nep-fdg New Economics Papers
on Financial Development and Growth
Issue of 2016‒12‒04
four papers chosen by
Iulia Igescu
Ministry of Presidential Affairs

  1. Government Spending Multipliers under the Zero Lower Bound: Evidence from Japan By Miyamoto, Wataru; Nguyen, Thuy Lan; Sergeyev, Dmitriy
  2. The Impact of Oil Prices on Macroeconomic Fundamentals, Monetary Policy and Stock Market for eight Middle East and North African Countries By Simohammed, Kamel; Benhabib, Abderrezzak; Maliki, Samir
  3. Effects of oil price and global demand shocks on small island developing states By Alrick Campbell
  4. The Global Diffusion of Ideas By Ezra Oberfield; Francisco Buera

  1. By: Miyamoto, Wataru; Nguyen, Thuy Lan; Sergeyev, Dmitriy
    Abstract: Using a rich data set on government spending forecasts in Japan, we provide new evidence on the effects of unexpected changes in government spending when the nominal interest rate is near the zero lower bound (ZLB). The on-impact output multiplier is 1.5 in the ZLB period, and 0.6 outside of it. We argue that these results are not driven by the amount of slack in the economy. A simple New Keynesian model can reproduce some features of our empirical findings if the ZLB period is caused by a deflationary trap and government spending is not too persistent.
    Keywords: fiscal stimulus; government spending; multiplier; zero lower bound
    JEL: E32 E5 E62
    Date: 2016–11
  2. By: Simohammed, Kamel; Benhabib, Abderrezzak; Maliki, Samir
    Abstract: The objective of this study is to investigate the impact of oil prices on macroeconomic fundamentals as well as monetary policy and stock market for eight oil-exporting and non-oil exports countries in the Middle East and North African region,namely Algeria,Egypt,Iran,Kuwait,Morocco, Saudi Arabia,Tunisia and Turkey. Using quarterly data for the period 1994Q4-2015Q2,with a Panel-ARDL, we may conclude that there are short run dynamic cross section relationships between,first,oil prices and macroeconomic variables such as growth rate and consumer price index, second, oil prices and money market rate and, third, market capitalization and oil prices. In the long run, dependent variables such as consumer price index and market stock exhibit a cointegration relationship with oil prices. However, no cointegration relationships could be established between oil price variations, monetary policy and growth rate. In this context, we apply a multivariate VAR model to examine responses of all variables to oil price shocks. Results show a relatively high elastic response of economic growth in oil-exporting countries except for Kuwait and, conversely, in oil-importing economics, GDP response to oil prices appear reasonably stable, close to zero. Similarly, the same results can be captured for each oil-importing and exporting country as far as the negative sign exhibited by market response to oil price during the first period caused by financial crisis contagion. The next macroeconomic variable, CPI, shows a positive response to oil.In addition, oil prices appear to have a negligible response on money market rates in the Middle East and North Africa except for Turkey and Egypt.
    Keywords: Oil shocks; Economic growth; Economy; Monetary policy; Stock market; Panel ARDL
    JEL: E00 E52
    Date: 2015–09
  3. By: Alrick Campbell
    Abstract: I employ a global VAR framework for 25 SIDS using annual data over the period 1980 to 2015. A key innovation associated with this research is the use of remittance weights to capture the close financial linkages between SIDS and advanced economies such as the US. I find that oil price shocks do not have a statistically significant negative effect on economic growth in most individual countries and different regions. Economies that are oil-intensive perform better than their low-intensity counterparts, but economic growth is likely to be greater if economies transition towards a more diversified energy supply mix. In terms of a negative demand shock to US GDP, output in SIDS decline more for those regions that have close economic ties with the US and are within its geographical proximity. From a policy standpoint, these results highlight the importance of gearing policy towards energy diversification and designing outward-oriented economic policies to guard against future oil price shocks.
    Keywords: Global VAR (GVAR), Impulse Responses, Oil prices, Small Island Developing States
    Date: 2016–11
  4. By: Ezra Oberfield (Princeton University); Francisco Buera (Federal Reserve Bank of Chicago)
    Abstract: We provide a tractable theory of innovation and technology diffusion to explore the role of international trade in the process of development. We model innovation and diffusion as a process involving the combination of new ideas with insights from other industries or countries. We provide conditions under which each country’s equilibrium frontier of knowledge converges to a Frechet distribution, and derive a system of differ- ential equations describing the evolution of the scale parameters of these distributions, i.e., countries’ stocks of knowledge. In particular, the growth of a country’s stock of knowledge depends only on its trade shares and the stocks of knowledge of its trading partners. We use the framework to quantify the contribution of bilateral trade costs to cross-sectional TFP differences, long-run changes in TFP, and individual post-war growth miracles.
    Date: 2016

This nep-fdg issue is ©2016 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.