Suchergebnisse

Ajit Zacharias, Thomas Masterson, and Fernando Rios-Avila update the Levy Institute Measure of Economic Well-Being (LIMEW) for US households for the period 2000-13. The LIMEW - which comprises base income, income from wealth, net government expenditures, and the value of household production - is aimed at achieving a more comprehensive understanding of trends in living standards. This policy brief analyzes developments during this period at all levels of the LIMEW distribution, with a particular focus on the significant role played by net government expenditures. The overall trend for 2000 - 13 was one of historic stagnation in the growth of economic well-being for US households, but an examination of the different components of the measure reveals significant shifts taking place behind this headline trend.

Purpose
– While the literature studying the effect of banking crises on real output growth rates has found short-lived effects, recent work has focused on the level effects showing that banking crises can reduce output below its trend for several years. This paper aims to investigate the effect of banking crises on investment finding a prolonged negative effect.


Design/methodology/approach
– The authors test to see whether investment declines after a banking crisis and, if it does, for how long and by how much. The paper uses data for 148 countries from 1963 to 2007. Econometrically, the authors test how banking crises episodes affect investment in future years after controlling for other potential determinants.


Findings
– The authors find that the investment to GDP ratio is on average about 1.7 percent lower for about eight years following a banking crisis. These results are robust after controlling for credit availability, institutional characteristics, and a host of other factors. Furthermore, the authors find that the size and duration of this adverse effect on investment varies according to the level of financial development of a country. The largest and longer-lasting decrease in investment is found in countries in a middle region of financial development, where finance plays its most important role according to theory.


Originality/value
– The authors contribute by finding that banking crisis can have long-term effects on investment of up to nine years. Further, the authors contribute by finding that the level of development of the country's financial markets affects the duration of this decrease in investment.

The relationship between intellectual property rights (IPR) protection and foreign direct investment (FDI) continues to pose a challenging puzzle. While several studies have found that these two variables are positively correlated, others have not been able to find conclusive results or have found that the relationship is actually negative. We contend that a partial explanation of these contradictory results resides on institutional differences among host countries. We find that increases in IPR protection encourage FDI in countries in which the shadow (informal) economy represents a relatively small percentage of the country's economy but it does not produce the same result in countries in which that percentage is relatively large. The size of the shadow economy is determined, in turn, by the quality of institutional variables such as the degree of bureaucracy, the level of corruption, and the extent of confiscatory taxation and political instability. We present empirical evidence supporting the results of our theoretical framework using threshold regression techniques on a sample of 94 countries and data for the 2000 - 2005 period.