Causality and state dependence in the finance-growth nexus: an empirical investigation

Whether financial development promotes economic growth or not has been a contentious research question over the past century. This thesis is an empirical contribution to two main issues in the area: causality and state dependence. Chapter 2 presents extensive Monte Carlo simulation results on the finite sample performance comparisons of heteroskedasticity-robust panel unit root tests . The long-run finance-growth causality is discussed in Chapters 2--3 by means of panel unit root and and panel cointegration tests. The causality in the short-to-medium run is explored in Chapter 4. Chapter 5 investigates state dependence in the finance-growth nexus using a functional coefficient modeling approach. Application of this approach proceeds further to Chapter 6, this time with a special emphasis on trade and financial openness as factors underlying the finance-growth link. Concluding remarks are provided in Chapter 7

Heteroskedasticity‐Robust Unit Root Testing for Trending Panels

Time-varying volatility and linear trends are common features of several macroeconomic time series. Recent articles have proposed panel unit root tests (PURTs) that are pivotal in the presence of volatility shifts, excluding linear trends, however. This article proposes a new PURT that works well for data that is both heteroskedastic and trending. Under the null hypothesis, the test statistic has a limiting Gaussian distribution. We derive the local asymptotic power to underpin the consistency of the test statistic. Simulation results reveal that the test performs well in small samples. As an empirical illustration, we examine the stationarity of energy use per capita in OECD economies. While the series are in general difference stationary, they could also be considered as trend stationary for specific time spans.Peer reviewe

Local Financial Development and Household Welfare in Vietnam: Evidence from a Panel Survey

<p><i>We examine the impact of local financial development on household welfare in Vietnam. We employ household-level panel data for the periods 2007, 2008, 2010 and 2013 covering three provinces and measure local financial development at the district, sub-district and village levels. To account for potential endogeneity that could emanate from the fact that local economic development could spur local financial development, we employ a recently suggested method of identification through heteroscedasticity. Our results show that local financial development has a significantly positive effect on household annual income, consumption and consumption smoothing</i>.</p

Panel unit-root tests for heteroskedastic panels

In this article, we describe the command xtpurt, which implements the heteroskedasticity-robust panel unit-root tests suggested in Herwartz and Siedenburg (2008, Computational Statistics and Data Analysis 53: 137–150), Demetrescu and Hanck (2012a, Economics Letters 117: 10–13), and, recently, Herwartz, Maxand, and Walle (2017, Center for European, Governance and Economic Development Research Discussion Papers 314). While the former two tests are robust to time-varying volatility when the data contain only an intercept, the latter test is unique because it is asymptotically pivotal for trending heteroskedastic panels. Moreover, xtpurt incorporates lag-order selection, prewhitening, and detrending procedures to account for serial correlation and trending data

Trends in African Migration to Europe: Drivers Beyond Economic Motivations

The current migration and refugee crisis in Europe requires an understanding of the different migration drivers beyond the well-known economic determinants. In this paper, we view migration from a broader human security perspective and analyze the determinants of regular and irregular migration flows from Africa to Europe for the period 1990-2014. Our results show that, in addition to economic determinants, a combination of push and pull factors influence the migration decisions of individuals. In particular, rising political persecution, ethnic cleansing, human rights violations, political instability and civil conflicts in African source countries are all signi cantly associated with increased migration flows into European destination countries. Therefore, our results underscore the need for the EU and European countries to collaborate with the source countries, not only in terms of supporting economic development in the source countries, but also in promoting human security: human rights, democracy, peace and social stability. Keywords: International migration; asylum seeker; refugee crisis; human security; Poisson Pseudo-Maximum Likelihood. JEL classi fication: F22; O1

The Joint Impact of Infrastructure and Institutions on Economic Growth

This paper examines the joint impact of infrastructure capital and institutional quality on economic growth using a large panel data set covering 120 countries and spanning the years 1980-2015. The empirical strategy involves estimating a simple growth model where, in addition to standard controls, infrastructure, institutional quality and their interaction are included as explanatory variables. Potential endogeneity concerns are addressed by means of GMM estimators that utilize internal instruments. We findd that the interaction terms between infrastructure capital and institutional quality have a positive and significant impact on economic growth. These results are robust to a variety of alternative specifications and institutional quality measures. Hence, our results suggest that maximizing returns from infrastructure development requires improving the quality of institutions. Keywords: infrastructure; institutions; growth; dynamic panel JEL classification: H54, F2