The impact of pre-announced day-to-day interventions on the Colombian exchange rate

Using cross-country cross-industry data, this paper explores how industry’s growth in number of firms in Central-East Europe (CEE) region is influenced by bank concentration in both the pre-crisis and crisis periods. The CEE region shows highly concentrated banking markets and less-developed financial markets; thus, the level of bank concentration and the resulting credit supply are crucial for firm creation and survival. Despite this, there is little evidence on these countries in the literature. Our empirical results suggest an inverted-U relationship: industry growth is fostered by bank concentration, but there is a turning point from which higher concentration begins producing the opposite effect. Moreover, the positive impact has a greater intensity during the crisis period compared to the pre-crisis period. Between sectors’ analysis shows that high-tech sectors are less reactive to changes in the concentration level.     

Poverty reduction without economic growth? : Explaining Brazil's poverty dynamics, 1985-2004

Brazil's slow pace of poverty reduction between the mid-1980s and the mid-2000s reflects both low growth and a low growth elasticity of poverty reduction. Using GDP data disaggregated by state and sector for a twenty-year period, this paper finds considerable variation in the poverty-reducing effectiveness of growth—across sectors, across space, and over time. Growth in the services sector was substantially more poverty-reducing than was growth in either agriculture or industry. Growth in industry had different effects on poverty across different states and its impact varied with initial conditions related to human development and worker empowerment. But because there was so little of it, economic growth actually played a relatively small role in accounting for Brazil's poverty reduction between 1985 and 2004. The taming of hyperinflation (in 1994) and a substantial expansion in social security and social assistance transfers, in large part mandated by the 1988 Constitution, accounted for the bulk of the overall reduction in poverty.     

The sources of contagion risk in a banking sector with foreign ownership

Foreign-dominated banking sectors, such as those prevalent in Central and Eastern Europe, are susceptible to two major sources of systemic risk: (i) linkages between local banks and (ii) linkages between a foreign parent bank and its local subsidiary. During and after the global financial crisis, the second source of risk has been stressed by local regulators. Using a nonparametric method based on extreme value theory, we analyze interdependencies in downward risk in the banking sectors of the Czech Republic, Poland, Slovakia, and Turkey during 1994–2013. We find that the risk of contagion from a foreign parent bank to its local subsidiary is substantially smaller than the risk between two local banks.     

Sources of output change in China: 1987-1997: application of a structural decomposition analysis

Since the beginning of the economic reforms implemented in the industrial sectors of China, the economy has grown and changed rapidly. The high GDP growth rates recorded since 1985 have stimulated unprecedented changes in the economic structure of this developing economy. The major causes of the changes are: the increase in consumption and investment, production technological change and trade. The objective was to analyse this type of structural change, and to explore the sources of economic growth during the period 1987–1997, by using the method of structural decomposition analysis (SDA). The chosen SDA method, based on the comparison between two input-output tables, allowed us to decompose each sector's and industry's output growth; it enabled the relative impact of final demand and technological change of each industry on overall growthto be measured.     

PLANT-LEVEL ANALYSIS USING THE ARD: ANOTHER LOOK AT GIBRAT'S LAW

This study uses the Annual Respondents Database to test whether Gibrat's law of proportionate effect holds for the UK manufacturing industry during the period 1973–1998. For a sample of manufacturing industries, four different panel unit root tests were carried out to test the relationship between growth and size for three measures of size: gross output, employment and gross value added. The tests were applied to unbalanced plant‐level panel data. The results show that there is strong evidence to reject Gibrat's law that firm growth is a random process in favour of the alternative proposition of mean reversion.     

The role of banks in the Czech monetary policy transmission mechanism

With this work, I aim to enrich the knowledge about the monetary policy transmission mechanism in the Czech Republic with empirical evidence on the impact of monetary policy on bank lending. Using a panel of quarterly time series for Czech commercial banks for the period 1996–2001, I study the overall effect of monetary policy changes on the growth rate of loans and the characteristics of the supply of loans. The characterization of the credit market's supply side allows us to make inferences on the operativeness of the credit channel (the bank lending channel and the broad credit channel) of the monetary transmission mechanism. I find that changes in monetary policy alter the growth rate of loans, with considerably stronger magnitude in the period 1999–2001 than in the period 1996–1998. From the analysis intended to capture the characteristics of the supply of loans, I conclude that the lending channel was operative in the period 1996–1998: I find cross‐sectional differences in the lending reactions to monetary policy shocks due to the degree of capitalization and to liquidity. For the subsequent period 1999–2001, the results also show distributional effects of monetary policy due to bank size and its bank's proportion of classified loans. In the context of steadily decreasing interest rates, this can bolster the supposition of financial frictions between borrowers and lenders and hence, that of an operative broad credit channel.     

The Internationalization of the Us Wage Process*

This paper explains the wage-growth slowdown that occurred in the US in the 1980s. Using the vector auto regression method, it is shown that (I) a substantial portion of variations in the growth rate of average hourly earnings and other sectoral wages in the US can be attributed to exchange-rule changes; (2) during the 1983-1985 period the strong appreciation significantly reduced the growth rate of wages, but the subsequent depreciation had only modest effects; and (3) sectors like construction and services, traditionally assumed to be immune to foreign competition, have become sensitive to exchange-rate developments.     

Are there asymmetries in the response of bank interest rates to monetary shocks?

This article examines the velocity and asymmetry of the response of bank interest rates to monetary policy shocks. Using an asymmetric vector error correction model, it analyses the pass-through of changes in money market rates to retail bank interest rates in Italy in the period 1985–2002. The main results of the article are: (1) the speed of adjustment of bank interest rates to monetary policy changes increased significantly after the introduction of the 1993 Consolidated Law on Banking; (2) interest rate adjustment in response to positive and negative shocks is asymmetric in the short run, but not in the long run; (3) banks adjust their loan (deposit) rate faster during periods of monetary tightening (easing); (4) this asymmetry almost vanished since the 1990s.     

The effect of structural change on the self-reliance and interdependence of aggregate sectors: the case of Spain, 1980–1994

The objective of this paper is to analyse structural and technological change in the Spanish economy between 1980 and 1994 using the input–output tables of 1980, 1986, 1990 and 1994. First we obtain and compare four linkage components throughout the period for each of the nine aggregate sectors in which the industries are grouped. Second, using Structural Decomposition Analysis, we obtain a technological effect and a demand effect for each of the previous components. These pressures show that the process of the technological modernisation of the Spanish economy is strongly linked to the growth of the high- and medium-technology industries and the service industries, and the different contribution of these industries to the improvement of productivity. On the one hand, the technology industries increase productivity by using better technologies. On the other hand, the service industries do not raise it significantly and even reduce it by increasing their unit costs.     

Determinants of bank failures in the US revisited

This study investigates factors influencing the bank failure rate in the United States over the period 1970 to 2007. The bank failure rate was found to be an increasing function of the unemployment rate, the average cost of funds, volatility of the S&P 500 Stock Index, and charge-offs as a percentage of outstanding loans and a decreasing function of the mortgage rate on new 30-year fixed-rate mortgages. The evidence implies also that the Federal Deposit Insurance Corporation Improvement Act acted to reduce bank failures whereas the Riegle–Neal Interstate Banking Act of 1994 may inadvertently have (by increasing competition and/or increasing costs through branch bank expansion) induced increased bank failures.     

Corporations and local economies in the Brazilian Amazon: the impacts of the mining sectors scheduled investments in Southeastern Pará (2004–2010)

Southeastern Pará is an extraordinarily dynamic region. There were large cattle ranching projects, financed in the 1960s. Expansion of peasant agriculture, mineral projects and gold prospecting followed the ranching projects. Also important structural transformations reinforced the role of the urban centres and the local rural bases in the logistics of new economic sectors conditioned by the presence of Companhia Vale do Rio Doce (CVRD), in the region since 1985. This article presents the results of an input–output analysis of the investment programme of CVRD from year 2004 up to 2010. The main findings are that the mineral sector has achieved a considerable influence over the economy of Southeastern Pará, so that during the cycle of investments each 1% in the growth of the mineral production creates growth possibilities of about 0.83% for the agricultural sector and about 0.86% for the local urban sectors. Considering just the production growth, a percentile point will imply growth at, respectively, 0.73% and 0.76% for those sectors. For the economy of the rest of the state of Pará, those elasticities would be, incorporating the investments, 0.80% and, without them, 0.68%. For the economy of the rest of Brazil they would be, respectively, 0.88% and 0.78%.     

THE ENRICHMENT OF A SECTOR (INDIVIDUAL,REGION OR COUNTRY) BENEFITS OTHERS: THE THIRD WELFARE THEOREM?

The economic enrichment of a sector may make other sectors as a whole better or worse off. However, for the benchmark case of proportionate enrichment, other sectors tend to gain. This result is shown using offer curves, supply and demand analysis, Cobb-Douglas utility functions, and a more general case. Allowing the enriching sector to be monopolistic does not affect the result. Semi-economic enrichment through migration and population growth also makes others better off. Most enrichments also tend to be equalizing in their effects on others.     

Factor market distortions across time,space and sectors in China

In this paper, we measure TFP losses in China?s non-agricultural economy associated with labour and capital misallocation across provinces and sectors between 1985 and 2007. We also decompose the overall loss into factor market distortions within provinces (between state and non-state sectors) and distortions between provinces (within sectors). Over the entire period, misallocation lowers aggregate non-agricultural TFP by an average of twenty percent. However, after initially declining, these losses increased appreciably beginning in the mid-1990s. This reversal can be attributed almost exclusively to increasing misallocation of capital between state and non-state sectors within provinces, while losses from between province misallocation remained fairly constant. We argue that the recent increase in capital market distortions is related to government policies that encourage investments in the state sector at the expense of investments in the more productive non-state sector.     

中美两国制造业全要素生产率比较研究

本文报告了根据 Jorgenson 方法所做的中国与美国的制造业分行业的全要素生产率的国际比较,以及中国制造业1985—1994年间全要素生产率的增长率。比较发现,就资本生产率和全要素生产率来说,中美之间的差距相对比较小,而就劳动生产率的差距来说,中美之间的差距相当大。美国制造业劳动生产率大约是中国制造业劳动生产率的17.67倍,但是美国制造业的全要素生产率大约是中国制造业全要素生产率的5倍。而中国制造业全要素生产率在1986—1994年间的平均增长实际有0.67%的减退。     

Debt and credit: Recent Canadian developments

In our examination of how recent developments (to 1988) in debt and credit markets have affected the Canadian economy, we compare the recent experience of borrower behavior in Canada with that in the United States, looking at debt-GDP ratios for various sectors and the corporate debt-equity ratio. In the late 1980s, the key differences between the two countries in the financial behavior of both the household and corporate sectors derive, we believe, from the sharper shock faced by Canadians in the early 1980s. Our examination of the relationship between credit growth and the growth of spending in the Canadian economy utilizes credit-indicator models developed at the Bank of Canada. We find that over the 1980–1987 period forecasts of the growth of real GDP and nominal GDP based on indicator models using real total household credit and nominal consumer credit, respectively, have narrowly outperformed the best bivariate monetary indicator models.     

Did foreign banks stay committed to emerging Europe during recent financial crises?

Our objective is to investigate empirically the behavior of foreign banks with respect to real loan growth during periods of financial crisis for a set of countries in which foreign banks dominate the banking sectors due primarily to having taken over large existing former state-owned banks. The eight countries are among the most developed in emerging Europe, their banking sectors having been modernized by the middle of the last decade. We consider a data period that includes an initial credit boom (2005 – 2007) followed by the global financial crisis (2008 & 2009) and the onset of the Eurozone crisis (2010). Our two innovations with respect to the existing literature on banking during the financial crisis are to separate foreign banks into two categories, namely, subsidiaries of the Big 6 European multinational banks (MNBs) and all other foreign-controlled banks, and to take account of the impact of exchange rates during the period. Our results show that bank lending was impacted adversely by both crises but that the two types of foreign banks behaved differently. The Big 6 banks remained committed to the region in that their lending behavior was not different from that of domestic banks supporting the notion that these countries are treated as a “second home market” by these European MNBs. Contrariwise, the other foreign banks active in the region were involved in fueling the credit boom but then decreased their lending aggressively during the crisis periods. Our results also indicate that bank behavior in countries having flexible exchange rate regimes differs from that in those in (or effectively in) the Eurozone. Our results suggest that both innovations matter for studying bank behavior during crisis periods in the region and, by extension, to other small countries in which banking sectors are dominated by foreign financial institutions having different business models.     

The Differential Growth Effect of FDI across US Regions

In this paper we examine and assess the differential impact of FDI on growth in eight US regions, as defined by the Bureau of Economic Analysis (BEA). The results show that the manufacturing FDI–growth relationship tends to vary across regions. In particular, while the New England, Mideast, Great Lakes, Rocky Mountains and Far West regions experienced a positive growth effect of manufacturing FDI over the sample period 1977–2001, other regions showed little evidence of such a relationship. Using disaggregated data across manufacturing sectors, we also find that there are great regional variations concerning the FDI–growth nexus, and only the Great Lakes and Far West regions experienced a beneficial impact of FDI on growth in all five manufacturing sectors examined.     

Bank efficiency in South‐Eastern Europe

This study examines the cost and profit efficiency of banking sectors in six transition countries of South‐Eastern Europe over the period 1998–2008. Using a stochastic frontier approach, our analysis reveals that the average cost efficiency of South‐Eastern European banks is 68.59 percent, and the average profit efficiency is 53.87 percent. Regressions on the determinants of bank efficiency show that foreign banks are characterized by higher profit efficiency but lower cost efficiency, and government‐owned banks are associated with lower profit efficiency than domestic private banks. However, the efficiency gap between foreign‐, domestic private‐ and government‐owned banks narrows over time. We also find that the market power of a bank has a positive association with both cost and profit efficiency. Institutional development, proxied by progress in banking regulatory reforms, privatization and enterprise corporate governance restructuring, also has a positive impact on bank efficiency.     

The impact of technological opportunity on the dynamics of trade performance

The paper examines statistically whether the degree to which countries are specialised in and/or increasingly move into sectors with above average levels of technological opportunity has any impact on growth in aggregate market shares of exports. A novelty of the paper is that it applies structural decomposition (SD) analysis not only on trade statistics, but also on US patent statistics. Nineteen countries and 17 manufacturing sectors for the period 1965–1988 are considered. A number of variables, in addition to the effects from the SD analysis, are included as explanatory variables. In this context, it is shown that there is a positive relationship between trade performance and the individual country’s ability to move into technological sectors offering above average technological opportunity.     

The impact of trade on the relative wages and employment of low skill workers in France

The impact of international trade on labour markets in developed countries will be different according to the degree of competition in product markets, the flexibility of the labour market and the skill intensity of production. An econometric analysis of the impact of trade in France has been undertaken using sectoral data for the period 1985–p1992. It is found that lower relative import prices reduce the relative employment of low skill workers in the first half the period and reduce their relative wages in the second half. In both cases the effect is more pronounced in sectors where the skill intensity of production is initially low.