Fixed investment and economic growth: new results on causality

This study re-examines the issue of causality between investment shares and economic growth. A methodology is applied based on Arellano and Bond (1991), and Holtz-Eakin, Newey and Rosen (1988) to quinquennial panel data on growth and investment shares for the post war period and shows that, contrary to previous results in the literature, causality between fixed investment and growth runs in both directions. Investment shares Granger-cause growth rates and growth rates Granger-cause investment shares. Granger causality from investment shares to growth rates is found to be negative. The result is in contrast with a capital fundamentalist view which sees fixed investment as the key to long run growth, but is fully consistent with the predictions of Solow-type growth models.     

Economic growth,exports and foreign direct investment in Least Developed Countries: A panel Granger causality analysis

This paper investigates potential Granger causality among the real GDP, real exports and inward FDI in Least Developed Countries for the period between 1970 and 2009. A new panel-data approach developed in Kónya (2006) [Kónya (2006), Exports and growth: Granger causality analysis on OECD countries with a panel data approach, Economic Modelling, 23, 978–992] which is based on SUR systems and Wald tests with country specific bootstrap critical values has been employed. The results indicate direct, one-period-ahead, unidirectional causality from exports to GDP in Haiti, Rwanda and Sierra Leone, and from GDP to exports in Angola, Chad and Zambia. Considering the FDI–Growth nexus, there is evidence of FDI Granger-causing GDP in Benin and Togo, and GDP Granger-causing FDI in Burkina Faso, Gambia, Madagascar and Malawi. While studying EXP–FDI relations, this paper finds that the causality is from FDI to real exports in Benin, Chad, Haiti, Mauritania, Niger, Togo and Yemen, and from real exports to FDI in Haiti, Madagascar, Mauritania, Malawi, Rwanda, Senegal and Zambia.     

Financial variables and euro area growth: A non-parametric causality analysis

This paper investigates the predictive ability of financial variables for euro area growth through bivariate and multivariate non-parametric Granger causality tests. Apart from assessing the within-country forecasting ability of commonly-employed financial variables, such as the term spread, the stock market returns and the growth of real money supply, we also test for cross-country influences. In this way, we reveal the countries that are more useful in predicting growth in other member countries along with the ones that are more receptive to other countries' financial developments. Our results suggest that financial variables are useful leading indicators for euro area growth at a joint level, albeit at different horizons, ranging from one to six quarters. Our finding of overall increased levels of receptivity among member states provides useful information for policy makers, especially in the case of monetary union such as the euro area.     

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.     

Exports and growth: Granger causality analysis on OECD countries with a panel data approach

This paper investigates the possibility of Granger causality between the logarithms of real exports and real GDP in twenty-four OECD countries from 1960 to 1997. A new panel data approach is applied which is based on SUR systems and Wald tests with country specific bootstrap critical values. Two different models are used. A bivariate (GDP–exports) model and a trivariate (GDP–exports–openness) model, both without and with a linear time trend. In each case the analysis focusses on direct, one-period-ahead causality between exports and GDP. The results indicate one-way causality from exports to GDP in Belgium, Denmark, Iceland, Ireland, Italy, New Zealand, Spain and Sweden, one-way causality from GDP to exports in Austria, France, Greece, Japan, Mexico, Norway and Portugal, two-way causality between exports and growth in Canada, Finland and the Netherlands, while in the case of Australia, Korea, Luxembourg, Switzerland, the UK and the USA there is no evidence of causality in either direction.     

The effect of economic freedom on growth revisited: New evidence on causality from a panel of countries 1970–1999

Does economic freedom cause economic growth or does causality run in the reverse direction? And do all the constituent parts of economic freedom exert a causal impact on economic growth or do some freedoms matter more than others? In order to answer these questions, this paper conducts a series of Granger causality tests using panel data for the period 1970–1999. In addition, the paper discusses a number of model specification issues, e.g. lag-length selection and the importance of intervening variables. The results suggest that some (but not all) aspects economic freedom affect economic growth and investment. On the other hand, there is only weak evidence that growth affects economic freedom.     

中国财政支出结构与经济增长的Granger因果关系分析

财政支出与经济增长之间有联系,那么,财政支出结构的变化是否会对经济增长起到显著的作用,它们之间的关系如何,就值得研究。可运用单位根、协整及Granger因果关系检验等计量方法,分析中国财政支出结构与经济增长的关系。     

中国卫生投资与经济增长适应程度分析

目的：分析中国卫生投资与经济增长适应程度。方法：通过建立＂推动效应＂模型和＂拉动效应＂模型对中国卫生经费支出的水平与国民经济增长的适应程度进行具体测算。结果：中国卫生投资增长速度稍快于国民经济增长速度,其中,政府卫生投资增速稍滞后于国民经济增速,社会卫生投资增速稍快于国民经济增速,个人卫生投资增速大大超过国民经济增速。结论：减弱个人卫生投资,适当减缓社会卫生的投资,适当增加政府对卫生投资,三方面同时进行调整,达到保持或稍减缓总卫生投资增速,使其与国民经济发展相符。     

The effect of the euro on foreign direct investment

In this paper the recent effect of the European Monetary Union on inward FDI-flows is examined using a difference-in-differences approach. The estimated results show that the introduction of the euro raised inward FDI flows by approximately 16% within the euro area, by approximately 11% to non-members and weakly by around 8% from non-member countries into the euro area. Moreover, the geographical effects of the euro are explored. The results show partial agglomeration tendencies for the euro area. There are also some indications of increased importance of vertical specialization in the sample.     

Exports, imports, and economic growth in Portugal: evidence from causality and cointegration analysis

This paper investigates the Granger-causality between exports, imports, and economic growth in Portugal over the period 1865–1998. The role of the import variable in the investigation of exports–output causality is emphasized, enabling one to test for the cases direct causality, indirect causality, and spurious causality between export growth and output growth. The empirical results do not confirm a unidirectional causality between the variables considered. There is a feedback effect between exports–output growth and imports–output growth. More interestingly, there is no kind of significant causality between import–export growth. Both results seem to support the conclusion that the growth of output for the Portuguese economy during that period revealed a shape associated with a small dual economy in which the intra-industry transactions were very limited.     

The long-run effect of foreign direct investment on total factor productivity in developing countries: a panel cointegration analysis

This paper examines the long-run effect of the level of foreign direct investment (FDI) on the level of total factor productivity (TFP) for 49 developing countries for the period 1981–2011 using panel cointegration and causality techniques. It is found that (i) FDI has, on average, a negative long-run effect on TFP in developing countries, (ii) long-run causality runs in only one direction, from FDI to TFP, (iii) in the short run, TFP has a negative effect on FDI, and (iv) the long-run effect of FDI of TFP differs between selected groups of countries: While the estimated long-run FDI–TFP coefficients are always relatively large, negative, and significant for countries with lower levels of human capital, financial development, and trade openness, the estimated effects are relatively small, insignificant, or even significantly positive for subgroups of countries with higher levels of human capital, financial development, and trade openness.     

Financial intermediation and growth: causality and causes without outliers

In a seminal paper, Levine et al. (J Monet Econ 46:31–77, 2000) provide cross-sectional evidence showing that financial development has positive average impact on long-run growth, using a sample of 71 countries. We argue that the evidence is sensitive to the presence of outliers.

The effect of EPA enforcement funding on private-sector pollution-control investment

The paper estimates the effects of the US Environmental Protection Agency (EPA) enforcement budget upon the demand for pollution-control equipment in the private sector. There are two possible effects. A direct effect occurs when the enforcement budget is used for inspections that result in enforced compliance requiring additional pollution control equipment. A second effect is anticipatory, and arises from the private sector's objective of minimizing expected costs due to fines imposed by the EPA for infractions of pollution-control requirements. This component of demand depends, in part, on the EPA enforcement budget. We find that increases in the EPA budget increase the demand for pollution-abatement equipment. This in turn implies that increases in the EPA enforcement budget have been effective in mitigating pollution.     

The effect of uncertainty on UK investment authorisation: Homogenous vs. heterogeneous estimators

This paper compares pooled and non-pooled models of UK capital investment using the Confederation of British Industrys (CBI) Industrial Trends Survey, focusing on the impact of uncertainty. The uncertainty measure is based on the cross sectional dispersion of optimism about the future business conditions in the industry in which the firm operates. The panel data estimation shows that uncertainty has quantitatively important negative effects on investment. However, if we look at the estimation results at the industry level, we find a great diversity in both estimated elasticities and t-statistics, providing valuable information not available from the pooled model. Finally, we compare the forecast performances of the above models; this analysis confirms that pooled estimators are generally better than non-pooled estimators in terms of out-of-sample forecast performance, but the difference between the two is not very large.     

Military spending,economic growth and investment: a disaggregated analysis by income group

Empirical Economics - Employing a panel vector autoregression (PVAR) methodology, the paper addresses the nexus between military expenditures and two key macroeconomic variables, namely growth...     

外商直接投资和经济增长:国内金融市场作用的实证分析

大多数外商直接投资(FD I)文献都忽略了金融市场和FD I相互作用对经济增长的影响。基于此,本文运用协整分析法分析了国内金融市场在FD I和中国经济增长中的作用;结果表明,国内金融市场在FD I和中国经济增长中没有起到积极作用。     

Money-output Granger causality revisited: an empirical analysis of EU countries

In this paper, the evidence collected in the large literature on testing for Granger-causality from money to output is revisited. Using a broad data base of 14 EU countries plus Canada, the US and Japan, and quarterly data from the mid 1960s to mid 1990s, a number of hypotheses from this literature is evaluated. It is found that very few general conclusions can be sustained. For instance, in most countries it is not the case that the use of data in levels creates a bias in favour of finding Granger-causality effects of money on output compared to using differences. Neither does the significance of money lags decline when increasing the number of variables included in the model. What appears to be robust, though, is that allowing for asymmetries clearly increases the likelihood of finding significant causality effects. Based on the Granger-causality test results, a number of country groups are obtained using cluster analysis, which are characterized by a similarly behaviour with respect to the money-output relation.     

The effects of local government investment on economic growth and employment: evidence from transitional China

Based on the panel data of 28 provinces in the year of 1987-2001,this paper examines the effects of the local government investment on economic growth and employment.The empirical result shows that the local government investment plays a significant positive role in economic growth and emplovment.However,while the proportion of local government investment to GDP had a remarkable rise after 1998.the elasticity of local government investment on economic growth declined,which shows that there is a hig room for raising the efficiency of local government mvestment.Moreover,the empirical examination shows that although local government investment had positive effect on employment,the elasticity had a decrease after 1994 when the tax-sharing system reform was put into practice.This shows that the positive role of local government investment on emplovment is also limited.This paper argues that the role of local governments as investors must be weakened,and local governments of different levels should lessen direct economic intervention and concentrate on public regulation.