Elmer Sterken

We investigate the causal relationship between public debt ratios and economic growth rates for 31 EU and OECD countries. We estimate a panel VAR model that incorporates the long-term real interest rate on government bonds as a vehicle to transmit shocks in both the public debt to GDP ratio and the economic growth rate. We find no causal link from public debt to growth, irrespective of the levels of the public debt ratio. Rather, we find a causal relationship from growth to public debt. In high-debt countries, the direct negative impact of growth on public debt is enhanced by an increase in the long-term real interest rate, which in its turn decreases interest-sensitive demand and leads to a further increase in the public debt ratio.

This study analyzes marginal social and private returns of R&D investment through the impact of international spillovers of R&D stocks. We compare the marginal social with marginal private returns using data of 27 OECD and EU countries from 1995 to 2008. We consider two channels of R&D spillovers: embodied in trade flows and disembodied by bilateral technological proximity. We find that marginal social returns on R&D are much larger than the marginal private returns for R&D‐intensive countries, in the embodied spillover channel. We also find that the embodied spillover channel through import flows is more important than the disembodied channel.

Este ensayo pronostica el número de medallas para los Juegos Panamericanos del 2011. El procedimiento del pronóstico consiste en analizar a los ganadores de las últimas cuatro ediciones de los Juegos Panamericanos por país. Las posibles variables explicativas de las medallas ganadoras son PIB, población, distancia geográfica con respecto al sitio donde se celebran los Juegos y la ventaja del país sede. Nuestro pronóstico muestra que Estados Unidos obtendrá el primer lugar en el total de medallas ganadas. Esperamos que México ocupe el cuarto lugar obteniendo 37 medallas de oro. Los resultados finales publicados después de los Juegos prueban nuestras predicciones. Sin embargo, los pronósticos son menos precisos que otras predicciones similares hechas para los Juegos Olímpicos.

This paper proposes a novel approach to investigating the propagation mechanism of balance sheet deterioration in financial institutions and firms, by extending the input–output analysis. First, we use a unique input–output table augmented by firm size dimension. Second, we link the input–output table with the balance sheet conditions of financial institutions and firms. Based on Japanese input–output tables, we find that the lending attitude of financial institutions affected firms’ input decision in the late 1990s and the early 2000s. Simulation exercises are conducted to evaluate the effects of changes in the lending attitude toward small firms as favorable as that toward large firms on sectoral allocations. We find that output was increased for small firms and reduced for large firms. The change in output was non-negligible, about 5.5% of the initial output of each sector. In particular, it exceeded 20% in textile, iron and steel and fabricated metal products.