The impact of deregulation and re-regulation on bank efficiency: evidence from Asia

Following the 1997 crisis, banking sector reforms in Asia have been characterised by the emphasis on prudential regulation, associated with increased financial liberalisation. Using a panel data set of commercial banks from eight major Asian economies over the period 2001-2010, this study explores how the coexistence of liberalisation and prudential regulation affects banks’ cost characteristics. Given the presence of heterogeneity of technologies across countries, we use a stochastic frontier approach followed by the estimation of a deterministic meta-frontier to provide ‘true’ estimates of bank cost efficiency measures. Our results show that the liberalization of bank interest rates and the increase in foreign banks' presence have had a positive and significant impact on technological progress and cost efficiency. On the other hand, we find that prudential regulation might adversely affect bank cost performance. When designing an optimal regulatory framework, policy makers should combine policies which aim to foster financial stability without hindering financial intermediation.

The Relationship between Transport Infrastructure and EconomicGrowth: An Empirical Analysis Comparing Developing and DevelopedCountries

Gross domestic product (GDP) is generally considered as the most important index and comprehensive measure of the size of economy. This paper investigates empirically the relationship between transport infrastructure (focus on highways) and GDP growth based on a production function approach. The physical stocks of transport infrastructure were used instead of monetary data to measure public capital together with several other variables (labor and private capital) that were hypothesized to affect economic growth. Then we explore a number of subsequent studies that use panel data covering the period between 1992 and 2004. An investigation was done to compare developed countries and developing countries. Results indicate that physical units are positively and significantly related to economic growth. Furthermore there was an interesting finding that the output elasticity with respect to physical units for developed countries is higher than developing countries.

An analysis of linkage between foreign direct investment and GDP per Capita in Pakistan : A time series analysis

This study aims to investigate the relation between foreign direct investment (FDI) and per capita gross domestic product (GDP) in Pakistan. The study is based on a basic Cobb-Douglas production function. Population over age 15 to 64 is used as a proxy for labor in the investigation. The other variables used are gross capital formation, technological gap and a dummy variable measuring among other things political stability. We find positive correlation between GDP per capita in Pakistan and two variables, FDI and population over age 15 to 64. The GDP gap (gap between GDP of USA and GDP of Pakistan) is negatively correlated with GDP per capita as expected. Political instability, economic crisis, wars and polarization in the society have no significant impact on GDP per capita in the long run.

Trade liberalisation and economic growth in Fiji : an empirical assessment using the ARDL approach

This study investigates the effect of trade liberalization on economic performance in Fiji using a Cobb-Douglas production function, which is expanded to take into account political instability and trade liberalization. The long run results conform to theoretical expectations, except for the contribution of labour force, which is negatively related to real Gross Domestic Product. We attribute this to the rapid and consistent emigration of skilled labour following the 1987 coups. While human capital was found to be the most influential variable, exports and investment were found to be weakly related to Gross Domestic Product. The key finding is that the dummy variable for signing the IMF agreement in 1984 had a statistically significant positive effect on real Gross Domestic Product in the long run, but the short run effects of signing the agreement as well as the short run and long run effects of implementing the agreement in 1986 were statistically insignificant.

Inflation and economic growth : a comparative analysis of Australia and the Philippines

Investigates the effects of inflation on economic growth in Australia and the Philippines using time-series data for each country. Uses time-series quarterly data sets covering the period 1970-1995 for Australia and 1950-1994 for the Philippines. A production function approach is used. Inflation was found to have a negative and statistically significant but differing impact on growth in both countries.

The role of capital-labour substitution in economic growth

Purpose – Although the importance of the elasticity of substitution between capital and labour (s) has been recognized in many areas in economics, this parameter has not received enough attention in economic growth. The purpose of this paper is to review the recent development in the importance of s in economic growth.

Design/methodology/approach – This paper specifically reviews the possibility of perpetual growth and slowdown, and the asymptotic behaviour of the balanced growth path for different values of s. It also reviews the determinants of the aggregate s.

Findings – Based on the empirical evidence that the value of s significantly departs from the Cobb-Douglas value of unity, the paper recommends employing the constant elasticity of substitution (CES) production function in both theoretical and empirical growth research.

Originality/value – This paper offers a new perspective on the elasticity of substitution between capital and labour due to its evaluation of various factors, methods and approaches.

Determinants of school attendance among migrant children: survey evidence from China's Jiangsu province

Across the developing world education is seen as a means of raising levels of everyday wellbeing and is being linked to improved measures of productivity and economic growth. This paper employs a household production function framework to examine the determinants of school attendance among migrant children using a unique dataset collected in China's Jiangsu province. The study finds that the main predictors of school attendance among migrant children in the sample were household income, mother's education, the length of residence of the child's mother in the city and whether both parents were working in the same city. © 2006 Blackwell Publishing Ltd.

Applied econometrics and implications for energy economics research

Developments in applied econometrics, particularly with regard to unit root tests and cointegration tests, have motivated a rich empirical literature on energy economics over the last decade. This study reviews recent developments in time series econometrics applications in the energy economics literature. We first consider the literature on the integration properties of energy variables. We begin with a discussion of the implications of whether energy variables contain a unit root and proceed to examine how results differ according to the specific unit root or stationarity test employed. We then proceed to examine recent developments in the literature on cointegration, Granger causality and long-run estimates between (disaggregated) energy consumption and economic growth. We review both single country and panel studies and pay particular attention to studies which have expanded the literature through adding variables such as financial development and trade, in addition to energy consumption to the augmented production function, as well as studies which have extended the literature through examining disaggregated energy consumption by type. In each case we highlight best practice in the literature, point to limitations in the literature, including econometric modeling challenges, and suggest recommendations for future research. A key message of our survey is that the profession needs to guard against 'overload' of research in these areas as most applied studies are no longer adding anything more to what is already known. © 2014 Elsevier B.V. All rights reserved.

Optimization Of Groundwater Remediation With New Efficient Parallel Algorithm For Global Optimization

Application of optimization algorithm to PDE modeling groundwater remediation can greatly reduce remediation cost. However, groundwater remediation analysis requires a computational expensive simulation, therefore, effective parallel optimization could potentially greatly reduce computational expense. The optimization algorithm used in this research is Parallel Stochastic radial basis function. This is designed for global optimization of computationally expensive functions with multiple local optima and it does not require derivatives. In each iteration of the algorithm, an RBF is updated based on all the evaluated points in order to approximate expensive function. Then the new RBF surface is used to generate the next set of points, which will be distributed to multiple processors for evaluation. The criteria of selection of next function evaluation points are estimated function value and distance from all the points known. Algorithms created for serial computing are not necessarily efficient in parallel so Parallel Stochastic RBF is different algorithm from its serial ancestor. The application for two Groundwater Superfund Remediation sites, Umatilla Chemical Depot, and Former Blaine Naval Ammunition Depot. In the study, the formulation adopted treats pumping rates as decision variables in order to remove plume of contaminated groundwater. Groundwater flow and contamination transport is simulated with MODFLOW-MT3DMS. For both problems, computation takes a large amount of CPU time, especially for Blaine problem, which requires nearly fifty minutes for a simulation for a single set of decision variables. Thus, efficient algorithm and powerful computing resource are essential in both cases. The results are discussed in terms of parallel computing metrics i.e. speedup and efficiency. We find that with use of up to 24 parallel processors, the results of the parallel Stochastic RBF algorithm are excellent with speed up efficiencies close to or exceeding 100%.

A note on policy, the composition of public expenditures and economic growth

In this article we study the growth and welfare effects of fiscal and monetary policies in economies where public investment is part of the productive process we present four different models that share the same technology with public infrastructure as a separate argument of the production function. We show that growth is maximized at positive levels of income tax and inflation. However, unless there are no transfers or public goods in the economy, maximization of growth does not imply welfare maximization we show that the optimal tax rate is greater than the rate that maximizes growth and the optimal rate of money creation is below the growth maximizing rate. With public infrastructure in the production function we no longer obtain superneutrality in the Sidrausky model.

The implications of embodiment and Putty-Clay to economic development

In this paper we construct and analyze a growth model with the following three ingredients. (i) Technological progress is embodied. (ii) The production function of a firm is such that the firm makes both technology upgrade as well as capital and labor decisions. (iii) The firm’s production technology is putty-clay. We assume that there are disincentives to the accumulation of capital, resulting in a divergence between the social and the private cost of investment. We solve a single firm’s problem in this environment. Then we determine general equilibrium prices of capital goods of different vintages. Using these prices we aggregate firms’ decisions and construct the theoretical analogues of National Income statistics. This generates a relationship between disincentives and per capita incomes. We analyze this relationship and show the quantitative and qualitative roles of embodiment and putty-clay. We also show how the model is taken to data, quantified and used to determine to what extent income gaps across countries can be attributed to disincentives.

Testing the externalities hypothesis of endogenous growth using cointegration

The initial endogenous growth models emphasized the importance of externaI effects in explaining sustainable growth across time. Empirically, this hypothesis can be confirmed if the coefficient of physical capital per hour is unity in the aggregate production function. Although cross-section results concur with theory, previous estimates using time series data rejected this hypothesis, showing a small coefficient far from unity. It seems that the problem lies not with the theory but with the techniques employed, which are unable to capture low frequency movements in high frequency data. This paper uses cointegration - a technique designed to capture the existence of long-run relationships in multivariate time series - to test the externalities hypothesis of endogenous growth. The results confirm the theory' and conform to previous cross-section estimates. We show that there is long-run proportionality between output per hour and a measure of capital per hour. U sing this result, we confmn the hypothesis that the implied Solow residual can be explained by government expenditures on infra-structure, which suggests a supply side role for government affecting productivity and a decrease on the extent that the Solow residual explains the variation of output.

The impact of public capital and public investment on economic growth: an empirical investigation

in this anicle we measure the impact of public sector capital and investment on economic growth. Initially, traditional growth accounting regressions are run for a cross-country data set. A simple endogenous growth model is then constructed in order to take into account the determinants of labor, private capital and public capital. In both cases, public capital is a separate argument of the production function. An additional data-set constructed with quarterly American data was used in the estimations of the growth mode!. The results indicate lhat public capital and public investment play a significant role in determining growth rates and have a significant impact on capital and labor returns. Furthermore, the impact of public investment on productivity growth was found to be positive and always significant for bolh samples. Hence. in a fully optimizing modelo we confmn previous results in the literature that lhe failure of public investment to keep pace with output growlh during the Seventies and Eighties may have played a major role in the slowdown of lhe productivity growth in the period. Anolher main outcome concems the output elasticity wilh respect to public capital. The coefficiem estimates are always positive and significant but magnitudes depend on each of lhe two data set used.