Luca A Ricci

Bio: Luca A Ricci is an academic researcher from International Monetary Fund. The author has contributed to research in topics: Exchange rate & Productivity. The author has an hindex of 42, co-authored 132 publications receiving 7222 citations. Previous affiliations of Luca A Ricci include University of Strathclyde.

External Debt and Growth

Abstract: This paper assesses the non linear impact of external debt on growth using panel data for 93 developing countries. The estimates support a non-linear, hump- shaped relationship between debt and growth, especially when the debt burden is measured relative to GDP. For a country with average indebtedness, doubling the debt ratio reduces growth by a third to a half percentage point after controlling for endogeneity. Our findings also suggest that the average impact of debt becomes negative at about 160-170 percent of exports or 35-40 percent of GDP and the marginal impact of debt at about half of these values.

Capital Account Liberalization and Economic Performance: Survey and Synthesis

Abstract: This paper reviews the literature on the effects of capital account liberalization and stock market liberalization on economic growth The various empirical measures used to gauge the presence of controls on capital account transactions as well as indicators of stock market liberalization are discussed We compare detailed measures of capital account controls that attempt to capture the intensity of enforcement with others that simply capture whether or not controls are present Our review of the literature shows the contrasting results that have been obtained These differences may reflect differences in country coverage, sample periods and indicators of liberalization In order to reconcile these differences, we present new estimates of the effects on growth of capital account liberalization and stock market liberalization We find some support for a positive effect of capital account liberalization on growth, especially for developing countries

External Debt and Growth

Abstract: This paper assesses the non linear impact of external debt on growth using a large panel data set of 93 developing countries over 1969-98. Results are generally robust across different econometric methodologies, regression specifications, and different debt indicators. For a country with average indebtedness, doubling the debt ratio would reduce annual per capita growth by between half and a full percentage point. The differential in per capita growth between countries with external indebtedness (in net present value) below 100 percent of exports and above 300 percent of exports seems to be in excess of 2 percent per annum. For countries that are to benefit from debt reduction under the current HIPC initiative, per capita growth might increase by 1 percentage point, unless constrained by other macroeconomic and structural economic distortions. Our findings also suggest that the average impact of debt becomes negative at about 160-170 percent of exports or 35-40 percent of GDP. The marginal impact of debt starts being negative at about half of these values. High debt appears to reduce growth mainly by lowering the efficiency of investment rather than its volume.

Exchange Rate Assessments; CGER Methodologies

Abstract: The IMF's Consultative Group on Exchange Rate Issues (CGER) was formed in the mid-1990s to provide exchange rate assessments for a number of advanced economies from a multilateral perspective. The rapid increase in international trade and financial integration since then has inspired the IMF to place stronger emphasis on multilateral surveillance, macro-financial linkages, and the implications of globalization. The CGER therefore has broadened its mandate to cover both key advanced economies and major emerging market economies, and this Occasional Paper summarizes the methodologies that underpin the expanded analysis.

The Colonial Origins of Comparative Development: An Empirical Investigation

Abstract: In Acemoglu, Johnson, and Robinson, henceforth AJR, (2001), we advanced the hypothesis that the mortality rates faced by Europeans in different parts of the world after 1500 affected their willingness to establish settlements and choice of colonization strategy. Places that were relatively healthy (for Europeans) were—when they fell under European control—more likely to receive better economic and political institutions. In contrast, places where European settlers were less likely to go were more likely to have “extractive” institutions imposed. We also posited that this early pattern of institutions has persisted over time and influences the extent and nature of institutions in the modern world. On this basis, we proposed using estimates of potential European settler mortality as an instrument for institutional variation in former European colonies today. Data on settlers themselves are unfortunately patchy—particularly because not many went to places they believed, with good reason, to be most unhealthy. We therefore followed the lead of Curtin (1989 and 1998) who compiled data on the death rates faced by European soldiers in various overseas postings. 1 Curtin’s data were based on pathbreaking data collection and statistical work initiated by the British military in the mid-nineteenth century. These data became part of the foundation of both contemporary thinking about public health (for soldiers and for civilians) and the life insurance industry (as actuaries and executives considered the

The Endogeneity of the Optimum Currency Area Criteria

Abstract: A country's suitability for entry into a currency union depends on a number of economic conditions. These include, inter alia, the intensity of trade with other potential members of the currency union, and the extent to which domestic business cycles are correlated with those of the other countries. But international trade patterns and international business cycle correlations are endogenous. This paper develops and investigates the relationship between the two phenomena. Using thirty years of data for twenty industrialized countries, we uncover a strong and striking empirical finding: countries with closer trade links tend to have more tightly correlated business cycles. It follows that countries are more likely to satisfy the criteria for entry into a currency union after taking steps toward economic integration than before.

Does Globalization Affect Growth? : evidence from a new Index of Globalization

Abstract: The study develops an index of globalization covering its three main dimensions: economic integration, social integration, and political integration. Using panel data for 123 countries in 1970–2000 it is analysed empirically whether the overall index of globalization as well as sub-indexes constructed to measure the single dimensions affect economic growth. As the results show, globalization indeed promotes growth. The dimensions most robustly related with growth refer to actual economic flows and restrictions in developed countries. Although less robustly, information flows also promote growth whereas political integration has no effect.

A New Measure of Financial Openness

Abstract: We create a new index that measures the extent of openness in capital account transactions. Despite the abundance of literature and policy analyses regarding the effect of financial liberalization, the debate is far from settled. One of the reasons for that outcome is the lack of proper ways of measuring the extent of the openness in cross-border financial transactions. We seek to remedy this deficiency by creating an index aimed at measuring the extensity of capital controls based on the information from the IMF's Annual Report on Exchange Arrangements and Exchange Restrictions (AREAER). This paper details how we construct the data and where our index stands in relation to the extant literature. Given the intricacy of capital controls policies and regulations, the exercise of quantifying the extent of financial openness remains a challenging task. Nonetheless, our index makes a substantial contribution in terms of its coverage of countries and time period; the data are available for 181 countrie...