEL: E32 E60 E61 F45 C33
    Date: 2016–06
  4. By: Andersen, Thomas Barnebeck (Department of Business and Economics); Barslund, Mikkel (Centre for European Policy Studies); Vanhuysse, Pieter (Department of Political Science and Public Management)
    Abstract: We ask whether EU membership has been associated with increased domestic economic growth. Using different causal identification strategies, different time periods, different country samples, and different datasets, we are unable to demonstrate the presence of a membership growth premium. This may reflect that GDP data are too noisy and/or causal identification too complicated, in which case we should remain agnostic about the EU’s growth impact. Alternatively, it may reflect that EU membership simply has no effect on prosperity.
    Keywords: EU membership; economic growth; single market
    JEL: F43 F45 O40 P20
    Date: 2016–06–08
  5. By: Utku Teksoz; Katerina Kalcheva
    Abstract: To predict economic success and failure, academics and policymakers alike are interested in the differences in institutional structures across natural resource-based economies. This paper uses a political economy framework to examine the effect of institutional variables on per capita Gross-Domestic-Product in resource-rich economies. After controlling for institutions, natural resource rents cease to have a negative impact on long-term growth. Institutions in resource-based economies foster economic growth when voice and accountability are in place; broad-based rule of law is enforced with secure property rights, and control of corruption; and when government effectiveness, regulatory quality, and political stability are positively perceived.
    Keywords: institutions, growth, political power, rents, property rights, resource-based economies
    Date: 2016
  6. By: Tetsuo Ono (Graduate School of Economics, Osaka University)
    Abstract: This study presents an endogenous growth, overlapping-generations model fea- turing probabilistic voting over public pensions. The analysis shows that (i) the pension-GDP ratio increases as life expectancy increases in the presence of an an- nuity market, while it may show a hump-shaped pattern in its absence; (ii) the growth rate is higher in the presence of the annuity market than its absence, but the presence implies an intergenerational trade-off in terms of utility.
    Keywords: Economic Growth; Population Aging; Probabilistic Voting; Public Pension; Annuity Market
    JEL: D70 E24 H55
    Date: 2014–04
  7. By: M. Savioli; R. Patuelli
    Abstract: Economic processes, consisting of interactions between human beings, exploit the social capital of persons endowed with specific cultures, identities and education. By taking into account this complexity, we focus on the role of institutions and policymaking in the building of social capital and its relevance to the fulfilment of their objectives. Social capital, however, is elusive and has several dimensions with which to interpret its multifaceted functions in economics and society. We cannot forget that social capital is sometimes even undesirable for society, for instance when unethically used. Even so, it is widely accepted that social capital has stable and positive effects.
    JEL: Z13 B52 D78
    Date: 2016–06

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