This empirical study investigates the dynamic link between patent growth and GDP growth in G7 economies. ARDL model showed that there exist positive relationship in long run between quarterly growth of patents and quarterly GDP growth. The error correction term suggests that 20,6 percent of the adjustment back to long run equilibrium of industrial production in G7 countries is corrected by 20,6% a year, following a shock like the one in 1974 , which in our study is controlled by a dummy variable D74. In the short run however at one or two lags there exist negative relationship between quarterly patents growth and quarterly growth of GDP. Johansen's procedure for cointegration showed that long run multipliers are positive between the patent growth and GDP growth in G7 economies.Granger causality test showed that patent growth Granger cause GDP growth in G7 countries.Unrestricted VAR showed that there exists positive relationship between patent growth and GDP growth at two or three lags.
In this paper non-convexity in economics has been revisited. Shapley-Folkman-Lyapunov theorem has been tested with the asymmetric auctions where bidders follow log-concave probability distributions (non-convex preferences). Ten standard statistical distributions have been used to describe the bidders’ behavior. In principle what is been tested is that equilibrium price can be achieved where the sum of large number non-convex sets is convex (approximately), so that optimization is possible. Convexity is thus very important in economics.
PurposeThe impact of remittances on household consumption stability and economic growth is not quite clear. This paper attempts to reopen the debate on the relationship among these three variables. The current remittance literature suggests that a decrease in household consumption volatility, induced by remittances, automatically leads to economic growth. This paper challenges these arguments by stating that, under certain circumstances, there is no automatic relationship among remittances, household consumption stability and growth.Design/methodology/approachThe authors approach the question from the perspective of emerging Central, Eastern and Southeastern European (CESEE) countries. The authors use the two-step system generalized method of moments (GMM) estimator with the Windmeijer (2005) finite-sample correction. To test the existence of the possible non-linear effects of remittances on household consumption stability and economic growth, the authors use threshold regressions.FindingsThe authors find that remittances significantly reduce household consumption volatility. They exhibit a consumption-smoothing effect on recipient households. This stabilizing effect happens not through the preventive role of remittances, but rather through their compensatory role. Remittances produce a weaker stabilizing effect on household consumption when the remittance to GDP ratio of the recipient country is above the estimated threshold level of 4.5%. The authors also find that there is a negatively significant and linear impact of remittances on growth. There is no evidence to suggest that remittances can foster productive investment and therefore promote economic growth in CESEE countries, which means that: (1) the remittances cannot be treated as a source of funds to invest in human and physical capital and (2) the remittances are compensatory rather than profit-oriented.Originality/valueAs far as the authors are aware, this is the first study that investigates the impact of remittances on both household consumption stability and economic growth simultaneously.
The aim of this paper is to investigate the issue of R&D investment and the market value of firms. This idea dates back from Arrow paper, later developed by Paul Romer, but in the area of economic growth. Zvi Griliches in 1979 first introduced the production function, which was later used in a vast literature from this area. In the theoretical section of this paper, Tobin's original model and Abel's (1984) model were described. These models relate Tobin's quotient with intangible assets of the company. In the empirical part, cross-section time series model (Feasible Generalized Least Squares Model) was developed for a panel (a total of 11 panels) of countries in Europe including UK and Turkey. Later, we test that model by estimating the marginal effects of R&D investment with Tobin's q on a small economy such as R. Macedonia. The results exert positive and statistically significant relationship between market value of the firms and R&D investment.
This paper revisits the Institutions and growth models. Econometric techniques have been applied on crosscountry data, just to confirm the apriori knowledge that Institutions effect on growth is positive and highly statistically significant. This evidence was confirmed by all four models. OLS proved as a better technique for our data than 2SLS, this simply because overidentification test showed that instrument cannot be considered exogenous, also Hausman test showed that OLS is better than 2SLS at 1% and 5% levels of significance. G2SLS estimator and Fixed effects panel estimators just confirmed the results from the OLS and 2SLS. As a proxy variable for institutions we used Rule of law variable, also as instruments were used revolutions and Freedom house rating as well as War casualties variables. Also as conclusion here Trade is insignificant in influence to GDP growth compared with quality of institutions.
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