Showing papers on "Negative relationship published in 1995"
Posted Content•
TL;DR: The authors showed that countries with a high ratio of natural resource exports to GDP tended to have low growth rates during the subsequent period 1971-89, even after controlling for variables found to be important for economic growth, such as initial per capita income, trade policy, government efficiency, investment rates, and other variables.
Abstract: One of the surprising features of modern economic growth is that economies with abundant natural resources have tended to grow less rapidly than natural-resource-scarce economies. In this paper we show that economies with a high ratio of natural resource exports to GDP in 1971 (the base year) tended to have low growth rates during the subsequent period 1971-89. This negative relationship holds true even after controlling for variables found to be important for economic growth, such as initial per capita income, trade policy, government efficiency, investment rates, and other variables. We explore the possible pathways for this negative relationship by studying the cross-country effects of resource endowments on trade policy, bureaucratic efficiency, and other determinants of growth. We also provide a simple theoretical model of endogenous growth that might help to explain the observed negative relationship.
3,511 citations
TL;DR: This article showed that countries with a high ratio of natural resource exports to GDP tended to have low growth rates during the subsequent period 1971-89, even after controlling for variables found to be important for economic growth, such as initial per capita income, trade policy, government efficiency, investment rates, and other variables.
Abstract: One of the surprising features of modern economic growth is that economies with abundant natural resources have tended to grow less rapidly than natural-resource-scarce economies. In this paper we show that economies with a high ratio of natural resource exports to GDP in 1971 (the base year) tended to have low growth rates during the subsequent period 1971-89. This negative relationship holds true even after controlling for variables found to be important for economic growth, such as initial per capita income, trade policy, government efficiency, investment rates, and other variables. We explore the possible pathways for this negative relationship by studying the cross-country effects of resource endowments on trade policy, bureaucratic efficiency, and other determinants of growth. We also provide a simple theoretical model of endogenous growth that might help to explain the observed negative relationship.
2,317 citations
Posted Content•
TL;DR: In this paper, the authors present empirical evidence against the standard dichotomy in macroeconomics that separates growth from the volatility of economic fluctuations and find that countries with higher volatility have lower growth.
Abstract: This paper presents empirical evidence against the standard dichotomy in macroeconomics that separates growth from the volatility of economic fluctuations. In a sample of ninety-two countries as well as a sample of OECD countries, the authors find that countries with higher volatility have lower growth. The addition of standard control variables strengthens the negative relationship. The authors also find that government spending-induced volatility is negatively associated with growth even after controlling for both time- and country-fixed effects. Copyright 1995 by American Economic Association.
1,585 citations
TL;DR: Acharya et al. as mentioned in this paper showed that a higher CAR is associated with a lower after-tax return on equity (ROE), and that the relationship between CAR and ROE holds both cross-sectionally and over time, holds when lags are included, and becomes even stronger when an extensive set of control variables is added to the regressions.
Abstract: ACCORDING TO CONVENTIONAL WISDOM in banking, a higher capital-asset ratio (CAR) is associated with a lower after-tax return on equity (ROE). The arguments in favor of this hypothesized negative relationship between capital and earnings have intuitive appeal and are consistent with standard oneperiod models of perfect capital markets with symmetric inforrnation between a bank and its investors. A higher capital ratio tends to reduce the risk on equity and therefore lowers the equilibrium expected return on equity required by investors. In addition, a higher CAR lowers after-tax earnings by reducing the tax shield provided by the deductibility of interest payments. Moreover, the reduced risk from a higher capital ratio may depress earnings by lowering the value of access to federal deposit insurance that at best imperfectly prices risk. Despite these arguments, the data on U.S. banks in the mid-to-late 1980s tell a very different story. Book values of CAR and ROE are positively related, and this relationship is both statistically and economically significant. As shown below, the positive relationship between CAR and ROE holds both cross-sectionally and over time, holds when lags are included, and becomes even stronger when an extensive set of control variables is added to the regressions. There are a number of potential explanations for the positive capital-earnings reThe opinions expressed do not necessarily reflect those of the Board of Governors or its staff. The author thanks Alan Greenspan for suggesting the original idea for this research, and the anonymous referees for making numerous suggestions that improved the paper. The author also thanks Sankar Acharya, Mark Carey, Sally Davies, Ed Ettin, Gary Gorton, David Jones, Pat McAllister, Myron Kwast, Jim O'Brien, Rich Rosen, and Greg Udell for helpful comments and thanks John Leusner, Jalal Akhavein, and Joe Scalise for outstanding research assistance.
805 citations
TL;DR: In this article, the authors reexamine the access story with a model in which campaign contributions can act as signals of policy preference and the (informational) value of access to any agent is endogenous.
Abstract: An important and pervasive view of campaign contributions is that they are given to promote access to successful candidates under circumstances when such access would not ordinarily be given. In this story, access is valuable as it offers groups the opportunity to influence legislative decisions through the provision of policy-relevant information. Under complete information regarding donors' policy preferences, I argue that this model predicts a negative relationship between contributions and the extent to which the groups' and the recipient legislators' preferences are similar. However, one of the more robust empirical findings in the literature is that this relationship is positive. Relaxing the informational assumption on donors' preferences, I reexamine the access story with a model in which campaign contributions can act as signals of policy preference and the (informational) value of access to any agent is endogenous.
392 citations
TL;DR: In this paper, two empirical relationships that have emerged as the former communist countries have taken steps to transform their economies have been examined, and they show that increased central bank independence (CBI) is correlated with lower inflation rates.
Abstract: This paper documents two empirical relationships that have emerged as the former communist countries have taken steps to transform their economies. First, data from a sample of twelve transition economies suggest that increased central bank independence (CBI) is correlated with lower inflation rates. This CBI-inflation correlation is not well explained by initial economic conditions and persists after controlling for fiscal performance and the overall quality of economic reforms. Second, across a larger set of twenty-five transition economies, there is a strong and robust negative relationship between inflation and subsequent real GDP growth. Inflation's adverse effect on investment appears to be one significant channel through which the relationship between inflation and growth arises. Copyright 1997 by Ohio State University Press.
189 citations
TL;DR: In this article, the authors examined the relationship between college quality and overeducation and found that if workers attending lower quality colleges receive less human capital in a year of schooling, they may require more schooling than the typical person to be qualified for their job.
114 citations
TL;DR: In this paper, the authors estimate the impact of price uncertainty on investment using a panel of U.S. manufacturing industries and find that for industries that have low levels of seller concentration and are likely to be highly competitive, the estimated impact is negative and statistically significant.
Abstract: The authors estimate the impact of price uncertainty on investment using a panel of U.S. manufacturing industries. Pooling the data for all industries, uncertainty has no impact on current investment. However, for industries that have low levels of seller concentration and, thus, are likely to be highly competitive, the estimated impact is negative and statistically significant, while for industries with high levels of seller concentration, the impact is always small and not significantly different from zero. The finding of a negative relationship between investment and price uncertainty in competitive industries is broadly consistent with models that incorporate irreversibility of capital investment. Copyright 1996 by Blackwell Publishing Ltd.
111 citations
TL;DR: This article investigated the relationship between inflation and output, in the data and in standard models, and reported that empirical cross-country studies generally find a nonlinear, negative relationship between the two variables.
Abstract: This article investigates the relationship between inflation and output, in the data and in standard models. The article reports that empirical cross-country studies generally find a nonlinear, negative relationship between inflation and output, a relationship that standard models cannot come close to reproducing. The article demonstrates that the models' problem may be due to their standard narrow assumption that all money is held by the public for making transactions. When the models are adjusted to also assume that banks are required to hold money, the models do a much better job. The article concludes that researchers interested in studying the effects of monetary policy on growth should shift their attention away from printing money and toward the study of banking and financial regulations.
108 citations
TL;DR: This paper found that the negative relationship between central bank independence and inflation remains even when a number of other explanatory variables are considered, including corporatism, and showed that the inclusion of corporatism does not diminish the significance of central banks independence.
Abstract: Many studies have found strong negative correlations between central bank independence and inflation, but the casual significance of this relationship is often challenged. We find that the negative relationship remains even when a number of other explanatory variables are considered. Special attention is given to the role of corporatism. Following Calmfors and Driffell it is argued that both high and low levels of centralization should be associated with lower inflation. We present empirical support for his hump shaped hypothesis, and find that the inclusion of corporatism does not diminish the significance of central bank independence.
41 citations
TL;DR: The authors showed that there is a negative relationship between the initial wage level and wage growth of inexperienced workers and that the ratio of the present values of rising wage profiles to flat wage profiles is generally close to one.
Abstract: This article tests the implications of the general human capital that (i) at the individual level, there is a negative relationship between the initial wage level and wage growth of inexperienced workers and (ii) at the market level, the ratio of the present values of wage profiles of investors and otherwise identical noninvestors equals one. We find a negative relationship between initial wage levels and wage growth, even after correcting for negative biases in existing estimates of this relationship. We also find that the ratio of the present values of rising wage profiles to flat wage profiles is generally close to one.
TL;DR: In this paper, the authors examined empirically the proposition that a large public enterprise sector for an economy acts as an obstacle to a healthy rate of economic growth and found that the evidence fails to support the hypothesis of a negative relationship between PE and economic growth.
Abstract: Examines empirically the proposition that a large public enterprise sector for an economy acts as an obstacle to a healthy rate of economic growth. The empirical analysis concentrates on the experience of the OECD countries for the years 1965‐85. Single and multiple equation‐models of economic growth are specified with the size of the public enterprise (PE) sector included as an explanatory variable. In general, the evidence fails to support the hypothesis of a negative relationship between PE and economic growth.
Journal Article•
TL;DR: Covariance model results using 1992 data reveal that among non-metropolitan hospitals, only hospitals located in single-hospital communities have lower costs than their counterparts in multiple- hospital communities, once other factors are held constant.
Abstract: This article explores two neglected questions: (1) Does the relationship between hospital concentration and costs vary between urban and rural markets? and (2) Do hospital costs in non-metropolitan areas vary with rurality? Covariance model results using 1992 data reveal that: (1) Although metropolitan and urban markets exhibit a negative relationship between hospital average costs and market concentration, non-metropolitan and rural markets fail to exhibit any relationship between costs and concentration; and (2) among non-metropolitan hospitals, only hospitals located in single-hospital communities have lower costs than their counterparts in multiple-hospital communities, once other factors are held constant.
TL;DR: In this paper, the effect of short sales regulation on the risk-return relationship was examined in a Canadian context, and the results corroborate that a negative linear relationship links expected risky asset returns and the divergence of agents' beliefs.
Abstract: This paper examines, in a Canadian context, the effect of short sales regulation on the risk-return relationship. It shows that, theoretically, the opportunity cost induced by short sales regulation is positively related to the dispersion of agents' beliefs and negatively related to the security's liquidity level. The model is tested over the sixty-month period from January 1985 through December 1989. All the 13,079 observations are pooled into a time series cross-sectional model. The results corroborate that a negative linear relationship links expected risky asset returns and the divergence of agents' beliefs. This negative relationship is consistent with the presence of opportunity costs resulting from short sales regulation when return beliefs are heterogeneous. However, the negative relationship between security returns and dispersion of beliefs is essentially confined to illiquid securities, that is, those monitored by a small number of analysts.
TL;DR: In this article, a negative relationship appears between the farmers' unmarried rate and an indicator of farm income, and the factors leading to the marital disparity support the hypothesis that economic disparity is first a cause but can also be an effect.
Abstract: In several Western European countries, prolonged or permanent male bachelorhood is much more frequent in agriculture than in other sectors. Our hypothesis is that this marital disparity is partly due to differences in earning capacity. This is tested for France: a negative relationship appears between the farmers' unmarried rate and an indicator of farm income. The factors leading to the marital disparity support the hypothesis that economic disparity is first a cause but can also be an effect. The evidence suggests that cultural factors are also involved. Copyright 1995 by Oxford University Press.
Posted Content•
01 Jan 1995TL;DR: In this paper, it is shown that the monopolistic-competition trade model predicts a negative relationship between internal scale economies and intra-industry trade, which might contribute towards an explanation for observed reversals of intra industry trade growth among industrial countries.
Abstract: This paper exposes some common misinterpretations of the "new trade theory". First, the view that high scale economies give rise to high levels of intra-industry trade is challenged. It is shown that the monopolistic-competition trade model predicts a negative relationship between internal scale economies and intra-industry trade. Second, in spite of a common perception that the "new" theory explains ever growing levels of intra-industry trade in an integrating world economy, a scrutiny of the basic model indicates that reduced distance costs result in lower intra-industry trade. However, if temporary re-location rigidities are considered, integration entails an initial surge of intra-industry trade, which eventually withers away, when the centripetal forces towards inter-industry specialisation take over. This might contribute towards an explanation for observed reversals of intra-industry trade growth among industrial countries.
Posted Content•
TL;DR: In this article, the authors investigated whether there is any relationship between farm size, technical efficiency and the use of agrichemicals which are potentially environmentally contaminating, and they obtained an indication that there is a positive, though weak relationship between technical efficiency, and use of contaminants.
Abstract: This paper investigates whether there is any relationship between farm size, technical efficiency and the use of agrichemicals which are potentially environmentally contaminating. These questions are pertinent in the context of current EU policy decions. Using two models of stochastic frontier production and a set of panel data on 35 farms from the South West of England for the years 1987-1991, we obtain an indication that there is a positive, though weak relationship between technical efficiency and the use of contaminants, and between technical efficiency and farm size. However, there is a negligible negative relationship between farm size and use of contaminants.