Topic
Capital deepening
About: Capital deepening is a research topic. Over the lifetime, 5203 publications have been published within this topic receiving 230297 citations.
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TL;DR: In this paper, the authors studied the shock-absorbing capacity of capital controls and showed that the output in economies with stricter capital inflow controls responds significantly less to global credit supply shocks, whereas capital outflow controls have no significant shock-absorbbing capacity.
53 citations
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TL;DR: In this paper, a large set of firm-level panel data for China's industrial enterprises is used to identify three channels of technical change, each associated with a different pattern of factor bias and underlying firm objective.
53 citations
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TL;DR: In this paper, the authors study the possibility that quality of bureaucracy may be an important structural determinant of open-economy macropolicies, in particular, the imposition/removal of capital controls and financial repression.
Abstract: Bureaucratic quality in terms of the level of corruption varies widely across countries, and is in general slow to evolve relative to the speed with which many economic policies can be implemented such as the imposition of capital controls. In this paper, we study the possibility that quality of bureaucracy may be an important structural determinant of open-economy macropolicies, in particular, the imposition/removal of capital controls and financial repression. We first derive a model that delivers such a result. Bureaucratic corruption translates into reduced ability by the government to collect tax revenue. Even if capital control/financial repression is otherwise inefficient, as long as the government needs the revenue for public goods provision, it would have to rely more on capital control/financial repression. For all countries for which we can obtain relevant data, we find that more corrupt countries are indeed more likely to impose capital controls, a pattern consistent with the model’s prediction. The result of this paper suggests that a premature removal of capital controls mandated by outside institutions could reduce rather than enhance economic efficiency.
53 citations
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TL;DR: In this paper, the authors employed an empirical framework of the cointegrated vector autoregressive model to investigate whether the sharp economic growth that the Chinese economy has experienced is another case of export-led growth due to the open-door policy or whether, on the contrary, this growth has been caused by high domestic savings and investment rates (and the consequent capital accumulation).
Abstract: One of the missing pieces preventing us from understanding recent Chinese economic development is the role played by openness and capital accumulation in this process. The question is whether the sharp economic growth that the Chinese economy has experienced is another case of export-led growth due to the open-door policy or whether, on the contrary, this growth has been caused by high domestic savings and investment rates (and the consequent capital accumulation). To answer this question, we employed an empirical framework of the cointegrated vector autoregressive model. The empirical results show that both investment (in physical capital and R&D) and exports, as well as the exchange rate policy, are relevant factors in explaining China's long-run economic growth over the past 4 decades.
53 citations
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TL;DR: In this paper, the authors propose an exogenous measure of a country's growth opportunities by interacting the country's local industry mix with global price to earnings (PE) ratios and find that these exogenous growth opportunities predict future changes in real GDP and investment in a large panel of countries.
Abstract: We propose an exogenous measure of a country's growth opportunities by interacting the country's local industry mix with global price to earnings (PE) ratios. We find that these exogenous growth opportunities predict future changes in real GDP and investment in a large panel of countries. This relation is strongest in countries that have liberalized their capital accounts, equity markets, and banking systems. We also find that financial development, external finance dependence, and investor protection measures are much less important in aligning growth opportunities with growth than is capital market openness. Finally, we formulate new tests of market integration and segmentation by linking local and global PE ratios to relative economic growth.
53 citations