Globalization and patterns of economic development

Globalization and Patterns of Economic Development. — One of the most important challenges facing economics is to understand why globalization spurs economic growth to a greater extent in some parts of the world than in others. While part of the answer rests with differences in national economic policies, such policy differences are only part of the story. Differences in physical geography and resource endowments also cause countries to experience very different patterns of economic development in the global economy. In this article, five different patterns of economic development are described, and it is illustrated how they are related to the underlying geography, economic policies, and resource endowments of a country.     

More similar and less equal: Economic growth in the European regions

More Similar and Less Equal: Economic Growth in the European Regions. — This paper examines the growth process of 109 European regions using a new data base. Applying various statistical tools, it concentrates on per capita income and labor productivity. The main results are the following: There has been a clear process of aggregate productivity convergence across the European regions over the 1980s. At the sectoral level, there has not been convergence in agriculture, while the industrial and services sectors show ß-convergence. Most crucially, the regional dispersion in per capita income has remained almost constant so that the differences in wealth conditions of the European citizens are still extremely high.     

Temporal causality and the dynamic interactions among macroeconomic activity within a multivariate cointegrated system: Evidence from Singapore and Korea

Temporal Causality and the Dynamic Interactions among Macroeconomic Activity within a Multivariate Cointegrated System: Evidence from Singapore and Korea. — The main purpose of this paper is to discern the dynamic causal relationship (in the Granger (temporal) sense) among real output, money, interest rate, inflation and exchange rate in the context of two small open economies, such as Singapore and Korea. The Granger-causal chain implied by the authors’ evidence that real output more often the authors’ predominantly leads (rather than lags) money supply followed by other three endogenous variables, is consistent more with the recent Real Business Cycle theory than with the other two major macroeconomic paradigms such as the Keynesian and the Monetarist.     

IMPACT OF MACROECONOMIC CONDITIONS ON GOVERNMENT POPULARITY: AN ECOWAS INVESTIGATION

A main focus of this paper is our analysis of the vote function using the vote share of government parties as the proxy variable for government popularity. Utilising Pedroni's (1999 ) panel cointegrated test and the fully modified OLS (FMOLS) technique, we empirically examine the long-run co-movement relationship in a bivariate model between government popularity and macroeconomic outcomes as well as a lag term in accordance with updated data for 11 countries of the Economic Community of West African States (ECOWAS) during the 1975-2005 period. The results indicate the existence of panel cointegration relationships in our empirical model. The panel FMOLS shows that several macroeconomic shocks are responsible for positive contributions to government popularity, especially in regard to economic growth and government expenditures. By contrast, currency depreciation, higher interest payments, and a greater taxation burden on households all contribute to lower government support in our sample countries. Based on such evidence, important policy implications emerge for ECOWAS.     

Health insurance reform and economic growth: Simulation analysis in Japan

This paper evaluates the drastic reforms of Japanese public health insurance initiated in 2006. We employ a computable general equilibrium framework to numerically examine the reforms for an aging Japan in the dynamic context of overlapping generations. Our simulation produced the following results: first, an increase in the co-payment rate, a prominent feature of the 2006 reform, would promote economic growth and welfare by encouraging private saving. Second, the ex-post moral hazard behavior following the increase in co-payment rates, however, reduces economic growth. Third, Japan's trend of increasing the future public health insurance benefits can mainly be explained by its aging population, and increasing the co-payment rate does little to reduce future payments of public health insurance benefits. Fourth, the effect on future economic burdens of reducing medical costs through efficiencies in public health insurance, emphasis on preventive medical care, or technological progress in the medical field is small. Finally, a policy of maintaining public health insurance at a fixed percentage of GDP will require reducing public health insurance benefits, perhaps up to 45% by 2050. Such a policy also reduces economic growth until approximately 2035. Our simulation indicates that the reform does not significantly reduce future public health insurance benefits, but it can enhance economic growth and welfare by encouraging private saving.     

The response of long-term interest rates to news about monetary policy actions: Empirical evidence for the U.S. and Germany

The Response of Long-Term Interest Rates to News about Monetary Policy Actions. Empirical Evidence for the U.S. and Germany. — The authors reestimate the expectations theory of the term structure focusing on the question of how monetary policy actions indicated by changes in the very short rate affect long-term interest rates. Their main point is that the expectations hypothesis implies that very long rates should only react to unanticipated changes of the very short rate. In contrast to cointegration tests of expectations theory, this implication only requires rational expectations but not stationary risk premia. Therefore, its empirical test sheds new light on the importance of expectations theory for the determinants of the term structure of interest rates.     

Food Access,Program Participation,and Health: Research Using FoodAPS

This piece is an introduction to the symposium on Food Access, Program Participation, and Health: Research using FoodAPS. The symposium includes articles presented at the National Bureau of Economic Research Conference on Food Security on December 7 and 8, 2017. The research herein was supported by the Economic Research Service of the U.S. Department of Agriculture, grant number 59‐5000‐5‐0115. The grant included funding to study the effects of various food assistance programs on outcomes, using data from the National Household Food Acquisition and Purchase Survey (FoodAPS). We describe the programs and the FoodAPS data, and point out highlights from the articles.     

内生货币供给理论分析与实证检验

货币外生性一直是主流经济学的一个重要假设前提,长期以来成为经济学理论的一个教务,然而现实经济的发展不断地冲击着这一命题,越来越多的学者开始对货币的外生性提出质疑,并产生了内生性的货币理论,但大多数都不承认货币供给具有完全的内生性,通常认为货币供给的产生还是由中央银行外生决定的,只是在其进入流领域后会不同程度受到经济内生因素的决定和影响,本文拟在一个完全没有中央银行存在的货金融体系中讨论货币供给的产生过程及影响因素,阐明在市场经济中货币供给具有完全的内生性,同时结合中国市场经济体制改革以来的实证数据以经验检验。     

RECOVERY FROM DEPRESSION: AUSTRALIA IN AN ARGENTINE MIRROR 1895–1913

The recovery from the 1890s depression in Australia was prolonged, and economic growth from 1895 to 1913 was below that in the comparable settler economies of Argentina and Canada. Why? Australia’s hesitant initial recovery is typically attributed to the imbalances in the economy resulting from the preceding boom, and its further delay to severe drought. Drawing on Argentine experience, it is suggested that additional factors need to be considered. Unlike Argentina, the unwillingness or inability of Australian governments to reschedule foreign debt or devalue the exchange rate exacerbated the slump. And the era of low‐cost pioneer farming ended earlier than in Argentina (or Canada).     

Vertical Integration,Foreign Multinationals and Stigler's Hypotheses: An Empirical Test Using Malaysian Data*

In this paper the hypotheses on motives for vertical integration as proposed by Stigler are empirically tested using a panel dataset from Malaysian manufacturing under both fixed‐effects and random‐effects specifications. Because the degree of multinational participation is expected to influence the results of the regression estimates, empirical tests are conducted with and without controlling for the effect of foreign firms’ participation. Depending on model specifications, evidence is found in favor of Stigler's hypotheses where vertical integration is positively related to demand growth and industry concentration. This result is generally consistent with those found in other vertical integration studies. Significantly, the coefficient estimates of the growth variable are not significant and biased downwards if there is no control on the effect of foreign multinationals in the estimation process.     

Corruption and Technological Progress: A Takeoff Theory of Good Governance

Corruption is known to be a function of its return relative to productive activity. But the idea that corruption might itself respond to technological progress has not been emphasized. This paper presents an approach for thinking about institutional features that lower corruption by lowering its relative return. Policies that promote productivity growth in market exchange may cause the relative reward to rent-seeking to decline. The evolutionary development of anti-corruption efforts may be a normal part of modernization, much as changes in income distribution and urbanization.     

The Role of Public Infrastructure in China's Regional Inequality and Growth: A Simultaneous Equations Approach

Using a simultaneous equations approach, this paper empirically investigates the impact of two types of public infrastructure, transportation infrastructure and knowledge infrastructure, on industrial geography, regional income disparities, and growth across 286 cities in China. It is found that an improvement in transportation infrastructure that reduces trade costs on goods increases growth and decreases income gap at the expense of increasing industrial agglomeration between cities. Therefore, this paper confirms the existence of a trade‐off between spatial equity (more even spatial distribution of economic activities) and spatial efficiency (higher growth rate). However, for knowledge infrastructure that reduces trade costs on ideas, it is found that it increases growth but also decreases income gap and industrial agglomeration simultaneously. Moreover, the impact of knowledge infrastructure is found to be larger in the case of high labor mobility.     

Converging on the learning curve: Theory and application to German regional data

Converging on the Learning Curve: Theory and Application to German Regional Data. — Studies finding convergence between regions are usually based on the assumptions of decreasing returns to overall capital and ubiquitous exogenous technical progress. In contrast, we derive convergence from a model with endogenous knowledge creation and knowledge spillovers which interact with the regional formation of human capital. The model allows for conditional convergence due to interregional knowledge dissemination which is an important determinant of the regional learning curve. In empirical estimates for 327 German regions, it is found that the characteristics of the knowledge and the human capital sectors have largely the impacts on convergence which are predicted by the model.     

The puzzle of migrant labour shortage and rural labour surplus in China

The paper examines the contentious issue of the extent of surplus labour that remains in China. China was an extreme example of a surplus labour economy, but the rapid economic growth during the period of economic reform requires a reassessment of whether the second stage of the Lewis model has been reached or is imminent. The literature is inconclusive. On the one hand, there are reports of migrant labour scarcity and rising migrant wages; on the other hand, estimates suggest that a considerable pool of relatively unskilled labour is still available in the rural sector. Yet the answer has far-reaching developmental and distributional implications. After reviewing the literature, the paper uses the 2002 and 2007 national household surveys of the Chinese Academy of Social Sciences to analyse and explain migrant wage behaviour, to predict the determinants of migration, and to examine the size and nature of the pool of potential rural–urban migrants. An attempt is also made to project the rural and urban labour force and migration forward to 2020, on the basis of the 2005 1% Population Survey. The paper concludes that for institutional reasons both phenomena are likely to coexist at present and for some time in the future.     

Investment and institutional uncertainty: A comparative study of different uncertainty measures

Investment and Institutional Uncertainty: A Comparative Study of Different Uncertainty Measures. — There is ample empirical evidence of a negative relationship between aspects of institutional uncertainty and investment. Most studies, however, do not allow a comparison between different dimensions of such uncertainty because they focus on specific indicators, particular regions or different periods. The paper concludes with an evaluation of the quantitative effects of the significant uncertainty indicators on investment finding that a lack of rule of law, high corruption, and volatility in real exchange rate distortions are the most detrimental for investment.     

The Determinants of Corruption: Cross‐Country‐Panel‐Data Analysis

This study explores the determinants of corruption, utilizing the Hausman and Taylor's technique to estimate a random effects model that incorporates both the effects of corruption determinants that vary over time and those that are time‐invariant, and using a larger panel dataset and a comprehensive set of corruption determinants. The first interesting result is that perception of strong support for rule of law is strongly correlated with reduced corruption, suggesting that a better quality of law enforcement reduces corruption. Rich countries have lower corruption, and the perception of free expression and accountability strongly decreases corruption, indicating that providing greater opportunities for citizens to participate in selecting their government, more freedom of expression, and free media are effective ways of curbing corruption. Conversely, natural resource abundance, country population size, country's dominant religious tradition, ethnic fractionalization, and political stability are unimportant determinants of corruption, while previous research has suggested they are important.