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In this article, the authors choose to test for sustainability of fiscal policy expressed as the stationarity of the debt to gross domestic product (GDP) ratio. Persistent deficits and increases in public debt in most of OECD countries in the last two decades have motivated a large number of empirical studies devoted to sustainability of fiscal policies. This paper departs from previous empirical studies both in the definition of sustainability and in the econometric approach. The authors retain a notion of effective sustainability, which imposes the stationarity of public debt expressed in terms of GDP as a condition for sustainability. This can be viewed as a practical solvency criterion to be opposed to the satisfaction of the intertemporal budget constraint. Concerning the econometric approach, rather than discarding unit root and cointegration tests, the authors reformulate them in order to increase power. The null hypothesis corresponds to a joint restriction on the two equations of the system. This leads to test jointly for a unit root in the process of the variables of interest and for the nullity of the feedback mechanism in an auxiliary equation.

ABSTRACT We reveal evidence that the US aggregate bank dividends exercise a causal impact on the US real GDP growth during the period from the introduction of the Prompt Corrective Action framework in 1992 until the outburst of the subprime mortgage market crisis in 2007. Over this period, the positive signalling effects of bank dividends outperform the negative effect of dividends on default risk. During the pre-Prompt Corrective Action and the recent post-2007 periods, bank dividends do not affect GDP growth. This regime-dependent relation is due to an asymmetric role of bank default risk. These findings are of interest to bank regulators in reassessing the role of bank dividends within Basel III and carry important policy implications as bank dividends constitute an important tool available to policy makers for strengthening real activity. Copyright © 2014 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

Stabilization policies frequently aim to boost spending as a means to increase gross domestic product. Spending does not necessarily translate into production, however, especially when inventories are involved. We look at the 'cash-for-clunkers' program that helped finance the purchase of nearly 700,000 vehicles in 2009. An analysis of auto sales and production movements reveals that the program did prompt a large spike in sales. But the program had only a modest and fleeting impact on production, as inventories buffered the movements in sales. These findings suggest caution in judging the efficacy of such policies by their impact on spending alone. [ABSTRACT FROM AUTHOR]

For many citizens and policymakers, the empirical relationship between economic growth and biodiversity conservation has not been sufficiently established for purposes of identifying the types of economic policies amenable to biodiversity conservation. Some think economic growth conflicts with biodiversity conservation; others think economic growth conduces biodiversity conservation. With panel data from 1997-2011, encompassing US continental states, we developed a series of statistical models to investigate the relationships among species endangerment, human population, and economic growth as indicated by GDP and per capita GDP. Species endangerment is highly correlated with population and GDP, and per capita GDP is a significant regressor of species endangerment. Across US continental states, competitive exclusion of non-human species occurs via human economic growth and population growth. [ABSTRACT FROM AUTHOR]