Marinko Škare

How important is human capital for growth in reforming economies

Abstract The aim of the paper is to broaden the research on human capital providing new evidence that human capital matters for economic growth in reforming economies. We propose a new model for measuring human capital. An advantage of the proposed model consists in international comparability; money metric scale and more importantly provide solid evidence on human capital significance for economic growth. This new approach in measuring human capital proved robust to the spurious regression problem involving human capital. Study results shows that human capital is important for growth and that large educational investments are essential to boost accumulation.

The role of equipment investments in economic growth: a cointegration analysis

New growth theories emerged during 1990s underlined the importance of exploring a link between the disaggregated level of investment and economic growth. We investigate the link between the different forms of investments (equipment, structure and human capital) and real GDP growth in Republic of Croatia for the (pre)transition period 1960-1989 and transition period 1990-2011. Our results suggest that equipment investments have a special role in increasing the GDP growth rates that is consistent with the work of De Long and Summers and Temple. Equipment investments-growth link is stronger than the structure investment-growth. We infer that small-open economies and particularly former planned economies through intensive equipment investment policy can enhance and sustain long-term growth.

A fractionally integrated model for the Croatian aggregate output (GDP) series

Abstract The general characteristics of output fluctuations in Croatia are examined under fractional integration framework. This paper evaluate the existence of long memory in real output decomposing fluctuations to transitory and permanent components. The results suggest that Croatian real output series behavior is best identified as ARFIMA model with order of integration 0.5 <d <1.5. This suggests that macroeconomic shocks in real output are highly persistent. Unlike other studies in Croatia that find real output to be I(0) or I(1) variable, test results from this study indicate that real output show the characteristics of long memory with mean reversion (fractional integration).

CORPORATE SOCIAL RESPONSIBILITY AND CORPORATE FINANCIAL PERFORMANCE – IS THERE A LINK?

Abstract The “business as usual” model is no longer possible. Globalization, technological and demographical changes have lead to the change in the internal organization structures, processes and behaviour. Environmental, social and governance issues are becoming extremely powerful means of gaining competitive advantage on the global market. The purpose of the paper is to underline the importance of socially responsible business practices for the corporation. In order to emphasize the importance of socially responsible behaviour with regards to financial performance, the research was enriched with of the comparative analysis of the financial performances of 45 corporations listed on Dow Jones Sustainability World Index 2009/2010 that represent the top 10% of the leading sustainability companies out of the biggest 2500 companies in the Dow Jones Global Total Stock Market Index compared with non CSR corporations – not listed on DJSWI. Authors are presenting results of the econometric model which further confirmed that CSR firms in the average enjoy better financial performance that non-CSR firms.

SHORT- AND LONG-RUN LINKAGES BETWEEN EMPLOYMENT GROWTH, INFLATION AND OUTPUT GROWTH: EVIDENCE FROM A LARGE PANEL

AbstractThis study examines the short- and long-run linkages between employment growth, inflation and output growth applying panel cointegration and causality tests to data for 119 countries over the period 1970–2010. We find evidence of positive Granger causality running from output growth to employment growth in the short run. Employment growth Granger causes output growth with a negative sign in the long run. Inflation Granger causes employment and output growth positively in the short run and negatively in the long run.

Employment Growth, Inflation and Output Growth: Was Phillips Right? Evidence from a Dynamic Panel

In this paper we analyse the short- and long-run relationship between employment growth, inflation and output growth in Phillips’ tradition. For this purpose we apply FMOLS, DOLS, PMGE, MGE, DFE, and VECM methods to a nonstationary heterogeneous dynamic panel including annual data for 119 countries over the period 1970-2010, and also carry out multivariate Granger causality tests. The empirical results strongly support the existence of a single cointegrating relationship between employment growth, inflation and output growth with bidirectional causality between employment growth and inflation as well as output growth, giving support to Phillips’ Golden Triangle theory.

Poverty and economic growth: a review

AbstractThe objective of this paper is to review and attempt a synthesis of the relevant literature on growth versus poverty, and to analyze the causal link between the two phenomena. Research issues that drive our study are: Does economic growth tend to “raise all boats” as Kuznets (1955) pointed out? What is the role of the pattern of growth in the process of development? Which factor must we consider in designing appropriate pro-poor growth policies? This paper finds considerable variation in the poverty–reducing effectiveness of growth across time and authors. Also, our analysis speaks in favour of the fact that as growth occurs poverty reduces, no matter the level of inequality. Identically, similar growth pattern has different effects on poverty reduction. We conclude that growth is good for poverty alleviation but it is not enough. The extent to which growth reduces poverty depends upon how we measure poverty, and upon absorptive capacity of the poor, the pace and pattern of growth. In times when t...

On the neutrality of money in CEE (EU member) states: A panel cointegration analysis

The concept of money neutrality is an important pillar of the mainstream economic literature. It implies that autonomous changes in the money supply have no influence on real macroeconomic variables in the long run. The goal of this paper is to test the validity of (long-run) money neutrality proposition in the CEE (EU member) states. The empirical research is based on panel cointegration analysis which utilises annual data on real output and broad (M2) as well as narrow (M1) monetary aggregates over the 1995–2013 period for 11 ex-socialist EU countries. The results suggest that the money neutrality proposition could be rejected in both cases when narrow or broad measure of money supply is applied, meaning that an active monetary policy could and should be used as a stabilisation instrument as well as in stimulating real economic activity.

Computable General Equilibrium Model for Croatian Economy

Abstract Computable General Equlibrium models or CGE models, are one of the most useful models in a global development planning and macroeconomic analysis. CGE models are discovered in 1960., but there was no major development until 1978. These models have become a standard tool of empirical economic analysis. These models dominate in major part of applied econometric analysis, which is involved on problem solving in economic development and local economic policies. They are inevitable tools for analysis in international trade and government planning, changes in oil markets, and at the same time they are used in the analysis in tax reforms, welfare distributions, and even in the analysis of global warming. From that it concludes that uses of CGE models are very wide-spread. In the last few years, improvements in a specification of the model, availability of data and development in computer technology results in increased efficiency and reduced cost of analysis, which is based on CGE models. CGE models are most commonly used for analysis in countries that are in transition, but basic framework and specification of a model can be used from global to the local level.

How useful is the golden triangle law in economics

AbstractWe explore the long term relationship between unemployment, inflation and output in the United Kingdom during 1851–2011 in search for a possible “golden triangle” connecting “natural” unemployment, price stability and strong (fast) rates of output growth. Exploring the possibility of existence of such internal macroeconomic equilibrium is important in setting and attaining these most acclaimed macroeconomic objectives. Not only could the results be applied in setting policy objectives but also unveil if low unemployment, stable prices and fast growth are supportive objectives. Preliminary results are encouraging and open the path for further research on the subject. Not a single economic policy designed on just a vague notion on the relationship between inflation, unemployment and output should be used since it will bring disaster to the economy.