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To purchase or authenticate to the full-text of this article, please visit this link: http://dx.doi.org/10.1111/j.1467-6435.2007.00376.x Byline: Jonas Dovern (1), Peter Nunnenkamp (1) Abstract: SUMMARY The paper applies an alternative approach to assess whether foreign aid promotes economic growth in developing countries, based on the concept of temporary growth accelerations suggested by Hausmann, Pritchett and Rodrik. In addition to aggregate aid, we differentiate between major aid categories, including grants, loans and so-called short-impact aid. It turns out that aid flows have a small but significantly positive effect on the conditional probability of growth accelerations. This result holds across different estimation methods. However, the significance of results crucially depends on the criteria applied to identify growth accelerations. Author Affiliation: (1)Kiel Institute for the World Economy, Duesternbrooker Weg 120, D-24105 Kiel, Germany

This paper investigates expert revisions of potential output (PO) estimates following recessions. Using data from the Organisation for Economic Co‐operation and Development (OECD), we show that downward revisions are substantial, permanent, and mostly driven by supply shocks. In contrast, PO estimates do not significantly react to demand shocks. Revisions are also partly caused by mismeasurement of PO before recessions. In particular, we show that the length of the preceding boom and pre‐recession values of the current account balance and credit volumes are correlated with post‐recession PO revisions. Our results call for improved methods for estimating PO and provide evidence against the existence of substantial hysteresis following demand shocks. [ABSTRACT FROM AUTHOR]

Summary: Established tests for proper calibration of multivariate density forecasts based on Rosenblatt probability integral transforms can be manipulated by changing the order of variables in the forecasting model. We derive order‐invariant tests. The new tests are applicable to densities of arbitrary dimensions and can deal with parameter estimation uncertainty and dynamic misspecification. Monte Carlo simulations show that they often have superior power relative to established approaches. We use the tests to evaluate generalized autoregressive conditional heteroskedasticity‐based multivariate density forecasts for a vector of stock market returns and macroeconomic forecasts from a Bayesian vector autoregression with time‐varying parameters. [ABSTRACT FROM AUTHOR]

The 2030 Agenda for Sustainable Development includes a set of 17 sustainable development goals ( SDG) with 169 specific targets. As such, it could be a step forward in achieving efficient governance and policies for global sustainable development. However, the current indicator framework with its broad set of individual indicators prevents straightforward assessment of synergies and trade-offs between the various indicators, targets, and goals, thus, heightening the significance of policy guidance in achieving sustainable development. With our detailed analysis of SDG 14 (Ocean) for European Union ( EU) coastal states, we demonstrate how the (complementary) inclusion of composite indicators that aggregate the individual indicators by applying a generalized mean can provide important additional information and facilitate the assessment of sustainable development in general and in the SDG context in particular. Embedded in the context of social choice theory, the generalized mean varies the specification of substitution elasticity and thus allows: (a) for a straightforward distinction between a concept of weak and strong sustainability and (b) for straightforward sensitivity analysis. We show that while in general the EU coastal states have a fairly balanced record at the SDG 14 level, certain countries like Slovenia and Portugal with a fairly balanced and a fairly unbalanced showing, respectively, rank very differently in terms of the two concepts of strong sustainability. [ABSTRACT FROM AUTHOR]

Highlights: [•] We apply the capital stock approach to measure wealth in German cities. The approach reflects the environmental, energy, social, human, and economic performance of the cities. [•] We compare our ranking with the average housing rates in German cities. [•] There is no inherent trade-off between economic and environmental capital stocks. [•] Clear regional differences exist between West and East Germany and between North and South Germany. [•] The comprehensive wealth index is strongly correlated with housing rents, which reflect individual willingness to pay for living in a certain city. [Copyright &y& Elsevier]

Purpose – The paper is to understand how the financial system is influenced by macroeconomic shocks and how the financial stance, in turn, feeds back into the macroeconomic environment is key for policy makers. The most recent financial crisis has demonstrated the need for a deeper understanding of these interdependencies. The purpose of this paper is to analyze what macroeconomic shocks affect the soundness of the German banking system. Design/methodology/approach – The paper draws on a micro-macro stress-testing framework for the German banking system in which macroeconomic and bank-specific data are used to identify the effects of various shocks in a structural vector autoregressive model, which includes main macroeconomic variables and an indicator of stress in the banking system. To this end, the sign-restriction approach is applied. Findings – First, it is found that there is a close link between macroeconomic developments and the stance of the banking sector. Second, monetary policy shocks are the most influential shocks for distress in the banking sector. Third, fiscal policy shocks and real estate price shocks have a significant impact on the distress indicator, while evidence is mixed for the exchange rate. Fourth, for the identification of most shocks it is essential to work in the integrated model that combines the micro- and the macro-sphere. Originality/value – The paper analyzes various shock scenarios in an integrated micro-macro framework that takes the mutual relationship between the financial stance and the macroeconomic environment into account. [ABSTRACT FROM AUTHOR]

We investigate the relevance of Carroll's sticky information model of inflation expectations for four major European economies (France, Germany, Italy and the United Kingdom). In contrast to the most rational expectation models, households in the sticky information environment update their expectations occasionally rather than instantaneously due to the costs of acquiring and processing information. Using survey data on household and expert inflation expectations we argue that the model adequately captures the dynamics of household inflation expectations. We estimate two alternative parametrizations of the sticky information model which differ in the stationarity assumptions about the underlying series. Our baseline stationary estimation suggests that the average frequency of information updating for European households is roughly once in 18 months. The vector error-correction model implies households update information about once a year. [ABSTRACT FROM AUTHOR]