Financial Development and Economic Activity in Advanced and Developing Open Economies: Evidence from Panel Cointegration.

YesThis study considers the effects of financial development on output in a panel cointegration framework, focusing on the implications of trade and financial openness. Our analysis indicates that after controlling for cross-sectional dependence, the typical relationship between finance and output does not hold in the long run. This relationship, however, is re-established once we account for economic openness. While trade openness emerges as more important for developing countries, financial openness is more important for advanced economies. In the long run, causality runs from financial development to output in the advanced economies, while in developing economies causality is bidirectional. There is no short-run causality between financial development and output, however

Foreign capital in a growth model

Within an endogenous growth framework, this paper empirically investigates the impact of financial capital on economic growth for a panel of 60 developing countries, through the channel of domestic capital formation. By estimating the model for different income groups, it is found that while private FDI flows exert beneficial complementarity effects on the domestic capital formation across all income-group countries, the official financial flows contribute to increasing investment in the middle income economies, but not in the low income countries. The latter appears to demonstrate that the aid-growth nexus is supported in the middle income countries, whereas the misallocation of official inflows is more likely to exist in the low income countries, suggesting that aid effectiveness remains conditional on the domestic policy environment

Reassessing the relationship between the financial sector and economic growth: Dynamic panel evidence

Historically, the development of the financial sector has been an indispensable driver of economic growth. In the aftermath of the Great Recession, there is a pressing need to reassess the role of the financial sector in the determination of economic growth. Using a dynamic panel framework, our analysis covers 34 European and Commonwealth of Independent States economies for the period 1998–2014 and controls for the role of macroeconomic and institutional variables. Our evidence suggests that the potential benefits of the financial sector finance may have dramatically reversed in recent years, resulting in “un-creative destruction.” The results suggest, tentatively, that there has been a severance of the link between the financial sector and the real economy. The results, however, vary according to the level of economic development across the European and Commonwealth of Independent States economies. In the case of developing market economies, the financial intermediation proxies are not significant in explaining economic growth. The effect of changes in investment expenditure, the money supply, wages, unit labour costs, and trade openness is found to be strong and in line with a priori expectations across all country samples. Notably, government consumption is also found to be a significant driver of economic growth, except in the developing market economies in the period following the Great Recession. In line with the growing consensus in other research areas, we provide evidence of a robust role for the institutional framework proxied by the quality of governance in determining economic development

The Spectrum of Benign Esophageal Lesions: Imaging Findings

Benign esophageal lesions occur in various diseases. Barium studies are useful for the evaluation of mucosal surface lesions but provide little information about the extramucosal extent of disease. Computed tomography and magnetic resonance imaging, on the other hand, permit the assessment of wall thickness, mediastinal involvement, adjacent lymphadenopathy, and distant spread. In diseases such as fibrovascular polyps, duplication cysts, scleroderma, trauma, caustic esophagitis, hiatal hernia, esophageal diverticulum, achalasia, and paraesophageal varices, the findings of imaging studies are specific, obviating the need for further invasive diagnostic work-up. The advent of helical computed tomography and its volume data set allows the acquisition of multiplanar images, and magnetic resonance imaging is useful both for this and for tissue characterization. Thus, multiplanar cross-sectional imaging further extends the role of imaging modalities to the evaluation of benign esophageal lesions. Through an awareness of the multiplanar cross-sectional appearances of various benign esophageal lesions, the radiologist can play an important role in the detection, diagnosis, further diagnostic planning, and treatment of the diseases in which they occur

Functional traits and phenotypic plasticity modulate species coexistence across contrasting climatic conditions

Functional traits are expected to modulate plant competitive dynamics. However, how traits and their plasticity in response to contrasting environments connect with the mechanisms determining species coexistence remains poorly understood. Here, we couple field experiments under two contrasting climatic conditions to a plant population model describing competitive dynamics between 10 annual plant species in order to evaluate how 19 functional traits, covering physiological, morphological and reproductive characteristics, are associated with species’ niche and fitness differences. We find a rich diversity of univariate and multidimensional associations, which highlight the primary role of traits related to water- and lightuse- efficiency for modulating the determinants of competitive outcomes. Importantly, such traits and their plasticity promote species coexistence across climatic conditions by enhancing stabilizing niche differences and by generating competitive trade-offs between species. Our study represents a significant advance showing how leading dimensions of plant function connect to the mechanisms determining the maintenance of biodiversity

The Credit–Growth Nexus: New Evidence from Developing and Developed Countries

The purpose of this paper is to assess the relationship between credit market development and economic growth for a heterogeneous panel of 20 developing and developed countries with varied growth experiences. The empirical study is based on estimations of generalized method of moments (GMM) and pooled mean group (PMG) on heterogeneous panel data model. Difference GMM estimation indicates that credit market development has a negative effect on economic growth. This result is robust for our full sample and for the subsample of non-OECD countries, but not for the subsample of OECD countries. However, using a PMG model, we provide evidence of a positive impact in the long run between credit market development and economic growth. When considering heterogeneity in the short-run relationship across countries, our findings suggest that the credit–growth relationship is specific across countries, depending on each country-specific legal and macroeconomic environment

Causality between FDI and Financial Market Development: Evidence from Emerging Markets

This paper studies the causal relationship between foreign direct investment (FDI) and financial market development (FMD) using panel data from emerging markets. Most studies of the relationship between FDI and FMD have focused on the role of FMD in the link between FDI and economic growth, with no deep understanding of direct causality between FDI and FMD, especially in emerging markets, where financial markets are in the development stage. We document bidirectional causality between FDI and stock market development indicators. For banking sector development indicators, the relationship is ambiguous and inconclusive. Care is therefore needed when analysing the relationship between FMD and FDI, as results may depend on whether the FMD variables used to evaluate causality are stock market or banking sector development indicators

An excess of niche differences maximizes ecosystem functioning

Ecologists have long argued that higher functioning in diverse communities arises from the niche differences stabilizing species coexistence and from the fitness differences driving competitive dominance. However, rigorous tests are lacking. We couple field-parameterized models of competition between 10 annual plant species with a biodiversity-functioning experiment under two contrasting environmental conditions, to study how coexistence determinants link to biodiversity effects (selection and complementarity). We find that complementarity effects positively correlate with niche differences and selection effects differences correlate with fitness differences. However, niche differences also contribute to selection effects and fitness differences to complementarity effects. Despite this complexity, communities with an excess of niche differences (where niche differences exceeded those needed for coexistence) produce more biomass and have faster decomposition rates under drought, but do not take up nutrients more rapidly. We provide empirical evidence that the mechanisms determining coexistence correlate with those maximizing ecosystem functioning. It is unclear how biodiversity-ecosystem functioning and species coexistence mechanisms are linked. Here, Godoy and colleagues combine field-parameterised competition models with a BEF experiment to show that mechanisms leading to more stable species coexistence lead to greater productivity, but not necessarily to enhanced functions other than primary production