THE FINANCIAL DEVELOPMENT AND GROWTH NEXUS: A META‐ANALYSIS

We conduct a meta‐analysis of the literature of financial development and economic growth. We cover a large number of empirical studies and estimations that have been published in journal articles. We measure the degree of heterogeneity and identify the causes of the observed differentiation. Among the most significant factors behind this heterogeneity is the choice of financial‐variable proxies, the kind of data used as well as whether a study takes into account the issue of endogeneity. Our results suggest that the empirical literature on the finance–growth nexus is not free from publication bias. Also, a genuine positive effect exists between financial development and economic growth.     

FINANCIAL LIBERALIZATION IN SUB‐SAHARAN AFRICA: WHAT DO WE KNOW?

Abstract Beginning from the early 1980s countries in Sub‐Saharan Africa embarked on financial liberalization policies with a view to reversing the ill‐effects of financial repression. This paper provides a survey of financial liberalization in Sub‐Saharan African countries over the period 1980 to 2004. Our review of empirical studies showed that financial liberalization has had diverse and contrasting effects on savings, investment and economic growth. Most studies found a significant positive effect of financial liberalization on investment whereas its effect on savings has been largely insignificant. The evidence on the effect on economic growth is inconclusive as different studies find contrasting results. It is found that financial liberalization policies have not had the desired and expected results as both financial and macroeconomic variables have not improved following financial liberalization in these countries. This calls for a rethinking of financial liberalization in Sub‐Saharan African countries. It is important that financial liberalization is carried out in a stable macroeconomic environment. In addition to this, there should be a building and reform of institutions and the strengthening of prudential regulation. Following this, financial liberalization can be embarked upon but it must be properly sequenced and not rushed.     

A Meta‐Analysis of β‐Convergence: the Legendary 2%

Abstract.  The topic of convergence is at the heart of a wide‐ranging debate in the growth literature, and empirical studies of convergence differ widely in their theoretical backgrounds, empirical specifications, and in their treatment of cross‐sectional heterogeneity. Despite these differences, a rate of convergence of about 2% has been found under a variety of different conditions, resulting in the widespread belief that the rate of convergence is a natural constant. We use meta‐analysis to investigate whether there is substance to the 'myth' of the 2% convergence rate and to assess several unresolved issues of interpretation and estimation. Our data set contains approximately 600 estimates taken from a random sample of empirical growth studies published in peer‐reviewed journals. The results indicate that it is misleading to speak of a natural convergence rate since estimates of different growth regressions come from different populations, and we find that correcting for the bias resulting from unobserved heterogeneity in technology levels leads to higher estimates of the rate of convergence. We also find that correcting for endogeneity of the explanatory variables has a substantial effect on the estimates and that measures of financial and fiscal development are important determinants of long‐run differences in per capita income levels. We show that although the odds of a study being published is not uniform for studies with different p ‐values, publication bias has no significant effect on the conclusions of the analysis.     

金融发展、FDI与经济增长

本文基于拉姆齐—卡斯—库普曼斯模型,利用中国29个省、市、自治区1978～2004年的面板数据,研究金融发展、外商直接投资(FDI)对经济增长的影响。研究显示FDI在一定水平下,对东道国资本积累和产出增长的影响是非线性的,随着外资数量的逐渐增加,其对资本积累和产出增长的促进效应逐渐下降,FDI进入初期的正影响最终转为负影响,研究还显示FDI在数量一定的情况下,金融发展对本国资本积累和产出增长有正影响。金融发展通过有利于吸引外商直接投资、为外资企业提供金融服务,将潜在的溢出效应转化为现实生产力,显著地促进了经济增长。     

CORRUPTION'S DIRECT EFFECTS ON PER‐CAPITA INCOME GROWTH: A META‐ANALYSIS

Corruption is a symptom of weak institutional quality and could have potentially adverse effects on economic growth. However, heterogeneity in reported findings makes it difficult to synthesize the evidence base with a view to test competing hypotheses and/or support evidence‐based policy and practice. To address this issue, we have extracted 327 estimates of corruption's direct effect on per‐capita GDP growth from 29 primary studies, following a peer‐reviewed and pre‐published systematic review protocol. Precision‐effect and funnel asymmetry tests indicate that corruption has a negative effect on per‐capita GDP growth after controlling for publication selection bias and within‐study dependence. However, multivariate meta‐regression analysis results indicate that the overall effect is not robust to inclusion of moderating variables through a general‐to‐specific procedure for model specification. We report that the marginal effect of corruption on per‐capita GDP growth is more adverse when the primary study estimates relate to long‐run growth, are based on low‐income‐country data only, and extracted from journal papers. The effect is less adverse in studies that use the International Country Risk Guide corruption perceptions index and in those reporting estimates from two‐stage least‐squares estimations.     

Financial development and economic growth: an empirical evidence from the GCC countries using static and dynamic panel data

This paper contributes to the existing empirics of finance-growth nexus of all GCC countries with new results based on a larger dataset and longer time period 1975–2012, incorporating additional control variables, FDI, interaction term of FDI & financial development variables, and oil production. We employed four estimation techniques, Pooled OLS, Fixed effect estimation, Random effect estimation, and the system GMM estimation and used static and dynamic panel data. We obtain a robust finding of consistently a positive effect of financial sector development (FSD) on economic growth of GCC region with implication that a substantial improvement in FSD was in place. The results indicate that FDI, Fixed capital formation and oil production contribute positively to the economic growth of this region. The study results signify for a continuity of the on-going financial reform process, supervision & monitoring exercises to bring hitherto more dividends to the GCC economies.     

The macroeconomic impact of economic uncertainty and financial shocks under low and high financial stress

External financial frictions might increase the severity of economic uncertainty shocks. We analyze the impact of aggregate uncertainty and financial condition shocks using a threshold vector autoregressive (TVAR) model with stochastic volatility during distinct US financial stress regimes. We further examine the international spillover of the US financial shock. Our results show that the peak contraction in euro area industrial production due to uncertainty shocks during a financial crisis is nearly-four times larger than the peak contraction during normal times. The US financial shocks have an influential asymmetric spillover effect on the euro area. Furthermore, the estimates reveal that the European Central Bank (ECB) is more cautious in implementing a monetary policy against uncertainty shocks while adopting hawkish monetary policies against financial shocks. In contrast, the Fed adopts a more hawkish monetary policy during heightened uncertainty, whereas it acts more steadily when financial stress rises in the economy.     

Macroeconomic effects of aggregate accounting conservatism: A cross‐country analysis

This paper examines whether aggregate conditional and unconditional conservatism are associated with economic growth. Prior studies find that conditional conservatism improves contracting efficiency, but that unconditional conservatism has either a neutral or detrimental impact on contracting. We therefore conjecture that country‐level conditional conservatism increases the efficiency of resource allocation in an economy, whereas country‐level unconditional conservatism is not similarly beneficial. Using a cross‐country sample, we construct country‐level estimates of conditional and unconditional conservatism. We find that conditional conservatism is associated with higher level of growth in Gross Domestic Product and Gross Domestic Product per Capita. By contrast, unconditional conservatism shows no or negative association. Our study contributes to the ongoing debate on the desirability of accounting conservatism and also extends the literature on the macroeconomic effects of aggregate financial reporting attributes.     

The non-observed economy and economic growth: A meta-analysis

Academics, politicians, the public in general and researchers have great interest in the non-observed economy. However, there is divergence in its definition, accounting methodology and economic effects. In this paper we conduct a meta-analysis on the empirical literature that estimates the impact of the parallel economy on economic growth. We conclude that there is no publication bias and that the average effect of the parallel economy on economic growth is insignificant. However, the reported effects differ considerably with the type and number of countries included in the sample of primary studies, the structure of the data, the methodology used to measure the parallel economy, the number of citations of primary studies, and the year they were published.     

金融发展、FDI技术溢出与中国经济增长——基于省际面板数据的实证分析

基于1990年-2008年中国省际面板数据,就金融发展水平决定的FDI溢出效应对中国经济增长影响的实证研究表明,样本期内FDI通过其资本积累效应,对中国经济增长产生了显著的促进作用,且这一作用有随时间而强化的趋势;金融发展具有放大FDI技术溢出效应的作用,并由此对中国经济增长产生正面影响,但目前来看这一影响还比较小;"金融抑制"现象依然存在并对中国经济增长产生了不利影响,但在经历了多年的金融体制改革之后,"金融抑制"现象已有所减轻,其对经济增长的负面影响趋于减弱。     

Financial development and economic growth in Vietnam

By making use of a panel dataset that covers 61 provinces of Vietnam over the period 1997 to 2006, this paper examines the link between financial development and economic growth. Our analysis, which is based on endogenous growth theory, reveals that financial development has contributed to economic growth in Vietnam. We find that high ratio of credit to Gross Provincial Product (GPP) has accelerated economic growth in Vietnam. We also found a strong positive link between financial development and economic growth when alternative measures of financial development were used. The impact of foreign direct investment on economic growth will be stronger if more resources are invested in financial market development.     

A SURVEY OF RECENT DEVELOPMENTS IN THE LITERATURE OF FINANCE AND GROWTH

Abstract.  This paper provides a survey of the recent progress in the literature of financial development and economic growth. The survey highlights that most empirical studies focus on either testing the role of financial development in stimulating economic growth or examining the direction of causality between these two variables. Although the positive role of finance on growth has become a stylized fact, there are some methodological reservations about the results from these empirical studies. Several key issues unresolved in the literature are highlighted. The paper also points to several directions for future research.     

开放条件下中国货币与经济关联度变动原因实证研究

本文运用动态条件相关(DCC)方法估计中国各层次货币与实体经济的关联度。研究发现,1994年前,关联度始终在低位波动,之后大幅提高,总体呈上升趋势。通过在模型中引入金融深化度和经济开放度,本文从不同的侧面解释了货币与经济关联度变动的原因。虽然金融深化度和经济开放度对关联度的影响程度随货币层次的提高而增强,但作用方向却不完全相同;金融深化度越高,经济开放度越低,关联度越强,这表明金融深化理论与中国国情相适应。这对于改革开放具有较强的现实意义。政府通过优先发展金融,深化金融体制改革,能够提高货币对经济增长的效能,促进经济结构的转型和经济持续增长。     

The productivity of transport infrastructure investment: A meta-analysis of empirical evidence

Investments in transport infrastructure have been widely used by decision makers to encourage economic growth, particularly during periods of economic downturn. There has been extensive research on the linkage between transport infrastructure and economic performance since the late 1980s, characterised by widely varying evidence. We conduct a meta-analysis of the empirical evidence on the output elasticity of transport infrastructure, based on a sample of 563 estimates obtained from 33 studies. Previous meta-analyses have focused on total public capital and hence cannot appropriately explain the wide variation in the productivity effect of transport infrastructure nor provide guidance to policymakers on the returns to investment in different types of transport infrastructure. Our results indicate that the existing estimates of the productivity effect of transport infrastructure can vary across main industry groups, tend to be higher for the US economy than for European countries, and are higher for roads compared to other modes of transport. The variation in the estimates of the output elasticity of transport is also explained by differences in the methods and data used in previous studies. Failing to control for unobserved heterogeneity and spurious associations tends to result in higher values, while failing to control for urbanisation and congestion levels leads to omitted variable bias. These findings can be used to inform future research on the choice of model specification and estimation and transport-related policy making.     

Not all trade wars are created equal

• ? When interpreting estimates of the economic impact of trade wars, the devil is in the detail. Our review of more than 30 institutions' trade war projections finds huge variation – much of which can be explained by differences in assumptions rather than differences in models' structures or specifications. Relative to estimates based on extreme financial or tariff assumptions, our main trade war scenario results are moderate and comparable with the IMF's latest analysis.
• ? In our baseline forecast, trade policy measures have a relatively limited overall impact on global growth. This is in line with recent experience: to date, direct effects from higher trade costs have been small, and policy action has acted to offset adverse impacts on confidence. But the risk of further escalation in US‐China trade tensions remains, even following the (fragile) Trump‐Xi truce agreed at the recent G20 summit.
• ? Our review finds that estimates of the impact of such an escalation range from negligible impacts to a deterioration in some countries’ economic conditions approaching that seen during the global financial crisis. Results in Oxford Economics’ “rising protectionism” scenario – from our latest Global Scenarios Service – are moderate in comparison.
• ? We also find that all estimates showing substantial economic effects from a trade war in our sample are predicated on extreme asset price or tariff moves. In some cases, tariffs are assumed to rise more than at the time of the Great Depression in the 1930s.
• ? Such differences in assumptions can largely account for the divergence in trade war impact estimates. This is illustrated in our very low probability “full‐blown global trade war” scenario – incorporating severe tariff and financial assumptions more in line with institutions like the Bank of England – which generates a deterioration in economic conditions that broadly matches extreme estimates in our sample.

     

对我国区际经济与金融差距关联性的实证分析

各区域间金融发展的差异对经济发展差距有无影响以及影响机制如何成为经济学研究的一项任务。以塞尔指标衡量我国经济与金融发展差距,发现我国区域间经济发展差距与金融发展差距呈现一致的变动关系,且金融差距大于经济差距。由此引出的基本判断是我国区际经济差距的逻辑原因有金融因素,进而采用格兰杰因果关系检验判断我国省际金融发展与经济增长间的关系,从中可以明确我国东部地区金融成长偏重于内生状态,而中西部地区更倾向于外生状态。考虑到改革的总体方向,并借鉴东部地区的经验,放松金融抑制、催化内生金融成长无疑是全面促进中西部经济发展的必然选择。     

Equity market and money supply spillovers and economic growth in BRICS economies: A global vector autoregressive approach

Previous studies report that private credit as a proxy of financial development contributes to economic growth in BRICS economies. This paper employs three additional measures of financial development, namely equity market, money supply and market capitalization, and further investigates cross-country evidence on the impact of equity market and money supply spillovers on economic growth in BRICS economies. Utilizing a Global Vector Autoregressive (GVAR) framework and quarterly data from 1989Q1 and to 2012Q4 from BRICS economies, we find that equity market and money supply variables do not predict the contributions of financial development in each BRICS member in boosting economic growth in the other member countries. However, market capitalization significantly influences economic growth. These results suggest that, besides private credit, market capitalization is another key channel of promoting growth in individual economies and the region. Policy implications of the findings are discussed.     

THE CAUSAL LINK BETWEEN FINANCIAL INCENTIVES AND WEIGHT LOSS: AN EVIDENCE‐BASED SURVEY OF THE LITERATURE

Obesity and overweight are linked to diseases that cost society a significant amount of resources. While behavior modification can reduce the problem, instigating such lifestyle changes is an uneasy task. One potential way to reduce the problem is through the use of financial incentives. In this survey, we review the available evidence, properly emphasizing studies that credibly yield meaningful estimates of the effect of financial incentives on weight loss. We find that the scientific literature on the subject has not yet satisfactorily settled whether such a mechanism is effective at eliciting the desired behavioral and health outcomes. We therefore advocate a rigorous large‐scale randomized experiment to provide reliable estimates of the effect.     

经济结构失衡背景下的中国经济增长质量

利用客观因子分析法与主观打分法相结合,测度了1978-2010年中国经济结构和各要素之间的失衡程度,利用结构方程模型分析了产业结构、投资消费结构、金融结构、区域经济结构与国际收支结构的失衡对于经济增长质量的影响。结果表明：中国经济结构整体失衡水平呈U型变化趋势,五大结构的失衡水平不断恶化。产业结构、投资消费结构、金融结构的失衡程度对经济增长质量产生了负效应,区域经济结构与国际收支结构对于经济增长质量产生正效应。在未来发展中,通过产业结构与投资消费结构、金融结构、区域经济结构、国际收支结构的协调、有序、均衡的调整,实现经济增长质量的稳定、可持续发展。     

DOES ICT GENERATE ECONOMIC GROWTH? A META‐REGRESSION ANALYSIS

Despite phenomenal technological progress and exponential growth in computing power, economic growth remains comparative sluggish. In this paper, we investigate two core issues: (1) is there really no connection between ICT and national economic growth? and (2) what factors moderate the ICT–growth relationship? We apply meta‐regression analysis to 466 estimates drawn from 59 econometric studies that explore the Solow or Productivity Paradox that there is little impact of ICT on economic growth and productivity. We explore the differential impact of ICT on developed and developing countries and the differential impact of different types of ICT: landlines, cell phones, computer technology and Internet access. After accommodating potential econometric misspecification bias and publication selection bias, we detect evidence that ICT has indeed contributed positively to economic growth, at least on average. Both developed and developing countries benefit from landline and cell technologies, with cell technologies’ growth effect approximately twice as strong as landlines. However, developed countries gain significantly more from computing than do developing countries. In contrast, we find little evidence that the Internet has had a positive impact on growth.