Financial conditions and the risks to economic growth in the United States since 1875

We explore the historical relationship between financial conditions and real economic growth for quarterly U.S. data from 1875 to 2017 with a flexible empirical copula modelling methodology. We compare specifications with both linear and non-linear dependence, and with both Gaussian and non-Gaussian marginal distributions. Our results indicate strong statistical support for models that are both non-Gaussian and nonlinear for our historical data, with considerable heterogeneity across sub-samples. We demonstrate that ignoring the contribution of financial conditions typically understates the conditional downside risks to economic growth in crises. For example, accounting for financial conditions more than doubles the probability of negative growth in the year following the 1929 stock market crash

Economic Growth in Colombia: a Reversal of Fortune"?"

Since 1979, Colombia´s annual GDP growth has been on average two percentage pointslower than what was observed between 1950 and 1980. The sources-of-growth decomposition shows that this deceleration can be accounted entirely by changes inproductivity. Indeed, between 1960 and 1980 productivity gains increased output perworker by nearly 1% per year. Since 1980, productivity losses have reduced output perworker at about the same rate. The time series analysis suggests that the implosion ofproductivity was caused by the increase in criminality which diverted capital and labor tounproductive activities. In turn, the rise in crime was the result of rapid expansion indrug-trafficking activities, which erupted around 1980. Consequently, the fortunesassociated with the emergence of Colombia as the world largest producer of cocaine had a significantly negative effect on growth and productivity. This explanation is supportedby cross-country evidence that shows that Colombia´s underperformance, especially inthe 1990s, is explained by its high homicide rate.Economic growth, productivity, social capital, crime and conflic

Revisiting economic growth in Colombia. A microeconomic perspective

This paper revisits economic growth in Colombia using the growth diagnostics methodology proposed by Hausmann, Rodrik and Velasco (2005), with the purpose of identifying the most binding constraints for economic growth and the policies that, if implemented, can have the largest positive impact. To rank public policy priorities the HRV (2005) methodological approach is complemented with an econometric analysis of micro-data, aimed at exploring the impact that the various potential constraints to growth have had on firm-level investment decisions. The data shows economic reactivation in areas with falling violence. Results from analysis at the microeconomic level, however, give a particular spin to this conclusion by showing that investment decisions at the firm level are also explained by the restoration of some form of public order connected to the cessation of paramilitary violence and not only by the reduction of violence. From a public policy perspective, perhaps the most relevant result is the confirmation that in Colombia investment decisions are negatively affected by thecost of financing. Empirical results, robust across model specifications, single out the provision of access to financing at fair prices as a policy priority for economic growth, relevant across country regions and independent of whether uncertainties from poor protection to property rights are resolved.Crecimiento económico, Colombia

Education and economic growth

Contemporary views on the determinants of economic growth place education in centre stage. Yet the way in which education affects growth is not yet well understood. This paper begins by surveying the recent literature on the factors that affect growth, paying particular attention to education. It then proceeds to estimate a comprehensive model of growth, testing its robustness across regions of the world. Policy conclusions are drawn

Governance & Economic Growth

This paper looks at some of the fundamental ideas in contemporary economics such as the basic economic problem, opportunity cost and allocation a person is expected to encounter when they are first introduced to economic theory. It attempts to explain how the manner in which these concepts are interpreted and disseminated in mainstream economics may be counter productive to the capacity of economics to develop new ways of countering scarcity. It aligns these concepts with recent unrest in Europe caused by austerity measures. The paper looks at the capacity for contemporary economics to emerge from a cocoon spun from cobwebs of antiquated thought and inhibitions in order for it find extraordinary solutions for the extraordinary economic challenges the world faces today. Accelerated economic growth in an EOS model is applied to the economy of a developed country to illustrate the faster pace at which the model can transform stock markets and economic conditions as well as an illustration of how the current model may not exploit the full potential for market capitalisation businesses could have. In addition to this the paper addresses the ability of workers to take control of their finances through a concept concerning the capitalisation of their labour. A labour capitalisation fund allows employees to have their projected lifetime earnings paid up front and invested for the duration of their working life. It improves the relationship between capital and labour, frees up financial resources for governments and creates a new lucrative financial product for banks and other institutions in the financial services industry.Scarcity; banking; credit creation; labour; banks; market capitalisation; resource creation; implosion; wobble effect; unemployment; economic thought; poverty; wealth; equation of exchange; market efficiency; stock market; money; price; mark-up; cost plus pricing; rationality; operating level economics; economic growth; expenditure fallacy; paradox.

Economic Growth Nonlinearities

Nonlinearities in growth have important implications for cross-country income inequality. In particular, they imply that countries may spend long periods of time in a low-growth poverty trap. However, finding evidence of such nonlinearities in the data and accounting for their emergence pose unique challenges to researchers.