Optimal Dutch disease

Growth models of the Dutch disease explain why resource abundance may reduce growth. The literature, however, also raises a new question: if the use of resource wealth hurts productivity growth, how should such wealth be optimally managed? This question forms the topic of the present paper. We show that the assumptions in the previous literature imply that the optimal share of national wealth consumed in each period needs to be adjusted down. Some Dutch disease, however, is always optimal. Thus, lower growth in resource-abundant countries may not be a problem in itself, but may be part of an optimal growth path. The optimal spending path of the resource wealth may be increasing or decreasing over time. What might be contrary to intuition is that the bigger is the growth generating traded sector, the more of the resource income should be spent in early periods.     

Optimal Dutch disease

Growth models of the Dutch disease explain why resource abundance may reduce growth. The literature, however, also raises a new question: if the use of resource wealth hurts productivity growth, how should such wealth be optimally managed? This question forms the topic of the present paper. We show that the assumptions in the previous literature imply that the optimal share of national wealth consumed in each period needs to be adjusted down. Some Dutch disease, however, is always optimal. Thus, lower growth in resource-abundant countries may not be a problem in itself, but may be part of an optimal growth path. The optimal spending path of the resource wealth may be increasing or decreasing over time. What might be contrary to intuition is that the bigger is the growth generating traded sector, the more of the resource income should be spent in early periods.     

Estimating the marginal propensity to consume using the distributions of income,consumption, and wealth

Studies of economic inequality almost always separately examine income, consumption, and wealth inequality, and hence, miss the important synergy amongst the three measures explicit in the life-cycle budget constraint. These joint distributions, however, are important in evaluating macroeconomic impacts of changes in income because the response may differ across the wealth distribution. This heterogeneity in the response to income changes can have significant impact on the effectiveness of government fiscal policy. Using the Panel Study of Income Dynamics from 1999–2013, we examine how the marginal propensity to consume (MPC) differs across the wealth distribution. We find that the MPC is lower at higher wealth quintiles, indicating that low wealth households cannot smooth consumption as much as other households. This implies that increasing wealth inequality likely reduces aggregate consumption, which, in turn, could limit economic growth.     

Leisure time, savings and trade patterns A two-country growth model

This paper proposes a simple two-country endogenous growth model with endogenous consumption, leisure time and wealth accumulation. The model examines possible causes for the world economic growth and the existence and persistence of trade patterns between countries with different preferceces and human capital under internationally free capital mobility. We show how differences in preferences in consumption, leisure time and wealth between the two countries may affect long-run world economic growth.     

Fiscal multipliers in the Eurozone: an SVAR analysis

We compute the value of fiscal multipliers (for government primary expenditure, Income and wealth taxes and for Production and import taxes) in the Eurozone countries since the creation of the currency union (2000Q1-2016Q4), in order to understand how the values can vary according to the public debt level, the pace of economic growth, and the output gap. Imposing quarterly fiscal shocks, the results showed that government expenditure had a positive effect on output, with an annual accumulated multiplier of 0.44, whereas tax multipliers presented negative signs: the Income and wealth and the Production and import taxes stood at ?0.11 and ?0.55, respectively. Furthermore, the spending multiplier showed a higher value for countries with lower levels of public debt, during recessions, and in countries with negative output gaps. On the other hand, tax shocks seemed to be recessive in highly indebted countries and those facing positive output gaps.     

Economic development and losses due to natural disasters: The role of hazard exposure

Our contribution is to show that the relationship between wealth and disasters is mainly formed by the exposure to disaster hazard. We first build a simple analytical model that demonstrates how countries that face a low hazard of disasters are likely to see first increasing losses and then decreasing ones with increasing economic development. At the same time, countries that face a high hazard of disasters are likely to experience first decreasing losses and then increasing ones with increasing economic development. We then use a cross-country panel dataset in conjunction with a hazard exposure index to investigate whether the data is consistent with the predictions from the model. In line with our model, we find that the relationship of losses with wealth crucially depends on the level of hazard of natural disasters faced by countries.     

The effects of progressive wealth redistribution on an economy's development performance

With the exception of studies concerning the effects of land reform programs on total agricultural output, there has been a lack of studies on how changes in the distribution of wealth may effect an economy's development performance. The objective of this study is to fill this gap and to show that under certain conditions progressive wealth redistribution can lead to an increase in an economy's rate of growth. A model is presented that incorporates portfolio behavior and financial markets into a two-sector input-output model. Model simulations are utilized to show that the major condition under which redistribution is favorable to growth is that the lower wealth group have a smaller marginal propensity to accumulate consumer durables than the upper wealth group.     

The biodiversity conservation game with heterogeneous countries

Biodiversity is an essential resource, which we classify as conditionally-renewable. In order to achieve conservation and sustainable use of biodiversity virtually all nation states signed the United Nations Convention on Biological Diversity. In this paper we investigate how the heterogeneity of countries in regard to ecosystems and wealth influences the stability of international biodiversity conservation agreements both without and with transfers. We further examine the effect of different degrees of ecosystem substitutability. We model a coalition formation game with players that have a continuous conservation choice. The conservation benefit is dependent on wealth and ecosystem quality. Aggregation of global benefits respects differences in ecosystem substitutability. In case of transfers, a fund redistributes coalition benefits according to a sharing rule. The main finding is that in the absence of transfers, compared to the homogeneous situation, heterogeneity in ecosystems and wealth reduces the size of a stable coalition. The destabilising effect is stronger the higher the ecosystem substitutability. Optimal transfers facilitate a large stable coalition.     

Demography, growth, and inequality

We extend the single-sector endogenous growth model to allow for a general demographic structure. The model shows that due to the “generational turnover term,” the equilibrium growth rate is less than that of a representative agent model. We find the local dynamics about the balanced growth path (bgp) to be unstable, implying that the bgp is the only viable equilibrium. Using numerical simulations, we analyze how economic consequences of a change in the population growth rate differ, depending on the source of the demographic change. In addition, we analyze the relationship between changes in the demographic structure and what we call the “natural rate of wealth inequality”. Finally, we use our model to study how the demographic transition experienced by the United States has affected the economic growth rate and the degree of wealth inequality.     

Wealth inequality,governance and economic growth

Links between economic growth and inequality are of growing interest for researchers and policy makers. Previous studies of this relationship have focused mainly on inequalities in income rather than in wealth. Yet from many perspectives wealth inequality is arguably more important. Using a new panel data set from Credit Suisse for 45 sample countries over the period 2000–2012, this study investigates the effects of wealth inequality on economic growth. Empirical results from system GMM estimation suggest that the wealth inequality is negatively associated with cross-country economic growth. This result is robust to alternative estimators and measures of wealth inequality, as well as the econometric specification. Further empirical investigation reveals that impact of wealth inequality on growth is mitigated by better governance.     

Oil,Growth, and Health: What Does the Cross‐Country Evidence Really Show?*

We show that previous results from the body of literature on the resource curse have primarily been driven by the collapse in oil prices during the mid‐1980s. By exploiting cross‐country variations in the size of initial oil endowments and the timing of oil discoveries, we find that there is a stable positive relationship between oil abundance and long‐run economic growth. Using dynamic panel data methods, we also find that there is no evidence that higher oil rents hinder growth. However, to focus on material gain means that the welfare gain from oil is understated, because oil‐rich countries benefit more by the reduction in infant mortality and the gain in longevity. Interestingly, such oil‐led health improvements are more pronounced in non‐democratic countries, where initial heath conditions were poor and oil wealth is concentrated among the ruling elites.     

Economic prosperity, biodiversity conservation, and the environmental Kuznets curve

Many conservationists contend that economic growth and biodiversity conservation are incompatible goals. Some economists contest this viewpoint, arguing that wealthier countries have the luxury of investing more heavily in efforts to conserve biodiversity. Under this assumption, we expect a U-shaped relationship between per capita wealth and proportion of species conserved. We test this environmental Kuznets curve (EKC) using estimates of per capita income and deforestation rates (index of biodiversity threat) for 35 tropical countries. A prior analysis [Dietz, S., Adger, W.N., 2003. Economic growth, biodiversity loss and conservation effort. Journal of Environmental Management, 68:23-35] using conventional regression techniques failed to provide any support for the parabolic relationship predicted by the EKC hypothesis. Here, we introduce the use of quantile regression and spatial filtering to reanalyze this data, addressing issues of heteroskedasticity and spatial autocorrelation. We note that preliminary analysis using these methods provides some initial evidence for an EKC. However, a series of panel analyses with country-specific dummy variables eliminated or even reversed much of this support. A closer examination of conservation practices and environmental indicators within the countries, particularly those countries that drove our initial support, suggests that wealth is not a reliable indicator of improved conservation practice. Our findings indicate that an EKC for biodiversity is overly simplistic and further exploration is required to fully understand the mechanisms by which income affects biodiversity.     

Regional development and national identity in sub-Saharan Africa

We study how regional development affects identification with the nation state using a sample of 192 African regions in 16 countries. We measure national identification with survey data from the fourth wave of the Afrobarometer and proxy regional development with night lights data. To account for the endogeneity of regional development, we employ an instrumental variables approach and use a proxy for mineral resource wealth as our main instrument. Our results show that inhabitants of more prosperous regions are more likely to identify with their nation rather than their ethnic group. Regarding transmission channels, we find suggestive evidence consistent with the interpretation that national identification is higher in richer regions because of different cultural beliefs and a lower reliance on traditional ethnic networks. Overall, our research implies that African governments can foster national identification by ensuring that all parts of a country participate equitably in economic development.     

上市公司并购与债权人财富效应

本文实证研究了中国上市公司并购活动对债权人财富的影响.以往研究基于债券价格的财富效应度量方法无法应用于缺乏债券价格的情况,因此本文引入了期权定价模型来估计不可交易债权的价值,并将该估值在并购前后的变化作为财富效应的新定义.实证研究的结果表明,中国上市公司的并购活动不仅没有给目标公司的债权人带来显著的财富效应,反而损害了目标公司债权人的财富,尤其是当目标公司财务风险较低时.     

Does Africa grow slower than Asia,Latin America and the Middle East? Evidence from a new data-based classification method

We address the question whether sub-Saharan African countries have lower average growth rates in real GDP per capita than countries in Asia, Latin and Middle America and the Middle East. In contrast to previous studies, countries are no a priori assigned to clusters based on geographical location. Instead, we propose a latent-class panel time series model, which allows a data-based classification of countries into clusters such that within a cluster countries have the same average growth rate. Our empirical results suggest that three clusters are sufficient to describe the different growth paths. Twenty-six African countries belong to the low growth cluster, but 8 African countries show growth rates comparable with many countries in Asia, Latin and Middle America and the Middle East.     

Wealth inequality in Central and Eastern Europe: Evidence from household survey and rich lists’ data combined*

We study how the problem of the ‘missing rich’, the underrepresentation of the wealthiest in household surveys, affects wealth inequality estimates for the post‐socialist countries of Central and Eastern Europe (CEE). The survey data from the second wave of the Household Finance and Consumption Survey (HFCS) are joined with the data from the national rich lists for Estonia, Hungary, Latvia, Poland and Slovakia. Pareto distribution is fitted to the joined survey and rich lists’ data to impute the missing observations for the largest wealth values. We provide the first estimates of the top‐corrected wealth inequality for the CEE region in 2013/2014. Despite a short period of wealth accumulation during the post‐1989 market economy period, our adjustment procedure reveals that wealth inequality in the Baltic countries is comparable to that of Germany (one of the most wealth‐unequal countries in Europe), while in Poland and Hungary it has reached levels observed in France or Spain. We discuss possible explanations of these findings with reference to the speed and range of privatization processes, extent of income inequality, and the role of inheritances and wealth taxes in the region.     

WHAT MAKES INTERNATIONAL CAPITAL FLOWS PROMOTE ECONOMIC GROWTH? AN INTERNATIONAL CROSS‐COUNTRY ANALYSIS

This paper re‐examines the relationship between international capital flows and economic growth within the context of various ‘conditional factors’ that possibly have the potential to influence such relationships. It achieves this by employing panel data for 80 countries that cover 1976–2007. International capital inflow is broken down into foreign direct investments (FDI) and foreign portfolio investments (FPI). We find interesting evidence that only FDI has a positive effect on growth and that FPI has an unfavorable, if not negative, effect on growth. The conditional variables of banking liberalization, high‐income level, twin crises, lower corruption, and human capital mitigate the positive impacts of FDI on growth. In contrast, the middle‐income level and good shareholder protection have a positive effect. As concerns FPI, the level of financial liberalization, being in a Latin American region, the wealth of countries, and market governance all influence the way that FPI affects growth, whereas the conditional variables of twin crises and human capital do not influence the effect of FPI on economic growth.     

中国城镇家庭财产水平研究:基于行为的视角

本文首先提出了一个各种因素影响家庭财产水平的理论框架。然后通过对奥尔多投资研究中心2007年"城市投资者行为调查问卷"数据的处理和实证分析,估算了中国城镇居民的财产函数,重点考察了户主的主观行为特征在财产积累过程中的重要作用。本文发现:户主投资参与度与风险偏好度的提高有利于家庭财产水平的增加;与低收入或者经济相对落后地区的家庭相比,对高收入或者经济发达地区的家庭来说,投资参与度与风险偏好度对家庭财产水平的积极影响更显著一些。最后,针对政府如何促进居民财产水平的提升,本文给出了相关的政策建议。     

Predicting FDI inflows: Exploring a nonlinear relationship between peace years,oil wealth,and the rule of law

Despite previous studies investigating the impacts of various factors such as peace years, natural resources, and the rule of law on foreign direct investment (FDI), empirical findings remain inconclusive. Therefore, this study investigates the interplay between these factors in shaping host country conditions that facilitate FDI inflows. Using generalized additive models, we examine the simultaneous effects of peace years, oil wealth, and the rule of law on FDI inflows in a sample of non-OECD countries from 1970 to 2009. Our results reveal that established peace is a critical factor in attracting FDI inflows for both oil-exporting and non-oil-exporting countries. However, the effects of the rule of law vary depending on oil wealth. Oil-exporting countries receive more FDI inflows when they have a weak rather than a strong rule of law, while non-oil-exporting countries tend to receive more foreign investments when they have a moderately strong rule of law. We argue that countries with oil wealth combined with a moderately weak rule of law provide an environment that is conducive to multinational corporations (MNCs) in extractive industries seeking monopoly rents. Conversely, countries without oil wealth should create stable yet efficient environments that protect property rights and promote labor market flexibility to appeal to non-resource-seeking MNCs.     

Are government transfers harmful to economic growth? A meta-analysis

A common perception is that government transfers are harmful to economic growth. However, existing empirical evidence on this point is mixed. Potential reasons for these conflicting results include differences in the level of economic development of the countries studied, different estimation methods and different measures of government transfers. By conducting a meta-analysis of 149 estimates reported in 23 studies, we sought to understand if – and if so, to what extent – government transfers are harmful to economic growth, as well as how important the abovementioned reasons are in explaining different findings in the literature. We found that government transfers are more detrimental to economic growth in developed countries compared to less-developed countries because such transfers can have a non-monotonic effect on growth. When government transfers are substantial, as they are in developed countries, they tend to reduce growth. We also found that the growth effects of government transfers are sensitive to the measurement of the transfers, i.e., studies that use unemployment benefits instead of social security tend to report a stronger negative growth effect.