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on Financial Development and Growth |
| By: | Stylianos Asimakopoulos; Yiannis Karavias |
| Abstract: | This paper examines the nature of the relationship between government size and economic growth and identifies the optimal level of government size through a novel and very general non-linear panel Generalized Method of Moments approach. Using a large panel dataset we uncover a statistically significant non-linear relationship via identifying the optimal threshold of government spending that maximizes growth. Furthermore, we show that the relationship between the two variables above and below that optimal level is statistically significant, even if we split our sample to developed and developing countries. Finally, we fi?nd an asymmetric impact of government size on economic growth in developed and developing countries around the estimated threshold. |
| Keywords: | government size, economic growth, dynamic threshold estimation JEL Classification: E62, C23, O11, O50 |
| URL: | http://d.repec.org/n?u=RePEc:not:notgts:15/02&r=fdg |
| By: | Mundaca, Gabriela |
| Abstract: | This paper deals with impacts of fossil fuel subsidy reform on economic growth, focusing mostly on the countries of the Middle East and East Africa (MENA) region. We first develop a theoretical growth model, and use it to demonstrate that a country can achieve higher levels of economic growth if the government reduces its energy subsidies. Our empirical work confirms the main results from the theoretical model. That is, a country that initially subsidizes its fossil fuels, and then eliminates or reduces these subsidies, will as a result experience higher economic GDP per capita growth, higher employment, and greater levels of labor force participation, especially among the youth. These effects are strongest in countries where fuel subsidies are generally high, such as those in the MENA Region. We here predict that for a given level of subsidy, a 20 cents average increase in the gasoline and diesel price per liter can increase the GDP per capita growth rate by about 0.46 percent and 0.24 percent, respectively. In the MENA countries, savings in subsidies seem to be earmarked by the region’s governments to health expenditures, education expenditures and public investment in infrastructure. These channels appear to be strong contributing factors to higher long-run growth when fuel subsidies are reduced. |
| Keywords: | energy subsidies, economic growth, public investment |
| JEL: | Q3 Q4 Q43 Q48 |
| Date: | 2015–07–16 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:65741&r=fdg |
| By: | Najibullah, Syed; Masih, Mansur |
| Abstract: | The study seeks to investigate the causal links between economic growth and remittances through two specific transmission channels, namely financial development and investment. Using Bangladesh as a case study, the study employs autoregressive distributed lag (ARDL) approach to cointegration proposed by Pesaran et al. (2001). Based on a time series data over the period 1977–2013, the findings reveal no long term lead-lag relationship between economic growth and remittances. However, the short term relation exists between remittances and investment. Investment also stimulates economic growth. A unidirectional transmitting channel through investment can be identified in the short run. The financial development was found to be weak in the growth remittances nexus and this shows the presence of a missing link between investment and financial development. This might happen due to financial exclusion and inflow of remittances through informal unaccounted channel. Policy makers should focus on financial sector deepening to promote financial inclusion. Moreover, creating awareness to promote flow of remittances through formal channel should get priority. For the future researchers, the inclusion of microfinance sector as a transmission channel might provide significant findings as the remittances in fact represent the people at the bottom of the pyramid, where microfinance sector has a strong presence unlike the formal financial sector. |
| Keywords: | remittances, economic growth, ARDL |
| JEL: | C22 C58 E44 |
| Date: | 2015–07–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:65837&r=fdg |