Showing papers on "Physical capital published in 2014"
TL;DR: The authors examines how and why the role of the university in society has evolved over time and argues that the forces shaping economic growth and performance have also influenced the corresponding role for the university.
Abstract: This article examines how and why the role of the university in society has evolved over time. The paper argues that the forces shaping economic growth and performance have also influenced the corresponding role for the university. As the economy has evolved from being driven by physical capital to knowledge, and then again to being driven by entrepreneurship, the role of the university has also evolved over time. While the entrepreneurial university was a response to generate technology transfer and knowledge-based startups, the role of the university in the entrepreneurial society has broadened to focus on enhancing entrepreneurship capital and facilitating behavior to prosper in an entrepreneurial society.
473 citations
TL;DR: In this paper, the interaction between capital requirements and monetary policy is assessed by means of simple rules in a dynamic general equilibrium model featuring a banking sector, and the benefits of introducing capital requirements become sizeable when financial shocks, which affect the supply of loans, are important drivers of economic dynamics; the availability of capital requirements as a policy tool yields a significant gain in terms of macroeconomic stabilization.
Abstract: The interaction between capital requirements and monetary policy is assessed by means of simple rules in a dynamic general equilibrium model featuring a banking sector. In “normal” times, when economic dynamics are driven by supply shocks, an active use of capital requirements generates modest benefits in terms of volatility of the target variables compared to the case in which only the central bank carries out stabilization policies. The lack of cooperation between the two policymakers may result in excessive volatility of the monetary policy rate and capital requirements. The benefits of introducing capital requirements become sizeable when financial shocks, which affect the supply of loans, are important drivers of economic dynamics; the availability of capital requirements as a policy tool yields a significant gain in terms of macroeconomic stabilization, regardless of the type of interaction between monetary and capital requirements policies.
410 citations
TL;DR: In this article, the authors examined the linkage between working capital management and corporate performance for a sample of non-financial UK companies and provided strong support for an inverted U-shaped relation between investment in working capital and firm performance.
322 citations
TL;DR: It is found that effective human capital per worker varies substantially across countries, and the model implies that output per worker is highly responsive to changes in TFP and demographic variables.
Abstract: We reevaluate the role of human capital in determining the wealth of nations. We use standard human capital theory to estimate stocks of human capital and allow the quality of human capital to vary across countries. Our model can explain differences in schooling and earnings profiles and, consequently, estimates of Mincerian rates of return across countries. We find that effective human capital per worker varies substantially across countries. Cross-country differences in Total Factor Productivity (TFP) are significantly smaller than found in previous studies. Our model implies that output per worker is highly responsive to changes in TFP and demographic variables. (JEL E23, I25, J24, J31, O47) No question has perhaps attracted as much attention in the economics literature as “Why are some countries richer than others?” Much of the current work traces back to the classic work of Solow (1956). Solow’s seminal paper suggested that differ ences in the rates at which capital is accumulated could account for differences in output per capita. More recently, following the work of Lucas (1988), human capital disparities were given a central role in the analysis of growth and development. However, the best recent work on the topic reaches the opposite conclusion. Klenow and Rodriguez-Clare (1997); Hall and Jones (1999); Parente and Prescott (2000); and Bils and Klenow (2000) argue that most of the cross-country differences in output per worker are not driven by differences in human capital (or physical capital); rather they are due to differences in a residual, total factor productivity (TFP). In this paper we revisit the development problem. In line with the earlier view, we find that factor accumulation is more important than TFP in accounting for relative incomes across countries. The key difference between our work and previous analyses is in the measurement of human capital. The standard approach largely inspired by the work of Mincer (1974), takes estimates of the rate of return to schooling as building blocks to directly measure a country’s stock of human capital. Implicitly, this method assumes that the marginal contribution to output of one additional year
306 citations
TL;DR: In this paper, the authors argue that the structure of a production network is key in determining whether and how microeconomic shocks propagate throughout the economy and shape aggregate outcomes, and that the importance of interconnections between firms and sectors in aggregate economic performance is highlighted.
Abstract: Amodern economy is an intricately linked web of specialized production units, each relying on the flow of inputs from their suppliers to produce their own output, which in turn is routed towards other downstream units. In this essay, I argue that the structure of this production network is key in determining whether and how microeconomic shocks—affecting only a particular firm or technology along the chain—propagate throughout the economy and shape aggregate outcomes. Therefore, understanding the structure of this production network can better inform both academics on the origins of aggregate fluctuations and policy makers on how to prepare for and recover from adverse shocks that disrupt these production chains. Two recent events have brought to the forefront the importance of interconnections between firms and sectors in aggregate economic performance. Consider first the 2011 earthquake in Japan. While the triple tragedy of the earthquake, the ensuing tsunami, and the near nuclear meltdown at Fukushima surely resulted in a significant destruction of human and physical capital, its effects would have been largely restricted to the affected areas were it not for the disruption of national
301 citations
TL;DR: In this paper, the authors examined the relationship between private capital flows and economic growth in Africa during the period 1990-2007 and found that foreign direct investment, foreign equity portfolio investment and private debt flows all have a negative impact on economic growth.
143 citations
TL;DR: In this paper, the authors develop a methodology to infer the amount of capital allocated to quantitative equity arbitrage strategies, which exploits time-variation in the cross-section of short interest.
Abstract: We develop a novel methodology to infer the amount of capital allocated to quantitative equity arbitrage strategies. Using this methodology, which exploits time-variation in the cross-section of short interest, we document that the amount of capital devoted to value and momentum strategies has grown significantly since the late 1980s. We provide evidence that this increase in capital has resulted in lower strategy returns. However, consistent with theories of limited arbitrage, we show that strategy-level capital flows are influenced by past strategy returns and strategy return volatility and that arbitrage capital is most limited during times when strategies perform best. This suggests that the growth of arbitrage capital may not completely eliminate returns to these strategies. (JEL G02, G12, G14, G23)
141 citations
TL;DR: A review of the central issues related to the role bank capital plays in financial stability and the prudential regulation issues engendered by this centrality can be found in this paper, where the authors discuss the contemporary thinking on these issues, and conclude with an indication of the most compelling open research questions.
Abstract: Financial crises impose large and persistent social costs, making banking stability an important regulatory goal. This paper provides a review of the central issues related to the role bank capital plays in financial stability and the prudential regulation issues engendered by this centrality. I begin with a description of the views of three distinct groups on bank capital: bankers, regulators and academics. Because social efficiency and financial stability concerns may call for higher capital levels than those that are privately-optimal for banks, regulatory capital requirements become germane. But it is often argued that such requirements may themselves entail various bank-level and social costs. Recognition of these costs means that, while there is broad agreement that banking stability would be enhanced by higher capital levels in banking, there is substantial disagreement in the theoretical literature over whether capital requirements should be significantly higher. The issue thus needs empirical adjudication. The empirical evidence reveals that, in the cross-section of banks, higher capital ratios are associated with higher lending, higher liquidity creation, higher bank values, and higher probabilities of surviving crises. Moreover, increases in capital requirements are met with modest declines in bank lending. While the issues are complex and the evidence does not conclusively settle the issue, the overarching message from the research and recent experience is that higher leverage in banking leads to higher systemic risk and a higher probability of a large government-funded bailout that may cause government debt to spike up and trigger a sovereign debt crisis with devastating social costs. This means that an important goal of capital regulation reform, as well as tax policy, ought to be to increase capital levels in banking, thereby strengthening a form of “private deposit insurance.” The paper discusses the contemporary thinking on these issues, and concludes with an indication of the most compelling open research questions.
136 citations
TL;DR: In this paper, the authors develop a theory of capital controls as dynamic terms-of-trade manipulation and show that a country growing faster than the rest of the world has incentives to promote domestic savings by taxing capital inflows or subsidizing capital outflows.
Abstract: We develop a theory of capital controls as dynamic terms-of-trade manipulation. We study an infinite-horizon endowment economy with two countries. One country chooses taxes on international capital flows in order to maximize the welfare of its representative agent, while the other country is passive. We show that a country growing faster than the rest of the world has incentives to promote domestic savings by taxing capital inflows or subsidizing capital outflows. Although our theory of capital controls emphasizes interest rate manipulation, the pattern of borrowing and lending, per se, is irrelevant.
121 citations
TL;DR: In this article, the authors present a measurement of organization capital, which relies on essential human inputs, or "organization capital," presents a unique challenge for measurement, since it cannot be fully owned by firms' fina...
Abstract: Intangible capital which relies on essential human inputs, or 'organization capital,' presents a unique challenge for measurement. Organization capital cannot be fully owned by firms' fina...
121 citations
01 Jan 2014
TL;DR: In this article, the authors used a new global panel dataset on public capital and resource rents covering the period 1970 to 2005 to find that, contrary to these expectations, resource rents significantly reduce the public expenditure.
Abstract: As poor countries deplete their natural resources, for increased consumption to be sustainable some of the revenues should be invested in other public assets. Further,
since such countries typically have acute shortages of public capital, the finance from resource depletion is an opportunity for needed public investment. Using a new global
panel dataset on public capital and resource rents covering the period 1970 to 2005 we find that, contrary to these expectations, resource rents significantly reduce the public
capital stock. This is more direct evidence for a policy-based ‘resource curse’ than the conventional, indirect evidence from the relationships between resource endowments,
growth and income. The adverse effect on public capital is mitigated by good institutions. We also find that rents from the depletion of non-renewable (mineral) resources
reduce the public capital stock whereas rents from sustainable (forestry and agriculture) sources do not.
01 Jan 2014
TL;DR: In this article, the authors argue that more capital will erode the economywide return on capital and that the assumption of high elasticity from time series is unsound, assuming a constant real price of capital despite the dominant role of rising prices in pushing up the capital/income ratio.
Abstract: Capital in the Twenty-First Century predicts a rise in capital’s share of income and the gap r g between capital returns and growth. In this note, I argue that neither outcome is likely given realistically diminishing returns to capital accumulation. Instead—all else equal—more capital will erode the economywide return on capital. When converted from gross to net terms, standard empirical estimates of the elasticity of substitution between capital and labor are well below those assumed in Capital. Piketty (2014)’s inference of a high elasticity from time series is unsound, assuming a constant real price of capital despite the dominant role of rising prices in pushing up the capital/income ratio. Recent trends in both capital wealth and income are driven almost entirely by housing, with underlying mechanisms quite different from those emphasized in Capital.
TL;DR: In this article, the authors employed a new endogenous growth model for theoretical support, auto-regressive distributive lag model and rolling window regression method in order to determine long run and short run association between trade openness and economic growth.
Abstract: The main objective of this study is to develop first time trade openness index and use this index to examine the link between trade openness and economic growth in case of India. This study employs a new endogenous growth model for theoretical support, auto-regressive distributive lag model and rolling window regression method in order to determine long run and short run association between trade openness and economic growth. Further granger causality test is used to determine the long run and short run causal direction. The results reveal that human capital and physical capital are positively related to economic growth in the long run. On the other hand, trade openness index negatively impacts on economic growth in the long run. The new evidence is provided by the rolling window regression results i.e. the impact of trade openness index on economic growth is not stable throughout the sample. In the short run trade openness index is positively related to economic growth. The result of granger caus...
Journal Article•
TL;DR: In this article, the determinants of capital structure in Turkey were investigated by using panel data methods for 79 firms in the manufacturing sector traded on the Istanbul Stock Exchange, and the base model was expanded with firm size and sector-specific effects.
Abstract: This study investigates the determinants of capital structure in Turkey by using panel data methods. The sample period spans from 1993 to 2010 for 79 firms in the manufacturing sector traded on the Istanbul Stock Exchange. The base model was expanded with firm size and sector-specific effects. This study compares also effects on capital structure according to sectors and firm size of variables used in models. Growth opportunities, size, profitability, tangibility and non-debt tax shields are used as the firm-specific variables that affect a firm’s capital structure decision. Empirical results present that there are significant relationships between growth opportunities, size, profitability, tangibility and leverage variables. But non-debt tax shields explanatory variable has insignificant effect on leverage 1 (book value of total debt / total assets) variable. Growth opportunity has effect on capital structure that this result supports the trade-off theory. Size, profitability and tangibility have effects and support the pecking order theory. On the other hand, profitability and growth opportunity variables have more significant effects than other variables on Leverage 1 and Leverage 2 (book value of total debt / book value of equity) for all sectors. Furthermore, in two leverage models, profitability variable of small and large firm groups has effect on capital structure and there is no a significant difference between two groups. Keywords: Capital structure; leverage; financing choice; the determinants of capital structure; panel data analysis. JEL Classifications: G32
TL;DR: This article explored gender sameness and difference in recovery from heroin dependence with reference to gender theory, the existing literature on women and drugs, and the concept of recovery capital, finding that women reported more physical and sexual abuse than men, they had better family and social relationships and more access to informal support, including material assistance and housing.
TL;DR: In this article, the authors develop a numerical approach for approximating the value of capital that integrates estimates from ecology and economics, and employ the method to recover credible accounting prices for a pound of Gulf of Mexico reef fish as a capital asset under real-world management conditions.
Abstract: Current efforts to value ecosystem services have contributed little to the valuation of natural capital, suggesting that in practice “nature is capital” primarily serves as a metaphor. We provide a theoretically motivated approach for recovering natural capital prices that expands beyond idealized management to encompass current, likely inefficient, management institutions. Theoretically consistent capital valuation requires adjusting for the net marginal productivity of the natural capital asset and price appreciation. We develop a numerical approach for approximating the value of capital that integrates estimates from ecology and economics. We employ the method to recover credible accounting prices for a pound of Gulf of Mexico reef fish as a capital asset under real-world management conditions. Our approach reveals the interdisciplinarity of natural capital valuation and the importance of understanding the feedbacks between the state of natural capital stocks, human behavior affecting these sto...
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TL;DR: In this article, the authors show that the capital/income ratio is actually stable or only mildly higher in the countries analyzed (France, the US, the UK, and Canada) except for Germany where it rose.
Abstract: In his book, Capital in the 21st Century,Thomas Piketty highlights the risk of an explosion of wealth inequality because capital is accumulating faster than income in several countries including the US and European countries such as France. Our work challenges the conclusions of the author in three steps. First, the author’s result is based on the rise of only one of the components of capital, namely housing capital,and due to housing prices. In fact, housing prices have risen faster than rent and income in many countries.It is worth noting that “productive” capital, excluding housing, has only risen weakly relative to income over the last few decades. Over the longer run, the “productive” capital/income ratio has not increased at all. Second, rent, not housing prices, should matter for the dynamics of wealth inequality, because rent represents both the actual income of housing capital for landlords and the dwelling costs saved by “owner-occupiers” (people living in their own houses). Logically, to properly measure capital, the value of housing capital must be corrected by measuring it on actual rental price, and not housing prices. Third, when we apply this change, we find that the capital/income ratio is actually stable or only mildly higher in the countries analyzed (France, the US, the UK, and Canada) except for Germany where it rose. These conclusions are exactly opposite to those found by Thomas Piketty. However, this does not mean that housing prices do not contribute to other forms of inequality. When housing prices rise, owners of the housing capital hold a higher value that can be transformed into consumption. It is also more difficult for young adults to become homeowners. Housing incomes of owners however do not necessarily increase which casts serious doubt on Piketty’s conclusion of a potential explosive dynamics of inequality based on these trends.
TL;DR: In this paper, a multilevel analysis performed using hierarchical linear modeling of Major League Baseball data was performed to understand the relationship between individual human capital and individual performance and support the notion that more is not always better when it comes to high quality human capital.
TL;DR: In this paper, the authors examined the relationship among various dimensions of intellectual capital, including human capital, organizational capital, and customer capital, with new product performance and found that human capital and organizational capital are positively related to customer capital.
Abstract: Based on the knowledge-based view, we examined the relationships among various dimensions of intellectual capital, including human capital, organizational capital, and customer capital, and new product performance. Regression analysis was used to test the hypotheses in a sample of 93 firms. The results indicated that human capital and organizational capital are positively related to customer capital which in turn has a positive effect on new product performance. This study contributes to the theoretical development of a conceptual model by examining the mediating role of customer capital in the relation human capital and organizational capital with new product performance. The empirical evidences support our prediction and indicate that human capital and organizational capital can deliver a better new product performance primarily through improving customer capital. Managerial implications and future research directions are discussed.
TL;DR: In the twenty-first century and for the OECD plus China area, this article showed that in capital market equilibrium without public debt, the average period of production equals the average waiting period of households.
Abstract: Modernized Austrian capital theory implies: in capital market equilibrium without public debt, the average period of production equals the average waiting period of households. In the twenty-first century and for the OECD plus China area,
TL;DR: In this paper, the effect of corruption on the effciency of capital investment is investigated using firm-level data from the World Bank enterprise surveys, covering 90 developing and transition economies, and the authors find that bribery decreases investment efficiency, as measured using both absolute and relative metrics of investment returns.
Abstract: This paper considers the effect of corruption on the effciency of capital investment. Using firm-level level data from the World Bank enterprise surveys, covering 90 developing and transition economies, we consider whether the cost of informal bribe payments distorts the efficient allocation of capital by reducing the marginal return per unit investment. Using country estimates of fractionalization and legal origin as instruments, and controlling for censoring, we find that bribery decreases investment efficiency, as measured using both absolute and relative metrics of investment returns. The negative effect is strongest for domestic small and medium-sized enterprises while there is no significant effect on foreign and large domestic firms. We conclude that reducing the level and incidence of bribery by public officials would facilitate a more efficient allocation of capital. This in turn would support economic growth and development, particularly for small and medium-sized enterprises.
TL;DR: In this article, the authors show that human capital must reflect the economic structure to foster the economic growth, otherwise it might only cause higher level of unemployment due to crowding out effect and imbalances on the labor market.
Abstract: Human capital is usually viewed as one of the key determinants of competitiveness and economic growth. However, recent statistical data about unemployment and growth in EU have revealed some weak spots of this traditional view. The human capital itself seems not to be a guarantee of economic stability and presumable quick recovery from crisis. On the contrary we see countries like Spain or Cyprus where the level of human capital, expressed as a percentage of tertiary educated population, is relatively very high but the unemployment reaches critical levels and economic growth is weak or negative. In this article we continue with our previous research and show that human capital must reflect the economic structure to foster the economic growth. Otherwise it might only cause higher level of unemployment due to crowding out effect and imbalances on the labor market. We also deal with responses of regional economies on recent economic crisis, when we show asymmetric responses based on structural differences and human capital endowment.
TL;DR: In this article, the authors evaluated whether and how SocioParamo, a national-scale PES program targeting Ecuadorian Andean grasslands (paramos), has the potential to contribute to local livelihoods and sustainable resource management.
Abstract: Payment for ecosystem services programs are being implemented in a wide variety of settings, but whether and in what contexts such programs present ‘win–win’ scenarios that simultaneously improve human well-being and achieve conservation goals remains poorly understood. Based on semi-structured interviews with early program participants enrolling either collectively- or individually-held land, we evaluated whether and how SocioParamo, a national-scale PES program targeting Ecuadorian Andean grasslands (paramos), has the potential to contribute to local livelihoods (financial, natural, social, human, and physical capital) and sustainable resource management. Low conservation opportunity costs associated with pre-existing constraints on land use and the existence of alternative livelihood options appeared to facilitate largely positive financial capital outcomes, although we found reduced financial capital among some smaller and medium-sized landholders who were required to eliminate burning and grazing. We found the greatest potential for improved social, financial, and natural capital among well-organized community participants enrolling collective land, while greater attention to building capacity of individual smaller landholders could improve outcomes for those participants. These results help fill a gap in knowledge by drawing on empirical data to demonstrate how divergent outcomes have begun to emerge among different groups of SocioParamo participants, providing lessons for PES program design.
TL;DR: In this paper, the authors examined the growth of Islamic micro-finance (bila sudi-qardh) scheme in Andaman Islands and to see how Islamic microfinance sector and social capital contribute to face the challenge in poverty alleviation.
Abstract: Purpose – The purpose of this paper is to examine the growth of Islamic microfinance (bila sudi-qardh) scheme in Andaman Islands and to see how Islamic microfinance sector and social capital contribute to face the challenge in poverty alleviation. Design/methodology/approach – The researcher developed a questionnaire and conducted non-random survey with the samples of Islamic microfinance group members to examine the Islamic microfinance and cash awqaf effect for the development of the local common resources (LCRs) in general; and financial, physical capital as well as social and human capital effects of the group members in particular. Findings – This study found that collective action through Islamic microfinance groups actually helps to increase environmental awareness, economic betterment of the members and fruitful management of LCRs through Islamic microfinance. Research limitations/implications – The paper's findings are limited to the Islamic microfinance groups' management in Andaman Islands in I...
TL;DR: In this paper, the authors revisited the relationship between institutions, human capital and development, and showed that the impact of institutions on long-run development is robust, while the estimates of the effect of human capital are much diminished and become consistent with micro estimates.
Abstract: In this paper we revisit the relationship between institutions, human capital and development. We argue that empirical models that treat institutions and human capital as exogenous are misspecified both because of the usual omitted variable bias problems and because of differential measurement error in these variables, and that this misspecification is at the root of the very large returns of human capital, about 4 to 5 times greater than that implied by micro (Mincerian) estimates, found in some of the previous literature. Using cross-country and cross-regional regressions, we show that when we focus on historically-determined differences in human capital and control for the effect of institutions, the impact of institutions on long-run development is robust, while the estimates of the effect of human capital are much diminished and become consistent with micro estimates. Using historical and cross-country regression evidence, we also show that there is no support for the view that differences in the human capital endowments of early European colonists have been a major factor in the subsequent institutional development of these polities.
TL;DR: In this article, the impact of foreign ownership on human capital intensity was investigated based on a large-scale survey of technology-based firms located in Portugal, finding that foreign ownership directly impacts a firm's general human capital (education); foreign ownership indirectly impacts a firms specific human capital(skills).
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TL;DR: The authors assesses empirically the key drivers of private capital flows to a large sample of emerging market economies in the last decade and investigates the role of fundamentals and country characteristics in mitigating or amplifying its effect using interaction models.
Abstract: This paper assesses empirically the key drivers of private capital flows to a large sample of emerging market economies in the last decade It analyzes the effect of the global financial cycle, measured by the VIX, on capital flows and investigates the role of fundamentals and country characteristics in mitigating or amplifying its effect Using interaction models, we find the effect of the VIX to be non-linear For low levels of the VIX, capital flows are driven by fundamental factors During periods of stress, the VIX becomes the dominant driver of capital flows while other determinants, with the exception of interest rate differentials, lose statistical significance Our results also suggest that the effect of global financial conditions on gross private capital flows increases with the host country’s level of financial sector development Finally, our results imply that countries cannot fully insulate themselves from global financial shocks, unless creating a fragmented global financial system
TL;DR: In this paper, the authors examined the effect of capital structure on Islamic banks' (IBs) performance to provide guidance to finance managers for raising capital funds, using a sample of 85 IBs covering banking systems in 19 countries.
Abstract: Purpose – This paper aims to examine the effect of capital structure on Islamic banks’ (IBs) performance to provide guidance to finance managers for raising capital funds. As newcomers to the markets, IBs are facing a trade-off. They can either use high capital ratios which increase the soundness and safety of the bank and lower the required return by investors, or depend on deposits and Islamic bonds which are considered cheaper sources of funds due to their tax rebate. An IB’s management must carefully decide the appropriate mix of debt and equity, i.e. capital structure, to maximize the value of the bank. Design/methodology/approach – Using a sample of 85 IBs covering banking systems in 19 countries, the study uses a two-stage least squares method to examine the performance determinants of IBs to control the reverse causality from performance to capital structure. Findings – After control of the macroeconomic environment, financial market structure and taxation, results indicate that IBs’ performance (...
TL;DR: In this article, the causal impact of dismissal costs on capital deepening and productivity exploiting a reform that introduced unjust-dismissal costs in Italy for firms below 15 employees, leaving ring costs unchanged for larger firms.
Abstract: This paper estimates the causal impact of dismissal costs on capital deepening and productivity exploiting a reform that introduced unjust-dismissal costs in Italy for firms below 15 employees, leaving ring costs unchanged for larger firms. We show that the increase in firing costs induces an increase in the capital-labour ratio and a decline in total factor productivity in small firms relativeto larger firms after the reform. Our results indicate that capital deepening is more pronounced at the low-end of the capital distribution - where the reform hit arguably harder - and among firms endowed with a larger amount of liquid resources. We also find that stricter EPL raises the share of high-tenure workers, which suggests a complementarity between firm-specific human capital and physical capital in moderate EPL environments.