RESEARCH
“The net foreign
asset position and government size” (ungated version until 29 November 2014). International Review of Economics and Finance, 2015 January, pp. 130-148, http://dx.doi.org/10.1016/j.iref.2014.09.010 .
ABSTRACT: This
paper analyzes the relationship between the net foreign asset position of a
country, and government size and consumption-wealth ratio in a stochastically
growing small open economy. The model suggests that more indebted countries are
associated with bigger governments when utility-enhancing government spending
is also volatility-reducing. More indebted countries would have a higher
volatility originating from domestic sources, thus encouraging government to
increase its size. Consumption-wealth ratio would also be higher for more
indebted countries. The empirical evidence based on a sample of 49 countries
for the period 1970-2009 broadly supports the main results of the model across
many different specifications.
JEL classification: F41; F43
Keywords: Net foreign asset position, Government size, Consumption-wealth
ratio.
ABSTRACT: In
this paper, the authors employ a portfolio approach based on a two-country
world to study the impact of financial openness on the size of government and
on other key economic variables, including the consumption-wealth ratio, the
growth rate of wealth, and welfare (assuming that public spending is utility
enhancing). The model suggests that the size of government, the
consumption-wealth ratio, and welfare should be greater in an open economy
because of higher productivity and/or less volatility because of risk sharing.
The theoretical results for the growth rate depend on differences in
productivity and in consumption-wealth ratios. The empirical evidence — based
on a sample of 49 countries from 1970 to 2009 — broadly supports the main
theoretical results of the model.
DATASET. Click here for the
common dataset (Excel) for "The impact of financial openness on the size
of utility-enhancing government", "Financial openness, volatility,
and the size of productive government", and "The current account and
the new rule in a not-so-small open economy". Latest version: 18 December
2012.
"Crecimiento versus Decrecimiento: ¿Es posible un cambio de modelo
económico?". Published at Estudios
Empresariales. 2012/3, Nº 140:
20-37.
ABSTRACT: This paper analyzes
whether a change in the economic model, from a growth perspective to a degrowth perspective, is possible. The author does not
think that would be possible. However, it is possible, and inevitable, to
change the current economic model to another which permits enjoying the present
without compromizing the future.
Keywords: Growth, degrowth, economic model, sustainibility
RESUMEN :
Este artículo analiza si es posible
un cambio de modelo económico desde una perspectiva de crecimiento a otra de
decrecimiento. El autor no cree que ello sea posible. No obstante, es posible,
e inevitable, cambiar el actual modelo económico a otro que permita disfrutar
del presente sin hipotecar el futuro.
Palabras Clave: Crecimiento,
decrecimiento, modelo económico, sostenibilidad.
"Accounting
for growth in Spain, the Basque Country (and its historic territories), Madrid,
and Navarre since 1965". Published at Ekonomiaz. Revista Vasca de Economía. 2011,
Nº 78, 3º cuatrimestre: 270-307.
ABSTRACT: This paper analyzes
the proximate causes of economic growth for Spain, the Basque Country (and its
three historic territories), Navarre, and Madrid since 1965. Overall, capital
and total factor productivity (TFP) growth was the main engine of output growth
since 1965. Three different periods are characterized. Despite the recent
period 1995-2008 has exhibited a poor TFP growth, the subperiod 2003-2007 has shown an important revival for
output, labor productivity, and TFP growth rates. This seems to be consistent
with an innovation-driven stage. Finally, some caution is suggested on the
results for the Basque Country since they change substantially depending on the
source of data employed. Despite divergences have narrowed recently, the Basque
Statistics Office offers generally higher growth rates for gross value added
than those provided by the Spanish counterpart.
Keywords: Economic growth accounting, total
factor productivity.
RESUMEN :
Este artículo analiza las causas
próximas del crecimiento económico en España, el País Vasco (y sus tres
territorios históricos), Madrid, y Navarra desde 1965. El crecimiento del
capital y la productividad total de los factores (PTF) fueron, en general, el
principal motor del crecimiento de la producción desde 1965. Se estudian tres
períodos con características muy diferentes. A pesar de que el período reciente
1995-2008 ha mostrado un crecimiento pobre de la PTF, el subperíodo
2003-2007 exhibe una importante recuperación en las tasas de crecimiento de la
producción, la productividad del trabajo, y la PTF. Esto parece ser coherente
con un estadio impulsado por la innovación. Finalmente, se sugiere tomar los
resultados obtenidos para el País Vasco con cierta precaución dado que varían
sustancialmente dependiendo de la fuente de datos empleada. A pesar de que las
divergencias han disminuido últimamente, el Instituto Vasco de Estadística
ofrece generalmente tasas de crecimiento mayores para el valor añadido bruto
que los que provee el Instituto Nacional de Estadística.
Palabras Clave: Contabilidad del crecimiento económico, Productividad total de los factores.
ABSTRACT: This paper analyzes the impact of financial
openness on the size of the government in a stochastically growing small open
economy when public spending is productive and volatility-reducing using a
portfolio approach. The main result of the model is that economies that are
more open are associated with a smaller productive public sector. The lower
risk associated with more open economies due to risk diversification implies
that the government is less inclined to increase the scale of its activity to
maximize welfare when productive spending is also volatility-reducing. The
empirical evidence based on a sample of 16 OECD countries for the period
1970-2004 broadly supports the main results of the model, even though some
results are mixed.
JEL classification: F41; F43
Keywords: Financial openness; volatility; consumption-wealth ratio; welfare;
optimal size of the public sector.
"The
current account and the new rule in a not-so-small open economy". Investigaciones
Económicas, vol. XXXIII(3), 2009,
529-557.
ABSTRACT: This paper provides a straigthforward
extension of the new rule for the current account [Kraay
and Ventura (2000)], abandoning the small open economy assumption: the response
of transitory income shocks on the current account is equal to the new rule
(savings generated by the shock multiplied by the domestic holdings of foreign
assets over total domestic assets) plus the saving generated by the shock in
the foreign economy multiplied by the foreign country's share of domestic
capital in foreign total assets. The extended new rule provides a good
description for the behavior of current accounts, and is even better than the
new rule, which would be rejected by recent evidence.
JEL classification: F41; F43
Keywords: Current account, intertemporal approach,
traditional rule, new rule
"La contabilidad del crecimiento
en la Comunidad Autónoma del País Vasco, la Comunidad Foral de Navarra y España
durante 1986-2000: una perspectiva sectorial". Unpublished manuscript.
Latest version: 24 April
2009.
ABSTRACT:
Recent important work has suggested that more
disaggregated studies on the sources of economic growth are needed in order to
ascertain why labor productivity and total factor
productivity (TFP) have exhibited a poor performance in recent years in Spain
as well as in the European Union. This paper studies the sources of economic
growth for the Autonomous Community of the Basque Country (Basque Country),
Navarre and Spain during 1986-2000 from a sectoral
perspective, through growth accounting. First, the results show important
differences in economic performance from some sectors to others. Second, the
growth rates of output have been higher during 1995-2000 than during 1986-1995.
However, the Basque Country has grown well below the other territories during
1986-1995 due to the higher impact of recession in 1992-1993 on manufacturing.
Third, while private capital and TFP have been the main engines of economic
growth in the period 1986-1995, labor input has been
the principal source of growth during 1995-2000, and the contribution of TFP to
growth has declined substantially. Focusing on the Basque Country, Bizkaia has had a differentiated performance, due to the
abnormally low contribution of private capital.
"50 años del modelo de Solow: una aplicación para la CAPV, Navarra y España", Estudios Empresariales, 127: 28-32, octubre de 2008 (nº 2).
ABSTRACT: This paper shows a brief application based on
Solow´s growth model, a growth accounting exercise for the Basque Country,
Navarre, and Spain during 1986-2004. Previously it offers a brief overview on
Solow´s growth model, after more than 50 years since it was published.
"The sources of economic growth
in the Basque Country, Navarre, and Spain during 1986-2004", Investigaciones Regionales,
nº 12, primavera 2008: 35-58.
ABSTRACT: This paper studies the sources of economic
growth in the Basque Country and its three historic territories (Araba, Bizkaia, and Gipuzkoa), Navarre,
and Spain during 1986-2004, emphasizing the role of infrastructures and
Information and Communication Technologies (ICT) on growth, and comparing the
results with those of the EU and the US. First, the growth rate of output was
higher in Navarre and Spain than in the US, and much higher than in the EU. The
Basque Country exhibited a better performance only during 1995-2004. Second,
labor and capital were the main engines of output growth. The growth in TFP was
residual and even declining in the period 1995-2004 due to the increasing
contribution of labor. Those results contrast with the pattern for the US
especially, where growth in TFP remained substantial. Third, infrastructures
contributed approximately 0,10% to output growth.
Fourth, the contribution of ICT capital to output growth was around 0,35% and it increased in the period 1995-2004. However, it
is still far from the levels for the EU and especially the US. Finally, the
growth rate of output per hour was above 1,20%, while
the Basque Country lagged behind. Growth in capital intensity was the main
source of labor productivity growth. While the contribution of infrastructures
to the growth rate of output per hour declined in the period 1995-2004, that of
ICT capital increased. Nevertheless the contribution of ICT capital to the
growth rate of output per hour remains behind that for the EU and the US.
"50 años de la firma del Tratado de Roma", Estudios Empresariales, 124: 54-59, septiembre de 2007 (nº 2).
ABSTRACT: This paper provides an overview of the European
integration process when the fiftieth anniversary of the signature of the
Treaty of Rome is being celebrated.
Please feel free to comment on any of these papers, if you wish, mailing
me at inaki.erauskin@deusto.es. Thanks a lot.