Derivatives market and economic growth nexus: Policy implications for emerging markets

The derivatives market plays a crucial role in an economy. However, its link to economic growth and macroeconomic factors seem to be insufficiently covered in academic research despite the publication of many empirical studies on the causality of finance and growth. Recently, many emerging markets, such as Vietnam, have decided to establish a derivatives markets for risk management to ensure stability in the economy. This paper investigates the dynamic relationship among these key variables using up-to-date panel data on 17 countries, for which required data are available until 2017. This study yields various findings. First, bidirectional Granger causality between derivatives markets and economic growth exists internationally. Second, using panel vector autoregression, impulse-response functions, variance decomposition techniques as well as panel econometrics estimations, we find that trade openness and government spending have more effects on the derivatives market than economic growth and inflation. Third, we document that the derivatives market has a more integrated direct relationship with economic growth and macroeconomic factors in high-income countries than their upper-middle-income counterparts. These new findings are essential for consideration by policy makers in emerging markets in relation to the development of their derivatives markets.     

HOW IS THE PRO‐CAPITALIST MENTALITY GLOBALLY DISTRIBUTED?

This article demonstrates the existence of conglomerates of nations that seem to have similar ideological attitudes towards capitalism. The main finding is the existence of relatively homogeneous global cultural clusters, the Anglosphere and Northern European nations showing the highest appreciation for free markets, followed by the Sinosphere. The rest of the world tends to be more anti‐capitalist, with the Middle East and Eastern Europe standing out for being at the end of the spectrum. Statistical analysis suggests that the capitalist mentality is to some extent autonomous, and does not seem to be determined strongly by other variables such as income, growth or inequality. At the same time, the capitalistic mentality appears to correlate with economic freedom, as measured by the Economic Freedom of the World index. If a pro‐capitalist ideology is connected to institutional development, then some conglomerates seem to be in a better position to attain or maintain economic growth in the future.     

Financial Markets, Development and Economic Growth: Tales of Informational Asymmetries

Abstract.  The development of financial systems is very often characterised by the development of innovative financial contracts which allow a more efficient allocation of resources and a higher level of capital productivity and economic growth. By exploiting the microeconomic theory of the optimal financial contract under asymmetric information, economists have recently managed to shed new light on the well studied issue of the relationship between financial market development and economic growth. This paper reviews the most recent progress of this literature which shows that the amount of information asymmetry in the credit market and the degree of heterogeneity between borrowers (typically firms) and lenders (typically workers or savers) determine the nature of the financial system. Differences in endowments and in the level of information distribution can give rise to very different financial contracts which affect, and in turn are affected, by capital accumulation and growth.     

Explaining Vertical Integration Strategies: Market Power, Transactional Attributes and Capabilities

abstract    We analyse vertical boundaries of firms by identifying and comparing industrial, transactional and firm-specific factors in such a way that industrial organization, new institutional economics and the capability-based view are all taken into account. After testing the model in 155 firms in the Spanish meat industry, we observe that only factors associated with both transaction costs and capabilities have a statistical and economic relevance for explaining vertical integration. Firms vertically integrate to create specific investment between stages of the value chain, to internally exploit their pool of knowledge and capacities, and to guarantee quality of inputs and services employed. On the other hand, firms avoid high levels of vertical integration in the presence of high demand changes in order to stay flexible. Finally, providers or clients with market power do not seem to affect vertical boundaries in any consistent way.     

Theory, Reality, and Performativity in Markets

A bstract .   The purpose of this article is to analyze the relation between scientific knowledge in the form of theories and the world that such theories are about. The focus is on market theories. I argue that everyday knowledge, conceptualized using the notion of "lifeworld," is the bedrock of scientific knowledge. I also make two distinctions, one between types of markets and one between principles of order in markets. There are two different types of markets, fixed-role markets and switch-role markets, and no existing theory can be used to explain both of them. In fixed-role markets, such as a producer market of garments, actors are identified as either sellers or buyers. In switch-role markets, such as the stock exchange market or currency market, actors are not identified with one role. The other distinction is between standard and status markets. In a status market, order is maintained because the identities of actors on both sides of the market are ranked according to status, which is a more entrenched social construction than the commodity traded in the market. In a market characterized by standards, the situation is reversed: the commodity is a more entrenched social construction than the social status of actors in the market. These distinctions are the backdrop of my analysis of the idea that markets are performed. It is concluded that the performativity approach is useful today for analyzing switch-role markets. A further conclusion is that neoclassical economic theory can be used in understanding switch-role markets, but not fixed-role markets.     

The Moral Economy of Parallel Currencies

A bstract .   This article offers a monetary analysis of Local Exchange Trading Systems (LETS) and examines both their moral and economic significance as well as the way in which these two aspects may conflict. After considering LETS' principles and history, I review three monetary theories in order to ascertain how one might best explore these phenomena. By drawing on the "Chartalist" tradition in monetary theory, I show (1) how strongly oriented LETS are to the formal market economy, from which, it is held, they detach themselves, and (2) that they do not effect a return to barter or an abolition of money, as is sometimes claimed. Both points become clear when one pays due attention to the primary function of money as money-of-account. In the final section, I consider LETS empirically and compare their structural potentials with their concrete form. LETS' members are motivated less by pecuniary gain than by the desire to build community and realize certain values. Participants have little motivation to expand LETS, which are therefore destined to remain small and ineffectual in offering an alternative to the unemployed and less well-off. Indeed, were LETS to grow in size, the moral commitment required of members would come into conflict with the growing financial interests at stake.     

THE SOCIOLOGICAL APPROACH TO FINANCIAL MARKETS

Abstract.  As a part of the renaissance and growth of economic sociology during the past two decades, and in response to processes such as economic globalization, financial markets have been increasingly scrutinized by sociologists. Their investigation is seen as relevant with respect to understanding the structure and dynamics of advanced societies, the dynamics of social development, as well as fundamental aspects of human behaviour. This paper charts recent developments in the sociology of financial markets; its starting point is the treatment of the concept of information within three sociological orientations: the social-structural approach, sociological neo-institutionalism and the newer social studies of finance. By highlighting their different assumptions about information and market behaviour, I discuss how these approaches conceptualize financial markets, the methodological implications and the ways in which they contribute to the study of financial exchanges.     

Broadband and local growth

I find a positive relationship between broadband expansion and local economic growth. This relationship is stronger in industries that rely more on information technology and in areas with lower population densities. Instrumenting for broadband expansion with slope of terrain leans in the direction of a causal relationship, though not definitively.The economic benefits of broadband expansion for local residents appear to be limited. Broadband expansion is associated with population growth as well as employment growth, and both the average wage and the employment rate—the share of working-age adults that is employed—are unaffected by broadband expansion. Furthermore, expanding broadband availability does not change the prevalence of telecommuting or other home-based work. Like other place-based policies, expanding broadband availability could raise property values and the local tax base, but without more direct benefits for residents in the form of higher wages or improved access to jobs.The analysis relies on the uneven diffusion of broadband throughout the United States, allowing comparisons between areas with greater and less growth in broadband availability. I combine broadband data from the Federal Communications Commission, employment data from the National Establishment Time-Series database, and other economic data from the US Census and BLS to examine broadband availability and economic activity in the US between 1999 and 2006.     

贸易、制度变迁与中国的经济增长

本文讨论了贸易和制度变迁对中国经济增长的影响。我们发现在1978年改革开放之前,贸易对中国经济增长的重要性并不明显,而1978年改革开放之后,贸易对经济增长的作用变得十分突出和重要。贸易发展方面存在的巨大差异,是中国东中西部地区的经济发展差距在改革开放之后开始迅速扩大的重要原因之一。贸易除了直接促进经济发展之外,还通过影响经济领域的制度变迁,从而间接影响经济增长。对外贸易为中国的非国有经济发展提供了动力和机会,推动了中国经济的市场化进程。非国有经济的发展和经济资源配置的市场化等经济领域的制度变迁,是推动中国经济持续增长的重要力量。坚持市场化导向的经济改革,限制行政权力,走向成熟的法治市场经济,是未来中国经济发展的内在要求。     

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.     

是市场的功能还是政府的作用——从传统、转型期经济向现代市场经济过渡

我们把发展中国家和经济转型期国家经过市场参数变换的区域称之为复通经济区域。本文从理论上揭示出在这些区域向现代市场经济过渡的时期必然存在着经济的零增长阶段,在此阶段如果政府无作用或作用不当,通货膨胀、贫富差距拉大和社会动荡等现象是不可避免的,这种现象从拉美等经济转型期国家的经验数据得到了验证。本文在此基础上以中国经济转型期的经验数据和实践基础论证了政府作用于市场经济的基本原理和方法,进而通过中国经济平稳增长过渡的"路径依赖"说明了中国经济改革和发展的科学性和正确性。     

弱周期性行业盈利稳定性和企业成长性的实证分析——基于医药和食品行业的数据研究

受金融危机影响,世界经济仍在谷底徘徊。弱经济形势下的投资成为一个有讨论价值的问题。国外成熟市场普遍观点认为,相比强周期性行业,弱周期性行业需求弹性小,盈利稳定,发展缓慢,在经济衰弱期应该多投资弱周期性行业。但是这个观点在我国非成熟市场是否成立仍需要数据分析与支持。本文以典型的弱周期性行业食品和医药行业为例,以强周期行业的化工行业进行实证对比分析,选取了2005—2012年三个行业上市公司的财务数据作为样本,就盈利稳定性和企业发展性进行对比分析。对于盈利稳定性,作者认为稳定的现金流、每股收益和权益回报率对于企业盈利稳定性的作用至关重要,还利用标准离差率来体现企业数据的波动程度,建立了相应的评价体系;对于企业成长性,利用资产周转率、销售毛利率等比例,在前人研究的基础上进行了评价模型改进,对各行业企业进行打分,最后得出与成熟市场不同的结论：与强周期性行业相比,食品行业并没有较强的盈利稳定性,医药行业也不是发展缓慢,竞表现出较强的企业成长性。对于研究结果的原因分析,作者认为在我国食品安全问题是食品行业盈利稳定性较差的根本原因,而我国医药行业成长性较强是受基本国情、政府支持和投入等因素的影响。     

Demographic volatility and economic growth: convention and beyond

Following the success of endogenous growth theory, recent empirical examinations of the demography–economic growth construct established that components of demographic change can provide meaningful and clear insights into the direction and impact of demographic variation in economic growth. While theoretical justification and empirical support to the claim cannot be denied, confusions seem to have arisen whether an empirical growth construct will only be limited to demographic dynamics or the model can entertain other non-demographic variables. In a leading research, Kelley and Schmidt (1995, 2001) provided seemingly ambiguous evidence that addition of non-demographic variables can add explanatory power to the growth regression. While subsequent empirical growth models have largely followed the convention as in KS, some important considerations like the stochastic effects of demographic system on economic growth seem to be missing. This paper attempts to address the concerns by suggesting a long-memory demographic system and embedding stochastic demographic characteristics in a standard Solow–Swan model, which also forms the basis of convergence pattern. We empirically show that significant stochastic shocks exist in the demographic components which could have contributed to the growth volatility across nations. We suggest that empirical growth models should account for stochastic demographic characteristics to enable economic policy makers with correct information about the current and future state of evolution of the demography–economic system.     

城市公共服务的价值估计、受益者分析和融资模式探讨

城市生活质量决定城市价值.城市政府所提供的各类公共服务,直接影响着居民在城市中生活的舒适和便利程度,关系到城市长期发展的动力.围绕此主旨,论文探讨了3个相关的问题.第一,如何估计城市公共服务这些非市场的价值;第二,这些城市公共服务的成本承担和利益享受是否匹配;第三,怎样的公共口融资模式能够使上述关系更为匹配.基于显示性偏好法中的特征价格模型,利用北京市住宅市场和土地市场的徽观和个体交易数据,实证结果表明,居民愿意为居住在地铁站、公交车站和公署周边一定范围(0.8公里)内分别支付住宅价格的17.1%、12.4%和6.4%,但是,这种价值并没有被资本化到土地价格中.这表明,居民对城市公共服务偏好的住处并没有被房地产开发企业以地价的形式传递给政府,开发企业成为实际的受益者.以房地产价值作为税基的物业税的征收使信息可以从居民直接传递至城市政府,将使城市公共服务的融资模式更为合理.     

Beyond the “Innovation's Black-Box”: Translating R&D outlays into employment and economic growth

The emergence of the so-called “European Paradox” shows that increasing Governmental R&D Investment is far from being a ‘panacea’ for stagnant growth. Surprisingly, Governmental R&D Employment does not contribute to ‘mass-market’ employment, despite its important role in reducing Youth-Unemployment. Despite the negative side-effect of Governmental R&D Employment on economic growth, University R&D Employment appears to have a quite important role in reducing Unemployment, especially Youth-Unemployment, while it also does not have a downside in terms of economic growth. Technological Capacity enhancement is the most effective instrument for reducing Youth-Unemployment and is a policy with a quite robust effect regarding sustainable economic development.     

Capitalizing Research & Development: Signaling or Earnings Management?

This paper analyzes the capitalization of Research & Development (R&D) expenditures under International Financial Reporting Standards (IFRS). Discretionary R&D capitalization can be exercised by managers to signal private information on future economic benefits to the market. It can, however, also serve as opportunistic earnings management. We analyze a unique, hand-collected sample of highly R&D intensive German IFRS firms during 1998–2012. We find that market values are not associated with capitalized R&D for the overall sample, indicating that earnings management may be a concern. We identify firm-years for which R&D capitalization is possibly used for pushing their earnings above a specific threshold (e.g. analysts' forecasted earnings, prior year's earnings). Our results show that both the decision to capitalize and how much to capitalize are strongly associated with benchmark beating. Consistently, we find that market values are negatively associated with capitalized R&D for firms who are likely to use capitalization for benchmark beating (about one third of the overall sample). On the other hand, the market values R&D capitalization positively for well-performing firms, for which capitalizing does not matter to beat an earnings benchmark (about half of the overall sample). This finding is robust to controls for endogeneity, various deflators, and different measures for earnings management.     

Linking entrepreneurial and market orientation to the SME’s performance growth: the moderating role of entrepreneurial experience and networks

Entrepreneurial orientation and market orientation (EO and MO, respectively) have received extensive research attention in the past several decades. Although scholars widely agree that both MO and EO are critical to firms’ performances, a better understanding is still needed about how market and entrepreneurial orientation develop over time as well as their relative impact on the growth of the SME’s performance. This study does not consider MO and EO as generic resources that always positively influence firms’ performances; instead, it tries to explore contingent elements, such as social and business networks and accumulated entrepreneurial experience. The hypotheses were tested on 191 small and medium-sized electronic firms located in an Italian geographical cluster during two periods: 2005 and 2016. This study suggests that SMEs, which develop social networks, may enjoy considerable advantages from entrepreneurial and market orientation, improving their performance benefits. Moreover, our results show that previous entrepreneurial experience, when specific, can reinforce the impact of entrepreneurial and market orientation on firms’ performance growth. This analysis makes several important contributions to the management literature on the strategic orientation of firms, the entrepreneurial experience and network development.

     

Foreign capital inflows, economic growth and stock market capitalization in Asian countries: an ARDL bound testing approach

This study investigates the effects of foreign capital inflows and economic growth on stock market capitalization in 18 Asian countries by using the panel data from the period of 2000–2010. The ARDL bound testing cointegration approach confirms the valid long run relationship between the considered variables. Results indicate that foreign direct investment has significant negative and economic growth has significant positive relationship with the stock market capitalization, whereas, the results of workers’ remittances is found insignificant in long run. The error correction model confirms the significant positive relationship of economic growth and workers’ remittances while, FDI has negative and significant impact on stock market capitalization in short run. Results of causality test based on Toda and Yamamoto (J Econom 66: 225–250, 1995) show the bidirectional causal relationship of foreign direct investment and economic growth with stock market capitalization. However, no causal relationship is found in between workers’ remittances and stock market capitalization. It is suggested that investor should not idealize the inflow of workers’ remittances to invest in Asian stock markets in long run. Simultaneously, size of the economy is a better leading indicator for Asian stock markets. On the other hand, inflows of FDI may mislead the investor to invest. Investor should keep on eye whether FDI come in the competition of domestic market or not? If this happens so investor should not invest in the stock market of host country.     

The transmission of foreign shocks to South Eastern European economies: A Bayesian VAR approach

The paper analyses the macroeconomic effects of foreign shocks in three South-East European (SEE) economies: Croatia, Macedonia and Bulgaria. In this regard, we investigate the transmission of several eurozone shocks (output gap, money market rates and inflation) on various macroeconomic variables in the aforementioned countries (output, inflation, money market rates and budget deficits). We trace the effects of foreign shocks on the basis of impulse response functions obtained from the Bayesian Vector Auto Regressions (VARs) separately for each country. The main findings from our study are: first, economic expansion in the eurozone has strong output and inflation effects on SEE economies, implying some degree of synchronization of business cycles; second, eurozone inflation is instantly and to a great extent transmitted to domestic inflation, suggesting that inflation in the SEE economies is mostly driven by foreign inflation; third, domestic money market rates are not closely linked with eurozone money markets; fourth, monetary policy in the SEE countries does not seem to be responsive to eurozone inflation shocks; and fifth, the fiscal authorities attempt to offset the spillover effects from both economic expansion and monetary tightening in the eurozone.     

ECONOMIC ANALYSIS AND INTER-JURISDICTIONAL COMPETITION

The European Union does not set its regulatory principles in line with those that the theory of public goods suggests. The Union does not have full competence in areas such as defence that might involve public goods over a Europe-wide area. Yet it does have competence over many areas that should be left to member states or local government. However, if competition between jurisdictions is prevented, there will be a drift towards centralisation of economic decision-making. This paper analyses this trend from the point of view of the theory of clubs and theories of market failure.