Education public financing and economic growth: an endogenous growth model versus evidence

Using an Endogenous Growth Model with physical and human capital and unemployment (Mauro and Carmeci in J Macroecon 25:123–137, 2003), we study the effects of subsidies to education in economic growth. According to the model, we conclude that government subsidies to education only enhance economic growth conditional on unemployment and that this relationship is negatively influenced by unemployment. We provide evidence from a broad panel data of countries that confirms the importance of unemployment in the relationship between subsidies to education and economic growth but dismiss its importance as a direct determinant of economic growth.      

The fallacy of composition and contractionary devaluations: output effects of real exchange rate shocks in semi-industrialised countries

This paper studies whether intra-developing country price competitionhas significant effects on the short-run growth of output indeveloping countries that are specialised in manufactured exports.Regression estimates using the generalised method of momentsapplied to annual panel data for 17 semi-industrialised countriesin 1983–2004 show that these countries exhibit a ‘fallacyof composition’, in the sense that a real depreciationrelative to competing developing country exporters increasesthe home country's growth rate at the expense of its competitors'growth. The results also suggest that real depreciations forthese developing countries relative to the industrialised countriesare contractionary.     

Economic freedom, civil liberties, political rights and growth: a causality analysis

Several empirical studies have established the relationship between economic freedom, civil liberties and political rights, and economic growth. Nevertheless, few studies analyze the directions of causality. This paper studies the causality relations between the institutional dimensions mentioned above and economic growth, as well as the interrelations between them, using the Granger methodology with panel data for 187 countries and five-yearly observations for the period 1976–2000. In addition, the relations between these freedoms and investment in physical and human capital are examined, to be able to isolate the direct and indirect effects on growth. The authors acknowledge the suggestions made by the editor and the reviewers, which have improved this work with respect to its initial version.     

International Integration and Growth: A Further Investigation on Developing Countries

The paper examines empirically the linkages between international integration and economic growth in a panel of 47 developing countries and 18 trade blocs over the period 1970–1989. Specifically, it attempts to identify through which channel(s) – notably, specialization according to comparative advantage and increased efficiency, exploitation of increasing returns from larger market, and technology spillovers through investment and trade–trade blocs can affect the economic growth of their member countries. The results suggest that (1) intra-bloc trade does not affect growth significantly; (2) income diversion among member countries contributes positively and significantly to growth; and (3) the size of the trade bloc does matter in the sense that the bigger is not always the better for the welfare of the member countries.     

The energy consumption-real GDP nexus revisited: Empirical evidence from 93 countries

In this paper, we analyse the long-run relationship between energy consumption and real GDP for 93 countries. We find mixed results on the impact of energy consumption on real GDP, with greater evidence at the country level supporting energy consumption having a negative causal effect on real GDP. For the G6 panel of countries, we find significant evidence that energy consumption negatively Granger causes real GDP. This means that for countries where energy consumption has a negative long-run causal effect on real GDP, energy conversation policies should not retard economic growth. We identify these countries and regional panels. We argue that these countries/regions should play a greater role in reducing carbon dioxide emissions.     

The productivity-wage and productivity-employment nexus: a panel data analysis of Indian manufacturing

This article investigates the long-run relationship between labour productivity and employment, and between labour productivity and real wages in the case of the Indian manufacturing sector. The panel data set consists of 17 two-digit manufacturing industries for the period 1973–1974 to 1999–2001. We find that productivity-wages and productivity-employment are panel cointegrated for all industries. We find that both employment and real wages exert a positive effect on labour productivity. We argue that flexible labour market has a significant influence on manufacturing productivity, employment and real wages in the case of Indian manufacturing.     

Social security expenditure and GDP in OECD countries: A cointegrated panel analysis

Abstract

Using panel data unit root tests and panel cointegration tests, as well as estimation techniques appropriate for heterogeneous panels such as the full modified OLS, this paper re-examines the long-run co-movement and the causal relationship between GDP and social security expenditure in a bivariate model, employing data on 25 OECD countries from 1980 to 2001. Our cointegration test results show strong evidence in favour of the existence of a long-run equilibrium cointegrating relationship between GDP and social security expenditure after allowing for a heterogeneous country effect. Regarding the panel-based error correction model, we find that GDP and social security expenditure lack short-run causality, but reveal the existence of long-run bidirectional causality. This shows that, in the long run, economic growth must be based on a social welfare policy that should be carried out, and economic growth can facilitate contiguous development in a social welfare policy. Lastly, we also provide evidence to support that social security expenditure can affect growth through the savings and human capital accumulation in OECD countries.     

Energy consumption and economic growth in Asian economies: A more comprehensive analysis using panel data

This paper applies the most recently developed panel unit root, heterogeneous panel cointegration and panel-based error correction models to re-investigate co-movement and the causal relationship between energy consumption and real GDP within a multivariate framework that includes capital stock and labor input for 16 Asian countries during the 1971–2002 period. It employs the production side model (aggregate production function). The empirical results fully support a positive long-run cointegrated relationship between real GDP and energy consumption when the heterogeneous country effect is taken into account. It is found that although economic growth and energy consumption lack short-run causality, there is long-run unidirectional causality running from energy consumption to economic growth. This means that reducing energy consumption does not adversely affect GDP in the short-run but would in the long-run; thus, these countries should adopt a more vigorous energy policy. Furthermore, we broaden the investigation by dividing the sample countries into two cross-regional groups, namely the APEC and ASEAN groups, and even more important results and implications emerge.     

Convergence of consumption patterns during macroeconomic transition: A model of demand in Ireland and the OECD

This study uses country-level panel data on consumption in Ireland and seven other OECD countries to examine the evolution of Irish consumption patterns as Ireland underwent rapid macroeconomic growth. Consumption levels obviously increased due to substantially higher incomes, but it is less clear how the shares of different types of goods purchased have changed or whether Ireland's consumption mix has converged with that of other high-income countries. Rankings based on a simple distance measure of consumption similarity suggest that Ireland moved from a “low-income” pattern similar to Portugal or Greece to a “high-income” pattern like that of Canada between 1995 and 2003. Using static and dynamic Almost Ideal Demand System models, we first estimate long- and short-run Irish price and income elasticities for nine categories of commodities between 1976 and 2003. These results provide evidence of substantial habit formation in aggregate consumption. We then estimate a long-run cross-country model covering six aggregate commodity groups between 1975 and 2003. The analysis shows that Ireland's demand parameters remain more similar to those of Greece than to higher-income OECD countries in the sample. Although Ireland has overtaken most other OECD countries in per capita income, it is still converging to a higher-income consumption pattern. We foresee further convergence of Irish expenditure patterns towards a pattern typical of high-income countries.     

If not only GDP,what else? Using relational goods to predict the trends of subjective well-being

In the last decade, a lively interdisciplinary discussion has grown around the evidence that, in the long-run, people’s subjective well-being is not significantly correlated with income growth. In other words, GDP growth does not predict the long run growth of subjective well-being. In this paper, we argue that there exists a different predictor of subjective well-being that works pretty well: sociability, i.e. the quality and quantity of social relationships (also referred to as relational goods). More precisely, we illustrate the role of sociability as a predictor of well-being, presenting the available evidence at both the within-country and the worldwide level. In particular, we discuss recent evidence from US cross-sectional data (General Social Survey, 1975–2004), cross-country time series (World Value Survey 1980–2005), and German panel data (German Socio-Economic Panel, 1996–2007). We conclude by indicating the most relevant open issues and suggesting future lines of research.     

FDI, domestic capital and economic growth: Evidence from panel data at China’s provincial level

Based on panel data at the provincial level in China, this paper found that direct effects foreign direct investment (FDI) had on economic growth were of insignificance. However, through improving technical efficiency and “crowding” in domestic investment, FDI produced positive effects on China’s economy. The state sector still played a major part in the total fixed investment, therefore, direct effects on growth were significant. Although private sector was increasingly important for the whole economy, it had no direct influences on economic growth. Meanwhile, neither the state sector nor private sector made contribution to the improvement on technical efficiency. __________ Translated from Shijie Jingji Wenhui 世界经济文汇 (World Economic Papers), 2006, (4): 27–43     

Revisiting residential demand for electricity in Greece: new evidence from the ARDL approach to cointegration analysis

This article re-examines the long-run and short-run determinants of the aggregate residential demand for electricity in Greece using data spanning the period 1964–2006 and the recently advanced ARDL cointegrating method (Pesaran, J Appl Econ 16:289–326, 2001) that has not been hitherto applied to Greek data. The results of the ARDL method combined with the (Johansen, J Econ Dyn Control 12:231–254, 1988) cointegration method show the presence of an equilibrium relationship among the variables involved. These findings may shed new light on the contemplation of more effective energy policies with respect to electricity.     

Estimation of a dynamic model of weight

The ongoing debate about the economic causes of obesity has focused on the changing relative prices of diet and exercise. This paper uses a model that explicitly includes time and spatially varying community-level urbanicity and price measures as instruments to obtain estimates of the effects of diet, physical activity, drinking, and smoking on weight. The instruments control for bias due to unobservables that may be common determinants of weight and these explanatory variables. We apply a dynamic panel system GMM estimation model to longitudinal (1991–2006) data from China to model weight and find that among adult men in China, about 5.4% of weight gain was due to declines in physical activity and 2.8–3.1% was due to dietary changes over this period. Combined, changes in physical activity and diet only explain around 8% of the short run gain in weight and about 11% of the long-run gain in weight among Chinese men.     

Development Policies in the EU: An International Comparison

This paper studies the impact of the EU Structural Funds Program for the period 1989–93 on the growth paths of the major recipient countries, Greece, Ireland, and Portugal. It uses an endogenous growth model of private, public, and human capital accumulation in which the public sector and current account balances play a crucial role. Simulation results show that these programs had a substantial impact on economic growth in these economies and contributed markedly to their convergence to EU standards. Their relative long-run position, however, would still be far from EU standards, which suggests the importance of continuing the transfer program.     

Skill Intensity in Foreign Trade and Economic Growth

This paper explores the link between trade structure, trade specialization and per capita income growth. It is argued that industrial upgrading in export specialization patterns has a positive long-run growth effect, while the effect of structural change in industrial import patterns is in principle ambiguous. A standard empirical growth model is augmented by various measures of structural change. The hypothesis that not trade per se matters, but that various types of trading activities impact differently on economic growth is tested on a sample of 45 countries (OECD members and selected Asian and Latin American countries) over the period 1981–1997. The data set comprises exports and imports for 35 manufacturing industries at the 3-digit level of the ISIC classification which are grouped according to skill intensity. The results of the dynamic panel estimation point towards a positive long-run growth effect arising from trade specialization in medium-high-skill-intensive industries. Further, important distinctions between the skill intensity of export and import patterns and their respective influence on economic development, as well as between the group of developing countries and OECD members are observed in this relationship.JEL classification: C23, F43, O19, O41, O57The author is grateful to Michael Landesmann and Robert Stehrer (wiiw), Neil Foster and Jesús Crespo Cuaresma (Department of Economics, University of Vienna), Michael Peneder (Austrian Institute of Economic Research) and two referees for valuable comments. This research is based on Jubiläumsfondsprojekt Nr. 8954, financial support by Oesterreichische Nationalbank is gratefully acknowledged.     

Does Higher Education Affect Economic Growth? The Case of Greece

Abstract

The purpose of the study is twofold: first, it presents an extensive review of empirical studies that have examined the relationship between higher education and economic growth. Second, it estimates the effect of higher education on economic growth in Greece over the period 1960–2009. It applies the model introduced by Mankiw, Romer, and Weil (1992 Mankiw, G., Romer, D., & Weil, D. (1992). A contribution to the empirics of economic growth. Quarterly Journal of Economics, 107(2), 407–437. doi: 10.2307/2118477[Crossref], [Web of Science ®] , [Google Scholar]) by using the higher enrolment rates as a proxy of human capital. The paper employs cointegration and an error-correction model to test the causal relationship between higher education, physical capital investments and economic growth. The empirical analysis reveals that there is a long-run cointegrating relationship between higher education, physical capital investments and economic growth. The elasticity of economic growth with respect to higher education is 0.52%. The results also suggest that there is evidence of unidirectional long-run and short-run Granger causality running from higher education and physical capital investments to economic growth.     

Causal relationship between apparel exports and macroeconomic factors

Apparel exports make a significant contribution to economic growth in major apparel exporting economies such as Bangladesh, Sri Lanka and Vietnam. This study aims to investigate the causal relationship between apparel export growth and its determinants such as GDP growth, infrastructure, financial development, foreign direct investment (FDI) and labour productivity using panel data from 11 major apparel exporting countries for the period 1996 to 2013. The results confirm a long-run equilibrium association among the variables and reveal that GDP growth, infrastructure, financial development, FDI, and labour productivity have a significant positive influence on apparel export growth. Furthermore, the heterogeneous panel non-causality test results suggest that GDP growth, infrastructure and labour productivity contribute to apparel export growth in the short-run. These findings have several policy implications for the governments of the countries under study.     

The link between economic growth and growth volatility

This paper investigates the relationship between economic growth and growth volatility through simultaneous equations system. By employing the identification through heteroskedasticity method of Rigobon (Rev Econ Stat 85:777–792, 2003) and using a panel of 158 countries over the period 1960–2010, we find that output volatility is detrimental to economic growth, suggesting that stabilization policies to mitigate short-run economic fluctuations contribute to long-run economic growth. And economic growth accelerates output variability, supporting the feedback effects from growth to the volatility. The evidence is robust to a number of sensitivity tests.     

Deposit insurance scheme and banking crises: a special focus on less-developed countries

This study analyzes the effect of an explicit deposit insurance scheme (EDIS) on the probability of a banking crisis in a country while taking the country’s overall economic development into account. The panel data for the period of 1980–2003 include all the countries having the data on an EDIS. The major finding is that if the interaction between a country’s overall economic development and its use of an EDIS is not controlled for, the country’s use of the EDIS increases the probability of a banking crisis. This increase is greater the more inefficiently designed the EDIS is. However, once the interaction between the overall economic development and the use of the EDIS is controlled for, it is found that the EDIS itself is not a significant factor of a banking crisis. In that case, the less developed the country is that is using an EDIS, the higher the probability of a banking crisis.     

Natural gas,trade and sustainable growth: empirical evidence from the top gas consumers of the developing world

Natural gas is the key non-renewable source of energy for a low-carbon economy. The research applies heterogeneous panel techniques to investigate the impact of natural gas consumption on economic growth across a panel of top 15 natural gas consumers of the developing world. We establish long-run dynamics with cross-sectional dependence and heterogeneity across the sample countries. The long-run output elasticities suggest that the natural gas consumption and trade variables have significant positive effect on the output in a panel of developing economies. Further, we establish feedback relationship among gas consumption, output and trade in the short-run. Given the significance of natural gas as the low-emission source of energy, we suggest governments and policy advisers of these major natural gas consumers to focus on developing pipeline infrastructure for adequate supply, reforming natural gas sector with a competitive price structure to combat excess demand in individual natural gas market. With trade integration, majority of these countries need to incorporate these initiatives to improve the technologies such as combined cycle power plant technology and value-added chemical production technology to achieve sustainable economic growth.