Unemployment and wage formation in a growth model with public capital

We study the relation between public capital, employment and growth under different assumptions concerning wage formation. We show that public capital increases economic growth, and that, if there is wage inertia, employment positively depends on both economic growth and public capital.

Research policy and endogenous growth

This paper studies the effects of different types of research policy on economic growth. We find that while tax incentives to private research, public funding of private projects, and basic research performed at public institutions have unambiguously positive effects on economic growth, performing applied research at public institutions could have negative growth effects. This is due to the large crowding out of private research caused by public R\&D when it competes with private firms in the "patent race". Concerning the effects of these policies on welfare, it is found that research policy can either improve or reduce consumer welfare depending on the characteristics of the policy and that an excessively high research subsidy will reduce it.

Financial intermediation in a model of growth through creative destruction

This paper presents an endogenous growth model in which the research activity is financed by intermediaries that are able to reduce the incidence of researcher's moral hazard. It is shown that financial activity is growth promoting because it increases research productivity. It is also found that a subsidy to the financial sector may have larger growth effects than a direct subsidy to research. Moreover, due to the presence of moral hazard, increasing the subsidy rate to R\&D may reduce the growth rate. I show that there exists a negative relation between the financing of innovation and the process of capital accumulation. Concerning welfare, the presence of two externalities of opposite sign steaming from financial activity may cause that the no-tax equilibrium provides an inefficient level of financial services. Thus, policies oriented to balance the effects of the two externalities will be welfare improving.

Knowledge, networks of cities and growth in regional urban systems

The objective of this paper is to measure the impact of different kinds of knowledge and external economies on urban growth in an intraregional context. The main hypothesis is that knowledge leads to growth, and that this knowledge is related to the existence of agglomeration and network externalities in cities. We develop a three-tage methodology: first, we measure the amount and growth of knowledge in cities using the OCDE (2003) classification and employment data; second, we identify the spatial structure of the area of analysis (networks of cities); third, we combine the Glaeser - Henderson - De Lucio models with spatial econometric specifications in order to contrast the existence of spatially static (agglomeration) and spatially dynamic (network) external economies in an urban growth model. Results suggest that higher growth rates are associated to higher levels of technology and knowledge. The growth of the different kinds of knowledge is related to local and spatial factors (agglomeration and network externalities) and each knowledge intensity shows a particular response to these factors. These results have implications for policy design, since we can forecast and intervene on local knowledge development paths.

Explaining High Economic Growth in Small Tourism Countries with a Dynamic General Equilibrium Model

This paper shows that tourism specialisation can help to explain the observed high growth rates of small countries. For this purpose, two models of growth and trade are constructed to represent the trade relations between two countries. One of the countries is large, rich, has an own source of sustained growth and produces a tradable capital good. The other is a small poor economy, which does not have an own engine of growth and produces tradable tourism services. The poor country exports tourism services to and imports capital goods from the rich economy. In one model tourism is a luxury good, while in the other the expenditure elasticity of tourism imports is unitary. Two main results are obtained. In the long run, the tourism country overcomes decreasing returns and permanently grows because its terms of trade continuously improve. Since the tourism sector is relatively less productive than the capital good sector, tourism services become relatively scarcer and hence more expensive than the capital good. Moreover, along the transition the growth rate of the tourism economy holds well above the one of the rich country for a long time. The growth rate differential between countries is particularly high when tourism is a luxury good. In this case, there is a faster increase in the tourism demand. As a result, investment of the small economy is boosted and its terms of trade highly improve.

Entrepreneurial Orientation, Intangible Assets and Firm Growth: the impact of ‘Spirit and Material’ on the growth of Chinese private firms

This paper has three contributions. First, it shows how field work within small firms in PR Chinese has provided new evidence which enables us to measure and calibrate Entrepreneurial Orientation (EO), as ‘spirit’, and Intangible Assets (IA), as ‘material’, for use in models of small firm growth. Second, it uses inter-item correlation analysis and both exploratory and confirmatory factor analysis to provide new measures of EO and IA, in index and in vector form, for use in econometric models of firm growth. Third, it estimates two new econometric models of small firm employment growth in PR China, under the null hypothesis of Gibrat’s Law, using our two new index-based and vector-based measures of EO and IA. Estimation is by OLS with adjustment for heteroscedasticity, and for sample selectivity. Broadly, it finds that EO attributes have had little significant impact on small firm growth, and indeed innovativeness and pro-activity paradoxically may even dampen growth. However, IA attributes have had a positive and significant impact on growth, with networking, and technological knowledge being of prime importance, and intellectual property and human capital being of lesser but still significant importance. In the light of these results, Gibrat’s Law is generalized, and Jovanovic’s learning theory is extended, to emphasise the importance of IA to growth. These findings cast new empirical light on the oft-quoted national slogan in PR China of “spirit and material”. So far as small firms are concerned, this paper suggests that their contribution to PR China’s remarkable economic growth is not so much attributable to the ‘spirit’ of enterprise (as suggested by propaganda) as, more prosaically, to the pursuit of the ‘material’.

UK Macroeconomic Forecasting with Many Predictors: Which Models Forecast Best and When Do They Do So?

Block factor methods offer an attractive approach to forecasting with many predictors. These extract the information in these predictors into factors reflecting different blocks of variables (e.g. a price block, a housing block, a financial block, etc.). However, a forecasting model which simply includes all blocks as predictors risks being over-parameterized. Thus, it is desirable to use a methodology which allows for different parsimonious forecasting models to hold at different points in time. In this paper, we use dynamic model averaging and dynamic model selection to achieve this goal. These methods automatically alter the weights attached to different forecasting models as evidence comes in about which has forecast well in the recent past. In an empirical study involving forecasting output growth and inflation using 139 UK monthly time series variables, we find that the set of predictors changes substantially over time. Furthermore, our results show that dynamic model averaging and model selection can greatly improve forecast performance relative to traditional forecasting methods.

Evaluation of tumour vascularisation in two rat sarcoma models for studying isolated lung perfusion. Injection route determines the origin of tumour vessels.

Isolated cytostatic lung perfusion (ILP) is an attractive technique allowing delivery of a high-dose of cytostatic agents to the lungs while limiting systemic toxicity. In developing a rat model of ILP, we have analysed the effect of the route of tumour cell injection on the source of tumour vessels. Pulmonary sarcomas were established by injecting a sarcoma cell suspension either by the intravenous (i.v.) route or directly into the lung parenchyma. Ink perfusion through either pulmonary artery (PA) or bronchial arteries (BA) was performed and the characteristics of the tumour deposits defined. i.v. and direct injection methods induced pulmonary sarcoma nodules, with similar histological features. The intraparenchymal injection of tumour cells resulted in more reliable and reproducible tumour growth and was associated with a longer survival of the animals. i.v. injected tumours developed a PA-derived vascular tree whereas directly injected tumours developed a BA-derived vasculature.

Genetic- or transforming growth factor-beta 1-induced changes in epidermal peroxisome proliferator-activated receptor beta/delta expression dictate wound repair kinetics.

Advances in wound care are of great importance in clinical injury management. In this respect, the nuclear receptor peroxisome proliferator-activated receptor (PPAR)beta/delta occupies a unique position at the intersection of diverse inflammatory or anti-inflammatory signals that influence wound repair. This study shows how changes in PPARbeta/delta expression have a profound effect on wound healing. Using two different in vivo models based on topical application of recombinant transforming growth factor (TGF)-beta1 and ablation of the Smad3 gene, we show that prolonged expression and activity of PPARbeta/delta accelerate wound closure. The results reveal a dual role of TGF-beta1 as a chemoattractant of inflammatory cells and repressor of inflammation-induced PPARbeta/delta expression. Also, they provide insight into the so far reported paradoxical effects of the application of exogenous TGF-beta1 at wound sites.

Productivity shocks and aggregate fluctuations in an estimated endogenous growth model with human capital

Employing an endogenous growth model with human capital, this paper explores how productivity shocks in the goods and human capital producing sectors contribute to explaining aggregate fluctuations in output, consumption, investment and hours. Given the importance of accounting for both the dynamics and the trends in the data not captured by the theoretical growth model, we introduce a vector error correction model (VECM) of the measurement errors and estimate the model’s posterior density function using Bayesian methods. To contextualize our findings with those in the literature, we also assess whether the endogenous growth model or the standard real business cycle model better explains the observed variation in these aggregates. In addressing these issues we contribute to both the methods of analysis and the ongoing debate regarding the effects of innovations to productivity on macroeconomic activity.

The international trade as the sole engine of growth for an economy

Can international trade act as the sole engine of growth for an economy? If yes, what are the mechanisms through which trade operates in transmitting permanent growth? This paper answers these questions with two simple two-country models, in which only one country enjoys sustained growth in autarky. The models differ in the assumptions on technical change, which is either labour- or capital-augmenting. In both cases, the stagnant economy imports growth by trading. In the first model, growth is transmitted because of permanent increases in the trade volume. In the alternative framework, the stagnant economy imports sustained growth because its terms of trade permanently improve.

Nowcasting Scottish GDP Growth

The delays in the release of macroeconomic variables such as GDP mean that policymakers do not know their current values. Thus, nowcasts, which are estimates of current values of macroeconomic variables, are becoming increasingly popular. This paper takes up the challenge of nowcasting Scottish GDP growth. Nowcasting in Scotland, currently a government office region within the United Kingdom, is complicated due to data limitations. For instance, key nowcast predictors such as industrial production are unavailable. Accordingly, we use data on some non-traditional variables and investigate whether UK aggregates can help nowcast Scottish GDP growth. Such data limitations are shared by many other sub-national regions, so we hope this paper can provide lessons for other regions interested in developing nowcasting models.

Asynchronous growth and competition in a two-sex age-structured population model

Asynchronous exponential growth has been extensively studied in population dynamics. In this paper we find out the asymptotic behaviour in a non-linear age-dependent model which takes into account sexual reproduction interactions. The main feature of our model is that the non-linear process converges to a linear one as the solution becomes large, so that the population undergoes asynchronous growth. The steady states analysis and the corresponding stability analysis are completely made and are summarized in a bifurcation diagram according to the parameter R0. Furthermore the effect of intraspecific competition is taken into account, leading to complex dynamics around steady states.

Low doses of ionizing radiation promote tumor growth and metastasis by enhancing angiogenesis.

Radiotherapy is a widely used treatment option in cancer. However, recent evidence suggests that doses of ionizing radiation (IR) delivered inside the tumor target volume, during fractionated radiotherapy, can promote tumor invasion and metastasis. Furthermore, the tissues that surround the tumor area are also exposed to low doses of IR that are lower than those delivered inside the tumor mass, because external radiotherapy is delivered to the tumor through multiple radiation beams, in order to prevent damage of organs at risk. The biological effects of these low doses of IR on the healthy tissue surrounding the tumor area, and in particular on the vasculature remain largely to be determined. We found that doses of IR lower or equal to 0.8 Gy enhance endothelial cell migration without impinging on cell proliferation or survival. Moreover, we show that low-dose IR induces a rapid phosphorylation of several endothelial cell proteins, including the Vascular Endothelial Growth Factor (VEGF) Receptor-2 and induces VEGF production in hypoxia mimicking conditions. By activating the VEGF Receptor-2, low-dose IR enhances endothelial cell migration and prevents endothelial cell death promoted by an anti-angiogenic drug, bevacizumab. In addition, we observed that low-dose IR accelerates embryonic angiogenic sprouting during zebrafish development and promotes adult angiogenesis during zebrafish fin regeneration and in the murine Matrigel assay. Using murine experimental models of leukemia and orthotopic breast cancer, we show that low-dose IR promotes tumor growth and metastasis and that these effects were prevented by the administration of a VEGF receptor-tyrosine kinase inhibitor immediately before IR exposure. These findings demonstrate a new mechanism to the understanding of the potential pro-metastatic effect of IR and may provide a new rationale basis to the improvement of current radiotherapy protocols.