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Sebastiaan Wijsman and Christophe Crombez

This paper studies the effects of fiscal rules on public investment. Economists argue that fiscal rules decrease public investment, as it is easier for governments to lower public investment than current expenditures. This paper presents an empirical assessment of the relationship between fiscal rules and public investment using European panel data covering the 1997–2016 period. In contrast to previous work, we focus on national fiscal rules and use the European Commission's Fiscal Rules Strength Index to measure the constraints imposed on public finances. This index captures 230 national fiscal rules and reflects the annual strength of fiscal rules in each European Union member state. In line with our expectations, we find that fiscal rules decrease public investment. We run some additional models in which the results are mixed.

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Grzegorz Konat

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Smita Roy Trivedi

Profitability of technical-analysis strategies has been explained with reference to central-bank intervention in markets (; ; ). I argue that central-bank intervention is a market shock which leads to a generation of trends, making technical analysis profitable. Looking at empirical evidence from the Indian foreign-exchange market, I find returns calculated for the entire period are consistently and substantially higher than when intervention periods are removed. Thirteen out of the 15 strategies demonstrate higher returns with intervention periods included, compared to without intervention periods. The Kolmogorov–Smirnov sample tests show statistically significant differences in the returns between the entire period and the without-intervention period for four strategies, which is confirmed by bootstrap estimation. The paper contributes first by including actual trading strategies in the empirical testing of profitability of technical analysis and second by emphasizing the efficacy of technical analysis rather than the action of the central bank itself in explaining profitability, in a departure from the existing literature.

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A. Bhatt Hakhu and C. Sardoni

The paper deals with the relationship between public spending and growth as well as the dynamics of the ratio of public debt to GDP. The authors show that a composition of public spending that favors productive expenditures, that is, those with a direct positive effect on the economy's long-run rate of growth, can determine a situation in which the ratio of public debt to GDP is stable, even though the government runs primary deficits. We test our theoretical results by considering the Indian case. Our empirical analysis substantially supports the idea that the dynamics of the economy as well as of the public-debt ratio are contingent on having a public sector that favors productive expenditures.

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Marco Flávio Cunha Resende, Vitor Leone, Daniela Almeida Raposo Torres and Simeon Coleman

In the balance-of-payments-constrained growth model literature, income elasticities (IEs) are considered as the crucial element determining a country's long-run growth rate. Although the extant literature accepts that technology matters for IEs magnitude, explanations linking technology and IEs magnitude are limited. In this paper, we make use of the National Innovation System (NIS) concept from the Evolutionary School to explain the channels through which the size of a country's IEs is influenced by the level of development of its NIS, which in turn is a channel through which the non-price competitiveness factors work. Additionally, we empirically test the hypothesis that the catch-up allowed by NIS developments achieved in South Korea and Hong Kong improved their IEs over the 1980–1995 period. Our empirical results suggest a link between the level of NIS development and the size of the IEs.

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Louis-Philippe Rochon

While Basil Moore is well known for his view on endogenous money, very little is known about how he got there, and how his views might have evolved through time. This paper examines Moore's early views, pre-Horizontalists and Verticalists, and explains how Moore's views are rooted in a traditional Keynesian Tobin approach. But Moore's sabbatical at the University of Cambridge in 1970, when he met Paul Davidson and Joan Robinson, changed all that. Yet it would take him a full decade to fully embrace endogenous money.