Template-Type: ReDIF-Paper 1.0
Author-Name: Murat Ungor
Author-Name-First: Murat
Author-Name-Last: Ungor
Author-Email: murat.ungor@otago.ac.nz
Author-Workplace-Name: Department of Economics, University of Otago, New Zealand
Author-Name: Tarek M. Harchaoui
Author-Name-First: Tarek M.
Author-Name-Last: Harchaoui
Author-Email: t.m.harchaoui@rug.nl
Author-Workplace-Name: Faculty of Economics and Business, Global Economics & Management, Nettelbosje, the Netherlands
Title: The Lion on the Move Towards the World Frontier: Catching Up or Remaining Stuck?
Abstract: The remarkable growth spurt reported by the Sub-Saharan African (SSA) economy since the mid-1990s offers the opportunity to revisit the narrative of its economic development experience. We investigate whether the SSA economy has initiated a gradual process of convergence which reverses the long-term fall so far behind the U.S. frontier. Our framework begins with a top-down approach that performs a nested development accounting exercise. This aggregate analysis complements a bottom-up approach that tracks the sectoral origins of the SSA aggregate relative labor productivity performance. The application of this framework to a representative sample of the SSA economy over the 1970-2010 period suggests the following set of results. After one-quarter of a century of falling behind the U.S. level of real income per capita, the SSA economy observed a swift turnaround towards the end of the 1990s, yet without showing any sign of catch-up. Second, parallel to favorable demographic developments, SSA reports a startling relative labor productivity gap which accounts for much of its relative income per capita gap. Third, the use of the concept of cognitive skills reveals that human capital considerations have worsened o_ over time, making total factor productivity no longer the biggest part of the story underlying relative labor productivity differences. Fourth, the sectoral evidence points to the coexistence of headwinds (negative within- and reallocation-effects) and tailwinds (between-effects) which tend to cancel out each other, thus preventing SSA aggregate economic performance to get anywhere closer to the world frontier even during the growth spurt period.
Length: 19 pages
Creation-Date: 2016-01
Revision-Date: 2016-01
File-URL: http://www.otago.ac.nz/economics/otago490202.pdf
File-Format: Application/pdf
File-Function: First version, 2016
Number: 1601
Classification-JEL: N10, O47, O55, O57
Keywords: Convergence; productivity; capital formation; structural change
Handle: RePEc:otg:wpaper:1601


Template-Type: ReDIF-Paper 1.0
Author-Name: Dennis Wesselbaum
Author-Name-First: Dennis
Author-Name-Last: Wesselbaum
Author-Email: dennis.wesselbaum@otago.ac.nz
Author-Workplace-Name: Department of Economics, University of Otago, New Zealand
Author-Name: Marc-Andre Luik
Author-Name-First: Marc-Andre
Author-Name-Last: Luik
Author-Email: luikma@hsu-hh.de
Author-Workplace-Name: Helmut-Schmidt University
Title: Did the FED REact to Asset Price Bubbles?
Abstract: This paper investigates whether the U. S. Federal Reserve responds to asset price bubbles or
not. We estimate a DSGE model featuring a financial accelerator and a process for asset price
bubbles. We find evidence for a fairly strong reaction to bubbles. However, a counterfactual
analysis shows that output is lower if the central banks reacts to the asset price bubble. Finally,
we estimate an asymmetric version in which the central bank only reacts to positive price
deviations. This version generates the best statistical fit. Including the bubble reduces the
negative effects of the recent financial crisis but the symmetric response would have generated
an earlier and stronger recovery.
Length: 22 pages
Creation-Date: 2016-02
Revision-Date: 2016-02
File-URL: http://www.otago.ac.nz/economics/otago511401.pdf
File-Format: Application/pdf
File-Function: First version, 2016
Number: 1602
Classification-JEL: C11, E32, E44, E62
Keywords: Bayesian Methods, Bubbles, Monetary Policy.
Handle: RePEc:otg:wpaper:1602

Template-Type: ReDIF-Paper 1.0
Author-Name: Dennis Wesselbaum
Author-Name-First: Dennis
Author-Name-Last: Wesselbaum
Author-Email: dennis.wesselbaum@otago.ac.nz
Author-Workplace-Name: Department of Economics, University of Otago, New Zealand
Title: Jobless Recoveries: The Interaction between Financial and Search Frictions
Abstract: This paper establishes a link between labor market frictions and financial market frictions.
We present empirical evidence about the relation between search and financial frictions. Then,
we build a stylized DSGE model that features this channel. Simulation excercises show that the
model with this channel generates a strong internal propagation mechanism, replicates stylized
labor market effects of the Great Recession, and, most importantly, creates a jobless recovery.
Length: 24 pages
Creation-Date: 2016-02
Revision-Date: 2016-02
File-URL: http://www.otago.ac.nz/economics/otago556617.pdf
File-Format: Application/pdf
File-Function: First version, 2016
Number: 1603
Classification-JEL: C32, E24, E32, J63.
Keywords: DSGE, Jobless Recovery, Labor Market and Financial Frictions
Handle: RePEc:otg:wpaper:1603

Template-Type: ReDIF-Paper 1.0
Author-Name: Dennis Wesselbaum
Author-Name-First: Dennis
Author-Name-Last: Wesselbaum
Author-Email: dennis.wesselbaum@otago.ac.nz
Author-Workplace-Name: Department of Economics, University of Otago, New Zealand
Title: Cheap Talk in a New Keynesian Model
Abstract: This paper shows that the stance of fiscal policy does have significant impact on the conduct
of monetary policy in the United States. Further, we document that the implied fiscal-monetary
policy interactions are subject to regime instability, using a Markov-switching model.
Then, we develop a microfoundation of regime switches using a cheap talk game between
central bank and government. As a case study, we simulate the effects of regime switches within
an otherwise standard New Keynesian model using the cheap talk game in the state-space of
our model.
Length: 31 pages
Creation-Date: 2016-02
Revision-Date: 2016-02
File-URL: http://www.otago.ac.nz/economics/otago557004.pdf
File-Format: Application/pdf
File-Function: First version, 2016
Number: 1604
Classification-JEL: C32, C7, E5, E6.
Keywords: Markov-switching, Monetary and Fiscal Policy Interactions, Policy Coordination Games, Sequential Games
Handle: RePEc:otg:wpaper:1604

Template-Type: ReDIF-Paper 1.0
Author-Name: Harry Cunningham
Author-Name-First: Harry
Author-Name-Last: Cunningham
Author-Email: harry.hunter.cunningham@gmail.com
Author-Workplace-Name: University of Otago
Author-Name: Stephen Knowles
Author-Name-First: Stephen
Author-Name-Last: Knowles
Author-Email: stephen.knowles@otago.ac.nz
Author-Workplace-Name: Department of Economics, University of Otago, New Zealand
Author-Name: Paul Hansen
Author-Name-First: Paul
Author-Name-Last: Hansen
Author-Email: paul.hansen@otago.ac.nz
Author-Workplace-Name: Department of Economics, University of Otago, New Zealand
Title: Bilateral foreign aid: How important is aid effectiveness to people for choosing countries to support?
Abstract: We conduct a discrete choice experiment (DCE) to determine how important aid effectiveness is to people relative to other criteria for choosing countries to support with bilateral foreign aid. We find that aid effectiveness is important, on a par with recipient-country need as proxied by the level of hunger and malnutrition. Both criteria are more important than others.
Length: 10 pages
Creation-Date: 2016-04
Revision-Date: 2016-04
File-URL: https://deptcontrib.otago.ac.nz/economics/otago610363.pdf
File-Format: Application/pdf
File-Function: First version, 2016
Number: 1605
Classification-JEL: C90, D64, O1
Keywords: foreign aid, aid effectiveness, discrete choice experiment, conjoint analysis, PAPRIKA method
Handle: RePEc:otg:wpaper:1605

Template-Type: ReDIF-Paper 1.0
Author-Name: Murat ungor
Author-Name-First: Murat
Author-Name-Last: Ungor
Author-Email: murat.ungor@otago.ac.nz
Author-Workplace-Name: University of Otago
Author-Name: Ayşe İmrohoroğlu
Author-Name-First: Ayşe
Author-Name-Last: İmrohoroğlu
Author-Email: ayse@marshall.usc.edu
Author-Workplace-Name: University of Southern California, Los Angeles
Title: Is Zimbabwe More Productive Than the United States? Some Observations From PWT 8.1
Abstract: In Penn World Table (PWT) 8.1, several developing countries stand out as outliers
with high total factor productivity (TFP) levels relative to the United States (U.S.).
For example, in 2011, Zimbabwe and Trinidad and Tobago are reported to have 3 and
1.6 times higher TFP levels than the U.S., respectively. In addition, for several other
countries, such as Turkey and Gabon, the stated levels of TFP are very similar to
that of the U.S. level (1.01 and 1.11 times the U.S. levels, respectively). Estimates
for some of these countries seem rather unlikely when compared with other measures
of productivity (such as output per worker). While in the construction of TFP levels
PWT does use country-speci_c factor shares we show that their results are very similar
to calculating TFP levels with a Cobb-Douglas production function where capital and
labor shares are assumed to be the same across all countries, i.e., using a constant
labor share of 2/3 for all countries. A simple modi_cation, using a constant labor
share of 2/3 for developed countries and 1/2 for developing countries, generates more
\plausible" estimates for TFP levels.
Length: 23 pages
Creation-Date: 2016-06
Revision-Date: 2016-06
File-URL: https://deptcontrib.otago.ac.nz/economics/otago615310.pdf
File-Format: Application/pdf
File-Function: First version, 2016
Number: 1606
Classification-JEL: O11, O40, O47
Keywords: Total factor productivity; labor income shares; Penn Tables
Handle: RePEc:otg:wpaper:1606

Template-Type: ReDIF-Paper 1.0
Author-Name: Alfred Haug
Author-Name-First: Alfred
Author-Name-Last: Haug
Author-Email: alfred.haug@otago.ac.nz
Author-Workplace-Name: University of Otago
Title: A New Test of Ricardian Equivalence Using the Narrative Record on Tax Changes
Abstract: This paper empirically tests the Ricardian equivalence hypothesis with a
narrative measure of tax shocks. The present value, at the time of legislation,
for tax increases motivated solely by concerns for improving the fiscal health of
the government is used for the tests. These tax news represent a switch from
debt to tax financing that should have no effects on the economy if Ricardian
equivalence holds as a good approximation. Such a tax increase seems to have
positive effects on real GDP in the post-1980:IV period. However, this is due to
fiscal anticipation as many of the tax increases are implemented with substantial
delays and distortionary taxes increase economic activity before taxes go up,
which is caused by intertemporal substitution. Therefore, Ricardian equivalence
is rejected.
Length: 20 pages
Creation-Date: 2016-07
Revision-Date: 2016-07
File-URL: http://www.otago.ac.nz/economics/otago616214.pdf
File-Format: Application/pdf
File-Function: First version, 2016
Number: 1607
Classification-JEL: E62, C51
Keywords: Ricardian equivalence hypothesis; narrative record; exogenous tax changes; government budget deficits.
Handle: RePEc:otg:wpaper:1607

Template-Type: ReDIF-Paper 1.0
Author-Name: Jeremy Clark
Author-Name-First: Jeremy 
Author-Name-Last: Clark
Author-Email: jeremy.clark@canterbury.ac.nz
Author-Workplace-Name: University of Canterbury
Author-Name: Arlene Garces-Ozanne
Author-Name-First: Arlene
Author-Name-Last: Garces-Ozanne
Author-Email: arlene.ozanne@otago.ac.nz
Author-Workplace-Name: University of Otago
Author-Name: Stephen Knowles
Author-Name-First: Stephen	
Author-Name-Last: Knowles
Author-Email: stephen.knowles@otago.ac.nz
Author-Workplace-Name: University of Otago
Title: Dire Straits v The Cure: Emphasising the Problem or the Solution in Charitable Fundraising for International Development
Abstract: We conduct a laboratory experiment to test the effect on charitable donations to international development NGOs (INGOs) of emphasising current deprivation in a developing country, versus emphasising the potential good a donation can achieve. Using a double-blind dictator experiment with earned endowments, we find that varying the information/emphasis has no significant effect on total donations, or on the probability of donating. An emphasis on current deprivation does, however, significantly raise the variance of donations, so that conditional on donating, it significantly raises donations compared to emphasising potential gains from the charity’s work.
Length: 32 pages
Creation-Date: 2016-10
Revision-Date: 2016-10
File-URL: http://www.otago.ac.nz/economics/otago623533.pdf
File-Format: Application/pdf
File-Function: First version, 2016
Number: 1608
Classification-JEL: C91, D64
Keywords: charitable giving, dictator game, message strategy
Handle: RePEc:otg:wpaper:1608

Template-Type: ReDIF-Paper 1.0
Author-Name: Arlene Garces-Ozanne
Author-Name-First: Arlene
Author-Name-Last: Garces-Ozanne
Author-Email: arlene.ozanne@otago.ac.nz
Author-Workplace-Name: University of Otago
Author-Name: Edna Ikechi Kalu
Author-Name-First:  Edna Ikechi
Author-Name-Last: Kalu
Author-Email: Edna.Kalu@unb.ca
Author-Workplace-Name: University of New Brunswick
Author-Name: Richard Audas
Author-Name-First: Richard
Author-Name-Last: Audas
Author-Email: rick.audas@otago.ac.nz
Author-Workplace-Name: University of Otago
Title: HOW DO EMPOWERMENT AND SELF-DETERMINATION AFFECT NATIONAL HEALTH OUTCOMES?
Abstract: There remains a persistent gap in health outcomes between wealthy and poor countries.
Basic measures such as life expectancy, infant and child mortality remain divergent, with
preventable deaths being unacceptably high, despite significant efforts to reduce these
disparities.
We examine the impact of empowerment, measured by Freedom House’s ratings of
country’s political and civil rights freedom, while controlling for per capita GDP,
secondary school enrollment and income inequality, on national health outcomes. Using
data from 1970-2013 across 149 countries, our results suggest, quite strongly, that higher
levels of empowerment have a significant positive association with life expectancy,
particularly for females, and lower rates of infant and child mortality.
Our results point to the need for efforts to stimulate economic growth be accompanied
with reforms to increase the levels of empowerment through increased political and
economic freedom.
empowerment, self-determination, political rights, civil liberties, per capita
GDP, secondary school enrollment, income inequality, life expectancy, infant and child
mortality
Length: 25 pages
Creation-Date: 2016-10
Revision-Date: 2016-10
File-URL: http://www.otago.ac.nz/economics/otago623826.pdf
File-Format: Application/pdf
File-Function: First version, 2016
Number: 1609
Classification-JEL: I14, I15
Keywords: empowerment, self-determination, political rights, civil liberties, per capita
GDP, secondary school enrollment, income inequality, life expectancy, infant and child
mortality
Handle: RePEc:otg:wpaper:1609




Template-Type: ReDIF-Paper 1.0
Author-Name: Muhammad Akhtaruzzaman
Author-Name-First: Muhammad
Author-Name-Last: Akhtaruzzaman
Author-Email: 
Author-Workplace-Name: Toi Ohomai Institute of Technology, Rotorua, New Zealand
Author-Name: Christopher Hajzler
Author-Name-First:  Christopher
Author-Name-Last: Hajzler
Author-Email: 
Author-Workplace-Name: Bank of Canada, International Economic Analysis Department, Ottawa, Canada
Author-Name: P. Dorian Owen
Author-Name-First: Dorian
Author-Name-Last: Owen
Author-Email: dorian.owen@otago.ac.nz
Author-Workplace-Name: University of Otago, Dunedin, New Zealand
Title: Does institutional quality resolve the Lucas Paradox?
Abstract: The Lucas Paradox observes that capital flows predominantly to relatively rich countries, contradicting the neoclassical prediction that it should flow to poorer capital-scarce countries. Alfaro, Kalemli-Ozcan, and Volosovych (2008) (AKV) argue that cross-country variation in institutional quality can fully explain the Paradox, contending that if institutional quality is included in regression models explaining international capital inflows, a country’s level of economic development is no longer statistically significant. We replicate AKV’s results using their cross-sectional IFS capital flow data. Motivated by the importance of conducting inference in statistically adequate models, we focus on misspecification testing of alternative functional forms of their empirical model of capital flows. We show that their resolution of the Paradox relies on inference in a misspecified model. In models that do not fail basic misspecification tests, even though institutional quality is a significant determinant of capital inflows, a country’s level of economic development also remains a significant predictor. The same conclusions are reached using an extended dataset covering more recent IFS international capital flow data, first-differenced capital stock data and additional controls.
Length: 39 pages
Creation-Date: 2016-12
Revision-Date: 2016-12
File-URL: https://deptcontrib.otago.ac.nz/economics/otago631038.pdf
File-Format: Application/pdf
File-Function: First version, 2016
Number: 1611
Classification-JEL: F21; F34; F41; E02; C52
Keywords: Lucas Paradox; capital flows; foreign direct investment; institutions; misspecification testing
Handle: RePEc:otg:wpaper:1611