nep-fdg New Economics Papers
on Financial Development and Growth
Issue of 2017‒07‒02
three papers chosen by
Georg Man

  2. Structural Changes and Growth Regimes By Tommaso Ciarli; Andre Lorentz; Marco Valente; Mario Savona
  3. Volatility and Growth: A not so straightforward relationship By Dimitrios Bakas; Georgios Chortareas; Georgios Magkonis

  1. By: SERGI BASCO; John P. Tang
    Abstract: While credit supply growth is associated with exacerbating financial crises, its impact on general economic activity and long run development are unclear. To identify a causal impact, we use bond payments to samurai in nineteenth century Japan as a quasi-natural experiment and exploit variation between regions. Our proxy for credit supply, samurai population shares, is positively associated with per capita levels of firm establishment and capital investment and average firm capital. Initial samurai population share affects output per capita in the short and long run only in regions with early access to railways, mainly through the tertiary sector. Our interpretation is that increased credit supply may have a positive and persistent impact on output if a region has productivity-enhancing investment opportunities.
    Keywords: credit supply, finance-led growth, market access, railways
    JEL: E51 N15 O47
    Date: 2017–06
  2. By: Tommaso Ciarli (University of Sussex - Science and Technology Policy Research Unit (SPRU)); Andre Lorentz (Universite de Technologie de Belfort-Montbeliard); Marco Valente (University of L'Aquila); Mario Savona (University of Sussex - Science and Technology Policy Research Unit (SPRU))
    Abstract: We study the relation between income distribution and growth mediated by structural changes on the demand and supply side. Using results from a multi-sector growth model we compare two growth regimes which differ in three aspects: labour relations, competition, and consumption patterns. Regime one, similar to Fordism, is assumed to be relatively less unequal, more competitive, and with more homogeneous consumers than regime two, similar to post-Fordism. We analyse the parameters that define the two regimes to study the role of exogenous institutional features and endogenous structural features of the economy on output growth, income distribution, and their relation. We find that regime one exhibits significantly lower inequality, higher output and productivity, and lower unemployment than regime two. Both institutional and structural features explain these difference. Most prominent among the first group are wage differences, accompanied by capital income, and the distribution of bonuses to top managers. The concentration of production magnifies the effect of wage differences on income distribution and output growth, suggesting the relevance of the norms of competition. Among structural determinants, particularly relevant are firm organisation and the structure of demand. The way in which final demand distributes across sectors influences competition and overall market concentration. Particularly relevant is the demand of the least wealthy classes. We also show how institutional and structural determinants are tightly linked. Based on this link we conclude by discussing a number of policy implications emerging from our model.
    Keywords: Structural change; income distribution; competition; consumption behaviour; technological change
    JEL: O41 L16 C63 O14
    Date: 2017–06
  3. By: Dimitrios Bakas (Nottingham Business School, Nottingham Trent University, UK; The Rimini Centre for Economic Analysis); Georgios Chortareas (School of Management and Business, King's College London, UK; Department of Economics, University of Athens, Greece); Georgios Magkonis (School of Management, University of Bradford, UK)
    Abstract: This paper is motivated by the conflicting theories and empirical evidence regarding the relationship between business cycle volatility and economic growth. The average reported effect of volatility on growth is negative, but the empirical estimates vary substantially across studies. We identify the factors that explain the heterogeneity of the estimates by conducting a meta-analysis. Our evidence suggests that researchers' choices regarding the measure of volatility, the control set of the estimated equation, the estimation methods, and the data characteristics play a significant role in the total outcome. Finally, the literature is found to be free of publication bias.
    Keywords: Economic Growth, Volatility, Business Cycles, Meta-Analysis, Bayesian Model Averaging
    JEL: C83 E32 O40
    Date: 2017–06

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