Date of Award
Doctor of Philosophy (PhD)
Income differences across country, banking crises and oil price shocks are the dominant macroeconomic features of our age and main economic difficulties faced by economies. This paper attempts to discuss these three topics one by one.
In the first Chapter, using a PPP-adjusted series of GDP per capita for the entire Caribbean over 1960-2013 period, we examine why some countries in this area are so rich and some others are not. We employ a Bayesian Model Averaging Framework and surprisingly find that the identity of last colonizer and the length of history after achieving independence matter most in determining the income differentials there. Caribbean islands that are finally colonized by UK or have longer timing of independence receive much lower levels of per capita GDP. Our results also show that the timing of colonial experience does not seem to matter too much in terms of income differentials in the Caribbean, which is opposite to the findings of some existing literature.
In the second chapter, we examine the output costs and deposits costs associated with 116 banking crises using cross country data for years after 1970 and develop an severity index of crises based on the deposits loss. Many banking crises do not lead to contractions in output and deposits, a result that holds for cases with/without deposit insurance schemes. We find that 1) middle and low income economies seem have received the most severe banking crises since 1970s; 2) the banking crises are not getting worse across time; 3) crises with deposit insurance schemes are slightly less severe than that without deposit insurance.
In the third chapter, we examine the relationship between output growth and oil prices change using one linear and two major non-linear specifications. We include eight OECD countries in our dataset and two of them, the UK and Norway, are oil exporters. Under linear specification, a positive standard deviation innovation in oil prices has a strong positive effect on real GDP growth for almost all oil importing countries, a finding that is against theoretical intuition. However, the results obtained from the two non-linear approaches tell the opposite stories and confirm the inaccuracy of linear specification.
Li, Huili, "Economic Growth in the Caribbean and Other Topics" (2017). All Dissertations. 2542.