Carlos Garcimartín

Convergence and Balance of Payments Constrained Growth: Is There a Puzzle?

One of the main implications of the neoclassical approach to growth is the existence of convergence across economies — although not necessarily to the same steady states — as a consequence of decreasing returns to capital. But, according to the balance of payments constrained growth theory as developed by Thirlwall, international convergence cannot be taken for granted. Although convergence can indeed occur in Thirlwall’s framework, the conditions that backward countries must fulfil to converge toward the leaders have some puzzling implications. In particular, non-price competitiveness must be higher in the less advanced countries than in the leading countries. This chapter is aimed at solving this puzzle by developing a model that attempts to reconcile the balance of payments constraint hypothesis with the notion of convergence. This model is employed to analyse economic growth in a sample of eleven developed nations over recent decades.

Progressivity and Redistribution in Non‐Revenue Neutral Tax Reforms: The Level and Distance Effects

Kakwani and Reynolds–Smolensky indices are used in the literature to measure the progressivity and redistributive capacity of taxes. These indices may, however, show some limits when used to make normative assessments about non‐revenue neutral tax reforms. Two approaches have traditionally been taken to overcome this problem. The first of these consists of comparing after‐tax income distributions through generalized Lorenz (concentration) curves. The second approach is based on the decomposition of changes in the Reynolds–Smolensky index into changes in the average tax rate and variations in progressivity. Nonetheless, this decomposition between the average tax rate and progressivity may be further exploited to obtain some information that can be relevant to assess tax reforms. The main aim of this study is to draw up some indicators that can be useful to quantify the effects of non‐revenue neutral tax reforms. These indicators are used to investigate the last personal income tax reforms that have taken place in Spain.

Taxes, Foreign Aid and Quality of Governance Institutions

This book contributes to the growing governance literature in three ways. First, it extends the analysis to new areas such as power asymmetry, regulation, transnational company strategies, and law enforcement. Secondly, it examines the role of formal institutions that shape and enforce the rules/norms codified in law; but also private-ordering institutions that function under the umbrella of the State; and private institutions (such as market rules/norms) that provide reputational and other information that foster compliance. Finally, the book extends and enriches the governance debate, addressing issues such as the determinants of institutional quality and efficiency, and the interaction between actor networks and institutional norms.

Balance-of-payments-constrained growth and convergence: one more piece of the jigsaw

Broadly speaking, the balance-of-payments-constraint hypothesis as developed by Thirlwall (1979) has been empirically supported. Yet, it fails to interpret correctly the necessary conditions for convergence. Although the neoclassical explanation of economic growth is not necessarily the correct one, it is a fact that some countries have indeed converged to others. When Thirlwalls model accounts for the possibility of convergence, it shows two main puzzling implications since it depends on income elasticities. First, a higher income elasticity to exports/imports ratio in backward countries not only implies convergence but divergence in the long run. Second, the non-price competitiveness is higher in the backward countries since they have a higher ratio. This study aims at developing a model that is able to reconcile the balance-of-payments-constraint hypothesis with convergence. Subsequently, it is applied to countries of the Organization for Economic Cooperation and Development (OECD).

Measuring Governance As If Institutions Matter: A Proposal

Given governance is still a hazy concept, the chapter goes back to the fundamentals that enable collective action trying to understand good governance as the result of quality institutions shaping social interaction in the public realm. Going beyond available indicators, the chapter wants to provide some sound criteria for measuring the quality of institutions and, by doing so, to investigate governance. At this aim, the chapter, first, presents the criteria that should define the quality of institutions; second, provides empirical evidence of the explanatory capacity of the suggested criteria; and, third, provides some practical procedures and examples that can be useful to transform the analytical approach into governance indicators. The chapter concludes with some policy implications drawn from the analysis.

Population Growth Effects on Spanish Convergence

Despite the abundant literature on convergence across the Spanish regions, most of the empirical research has used cross-section regressions or data panel techniques with fixed effects, resulting in biased estimates. In addition, many of these studies do not explicitly account for the effect of population among other traditional variables determining the steady state. This paper attempts to overcome these limitations, controlling for the endogeneity of population and other explanatory variables. For this purpose, dynamic data panel model will be used to 17 Spanish regions from 1955 to 2004. The paper concludes that the deep reduction in steady-state disparities across Spanish regions can be attributed mainly to the differences in their population growth rates, due to a large extent to inter-regional migrations.

ES VIABLE UN FONDO DE COHESIÓN SOCIAL IBEROAMERICANO

Al margen de razones puramente solidarias, la cohesion social y las politicas orientadas a alcanzarla se justifican por los reditos reciprocos derivados de las relaciones economicas internacionales. Bajo determinadas circunstancias, estos reditos pueden aumentar gracias a las politicas de cohesion, tanto para los receptores como para los donantes netos de fondos. En primer lugar, porque se aprovechan en mayor medida las ventajas que proporciona la especializacion productiva. En segundo lugar, porque aumentan los incentivos para reducir las barreras al movimiento de mercancias y factores de produccion. En tercer lugar, porque pueden fortalecer las capacidades institucionales de los distintos paises. Finalmente, porque, junto a estas razones de indole economico, existen tambien importantes beneficios de corte sociopolitico.