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A reduction in capital tax rates generates substantial dynamic responses within the framework of the standard neoclassical growth model. The short-run revenue loss after a tax cut is partly — or, depending on parameter values, even completely — offset by growth in the long-run, due to the resulting incentives to further accumulate capital. We study how the dynamic response of government revenue to a tax cut changes if we allow a Ramsey economy to engage in international trade: the open economy's ability to reallocate resources between labor-intensive and capital-intensive industries reduces the negative effect of factor accumulation on factor returns, thus encouraging the economy to accumulate more than it would do under autarky. We explore the quantitative implications of this intuition for the US in terms of two issues recently treated in the literature: dynamic scoring and the Laffer curve. Our results demonstrate that international trade enhances the response of government revenue to tax cuts by a relevant amount. In our benchmark calibration, a reduction in the capital-income tax rate has virtually no effect on government revenues in steady state.

This paper investigates empirically the Balassa-Samuelson hypothesis (BSH) using annual data over 1970-2008 from 33 countries grouped into developed and developing countries. The innovative feature of our study is that we introduce a new approach for classifying traded and nontraded industries. Our proposed approach allows for country specific heterogeneity over each industry, and changes in classifications of industries across periods. We apply panel cointegration tests with group-mean panel dynamic ordinary least squares (DOLS) estimators suggested in Pedroni (2000, 2001) to examine the BSH. We also use persistence profiles in order to investigate the speed of adjustment to equilibrium in response to shocks on cointegrating relations, and employ them as a complementary tool for checking whether the long run relationships obtained from the tests are actually valid. Our main finding is that there is not enough evidence in favour of the BSH nor in favour of purchasing power parity (PPP) in either developed or developing countries. In developed countries, there is strong evidence that higher growth countries will experience real exchange rate appreciation. However, this relation does not provide evidence in favour of the BSH. We actually find opposing evidence that as productivity growth in traded goods relative to that in nontraded goods increases, the real exchange rated tends to depreciate. For developing countries, our results support the BSH. However, the speed of reversion to equilibrium is very slow. We also find moderate evidence that comparatively rapidly growing developing countries will experience real exchange rate depreciation.

Do openness to trade and higher levels of human capital growth promote faster growth? To answer that question we use a panel of countries to investigate the role of human capital and two measures of openness in determining both the level of income and its growth rate. We argue that focusing on the levels of income by estimating a production function will give misleading estimates if there are unobserved differences in the underlying growth of technical efficiency across countries that are correlated with the explanatory variables. Using a growth rate equation, where we allow for country fixed effects and for possible endogeneity of explanatory variables, we show that both measures of openness, one the Sachs-Warner measure which reflects policy, and one from the PENN World Tables, the share of trade in GDP, give similar results. We argue that openness has a highly significant and large effect on the underlying rate of growth of productivity, while human capital does not.

This paper intends to harmonize two different approaches employed in the analysis of business cycles and, in doing so, it retrieves the stylized facts of the business cycle in Europe. We start with the ‘classical’ approach proposed in Burns and Mitchell (1946) of dating and analyzing the business cycle. The stylized facts retrieved are commented and compared to those obtained by Harding and Pagan (2002) for the U.S.. Two conclusions can be extracted from the results: a) though the turning points obtained for individual countries seem to cluster and would suggest the idea of a common cycle, there are relevant differences in the stylized facts characterizing the business cycle in the individual European economies under analysis; b) moreover, we find relevant differences in the business cycle stylized facts of the European countries and the U.S., mostly in terms of the duration, the amplitude of the cycle and the shape of the recovery. We then adopt the ‘modern’ alternative: the Markov-switching vector autoregression (MS-VAR). The model’s regime probabilities provide an optimal statistical inference of the turning point of the European business cycle. For assessing the capacity of the parametric approach to generate the stylized facts of the classical cycle in Europe, the stylized facts of the original data are compared to those of simulated data. Contrary to the results reported by Harding and Pagan (2002) , we show that the MS-VAR model is a good candidate to be used as an statistical instrument to improve the understanding of the business cycle.

In this paper, we study the effects of industrial policies on international convergence using a multi-country agent-based model which builds upon Dosi et al. (2019b). The model features a group of microfounded economies, with evolving industries, populated by heterogeneous firms that compete in international markets. In each country, technological change is driven by firms’ activities of search and innovation, while aggregate demand formation and distribution follows Keynesian dynamics. Interactions among countries take place via trade flows and international technological imitation. We employ the model to assess the different strategies that laggard countries can adopt to catch up with leaders: market-friendly policies;industrial policies targeting the development of firms’ capabilities and R&D investments, as well as trade restrictions for infant industry protection; protectionist policies focusing on tariffs only. We find that markets cannot do the magic: in absence of government interventions, laggards will continue to fall behind. On the contrary, industrial policies can successfully drive international convergence among leaders and laggards, while protectionism alone is not necessary to support catching up and countries get stuck in a sort of middle-income trap. Finally, in a global trade war, where developed economies impose retaliatory tariffs, both laggards and leaders are worse off and world productivity growth slows down.

This paper focuses on the role of capabilities in economic development. In recent years, the quality and availability of data on different aspects of development have improved, and this provides new opportunities for investigating the reasons behind the large differences in economic development. Using factor analysis on data for 25 indicators and 115 countries between 1992 and 2004, we identify four different types of “capabilities”: the development of the “innovation system”, the quality of “governance”, the character of the “political system” and the degree of “openness” of the economy. Innovation systems and governance are shown to be of particular importance for economic development.

The economic history of Argentina presents one of the most dramatic examples of divergence in the modern era. What happened and why? This paper reviews the wide range of competing explanations in the literature and argues that, setting aside deeper social and political determinants, the various economic mechanisms in play defy the idea of a monocausal explanation.

In this paper, we present a standard quality ladders endogenous growth model with one significant new assumption, that it takes time for firms to learn how to export. We show that this model without Melitz-type assumptions can account for all the evidence that the Melitz (2003) model was designed to explain plus much evidence that the Melitz model can not account for. In particular, consistent with the empirical evidence, we find that trade liberalization leads to a higher exit rate of firms, that exporters charge higher prices for their products as well as higher markups, and that many large firms do not export. We also find that trade liberalization promotes economic growth and that it has the opposite effect of retarding economic growth in a closely comparable growth model with Melitz-type assumptions.

This paper studies the impact of capital market distortions on misallocation, competition and aggregate productivity. Focusing on distortions in the access to international borrowing across firms, I show that a reduction in these distortions leads to an increase in aggregate productivity through two different channels. First, previously credit-constrained firms respond to better financing terms by increasing their investments in technology, a reallocation effect. Second, non-constrained firms also expand their investments in technology due to increased competition, a pro-competitive effect. I provide evidence for these two channels using firm-level census data around the deregulation of international financial flows in Hungary.

Why doesn't capital flow into fast-growing countries? In this paper, we provide a quantitative framework incorporating heterogeneous producers and underdeveloped domestic financial markets to study the joint dynamics of total factor productivity (TFP) and capital flows. When an unexpected once-and-for-all reform eliminates non-financial distortions and liberalizes capital flows, the TFP of our model economy rises gradually and capital flows out of it. The rise in TFP reflects efficient reallocation of capital and talent, a process drawn out by frictions in domestic financial markets. The concurrent capital outflows are driven by the positive response of domestic saving to higher returns, and by the sluggish response of domestic investment to the higher TFP--the latter being another ramification of domestic financial frictions. We use our model to analyze the welfare consequences of opening up capital accounts. We find that the marginal welfare effect of capital account liberalization is negative for workers and positive for entrepreneurs and wealthy individuals.

Ce working paper a fait l'objet d'une publication dans : Journal of Mathematical Economics, 68:103-114, 2017; A series of recent studies in economic growth theory have considered a class of models of international borrowing where, in the absence of a perfect investment commitment , the borrowing constraint depends on the historical performances of the country. Thus, a better level of past economic activity gives a higher reputation, thereby increasing the possibility of accessing the international credit market. This note considers this problem in a stochastic setting based on the volatility of the internal net capital. We study how the optimal consumption level and the maximal expected welfare depend on the combined influence of the trajectory of past economic variables and the volatile environment. In particular, we show how the strength of the history effect and the relative weight of the historical performance depend on the degree of risk.

Our paper investigates the impact of rising inequality in a two-country macroeconomic model with an agent-based household sector characterized by peer effects in consumption. In particular, the model highlights the role of inequality in determining diverging balance of payments dynamics within a currency union. Inequality may drive the two countries into different growth patterns: where peer effects in consumption interact with higher credit availability, rising income inequality leads to the emergence of a debt-led growth. Where social norms determine weaker emulation and credit availability is lower, an export-led regime arises. Eventually, a crisis emerges endogenously due to the sudden-stop of capital flows from the net lending country, triggered by the excessive risk associated with the dramatic amount of private debt accumulated by households in the borrowing country. Monte Carlo simulations for a wide range of calibrations confirm the robustness of our results.

Migrants' remittances are an essential source of income in many developing countries. In this article, we build a post-Keynesian stock–flow consistent model adapted to Moldova, one of the top recipients of remittances. In addition to increasing household consumption, migrants' transfers have strong effects on economic growth in Moldova. However, remittances are very sensitive to the economic conditions in migrants' destination countries, especially since the 2008 global financial crisis. After including remittances in consumption behavior and lenders' risk, we run simulations to show how shocks in migrants' destination countries (that is, Europe and Russia) impact the Moldovan economy through fluctuations in remittances. First, the increasing instability of remittances explains a significant portion of the economic volatility experienced by Moldova. Second, the high level of imports implies a weak multiplier effect of remittances, leading to an unsustainable pattern of growth.

Nigeria is an oil dependent economy, over 90 per cent of its exports receipts in recent years flow from petroleum but this sector is currently affected by local challenges, which include insecurity, oil thefts, sabotage and an unfriendly operational environment. These challenges are generating loses for the major producers and encouraging capital flight but amidst this situation, the economy is said to be having an impressive growth. This paradox informed this research. The study was designed to see the nexus between exports and economic growth in Nigeria. Using data from the Central Bank of Nigeria spanning 1980-2011, the study with the aid of OLS regression analysis found a strong relationship between Exports and economic growth in Nigeria. Nigeria will be better served if it diversifies its export base. It must also create structures that lead to better redistribution of export incomes within the local economy.

During the past three decades, many countries have lifted restrictions on cross-border financial transactions. We present a simple model that can account for the observed effects of financial globalization. The model emphasizes the role of imperfect enforcement of domestic debts and the interactions between domestic and foreign debts. Financial globalization can lead to a variety of outcomes: (i) domestic capital flight and ambiguous effects on net capital flows, investment, and growth; (ii) capital inflows and higher investment and growth; or (iii) volatile capital flows and unstable domestic financial markets. The model shows how the effects of financial globalization depend on the level of development, productivity, domestic savings, and the quality of institutions.

Real housing prices in Sweden have roughly doubled the last 15 years. The rise in housing prices has coincided with a rise in household debt, sparking debate about both the presence of financial imbalances in the Swedish economy and the macroeconomic effects that a correction of these imbalances would have. In this paper, we conduct a quantitative assessment of the macroeconomic effects of a considerable decline in housing prices using a Bayesian VAR model. Results show that a 20% drop in housing prices would lead to a recession-like impact on household consumption and unemployment. The impact would be even greater if falling housing prices coincided with a global economic downturn. This information should be useful to policymakers. If a fall in housing prices were to materialize, more expansionary stabilization policies would be motivated in order to dampen the effects on the real economy.

The significant change in South Africa’s trade patterns over the past two decades should affect the impact of shocks in the rest of the world on the country, since South Africa is a small open economy. We investigate the effect with the use of a global vector autoregression (GVAR) model from 1979Q2 to 2009Q4. To account for changes in international trade linkages, we assemble the country-specific foreign variables with time-varying trade-weighted data. We show that the long-term impact of a shock to Chinese GDP on South African GDP is 330% stronger in 2009 than in 1995, due to the substantial increase in South Africa’s trade with China since the mid-1990s. By 2005, a United States (US) GDP shock only has a quarter of the long-term impact on South African GDP compared to 1995, as trade with the US declined noticeably. By 2009, the impact of a US GDP shock on South African GDP is insignificant. The results indicate why the recent global crisis did not affect South Africa as much as it affected developed economies. It also stresses the increased risk, to the South African economy and economies in the rest of the world, should China experience slower GDP growth.

This paper revisits the Dutch disease by analyzing the general equilibrium effects of a resource shock on a dependent economy, both in a static and dynamic setting. The novel aspect of this study is to incorporate in one coherent framework two distinct features of the Dutch disease literature that have previously been analyzed in isolation: capital accumulation with absorption constraint, and productivity growth induced by learning-by-doing. The result of long run exchange rate appreciation is maintained in line with part of the Dutch Disease literature. In addition, a permanent change in the employment shares occurs after the resource windfall, in favor of the non-traded sector and away from the traded sector growth engine of the economy. In other words, in the long run both of the classic symptoms of the Dutch Disease remain in place. © Springer Verlag. The final publication is available at https://link.springer.com/article/10.1007%2Fs10258-017-0137-x. This is the authors' submitted manuscript to the article.

In this paper we present a multi-country, multi-industry agent-based model investigating the different growth patterns of interdependent economies. Each country features a Schumpeterian engine of endogenous technical change which interacts with Keyneasian/Kaldorian demand generation mechanisms. National growth trajectories are driven by firms’ accumulation of technological knowledge, which in turn also leads to emergent specialization patterns in different industries. Interactions among economies occur via trade flows, stemming from the competition of firms in international markets. Simulation results show the emergence of persistent income divergence among countries leading to polarization and club formation. Moreover, each country experiences a structural transformation of its productive structure during the development process. Such dynamics results from firm-level virtuous (or vicious) cycles between knowledge accumulation, trade performances, and growth dynamics. The model accounts for a rich ensemble of empirical regularities at macro, meso and micro levels of aggregation.

Given the geographic concentration of oil production in Canada, oil price shocks are primary drivers of regional variation in income. It is widely believed that global oil price fluctuations only matter for the economy of oil-rich regions in Canada but can effectively be ignored in other regions. Based on detailed Canadian city-level and province-level data, our analysis shows that this view is mistaken. Unexpected increases in oil prices stimulate the Canadian economy in general and raise housing demand and real house prices in all regions across Canada. We develop a theoretical model of how real oil price shocks spread across regions. The model differentiates between oil-producing and non-oil-producing regions and incorporates multiple sectors, trade between provinces, government redistribution and consumer spending on fuel. The model establishes that oil price shocks spread to housing markets in non-oil-producing regions as the government effectively redistributes oil revenue and as the volume of interprovincial trade increases. Our finding that oil price shocks affect housing demand not only in oil-rich but also in oil-poor regions will ease the concern that a common interest rate policy may not equally suit all regions. It also suggests that regulators of mortgage markets in oil-poor regions must consider the consequences of fluctuating oil prices on their regions. Finally, the positive effect we find of oil price shocks on household debt and bank lending has implications for monitoring the risks in credit markets., Étant donné la concentration géographique de la production pétrolière au Canada, les chocs des prix du pétrole comptent parmi les principales causes de disparités de revenu entre les régions. L’idée est répandue que les fluctuations des prix mondiaux du pétrole ne perturbent que les régions du Canada riches en pétrole et que les autres peuvent, de fait, ne pas s’en soucier. À partir de données canadiennes détaillées par ville et par province, notre analyse montre qu’il s’agit d’une perception erronée. Des hausses inattendues des prix du pétrole stimulent l’ensemble de l’économie canadienne et font augmenter la demande de logements et les prix réels des logements dans toutes les régions du pays. Nous avons élaboré un modèle théorique de la propagation des chocs des prix réels du pétrole d’une région à l’autre. Ce modèle, qui fait la distinction entre les régions productrices et non productrices, tient compte de nombreux secteurs, des échanges commerciaux entre les provinces, de la redistribution des revenus par l’État et des dépenses de consommation en carburant. Il permet d’établir que les chocs de prix du pétrole se propagent aux marchés du logement des régions non productrices puisque l’État redistribue, de fait, les revenus du pétrole et que les échanges commerciaux interprovinciaux augmentent. Notre principale conclusion — à savoir que les chocs pétroliers se répercutent sur la demande de logements non seulement dans les régions riches en pétrole, mais aussi dans celles qui en sont dépourvues — contribuera à atténuer les craintes entourant la capacité d’une politique de taux d’intérêt commune de convenir à toutes les régions. Il en découle également que les autorités de réglementation des marchés hypothécaires dans les régions non productrices de pétrole doivent s’intéresser aux conséquences des fluctuations des prix pétroliers pour leur région respective. Enfin, les effets positifs des chocs des prix pétroliers que nous avons relevés sur l’endettement des ménages et les prêts bancaires ont des implications pour la surveillance des risques sur les marchés du crédit.

Досліджується процес поступового переходу лідируючих позицій у світовій економічній системі від країн групи «G7» до «E7» на чолі з Китаєм відповідно до законів циклічного, «спіралеподібного» розвитку цивілізації. Розглянуто генезис і основні принципи конфуціанства як етико-політичного і філософського вчення, що базується на трьох складових: соціальна гармонія, людяність і ритуал. Розкрито ключові фактори успішного і стабільного розвитку економіки Китаю: масштабне, продуктивне та організоване землеробство, наукові відкриття, ремесла, виробництво продукції на внутрішній і зовнішній ринок, торгівля, розвиток міст, кредитно-банківська система, сильна центральна влада і податкова система. Вивчено особливості процесу модерізаціі економіки, вирішення політичних, соціальних і екологічних проблем КНР з використанням традиційних цінностей конфуціанства в період 1949-2018рр. Надано критичну оцінку економічній політиці КПК в періоди «великого стрибка», «культурної революції», а також «чотирьох модернізацій». Представлені теоретико-методологічні підходи до формування та реалізації основних етапів стратегії розвитку Китаю на період до 2050р. в умовах викликів глобалізації при дотриманні принципу стабільності в русі. Проведено аналіз стану торгово-економічних відносин між Україною та Китаєм, розроблені пропозиції щодо перспектив їх подальшого розвитку на рівноправній та взаємовигідній основі. Звернуто увагу на основні напрямки китайських інтересів на ринку України: сільське господарство, інфраструктура, енергетика, освіта, наука і техніка. Розкрито переваги та загрози створення зони вільної торгівлі «Китай-Україна» з використанням методології SWOT-аналізу. Наголошується на необхідності розробки запобіжних заходів зі строни держави щодо максимального захисту інтересів вітчизняних товаровиробників в торгівлі з більш сильним і більш досвідченим партнером. Варто при цьому враховувати досвід функціонування зони вільної торгівлі «Україна – ЄС». The process of gradual transition of leading positions in the global economic system from the countries of the group “G7” to “E7” led by China is studied in accordance with the laws of cyclic, "spiral" development of civilization. The genesis and basic principles of Confucianism as an ethical-political and philosophical doctrine are considered, which is based on three components: social harmony, humanity and ritual. The key factors of the successful and stable development of the Chinese economy are revealed: large-scale, productive and organized agriculture, scientific discoveries, crafts, production of products on the domestic and foreign markets, trade, urban development, credit and banking system, strong central government and the tax system. The features of the process of modernization of the economy, solution of the political, social and environmental problems of the PRC with the use of traditional values of Confucianism during the period 1949-2018 were studied. The critical assessment of the CCP's economic policies during the “big jump”, “cultural revolution”, and “four modernizations” was provided. The theoretical and methodological approaches to the formation and realization of the main stages of the development strategy of China for the period up to 2050 under the conditions of the challenges of globalization while respecting the principle of stability in the movement are presented. The analysis of the state of trade and economic relations between Ukraine and China was made; proposals on the prospects for their further development on the equal and mutually beneficial basis were developed. The attention is focused on the main directions of Chinese interests in the Ukrainian market: agriculture, infrastructure, energy, education, science and technology. The advantages and threats of creation of the China-Ukraine free trade zone with the use of SWOT-analysis methodology are revealed. It is emphasized that it is necessary to develop preventive measures in order to maximally protect the interests of domestic commodity producers in trade with a stronger and more experienced partner. It is worth taking into account the experience of the functioning of the FTD Ukraine-EU.

In this paper, we test the Frankel & Rose hypothesis of Optimum Currency Area for the Maghreb countries by demonstrating how the co-movements of outputs would respond to a trade integration process. In particular, by using panel analysis over the period 1980~2010, we evaluate if a monetary integration project across these countries is endogenous. Our main result suggests that while trade intensity may help to harmonize business cycles, the magnitude of this harmonization is lower for the Maghreb countries than for industrial countries. This result is robust even when we take into consideration many control variables including intra-industry trade, economic diversification, and financial integration. Therefore, we suggest that an acceleration of trade linkage as well as product diversification should take place prior to any move towards monetary union across the Maghreb countries.

Does the size of a country affect its economic growth rate? Theory suggests that the existence of a national scale effect is favouring large countries and that small countries may overcome the impediments of smallness once their markets become internationally more integrated. So far, empirical evidence of a distinct impact of country size on economic growth is rather limited. The present study sheds light on this impact from a European perspective. Country size indeed correlates with economic growth and European economic integration enhances the convergence process of the countries. It is further shown that the impact of size varies according to a country’s individual level of economic integration, suggesting that the long-term economic growth path is characterized by multiple transition points. This finding is particularly important given the prevailing imperfections of the European Union Single Market and the increasing number of small European Union member states.

The liberalization thesis has generated a lot of debate in theoretical and empirical literature. In this paper we construct an index of financial liberalization from 1981 to 2012 to investigate its impact on economic growth in Nigeria using the McKinnon-Shaw framework. The Ordinary Least Squares Methodology and cointegration analysis are adopted in the study. The result reveals that financial liberalization (FINDEX) and private investment (PINV) have significant positive impact on economic growth in Nigeria. However, real lending rate (LDR) proved to be negatively related to economic growth in Nigeria within the period under review. We therefore conclude that the monetary authorities and policy makers in Nigeria need to support the liberalization process by formulating complementary policies and financial sector reform measures that will help in strengthening the impact of the liberalization process on the economy and also ensure that the benefits of the liberalization exercise is maximized.

This paper uses a production function to examine the channels through which remittances affect output per worker in 31 Sub-Saharan African countries from 1980 to 2010. Lagged remittances increase physical capital per worker, average years of schooling and total factor productivity, but the effectiveness of remittances varies with the income level of the recipient nation. Although remittances have increased both physical capital and total factor productivity among the upper middle income nations, among the lower middle income, they have increased only the physical capital. Meanwhile a reduction in institutional risk has encouraged investment and efficiency, but its relationship to the effectiveness of remittances has been inconclusive.

Die Unternehmen investieren seit der globalen Wirtschaftskrise eher verhalten in neue Ausrüstungen in Deutschland. Der aus Maschinen und Geräte bestehende Kapitalstock stagniert bereits seit dem Jahr 2008. Das ist die längste Phase ohne einen Kapitalaufbau in diesem Bereich seit 1991. Eine IW-Befragung von 2.900 Unternehmen im Herbst 2014 liefert wichtige Informationen über die gegenwärtigen Investitionshemmnisse in Deutschland. Demnach leiden die Investitionen vor allem unter den großen weltwirtschaftlichen Unsicherheiten. Die investiven Rahmenbedingungen haben sich aber auch in Deutschland verschlechtert. Für die Hälfte der befragten Firmen zählen dazu vor allem die im internationalen Vergleich hohen Energiekosten. Die Frühverrentung, der Mindestlohn mit seinen umfangreichen Dokumentationspflichten und die geplante strengere Regulierung der Zeitarbeit schaffen ebenfalls zusätzliche Kosten für die Unternehmen - und verringern den "return on investment". Bevor sich die Politik an teuren Investitionsprogrammen verausgabt, sollte sie sich bemühen, die Angebotsbedingungen für Unternehmen in Deutschland wieder zu verbessern. Hier kann auf drei Ebenen angesetzt werden: 1. Kosten in den Griff bekommen. Deutschland ist ein Hochkostenland. Das gilt nicht nur für die Arbeitskosten, sondern auch für die Energie. Eine Reduktion dieser Belastungen ist ebenso notwendig wie mehr Planungssicherheit für energieintensive Unternehmen. 2. Flexibilität erhalten. Bürokratie und Regulierungen müssen abgebaut und dürfen nicht aufgebaut werden. So könnte für jede neue bürokratische Regelung eine andere wirkungsgleich gestrichen werden. 3. Grundlagen für künftiges Wachstum schaffen. Dazu muss beständig und effektiv in die Infrastruktur investiert werden - nicht im Rahmen von Hauruck-Programmen. Die Mittel für eine ordentliche Infrastruktur sind da - die Politik muss nur Prioritäten setzen. Einen Grund für Steuererhöhungen gibt es nicht.

Foreign Direct Investment originating from East, Southeast, and South Asian developing countries has increased significantly since 1980. This paper examines the extent and determinants of Foreign Direct Investment outflows from these countries between 1980 and 2011. We use selected home country-specific macroeconomic variables and identifies the key determinants of Foreign Direct Investment outflows using correlation and regression analysis. The results show that Foreign Direct Investment outflows are closely associated with high levels of Gross Domestic Product, high domestic savings, large foreign reserves, export orientation, and relatively large Foreign Direct Investment inflows in the source countries, with the strength and importance of each factor varying with the level of development. Our main conclusion is that, although non-traditional Foreign Direct Investment outflows have so far been confined to a limited number of developing countries, mostly Asian, other developing countries could also become capital exporters with a supportive international environment and appropriate domestic policies.

The dominance of oil in the Nigeria’s external sector and as its major source of revenue is not in dispute. This therefore necessitates the need to probe the nexus and the magnitude of the effects of fluctuation in the exchange rate on oil price and on how it impacts the Nigeria’s economic performance. Against this background, this study evaluated the effects of exchange rate fluctuations on crude oil price as well as on economic performance, simultaneously. The Ordinary Least Square (OLS) and the Two Stage Least Squares (TSLS) estimation techniques were employed. The study found that real exchange rate has a positive effect (1.2 per cent) on the Nigeria’s economic performance. We also found that a one percentage increase in the price of oil would positively influence the economic performance of Nigeria by the magnitude of 4 per cent. The R2 shows that 82 per cent deviation in the gross domestic product was captured by the explanatory variables whereas the J-statistics of the model is insignificant, thus, confirming the relevance and validity of the instruments used.

The purpose of this analysis is to analyse the connection between foreign direct investments and economic growth in transition economies during a period of increased integration of financial systems in the global financial system. The research focuses on the relationship between foreign direct investments and economic growth during 1970-2013, by means of methods such as the graphic, the regression and the correlation ones. The research findings show that there is a direct and strong connection between the inward financial flows of foreign direct investments and the GDP during the period under analysis in transition economies. In transition economies, a high inward flow of foreign direct investments leads to an increase of the Gross Domestic Product per capita, while a positive development of the standard of living will attract new inward FDI flows, since transition economies are seen as attractive recipients/hosts for foreign direct investments.

This article investigates the relationship between economic growth, renewable energy consumption, gross fixed capital and total number of labor for 1980-2012 in selected OECD countries in terms of sustainability. Four OECD countries are included in our model in order to differentiate the relationship between nuclear energy consumption and economic growth in more developed OECD countries such as the U.S. and Germany with less developed OECD countries such as Turkey and Italy. According to the results of autoregressive distributed lag approach, the effect of renewable energy consumption on gross domestic product (GDP) is positive in both U.S. and Germany whereas renewable energy consumption has negatively correlated with GDP in Italy and Turkey. It can be concluded that renewable energy consumption has positive effect on economic growth only in more developed countries.

This paper presents the main developments of the eurozone during the crisis period and the measures adopted by ECB in this context. The paper especially aims the countries that were the most affected by the crisis, namely: Greece, Cyprus, Ireland, Portugal, Spain and Italy. The public debt of those countries increased greatly and they faced many pressures on the international financial markets.

The study addresses the economic development of four European countries - Romania, Hungary, Czech Republic, and Poland beginning with 1990. It will be employed a descriptive analysis of their trade and growth dynamics. Emphasis will be placed on the determinants of economic growth of this group of countries in general and foreign trade in particular. The results indicate a heterogeneous dynamics of economic performances explained by specific characteristics and less by exogenous aspects related to trade partners and commercial structure, regional integration or foreign policy influenced by geographic proximity. In what concerns Romania, it appears to have been driven by a weaker engine of economic growth in the last two centuries.

Do theoretical welfare gains from trade translate into aggregate measures of economic activity? We calculate the changes in real GDP and real consumption that result from changes in trade costs in a range of workhorse trade models, following the procedures outlined by statistical agencies in the United States. Our main findings are as follows: First, real GDP and measured aggregate productivity rise in response to reductions in variable trade costs if GDP deflators capture the decline in trade costs. Second, with balanced trade in each country, changes in world real consumption and changes in world real GDP (i.e.: weighting the change in each country by its nominal GDP) in response to changes in variable trade costs coincide, up to a first-order approximation, with changes in world theoretical (welfare-based) consumption. The equivalence between measured consumption and theoretical consumption holds country-by-country under stronger conditions. Third, for given trade shares and changes in variable trade costs, changes in real GDP and changes in world real consumption are approximately equal in magnitude across the models we consider.

This article aims to analyze and explain the traditional model of Investment Development Path with new teoretical approaches. Investment Develoment Path is the latest theory about foreign direct investment and explains the relationship between a country’s development level and international investment position of a country. It has become a necessity in this research field of Romanian economy to establish a idiosyncratic model for evolution of inflows and outflows of Foreign Direct Investments after 1990. Also, persistent confusion between static and dynamic nature in using appropriate economic Romanian terms is removed. General theoretical approach is enhanced with new elements of schematic theorizing of Stages of Investment Development Path.

Episodes of large capital inflows in small open economies are often associated with a shift of resources from the tradable to the non-tradable sector and sometimes lead to balance-of-payments crises. This article builds a two-sector dynamic model to study the evolution of the sectoral structure and its impact on financial fragility. The model embeds a static mechanism of balance-of-payments crisis which produces multiple equilibria within a single time period when the non-tradable sector is large enough compared to the tradable sector. The article studies the dynamics induced by an increase in financial openness. It shows that the relative size of the non-tradable sector overshoots, which makes the economy more likely to be financially fragile during the transitory dynamics. Using an extended version of the model, the article conducts a quantitative analysis and shows that this mechanism accounts well for several episodes of large capital inflows that led to financial crises.

The paper develops a multi-sectoral growth model that links a Post-Keynesian macro-framework to an evolutionary modelling of technical change and industrial dynamics. Following Pasinetti 1981 and Verspagen 1993, we assume that sectors are integrated such that the dynamics of each sectors’ demand are interdependent, and co-evolving. Technical change mechanisms are directly inspired by evolutionary models of growth and industrial dynamics. Lorentz 2007 shows that the structure of the demand characteristics shape the structure of the economies influencing directly specialization patterns and growth rates differences among economies. The aim of this paper is to show that the introduction of satiation levels a la Pasinetti limits this effect. Hence both sectorial specialization and growth rates differences tend to disappear when the satiation levels are reached. In other words, these macro-patterns appear to be highly dependent on the persistence of structural change. JEL Codes: O41, O33, E11, F43

Purpose: The present study investigates the relationship between trade and economic growth. Methodology: This paper uses the Johansen co-integration approach, Fully Modified Ordinary Least Square (FMOLS) approach to analyse the relationship among trade liberalization, export, import, population growth and economic growth. Findings: Results show there is long run equilibrium among trade liberalization, export, import, population growth and economic growth. A negative and significant relationship exists between trade liberalization and economic growth. Both export and import show positive and significant results. Population shows an insignificant effect on economic growth of Nigeria. It is therefore concluded that concern about trade liberalization in Nigeria should not be a priority. Recommendations: However, the paper recommends among others that priorities should be given on how to fight corruption which is the major problem of the country.

This paper examines whether the existence of externalities associated with foreign direct investment (FDI) benefits the domestic firms of Indian manufacturing industries. Empirical findings reveal that local firms benefit from vertical foreign presence, whereas the horizontal foreign presence at the industry level could not substantially raise the value addition of labor across Indian industries. The absorptive capacity of domestic firms is highly relevant to reap the benefit from foreign presence, and could act as a precondition for incorporating the benefit of FDI externalities. Higher concentration and a greater size of the domestic market facilitate to raise the productivity spillovers from foreign presence. Furthermore, the FDI-technology spillovers seem to be higher for RD Wang and Blomstrom, 1992). The introduction of a new technology into a given market may be too expensive and risky for a domestic firm to follow, because of the cost inherent in acquiring its knowledge and uncertainty of the results that may be obtained (Crespo and Fontoura, 2007). If a technology is successfully used by a MNE, then domestic firms will be encouraged to adopt such technology. Barrios and Strobl (2002) suggest that the relevance of this effect increases with the similarity of the goods produced by the two types of firms in case of spillover related to product and process technology.FDI spillovers could be occurred, when the possibility of domestic firms hiring of MNEs workers, who have knowledge and experience of the technology and are able to apply this technology in domestic firms (Fosfuri et al., 2001; Glass and Saggi, 2002). However, the possibility of negative impact arising through this channel could not be avoided, as MNEs may attract best workers from domestic firms by offering higher wages and salaries (Sinani and Meyer, 2004). In addition, the influence of labor mobility on the efficiency of local firms is difficult to evaluate, as it involves tracking the workers in order to investigate their impact on the productivity of other workers (Saggi, 2002).2 The remaining important channels of FDI spillovers are exports, competition, and forward-backward linkages with domestic firms, etc.3FDI and technology imports could be recognized as alternative channels for technology spillover (Kanturia, 2001, 2002; Behera et al. …

The technological progress that arose in areas such as transportation, communication and information exchange has led to a series of consequences that forced national economies to converge into a global, market based economy. In addition to the aforementioned causes, increased liberalisation amidst financial markets has supplemented the initiation of this metamorphosis that had several benefits in terms of general commercial exchange (trade), capital flows, and investment opportunities for business organisations. Simultaneously with the financial leverage resulted from the expansion of these interconnections, a series of channels that are detrimental to the financial welfare of entities has emerged, which, in consequence elevated the vulnerability and susceptibility to external economic shocks. The major debate elicited by this trade-off mainly concerns the costs and benefits of the international liberalisation of capital flows and trade. The purpose of this article is to examine the methods through which globalisation has affected the expansion of the international financial crisis back in 2008, by identifying and assessing the subsequent transfer routes, to and from the United States, where it was initially triggered. This article also aims to evaluate the repercussions experienced by Central and Eastern Europe and how they re-established economic growth following the financial crisis.

La mise en oeuvre de réformes structurelles sur les marchés des biens et du travail a des effets différenciés selon la structure économique sous-jacente des pays. Les effets de diffusion de ces réformes structurelles sont généralement positifs pour les économies partenaires, mais d’une ampleur qui varie avec les caractéristiques des canaux de diffusion, sensiblement différents d’une économie à l’autre.

The purpose of the present paper is to investigate the cross-sectional impacts of macroeconomic factors on economic growth and testing the hypothesis that inflation has negative effect on economic growth in 90 developing countries during 1995-2003. Methodology: We use a simultaneous equations system in which both inflation and economic growth are treated as endogenous variables. We have also extended the Levine – Renelt framework to include the so-called Gordon triangle model. Findings: Our findings indicate that the rate of exports of goods and services, the ratio of total private and public investment to GDP have positive and significance and the rate of labor force has positive but insignificance whereas, the ratio of current government expenditures to GDP as well as the inflation rate have negative and significance effect on economic growth in countries under consideration. Recommendations: Lowering the inflation rate is an effective step to reach high economic growth in these countries. Also, our results regarding Gordon's inflation adaptive equation show that the liquidity growth rate as well as the so – called Gordon inflation inertia plays a more significance role compared to other explanatory variables. Therefore, lowering rate of liquidity as well as policies promote optimistic expectation regarding the ability of government to control inflation via the inertia channel is suggested for these developing countries.

We estimate a dynamic panel data model to assess the relationship between different levels of instability-proxied by growth volatility and inflation- and growth in Latin America from 1960 to 2011. Outlying observations could be mistakenly treated as thresholds or regime switch. Hence we use k-median clustering to mitigate the outlier problem and properly identify "scenarios" of instability. Our key findings are that while high inflation is harmful, low inflation is in fact positively related to growth. Volatility is also found to be significant and negative, but with no differential effect- between low and high levels-on growth.

In today's world, globalization has reached to such an extent that, investment in information and technology is inevitable to be integrated with global system and increase competitive power. Therefore, R&D investments are of high importance and priority for growth process of economy. This paper investigates the long-run relationship between R&D expenditure and economic growth using the Johansen co-integration and the vector error correction models. The research findings indicate that there is a unidirectional causal relationship running from economic growth to R&D. the long-run coefficients for the variable R&D is strongly statistically significant and has positive value. The growth rate of GDP will increase 0, 2630% if R&D shares in the GDP increases 1%.

Taking into consideration the determinants of the economic crisis and of the sovereign debt crisis, we aim to analyze the dynamics of the European economies and discuss changes related to macroeconomic imbalances, as highlighted by the recent crises as an important factor of the unfavorable dynamics registered during the last years. In this respect we considered both internal and external imbalances, as specified in the macroeconomic imbalance procedure that was implemented for the European Union member states since 2012, as a response to the crises that affected all open economies of the world. The purpose of this article is to provide a comprehensive analysis of economic imbalances in the European Union and to determine their influence on economic growth.

Purpose: This paper examined the long run relationship between health outcomes and economic growth in Nigeria from 1961 to 2012. Methodology: Using annual time series data, Augmented Dickey-Fuller (ADF) test is conducted to check the stochastic properties of the variables. Also, the long run relationship among the variables is confirmed based on Johansen Multivariate Cointegration approach whereas the long run and short run dynamics are observed using Vector Error Correction Mechanism (VECM). In addition, VEC Granger causality test is employed to examine the direction of causality among the variables. Findings: On the whole, the results obtained revealed the existence of a long run relationship between health outcomes and economic growth in Nigeria and that both life expectancy and crude death rate as measures of health are found to have a long run negative and statistically significant impact on the economic growth over the study period. This is further buttressed by the results of Granger causality test which indicated the existence of unidirectional causality running from life expectancy and crude death rate to economic growth. Recommendations: The study therefore, calls for governments at various levels to create preconditions for health improvements in Nigeria in order to boost the level of health outcomes.

Az európai növekedési potenciál fokozatos, ám több évtizeden át látens eróziója az elmúlt másfél évtizedben - versenyképességi és alkalmazkodási problémáinak kiéleződésével párhuzamosan - egyre nyíltabb formában jelent meg. Az EU-15 országai termelékenységének felzárkózása az Egyesült Államokéhoz - fokozatos mérséklődés után - az 1990-es évek közepén megtört, majd növekedési dinamikája egyre inkább elmaradt fő versenytársáétól. A teljes tényezőtermelékenységbeli különbségek csekély számú iparágban összpontosulnak: az elektronikai berendezések előállítása, a nagy- és a kiskereskedelem, az ingatlan- és egyéb üzleti szolgáltatások, illetve a pénzügyi szolgáltatások területén. A fő okok a termék- és munkaerőpiacok működésének eltéréseiben, az Egyesült Államokat jellemző intenzívebb versenykörülményekben, illetve egyes európai részpiacok túlszabályozásában keresendők. Lényeges szerepet játszanak továbbá az innovatív szektorok adminisztratív és pénzügyi belépési korlátai. Journal of Economic Literature (JEL) kód: E27, F15, F43, O40, O47., Gradual, latent erosion of European growth potential over several decades - parallel exacerbation of problems of competitiveness and adaptation - has been appearing in an increasingly open form. The improvement in the productivity of the EU 15 countries compared with the United States eased steadily and then ceased in the mid-1990s, after which its growth dynamic fell behind that of its main competitor. The whole factor-productivity differences were centred on a small number of industries: production of electronic equipment, wholesale and retail trading, real-estate and other commercial services, and financial services. The main causes can be sought in differences in the operation of product and labour markets, the more intensive competition conditions characteristic of the United States, and the excessive regulation of certain partial European markets. An essential role is also played by the administrative and financial entry restrictions on innovative sectors.

Purpose: Money plays an important role in determining the national income that economic theory is a widely accepted concept. The study economic development in Pakistan and Money monetization investigate the relationship between the long- terms. Methodology: Based on endogenous growth theory, this study empirically developed models of standard gross domestic product (GDP) based on examination term is negative and significant.Money supply, the study applies error correction model. This study from 1980 to 2012 time series data uses. Findings: Co- integration results show that the variables are co- integrated. That long stable equilibrium relationship has ended. Error correction results a dependent variable and inflation, income gap, investment money supply (M-2) independent variable, Auto- regressive distributive share to the integration interval (ARDL) bound testing approach to long- term equilibrium relationship between the variables included in the model to check is used to examine short -run relationship between money and economic growth. Recommendations: This study open new directions for further research.

The paper aims to explain the role of uncertainty on household saving rates in Eastern European Countries (EEC), and to draw a comparison with more developed European economies. We consider that uncertainty plays an important role on household saving formation in EEC. For this purpose we perform a panel analysis over the period 1995-2014, for each group of countries. We consider different uncertainty indicators and a series of control variables; including macroeconomic and demographic determinants of household saving rates. As econometric model we use a fixed-effects GLS regression testing data for heteroscedasticity and contemporaneous correlation. The results underline that uncertainty expressed through people expectations has no clear influence on household saving rates in EEC, while unemployment and taxation are the main determinants. The findings of the paper can be useful for future policies aimed to increase household saving in EEC as a cheap and stable funding source of investments.

Considering the evolution of the Romanian-German economic relations, with their two major components (the direct foreign investments and trade), we analyzed their influence on a specific market in Romania, in this case the logistics market in Romania. After the analysis, we can conclude that the Romanian-German economic relations influenced in a positive way the development of the logistics market in Romania, both in terms of quantity but also in terms of quality, and, in addition to this, it has a significant contribution in terms of stability for the logistics market in Romania.

This article analyses energy intensity for panel of six Middle East and North Africa (MENA) countries: Tunisia, Algeria, Morocco, Egypt, Jordan, Iran, Arabia Saudi and Emirats Arab, over the period 1980 to 2012. It is based on panel data econometrics heterogeneous according to cointegration tests developed by Pedroni and the Pooled Mean Group (PMG) estimator of Pesaran. The results show that energy intensity of GDP in MENA depends largely on the level of investment, the structure of economies and urbanization.