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Kormendi and McGuire (1985) document a negative effect of inflation on economic growth for a cross-section of 47 countries during the period 1950-1977. Recent panel evidence such as Barro’s (2001) strengthens the support for such a negative effect. In qualification, Khan and Senhadji (2001), Ghosh and Phillips (1998), and Judson and Orphanides (1996) all find a significant negative inflation-growth effect above a certain “threshold” value of the inflation rate, and no significant effect below the threshold value, without using instrumental variables and with differences found between less and more developed country samples. Further the above threshold negative effect that they find is significantly non-linear whereby the marginal effect is stronger at lower inflation rates than at higher ones; see also Fischer (1993).

It is well known that the usual procedures for estimating panel data models are inconsistent in the dynamic setting. A large number of consistent estimators however, have been proposed in the literature. This paper provides a survey of the majority of mainstream estimators, which tend to consist of IV and GMM ones. It also considers a newly proposed extension to the promising Wansbeek-Bekker estimator (Harris & Matyas, 2000). To provide guidance to the applied researcher working on micro-datasets, the small sample performance of these estimators is evaluated using a set of Monte Carlo experiments.

The paper presents a monetary model of endogenous growth and specifies an econometric model consistent with it. The economic model suggests a negative inflation-growth effect, and one that is stronger at lower levels of inflation. Empirical evaluation of the model is based on a large panel of OECD and APEC member countries over the years 1961-1997. The hypothesized negative inflation effect is found comprehensively for the OECD countries to be significant and, as in the theory, to increase marginally as the inflation rate falls. For APEC countries, the results from using instrumental variables also show significant evidence of a similar behavior. The nature of the inflation-growth profile and differences in this between the regions are interpreted with the credit production technology of the model in a way not possible with a standard cash-only economy.

Since the early seventies policy makers and academics alike have been paying increasing attention to the interaction between environmental regulation and foreign trade. The theories and methodologies applicable to this diverse and complex relationship are surveyed among others by Anderson and Blackhurst (1992), Dean (1992), Van Beers and Van den Bergh (1996) and Xing and Kolstad (1996). The specific issues investigated are numerous, ranging from the environmental determinants of trade, through the impact of trade on the environment and the effects of environmental policy on trade, to the substitution or complementarity of trade and environmental policy measures. The focus of this paper is on the relationship between the relative stringency of environmental regulations and international competitiveness. A three-dimensional panel data framework is employed, which allows for both importing and exporting country effects, as well as for time (or business cycle) effects. Even if these additional specific effects are insignificant, the panel data set used is expected to be more reliable and enlightening than a simple cross-sectional data set, since bilateral trade, especially on the lower, two- and three-digit SITC levels, is often prone to strong annual fluctuations. As the analysis shows, as soon as these specific effects are taken into consideration, the relationship between stricter regulations and foreign trade becomes statistically insignificant. This suggests that environmental costs do not have a real impact, either negative or positive, on foreign trade. The paper is structured as follows. The model is briefly described in Section 2. Section 3 discusses the measurements and sources of the data used, with special regard to the strictness of environmental regulations. The empirical findings are summarized in Section 4. Finally, the concluding remarks can be found in Section 5.

Wansbeek and Bekker considered a new estimator for simple dynamic panel data models (where there are no exogenous variables) which involved a complex weighting matrix. An operational variant of this estimator is proposed which is applicable to the more realistic case where there are exogenous variables. Also proposed is an easy-to-compute approximation to the weighting matrix. The performance of this (these) new estimator(s) is examined, revealing very desirable small sample properties in a wide range of situations that the applied researcher is likely to encounter, especially in moderate time series length panels.

This paper implements a panel data approach of the Solow model to study the phenomenon of growth convergence for 22 OECD countries. It shows that although the derived estimable Solow model is probably underspecified from an econometric point of view, it is still possible to conclude that there is a likely convergence to a steady state rate of about 2-4%.