Impact of World Bank lending in an adjustment-led growth model

Within a financial- and growth-programming framework, this paper develops a policy-driven growth model and addresses the effects of World Bank lending on economic growth in a sample of 30 countries, after having controlled for the effects of key macroeconomic variables. Both static and dynamic panel estimates suggest a positive significant effect of the rate of growth in World Bank lending on economic growth, conditional on other variables, namely changes in exchange rate, domestic credit growth, and inflation. Empirical evidence also reveals the positive effect of a macroeconomic policy index in this sample of developing countries

On the Real Spectra of Calogero Model with Complex Coupling

We study the eigenvalue problem of the rational Calogero model with the coupling of the inverse-square interaction as a complex number. We show that although this model is manifestly non-invariant under the combined parity and time-reversal symmetry ${\cal{PT}}$, the eigenstates corresponding to the zero value of the generalized angular momentum have real energies.Comment: revtex4 8 pages, 2 figure

The Fisher/Cobb-Douglas Paradox, Factor Shares, and Cointegration

This note uses insights from cointegration analysis to reexamine two separate but related issues concerning the estimation of production function parameters. Fisher (1971) documented a paradox in estimating substitution elasticities -- the puzzling divorce between the technology underlying his simulated data and the technology estimated from these data. This note both resolves the Paradox and, based on this resolution, raises important questions about estimation strategies (pioneered by Caballero, 1994) that rely on cointegration to recover production function parameters.production function elasticities, cointegration

The Marginal Product of Capital: A Persistent International Puzzle

Large and sustained differences in marginal products of capital (MPKs) across countries are sharply at odds with the core implications of the neoclassical framework. Lucas (1990) and many subsequent studies have examined reasons for this MPK differential. In a recent contribution, Caselli and Feyrer (2007) take the ground out from under this debate by reconsidering measurement issues and concluding that the MPK differential vanishes. Despite Caselli and Feyrer’s important advances in measurement, the international MPK puzzle persists. We show that the measurement of MPKs in their framework is substantially affected by adjustment costs in the accumulation of capital. With the proper technology and a plausible parameterization of adjustment costs, the MPK in poor countries is much higher than the MPK in rich countries. Why capital flows do not eliminate the MPK differential remains a persistent international puzzle. We examine the quantitative importance of financial frictions, relative prices, and adjustment costs in accounting for the MPK differential and document that adjustment costs provide the leading explanation.marginal product of capital, adjustment costs, macroeconomic analysis of economic development, international capital flows

The Elasticity of Derived Demand, FactorSubstitution and Product Demand: Corrections to Hicks’ Formula and Marshall’s Four Rules

Nearly 75 years ago, John Hicks introduced and formalized the concept of the elasticity of substitution between capital and labour and its relation to derived demand. The resulting formula has proven very useful in understanding the derived demand for productive factors, the distribution of factor incomes, and Marshall's Four Rules. This short paper notes that a slip occurred in the original derivation, presents a modified formula, and shows that Marshall's First Rule is no longer generally valid.derived demand, substitution elasticity, John Hicks

Do corporate taxes harm economic performance? Explaining distortions in R&D- and export-intensive UK firms

This paper analyzes the effects of corporate tax liability on firm-level total factor productivity (TFP) as the key driver of economic performance. This is a new dimension in the UK productivity puzzle that has not attracted attention so far. We use 6559 manufacturing firms over 2004–2011 to investigate whether higher levels of corporate tax affect the productivity catch-up process by reducing after-tax earnings that could alternatively be used for productivity-enhancing investment, particularly focusing on R&D- and export-intensive firms. Our key results are summarized as follows: first, higher levels of corporate taxation impact adversely on TFP and this finding is robust to different tax measures and insensitive to endogeneity bias; second, as R&D- and export-intensive firms tend to have relatively higher TFP growth, higher levels of tax liability as a share of earnings before interest and taxes decelerate TFP growth of these firms