MODELING REGIONAL ECONOMIC GROWTH WITH A FOCUS ON AMENITIES

While the literature is clear that areas endowed with scenic beauty, lakes, forests, and wildlife among other natural and built amenities are experiencing robust economic growth, the theoretical foundations for this work are weak. In this study, we employ a Bayesian Modeling Average (BMA) approach to address the problem of model specification. Using data for US counties, we estimate a neoclassical growth model while looking at growth over the 1990s. We look at three separate ways of measuring amenities and recreational opportunities that build on those amenities. While the results suggest that higher amenity areas experience faster growth, still some level of value-added development may be required to realize that growth.     

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.     

A MODEL OF GROWTH AUGMENTED WITH INSTITUTIONS

This paper shows that the inclusion of institutional indicators in a traditional model of growth substantially improves its explanatory capacity. The results have implications for economic policy, because not all the dimensions of institutional quality influence growth to the same extent. A large sample of 165 countries and estimation methods with instrumental variables are used to solve endogeneity problems.     

MONETARY POLICY IN A NON‐REPRESENTATIVE AGENT ECONOMY: A SURVEY

It is well known that central bank policies affect not only macroeconomic aggregates, but also their distribution across economic agents. Similarly, a number of papers demonstrated that heterogeneity of agents may matter for the transmission of monetary policy to macro variables. Despite this, the mainstream monetary economics literature has so far been dominated by dynamic stochastic general equilibrium models with representative agents. This paper aims to tilt this imbalance towards heterogeneous agents setups by surveying the main positive and normative findings of this line of the literature, and suggesting areas in which these models could be implemented. In particular, we review studies that analyse the heterogeneity of (i) households’ income, (ii) households’ preferences, (iii) consumers’ age, (iv) expectations and (v) firms’ productivity and financial position. We highlight the results on issues that, by construction, cannot be investigated in a representative agent framework and discuss important papers modifying the findings from the representative agent literature.     

ECONOMETRICS FOR GRUMBLERS: A NEW LOOK AT THE LITERATURE ON CROSS‐COUNTRY GROWTH EMPIRICS

Abstract Since the seminal contribution of N. Gregory Mankiw, David Romer and David N. Weil in 1992 the growth empirics literature has used increasingly sophisticated methods to select relevant growth determinants in estimating cross‐section growth regressions. The vast majority of empirical approaches, however, limit cross‐country heterogeneity in production technology to the specification of total factor productivity, the ‘measure of our ignorance’. In this survey, we present two general empirical frameworks for cross‐country growth and productivity analysis and demonstrate that they encompass the various approaches in the growth empirics literature of the past two decades. We then develop our central argument, that cross‐country heterogeneity in the impact of observables and unobservables on output as well as the time‐series properties of the data are important for reliable empirical analysis.     

FINANCIAL DEVELOPMENT AND ECONOMIC GROWTH: A META‐ANALYSIS

We analyze 1334 estimates from 67 studies that examine the effect of financial development on economic growth. Taken together, the studies imply a positive and statistically significant effect, but the individual estimates vary widely. We find that both research design and heterogeneity in the underlying effect play a role in explaining the differences in results. Studies that do not address endogeneity tend to overstate the effect of finance on growth. While the effect seems to be weaker in less developed countries, the effect decreases worldwide after the 1980s. Our results also suggest that stock markets support faster economic growth than other financial intermediaries.     

NONLINEAR GROWTH EFFECTS OF TAXATION: A SEMI‐PARAMETRIC APPROACH USING AVERAGE MARGINAL TAX RATES

One of the major challenges of empirical tax research is the identification and calculation of appropriate tax data. While there is consensus that average marginal tax rates are most suitable for studying the effects of tax policy on economic growth, because of data limitations the calculation of marginal tax rates has been limited to the USA and the UK. This paper provides calculations of average marginal tax rates for the four Scandinavian countries using the methodologies of Seater (1982, 1985) and Barro and Sahasakul (1983, 1986). Then, by pooling the newly calculated tax rates for the Scandinavian countries with the data for the USA and the UK, we investigate the effects of tax policy shocks on the per capita GDP growth rate. Our results suggest that an increase in average marginal tax rates has a negative impact on economic growth. Employing additive mixed panel models with penalized splines as estimation approach, we show that changes in tax rates have nonlinear effects. Increasing average marginal tax rates turn out to be the most distorting at relatively moderate tax rates. Copyright © 2013 John Wiley & Sons, Ltd.     

THE IMPACT OF RURAL OUTMIGRATION ON REGION OF ORIGIN IN KOREA*

To assess the impact of rural outmigration on regions of origin, this paper borrows from international trade theory to develop a model of rural-to-urban migration. Borrowing from theories of nontraded goods and Dutch Disease, a model is developed for application to Korea. The model finds that rural outmigration can be detrimental to the rural sector when outmigration reduces farm profitability and triggers deterioration in the rural service sector. Farm profitability falls because of rising labor costs that cannot be passed on to consumers. The rural service sector falters when outmigration reduces market demand while raising input costs. County (kun) level Korean census data are used to test the model.     

ON BOOTSTRAPPING A CLASS OF DIFFERENTIABLE STATISTICAL FUNCNONALS WITH APPLICATIONS TO L– AND M– ESTIMATES

EFRON'S (1979) "bootstrap" method is justified for a class of differentiable statistical functionals which includes many L – and M –statistics. For illustration, a Monte Carlo study for the trimmed means is also included.     

THE IMPACT OF LABOR MARKET REGULATION ON EMPLOYMENT IN LOW‐INCOME COUNTRIES: A META‐ANALYSIS

Controversy over labor market policy often centers on achieving a balance between preventing worker exploitation, and avoiding loss of productivity or employment through excessive regulation. Although the literature documenting the impact of labor market regulation on employment is extensive, there is a dearth of evidence on the impact of such policies in low‐income countries (LICs). Since it is easier for workers, especially women, to slip into the informal sector in LICs, regulations are likely to have stronger impacts on formal employment in these countries (but lower impacts on unemployment). We systematically reviewed available research from countries that are, or were until recently, LICs. Most studies document that more stringent labor regulations are associated with lower formal sector employment and higher informal sector employment. We also conducted a metaregression analysis of the impact of minimum wages on formal and informal employment. After controlling for publication bias, higher minimum wages are associated with lower formal employment and a higher share of informal workers.     

SOCIO‐ECONOMIC STUDIES ON SUICIDE: A SURVEY

Abstract In this paper, we review economic theories and empirical studies on the socio‐economic aspects of suicide. Through our survey, we would like to emphasize the importance of studying suicide by employing a ‘rational’ approach that complements the medical perspective on suicide. We first introduce major economic theories of suicide and then present a summary of a variety of empirical studies from the socio‐economic perspective. To shed light on the mixed empirical evidence, we employ a meta‐regression method to investigate how the existing empirical results vary. We have identified a publication bias, not highlighted previously, in the existing literature with respect to several commonly employed socio‐economic factors. Several characteristics of existing studies have been identified as influencing the qualitative outcome. We then discuss the recent developments in economic studies on suicide, on the basis of the authors’ ongoing project on suicide. In the concluding section, we point out some issues for further studies.     

WORDS, DEEDS AND OUTCOMES: A SURVEY ON THE GROWTH EFFECTS OF EXCHANGE RATE REGIMES

Abstract.  Recent studies on the growth effects of exchange rate regimes offer a wide range of different, sometimes contradictory results. In this paper, we systematically compare three prominent contributions in this field. Using a common data set, a common specification and common estimation methods, we argue that the contradictory findings can be explained by the fact that these studies use regime classifications which reflect fundamentally different aspects of exchange rate policy.     

HOUSING POLICY ISSUES IN A RICH COUNTRY WITH HIGH POPULATION GROWTH: THE CASE OF RIYADH, SAUDI ARABIA

Riyadh is a dynamic city characterized by extremely rapid growth over the past quarter of a century. Nevertheless, its housing stock is generally of high quality. This article explores the city's current and future housing issues. It does so in the context of projecting Riyadh's housing needs, both physical units and corresponding investment, over the 20-year period beginning in 2004. The analysis was carried out using the Housing Needs Assessment Model developed by the Urban Institute and applied in a number of countries. The results show that the great majority of Riyadh's residents will continue to have very favorable housing conditions. Still, several percent of all households (more than 50 000 in the middle of the projection period) will face housing affordability problems. We argue for implementation of a rental housing allowance program to address this issue. Additionally, it is an open question as to whether the Kingdom of Saudi Arabia will be able to continue to provide housing consistent with the aspirations of middle class families. The analysis pays particular attention to the presence of a large number of guest workers and of the practice of employer-provided housing.     

DEMOGRAPHIC EFFECTS ON ECONOMIC GROWTH AND CONSEQUENCES FOR THE PROVISION OF PENSIONS

As the population of an economy ages saving declines and, through that channel, economic growth can decline too. Returns to physical capital fall, making the provision of pensions more and more difficult. The income of the working population deteriorates and they respond by having fewer children. This intensifies the problem even further.