Addressing causality in the effect of capital account liberalization on growth

Evidence supporting the positive effects of capital account liberalization on growth is mixed at best. Even after conditioning on the quality of domestic financial institutions, a significant number of studies still find no effect. One possible explanation is reverse causation. If low growth countries liberalize in order to spur growth, the observed correlation between growth and liberalization will underestimate the impact of capital account openness. To eliminate this bias, I instrument capital account liberalization with the average level of openness of other countries to capture the “fad” element in financial liberalization. IV estimates indicate a significant positive effect of liberalization on growth, confirming the predictions of economic theory.     

Price discovery and the effects of fragmentation on market quality: evidence from Cypriot cross-listed stocks

Using a novel high-frequency data set, we examine the contribution of Greek trading to the price discovery process of a pair of Cypriot blue-chip, cross-listed stocks during overlapping trading hours. Additionally, we investigate the effects of market fragmentation on the home market’s quality, as measured by microstructure-based liquidity measures. Contrary to earlier studies from other markets, our findings show that foreign stock exchanges can act as the leading contributors to price discovery and can concentrate the majority of trading activity and produce the lowest transaction costs. Our results also show that market fragmentation can lead to negative effects on market liquidity.     

Trade liberalization and capacity utilization: New evidence from the Turkish rubber industry

This study empirically tests the hypothesis that trade liberalization increases capacity utilization. It calculates capacity utilization for the Turkish rubber industry by using a production theory framework. More specifically, plant-level capacity utilization levels are calculated using a Generalized Leontief cost function system. Capacity utilization levels were low but improved when the trade regime shifted from a restrictive to a more liberalized one. The size and location of plants were two significant factors which created capacity utilization differences within the industry. However, capacity utilization levels appeared to improve primarily because of trade liberalization.Also, a scholar-in-residence, Department of Economics, Duke University. My particular thanks go to Patrick Conway, Marjorie McElroy, Edward Tower, participants of the International Economics Workshops at Duke University, and the anonymous referee for helpful suggestions. Any errors are mine.     

Volatility of capital flows and financial liberalization: Do specific flows respond differently?

This paper examines the volatility of capital flows following the liberalization of financial markets. Utilizing a panel data set of overlapping data, the paper focuses on the response of foreign direct investment, portfolio flows, and other debt flows to financial liberalization. The financial liberalization variable comes from the chronology and index developed by Kaminsky and Schmukler [Kaminsky, G.L. and Schmukler, S.L., 2003, Short-run pain, long-run gain: The effects of financial liberalization, IMF Working Paper WP/03/34.]. Different types of capital flows are found to respond differently to financial liberalization. Surprisingly, portfolio flows appear to show little response to capital liberalization while foreign direct investment flows show significant increases in volatility, particularly for the emerging markets considered.     

发展中国家的资本账户开放:问题和抉择

无论是对发达国家还是发展中国家资本账户的开放性研究,人们都倾注了大量的精力.但是回顾这争鸣的百家,对发展中国家资本账户开放后的经济效应,也莫衷一是.尽管如此,被经济学界广泛承认的事实是,资本账户开放后的效应是因各国情况不同而不同的,需要决策者审时度势,慎之又慎,尤其要避免伴随资本账户开放而可能带来的金融冲击甚至危机.     

Trade liberalization and trade performance of environmental goods: evidence from Asia-Pacific economic cooperation members

In this article, we study the impact of trade liberalization, including reductions in both tariff and nontariff trade barriers, on environmental goods (EGs) exports. Using bilateral trade data from 20 Asia-Pacific Economic Cooperation members, we find that tariff reduction in an exporting country has a larger positive impact on its exports of EGs than tariff reduction in an importing country. Our results also show that a lower nontariff barrier in an importing country increases its imports of EGs. A considerable amount of heterogeneity also exists in subsample results based on countries’ income levels.     

Financial and Capital Account Liberalization,Financial Development and Economic Development: A Review of Some Recent Contributions

Abstract

This article presents a review of some recent contributions on the relation between global finance and economic development in emerging economies. It first, stresses the growing consensus among economists on the financial instability that financial and capital account liberalization can possibly cause in emerging economies. It then outlines and compares two alternative strategies to tame such instability. The comparison is between the “good-institutions need-to-come-first” approach put forward by some mainstream economists, and the request for a deeper reform of the existing monetary system advocated by heterodox economists.     

金融发展、资本账户开放与金融不稳定——来自中国的证据

文章建立一个由金融发展程度、资本账户开放与金融不稳定指标组成的向量自回归(VAR)模型,利用中国1982~2005年的年度数据对这些变量的长期协整关系和短期的调整动力学进行相关的时间序列分析。模型的估计结果显示,对于中国来说,金融发展程度、资本账户开放和金融不稳定之间存在着长期的协整关系,但三者之间的影响程度和方向各不相同。所有结果均显示,无论从短期和长期看,金融发展程度对一国的金融稳定具有显著影响,对资本账户开放的进程也具有重要的影响。     

中国工业资本收益率和配置效率测算及分解

本文利用1999-2007年的工业企业数据库测算了中国工业资本收益率,在此基础上基于资本边际收益均一化理论测算了工业资本配置效率,并利用份额转换分析方法对工业资本收益率进行行业间分解,结果显示:(1)中国的工业资本收益率在近十年内大幅提高,而资本在行业间的配置效率虽然有所提高,但是变化很小。(2)中国工业部门资本收益率的增长是由于资本收益率自身的增长效应带来的。工业资本效率的改善更多体现在总量效率上,而投资结构缺乏效率。本文的发现对反思和探讨产业调控政策措施选择问题具有借鉴意义。     

Real wages and labor-saving technical change: evidence from a panel of manufacturing industries in mature and labor-surplus economies

Recent theories have provided a persuasive account of a key stylized fact of mature economies: the common long-run trends of average real wages and labor productivity, and the ensuing stationarity of functional distribution. Central to these theories is the notion of directed technical change, which claims that a rise in labor costs sparks the adoption of labor-saving innovations. This paper empirically examines a core prediction of these theories, namely that shocks to functional distribution elicit compensatory adjustments in real product wages and labor productivity. Using two disaggregated data-sets of manufacturing industries (EU-Klems and Unido), I find evidence of cointegration and two-way, long-run Granger causality between these two variables. These findings suggest that directed technical change is indeed key for producing stationarity in functional distribution, and they complement the recent empirical literature on distributive cycles and productivity growth. Preliminary evidence from the Unido data-set also suggests the importance of directed technical change in developing countries. To illuminate the empirical procedure, I present a theoretical model of growth and distribution with directed technical change.     

Capital mobility and sustainability: Evidence from U.S. current account data

We propose an empirical framework that allows us to jointly test for the sustainability of the current account deficit and evaluate the capital mobility thesis by examining the time series properties of the current account. We argue that this approach is more useful than the Feldstein-Horioka (1980) cross-section regression because of its firm basis on the long run inter-temporal budget constraint and of its richer dynamics that allow for a more useful method to evaluate the capital mobility thesis. Based on a century and half of U.S. current account data, we find evidence of current account sustainability and major breaks in the current account dynamics such that adjustment in the current account switches off allowing the current account to accumulate at a non-stationary rate. We assess whether periods in which the current account accumulates in a non-stationary way correspond to historical periods believed to have witnessed high degree of capital mobility.First version received: June 2003/ Final version received: January 2004     

Capital flight from the countries in transition: Some empirical evidence

This paper presents empirical evidence suggesting that the transition economies have tended to experience capital flight during periods of macroeconomic instability, such as high inflation and sharply declining output. The timing of these outflows, however, has differed somewhat across countries. Poland and Czechoslovakia experienced significant capital flight early in the transition process, but as reforms have progressed, capital outflows have slowed. By contrast, Russia registered a relatively steady flow of capital flight from 1991-94, with cumulative outflows totalling about $40 billion. Finally, capital flight from Hungary has been subdued, paralleling the gradual course of economic reforms and the country's comparative political stability.     

The causality between FDI and sector-specific production in Turkey: evidence from threshold cointegration with regime shifts

This article considers bidirectional nonlinear cointegration relation between FDI and industrial output in Turkey. The data cover the monthly period 2005:1–2013:10 for the time series of total industrial production, 36 sub-industrial sectors’ production and FDI. Following nonlinear threshold cointegration and VECMs, the article yields that (i) total industrial production and nine sub-industrial productions have positive long-run impact on FDI with significant error corrections, (ii) six sub-industrial productions have short-term influence on FDI, (iii) FDI has long-run positive impulse on total industrial production and nine sub-industrial productions with some significant error corrections and (iv) FDI affects four sub-industrial productions in the short run as well as in the long run. The results of VECMs from (i) also reveal that the all short-term adjustment parameters are found significant and powerful in 10 typical regimes (Regime-1s) and in 5 extreme regimes (Regime-2s). Finally, the outcome of VECMs from (iii) yields that short-term adjustment parameters are found significant and powerful in two typical regimes and in four extreme regimes. Eventually, considering FDI’s positive impact in the short and long run, this article suggests that policymakers promote specifically the FDI inflows to the sectors of intermediate goods, manufacture of beverages, manufacture of rubber and plastic and manufacture of other nonmetallic mineral products.     

The impact of trade liberalization on employment,capital, and productivity dynamics: evidence from the uruguayan manufacturing sector

This paper studies the impact of trade liberalization on labor and capital gross flows and productivity in the Uruguayan Manufacturing Sector. Higher international exposure implied a slightly higher job creation, an important increase in job and capital destruction, and an increase in productivity. Unions dampened these effects. Although not associated with higher creation rates, unions were effective in reducing job and capital destruction but they also reduced productivity growth. Industry concentration mitigated the destruction of jobs but had no effects on job creation or in capital and productivity dynamics.     

Economic liberalization and price response of aggregate private investment: time series evidence from India

Abstract.  This paper presents evidence on the effects of economic liberalization of 1991 on the price responsiveness of aggregate private investment in India. The wide ranging reforms are expected to increase the price response of private investment due to (i) the Le Chatelier effect, (ii) a higher price elasticity of demand for final goods, and (iii) possible relaxation of the credit constraint. The empirical results, based on alternative specifications, estimation methods, and sample periods, show a dramatic increase in the price response; the elasticity of investment with respect to the relative cost of capital has increased five times after the dismantling of the 'Licence Raj.'     

Capital flows and economic growth revisited: evidence from five Sub-Saharan African countries

The study examines the differential effects of capital flows on economic growth in five Sub-Saharan African (SSA) countries over the period 1970–2014. Using the autoregressive distributed lag methodology, the findings show that in the long-run capital flows (i.e. foreign direct investment (FDI), aid, external debt, and remittances) have different effects on economic growth. FDI has a significant positive effect in Burkina Faso and negative effects in Gabon and Niger whereas the impact of debt is negative in all countries. Aid, however, promotes growth in Niger and Gabon whiles it deters growth in Ghana. Remittances, on the other hand, have a significant positive effect in Senegal. Finally, gross capital formation is significant in most of the countries and the impact of trade is mixed. These results suggest that the benefits of capital flows in SSA have been overemphasized.     

Capital structure and value of reported earnings: evidence from an emerging market

This article documents a nonlinear impact of capital structure on the value of reported earnings in India during the period between 2009 and 2015. Our results show that earnings reported by firms with moderate level of debt are more valuable than earnings reported by firms with low or high level of debt. Our results are robust across various proxies of capital structure and across various sub-samples. This article argues that moderate level of debt is associated with low-agency problems, while low and high level of debt is synonymous to high-agency problems. Differences in agency problems result in reported earnings that have very different levels of relevance.     

“创新”抑或“关系”？儒家文化视角下社会资本与企业战略研究

在经济社会转型期复杂的外部环境下,中国民营企业如何在激烈的市场竞争中调整战略、获取竞争优势并谋求长期发展？基于儒家文化视角考察了社会资本对民营企业战略导向的影响。以中国私营企业为研究样本,发现社会资本降低了企业的资源约束,但也“绑架”企业持续进行关系投入,促进了民营企业的创新战略和关系战略。儒家文化则规制了这种作用,在一定程度增强了企业的创新战略并削弱了关系战略。进一步研究发现,竞争激烈的环境更容易激发企业的战略变革,但外来文化冲击导致的文化冲突削弱了儒家文化的影响。机制检验发现,社会资本通过缓解融资约束,从而支持了民营企业的战略投入。以上结果经过工具变量回归及一系列稳健性检验后依然成立。上述发现拓展了非正式制度下企业行为的研究,为解释中国情境下民营企业的战略行为提供了经验证据。     

Herding on lottery-type stocks: evidence from the Chinese stock market

Previous studies have provided evidence that investors have gambling propensity in the stock market and exhibit a preference for lottery-type stocks. In this study, we use high total skewness and high maximum daily return (MAX) to measure lottery-type stocks and examine whether investors do exhibit distinct herding pattern in these stock types. Empirical results show that investors display stronger herding among lottery-type stocks, thereby indicating that such stocks induce correlated behaviour with the investors. In addition, we find that stocks with the highest skewness exhibit stronger herding under upmarkets, whereas stocks with the lowest skewness display stronger herding under downmarkets. Regarding the highest MAX portfolio, no significant herding asymmetry is seen between upmarket and downmarket. The results reported in this article demonstrate that comovement in stock returns may be partly attributed to the nonstandard preferences of investors in the stock market.     

Trade liberalization and markups: Micro evidence from China

This paper presents evidence from highly disaggregated Chinese firm-product data that, given productivity, input tariff reductions induce an incumbent importer/exporter to increase product markups. We further investigate empirically the mechanisms underlying this trade liberalization effect, and find that input tariff reductions decrease marginal costs, and their effects on markup adjustments are more profound among firms with higher import dependence. Moreover, we exploit unique features of Chinese data by comparing results for two trade regimes: ordinary trade (wherein firms pay import tariffs to import) and processing trade (wherein firms are not subject to import tariffs). While the aforementioned trade liberalization effects and mechanisms only apply to ordinary trade, processing trade samples are used in a placebo test. The paper also shows that more productive firms charge higher markups for products. All these findings are robust to alternative markup measures including one estimate using physical-quantity output data, different production function specifications, a subsample consisting only of pure exporters, and estimations based on our theoretical derivations.