We investigate whether income inequality affects subsequent growth in a cross-country sample for 1965-90, using the models of Barro (1997), Bleaney and Nishiyama (2002) and Sachs and Warner (1997), with negative results. We then investigate the evolution of income inequality over the same period and its correlation with growth. The dominating feature is inequality convergence across countries. This convergence has been significantly faster amongst developed countries. Growth does not appear to influence the evolution of inequality over time. Outline

https://www.econstor.eu/bitstream/10419/81822/1/02-28.pdf

Economic growth and income inequality

We develop a novel system of re-classifying historical exchange rate regimes. One difference between our study and previous classification efforts is that we employ an extensive data base on market-determined parallel exchange rates. Our 'natural' classification algorithm leads to a stark reassessment of the post-war history of exchange rate arrangements. When the official categorization is a form of peg, roughly half the time our classification reveals the true underlying monetary regime to be something radically different, often a variant of a float. Conversely, when official classification is floating, our scheme routinely suggests that the reality was a form of de facto peg. Our new classification scheme points to a complete rethinking of economic performance under alternative exchange rate regimes. Indeed, the breakup of Bretton Woods had a far less dramatic impact on most exchange rate regimes than is popularly believed. Also, contrary to an influential empirical literature, our evidence suggests that exchange rate arraignments may be quite important for growth, trade and inflation. Our newly compiled monthly data set on market-determined exchange rates goes back to 1946 for 153 countries.

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The Modern History of Exchange Rate Arrangements: A Reinterpretation

We develop a novel system of reclassifying historical exchange rate regimes. One key difference between our study and previous classifications is that we employ monthly data on market-determined parallel exchange rates going back to 1946 for 153 countries. Our approach differs from the IMF official classification (which we show to be only a little better than random), it also differs radically from all previous attempts at historical reclassification. Our classification points to a rethinking of economic performance under alternative exchange rate regimes. Indeed, the breakup of Bretton Woods had less impact on exchange rate regimes than is popularly believed.

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An econometric study of CO2 emissions, energy consumption, income and foreign trade in Turkey

This study attempts to examine empirically dynamic causal relationships between carbon emissions, energy consumption, income, and foreign trade in the case of Turkey using the time series data for the period 1960-2005 This research tests the interrelationship between the variables using the bounds testing to cointegration procedure The bounds test results indicate that there exist two forms of long-run relationships between the variables In the case of first form of long-relationship, carbon emissions are determined by energy consumption, income and foreign trade In the case of second long-run relationship, income is determined by carbon emissions, energy consumption and foreign trade An augmented form of Granger causality analysis is conducted amongst the variables The long-run relationship of CO2 emissions, energy consumption, income and foreign trade equation is also checked for the parameter stability The empirical results suggest that income is the most significant variable in explaining the carbon emissions in Turkey which is followed by energy consumption and foreign trade Moreover, there exists a stable carbon emissions function The results also provide important policy recommendations

The literature on the relation between stock prices and exchange rates is very poor and includes few studies that have argued that exchange rate changes do effect stock prices.By relying on the portfolio approach to exchange rate determination, it is argued that a change in stock prices could also have an impact on exchange rates, i.e. there could be a two-way relationship between exchange rates and stock prices. Granger concept of causality as well as cointegration technique are employed to support this conjecture. The empirical results show that there is bidirectional causality between stock prices measured by S&P 500 index and the effective exchange rate of the dollar, at least in the short-run. The cointegration analysis reveals that there is no long-run relationship between two variables.

Stock prices and the effective exchange rate of the dollar

Within the international trade literature it is not uncommon to find arguments about whether devaluation will improve the trade balance. It is argued that the flows of goods respond only with time lags to changes in the exchange rate. The J-Curve terrn is used to describe the movement over time of the trade balance: it may deteriorate at first and improvement may come later. This paper presents a method by which one could detect the existence of the J-Curve. The method is applied to four developing countries. The empirical evidence supports the pattern of movemnent described by the J-Curve. A major policy option for a country facing a persistent balance of payments deficit is said to be devaluation of its currency. Within the international trade literature it is not uncommon to find arguments about whether devaluation will improve the trade balance or the balance of payments. For example, proponents of the elasticities approach describe the necessary and sufficient conditions for an improvement in the trade balance in terms of elasticities of demand and supply referred to as the Marshall-Lerner condition.' While there is abundant empirical evidence to suggest that these conditions are indeed met (at least for industrial countries), there have been circumstances under which 2 devaluation has not been successful. For example, one might wonder why the U.S. trade balance deteriorated so much in 1972 despite the devaluation of the dollar in 1971. This unfavorable effect of devaluation on the trade balance is termed the "J-Curve" phenomenon Received for publication August 23, 1984. Revision accepted for publication November 26, 1984. *The University of Wisconsin-Milwaukee. I would like to thank two anonymous referees for their valuable comments on the initial draft of this paper. 1 Proponents of the absorption approach (e.g., Alexander, 1952) describe how devaluation may change the terms of trade, increase production, and switch expenditures from foreign to domestic goods, thus improving the trade balance. International monetarists argue that devaluation reduces the real value of cash balances and/or changes the relative price of traded and nontraded goods, thus improving both the trade balance and the balance of payments. 2 For an cstimate of the elasticities, see Houthakker and Magee (1969) and Warner and Kreinin (1983). The former study provides the elasticities estimates under fixed exchange rates and the latter under floating rates. This content downloaded from 157.55.39.17 on Wed, 31 Aug 2016 04:39:37 UTC All use subject to http://about.jstor.org/terms

Devaluation and the J-Curve: Some Evidence from LDCs

Determinants of international trade flows: The Case of Developing Countries

Due to lag structure, currency devaluation is said to worsen the trade balance first and improve it later resulting in a pattern that resemble the letter J, hence the J-Curve phenomenon. Since its introduction by Magee in 1973 (Brooking Papers on Economic Activity, 1, pp. 303–25), a large number of studies have attempted to test the phenomenon using different techniques and different model specifications. The results are at best ambiguous and deserve to be collected together for the future generation of researchers and graduate students. This paper fills such a vacuum in the literature by reviewing the J-Curve related empirical papers.

The J-Curve: a literature review

Purpose – Since the last review article by McKenzie, the literature has experienced a surge in the number of empirical articles. These new contributions, coupled with those that were overlooked by McKenzie, set the stage for this review. Many of the recent studies have been empirical in nature and these deserve specific attention. Thus, this paper aims to survey and review all of the studies by paying attention to the attributes outlined in the text.Design/methodology/approach – This paper examines the vast empirical literature, up to 2005, to assess the main trends in modeling and estimating these trade flows at the aggregate, bilateral, and sectoral levels.Findings – The increase in exchange‐rate volatility since 1973 has had indeterminate effects on international export and import flows. Although it can be assumed that an increase in risk may lead to a reduction in economic activity, the theoretical literature provides justifications for positive or insignificant effects as well. Similar results have b...

Mohsen Bahmani-Oskooee

Papers

Stock prices and the effective exchange rate of the dollar

Devaluation and the J-Curve: Some Evidence from LDCs

Determinants of international trade flows: The Case of Developing Countries

The J-Curve: a literature review

Exchange rate volatility and trade flows: a review article