An Empirical Analysis of Income Convergence in the European Union

In this paper, we investigate the convergence process within the European Union (27 countries). More particularly, we study the convergence process of the new entrants from Central and Eastern Europe and of the 15 Western countries between 1990 and 2007. Applying a panel approach to the convergence equation derived by Mankiw et al. (1992) from the Solow model, we highlight the existence of heterogeneity in the European Union and show that new entrants and former members of the European Union can be seen as belonging to significantly differ ent groups of convergence. The existence of heterogeneity in the European Union or the Eurozone might affect their stability as the recent Greece’s sovereign debt crisis illustrates it.

A calibrated Growth Model of Global Imbalances

Global imbalances are considered as one of the main culprits of the financial crisis which started in the United States in 2007. This paper aims to build a two- country deterministic growth framework with overlapping generations to investigate the macroeconomic effects of global imbalances that originate from forced saving in one country. This framework allows us to study the existence of a dynamic equi- librium with global imbalances, the impact on the world interest rate, and the short-run and long-run welfare implications on the young and old generations in both countries. In particular, we show that global imbalances worsen the welfare of the young generations of both countries in the short run and can offset the potential gain of the international integration of capital markets.

Stock Markets, Banks and Long Run Economic Growth: A Panel Cointegration-Based Analysis

The aim of this paper is to investigate the long run relationship between the development of banks and stock markets and economic growth. We make use of the Groen and Kleibergen (2003) panel cointegration methodology to test the number of cointegrating vectors among these three variables for 5 developing countries. In addition, we test the direction of potential causality between financial and economic development. Our results conclude to the existence of a single cointegrating vector between financial development and growth and of causality going from financial development to economic growth. We find little evidence of reverse causation as well as bi-directional causality.

A Growth Model of Global Imbalances

peer reviewedaudience: researche

Advertising, innovation and economic growth

Este artículo analiza las consecuencias que los gastos publicitarios tienen para la dinámica empresarial y el crecimiento económico, a través de la interacción entre la publicidad y los gastos en investigación y desarrollo (I+D) en las empresas. Presentamos un modelo de crecimiento económico endógeno con heterogeneidad entre empresas que incorpora decisiones sobre gastos en publicidad. Calibramos el modelo usando microdatos para Estados Unidos, con el fin de estudiar patrones empíricos existentes entre empresas de distinto tamaño. Mediante la interacción entre publicidad e I+D, nuestro modelo propone una nueva explicación para la correlación negativa observada en los datos entre la intensidad innovadora y el tamaño empresarial. Nuestro modelo predice que los gastos en publicidad y en I+D son sustitutos en las empresas. Reducir costes publicitarios conlleva una reducción de inversión en I+D, así como una ralentización del crecimiento económico. A continuación, presentamos la evidencia empírica que demuestra la existencia de dicha sustitución mediante el uso de variación regional exógena en la política impositiva estadounidense referente a gastos en I+D. Finalmente, demostramos que los subsidios a la innovación son más efectivos en una economía que permita a las empresas publicitar sus productos respecto a una en la que la publicidad no esté permitidaThis paper analyzes the implications of advertising for firm dynamics and economic growth through its interaction with R&D investment at the firm level. We develop a model of endogenous growth with firm heterogeneity that incorporates advertising decisions. We calibrate the model to match several empirical regularities across firm size using U.S. data. Through a novel interaction between R&D and advertising, our model provides microfoundations for the empirically observed negative relationship between both firm R&D intensity and growth, and firm size. Our model predicts substitutability between R&D and advertising at the firm level. Lower advertising costs are associated with lower R&D investment and slower economic growth. We provide empirical evidence supporting substitution between R&D and advertising using exogenous changes in the tax treatment of R&D expenditures across U.S. states. Finally, we find that R&D subsidies are more effective under an economy that includes advertising relative to one with no advertisin

Public Education Expenditures, Growth and Income Inequality

Bel-Agein

A Note on the Use of the Modified Value-at-Risk

While the Modified Value-at-Risk (or Cornish Fisher Value-at-Risk) has been quite extensively used by practitioners and academics since its introduction, we show that it can be consistently used only over a limited interval of confidence level. Confidence level below 95.84% should never be used for the Modified Value-at-Risk to be consistent with investors' preferences for kurtosis. In addition, the use of higher confidence level is restricted by the value of the skewness. Failure to respect these restrictions on confidence levels results in mistakenly assessing assets' risk and potentially in overweighting assets which exhibit undesirable properties in terms of higher moments