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Human capital is supposed to be an important factor for innovation and economic development. However, the long-run impact of human capital on current innovation and economic development is still a black box, in particular at the regional level. Therefore, this paper makes the link between the past and the present. Using a large new dataset on regional human capital and other factors in the 19th and 20th century, we find that past regional human capital is a key factor explaining current regional disparities in innovation and economic development. [ABSTRACT FROM AUTHOR]

This paper quantifies the contribution of exports to economic growth in Central and East European countries (CEECs) during transition. Two theoretical models are examined: the first is based on an aggregate production function which includes exports as an additional 'input'; while the second is based on a two-sector (exports and non-exports) model where exports provide positive externalities in non-export production. Each model is estimated with both fixed and random effects using panel data. Results show that the random effects model is preferred and that exports have a significant impact on economic growth. [ABSTRACT FROM AUTHOR]

The effect of European integration on long-term growth of the EU-15 member states is studied by means of panel data methods. The length of EU membership is found to have a significant positive effect on economic growth, which is relatively higher for poorer countries. While previous empirical studies tend not to find positive growth effects of regional integration, the present study suggests an asymmetric, convergence-stimulating impact of EU membership on long-term growth. [ABSTRACT FROM AUTHOR]

The empirical relationship among fiscal contractions, permanent improvement in public finances and short-run economic performance is examined using a sample of 14 European countries over the last three decades. The actual experience of policy-making has taught that only the adjustments that relied heavily on primary expenditure cuts and were implemented over a relatively long time span were able to achieve a long lasting reduction of public liabilities. Indeed, during these consolidations, tax increase amounted to a small fraction of the total adjustment. Furthermore, though they unfolded over a longer period with respect to the unsuccessful ones, the overall budget cut was not larger. As regards the macroeconomic impact, successful episodes tended to be associated with improved economic performance. During the adjustment period and in the following two years, the economies experienced strong consumption and investment growth, reduced unemployment, better international competitiveness and falling interest rates. This empirical evidence is here interpreted via the theory known as expectation view of fiscal policy. [ABSTRACT FROM AUTHOR]

The banking sector and the stock market in Europe have been adversely impacted by a series of global financial crises over the last two decades. Major financial reforms were implemented to enhance the stability and competition within the banking sector. Measures were also implemented to create a vibrant stock market in Europe to stimulate economic growth in Europe. This study examines the interactions between stock market development, banking competition, and banking stability in European countries from 1996 to 2016. The purpose of the study is to understand the inter-linkages between these variables to ascertain the spillover impact of policy reforms in the banking sector on the stock market and vice-versa. Using a vector error-correction model, the study finds long-run and short-run inter-linkages between banking competition, banking stability, and stock market development in European countries. The study's most robust result is that banking competition and banking stability stimulate stock market development in the long run. There is also some evidence that healthy competition in the banking sector and stock market development instils greater stability in the banking sector. The results suggest that policy measures put in place to create a vibrant stock market must include elevating banking competition and banking stability, with policymakers being cognizant that causality may be bidirectional. [ABSTRACT FROM AUTHOR]

The unprecedented expansion of sovereign balance sheets since the beginning of the global crisis has given a new meaning to the termsovereign risk. Developments in Europe since early 2010 revealed new challenges for the functioning of private banks in an environment of heightened sovereign risk and may have contributed to deleveraging. The article uses an innovative way of measuring the perception of sovereign risk and its impact. Using an extension of a common market discipline framework, it shows that exposure to sovereign risk may have limited the ability of banks in Europe to collect deposits. Potential identification issues between deposits and bank efficiency are controlled by using data envelopment analysis (DEA). The results are robust to inclusion of conventional measures of bank performance and the sector-wide holdings of foreign sovereign debt. [ABSTRACT FROM PUBLISHER]

We develop a general equilibrium endogenous growth model of a monetary union between two countries that differ in economic dimension and level of development. By solving transitional dynamics towards the steady state, we examine the impact of fiscal shocks that may lead to excessive deficits. Results suggest that the individual and the whole impact of such deficits depend on which country they occur. In such context, we argue that the small and less developed country should be allowed to temporarily run an excessive deficit, in order to improve economic convergence within the union. [ABSTRACT FROM AUTHOR]

This article discusses the ideas creation model that was initially formulated by Romer and later generalized and empirically applied by Jones. In particular, we generalize Jones' model to include catching up to a technological frontier, which improves the empirical results for European countries, and ensures convergence to the technological frontier in the steady state [ABSTRACT FROM AUTHOR]

It has been suggested that members in the EC or the EFTA experienced significantly higher growth rates compared to nonmember countries. This suggests that the European integration either captures omitted variables or that it gives rise to increased growth rates through enhanced investment and/or increased knowledge transfer. The present study attempts to resolve this issue. The analysis identifies a two-link chain between European integration (EI) and growth through investment. In addition, on examining whether there are any knowledge spillovers resulting from integration it is found that integrated countries do in fact experience more knowledge spillovers compared to nonintegrated countries. Employing both the neoclassical and endogenous growth approaches, it is found that trade variables are especially important for growth in Total Factor Productivity (TFP). The study is undertaken for a panel sample consisting of 20 OECD countries and covering three time periods between 1976 and 1990. Special emphasis is placed on specification and sensitivity analysis. [ABSTRACT FROM AUTHOR]