In estimating econometric time series models, it is assumed that the parameters remain constant over the period examined. This assumption may not always be valid when using data which span an extended period, as the underlying relationships between the variables in these models are exposed to various exogenous shifts. It is therefore imperative to examine the stability of models as failure to identify any changes could result in wrong predictions or inappropriate policy recommendations. This research proposes a method of estimating the location of break points in linear econometric models with endogenous regressors, estimated using Generalised Method of Moments (GMM). The proposed estimation method is based on Wald, Lagrange Multiplier and Difference type test statistics of parameter variation. In this study, the equation which sets out the relationship between the endogenous regressor and the instruments is referred to as the Jacobian Equation (JE). The thesis is presented along two main categories: Stable JE and Unstable JE. Under the Stable JE, models with a single and multiple breaks in the Structural Equation (SE) are examined. The break fraction estimators obtained are shown to be consistent for the true break fraction in the model. Additionally, using the fixed break approach, their $T$-convergence rates are established. Monte Carlo simulations which support the asymptotic properties are presented. Two main types of Unstable JE models are considered: a model with a single break only in the JE and another with a break in both the JE and SE. The asymptotic properties of the estimators obtained from these models are intractable under the fixed break approach, hence the thesis provides essential steps towards establishing the properties using the shrinking breaks approach. Nonetheless, a series of Monte Carlo simulations conducted provide strong support for the consistency of the break fraction estimators under the Unstable JE. A combined procedure for testing and estimating significant break points is detailed in the thesis. This method yields a consistent estimator of the true number of breaks in the model, as well as their locations. Lastly, an empirical application of the proposed methodology is presented using the New Keynesian Phillips Curve (NKPC) model for U.S. data. A previous study has found this NKPC model is unstable, having two endogenous regressors with Unstable JE. Using the combined testing and estimation approach, similar break points were estimated at 1975:2 and 1981:1. Therefore, using the GMM estimation approach proposed in this study, the presence of a Stable or Unstable JE does not affect estimations of breaks in the SE. A researcher can focus directly on estimating potential break points in the SE without having to pre-estimate the breaks in the JE, as is currently performed using Two Stage Least Squares.

Contrary to conventional theory, a growing body of evidence suggests that economies with abundant natural resources perform badly in terms of economic growth relative to their resource poor counterparts—the so-called resource curse hypothesis. However, this general hypothesis is not robust. It clearly fails to account for the differing experiences of resource abundant economies. For instance, the theory, applied generally, offers no explanation as to why economies like Botswana and Norway have exceptional growth while Saudi Arabia and Nigeria have stagnated. Prompted by these experiences, the thesis investigates the circumstances under which the curse is more or less likely to exist. In particular, the thesis finds evidence that the major reason for the diverging experiences is the differences in the quality of institutions across countries. The thesis tests the hypothesis that the effect of resources on growth is conditional on the type and quality of institutions, by further building on Boschini, Pettersson, and Roine’s (2007) and Mehlum, Moene, and Torvik’s (2006b) influential works on the role of institutions in mitigating the resource curse. Advances are made by: (a) using a panel of up to 53 countries with different levels of development, institutional quality and natural resource abundance over the period 1984-2003; (b) applying a two-step system Generalised Method of Moments (GMM) estimation that accounts for biases associated with omitted variables, endogeneity and unobserved heterogeneity that potentially affect existing cross-country Ordinary Least Squares (OLS) growth results; (c) supplementing results of the commonly used International Country Risk Guide (ICRG) institutional performance indicators with those of institutional design indicators–that is, highlighting the role of electoral rules and form of government; (d) using an institutional quality measure that is more related to financial institutions than just economic or political institutions; (e) using a resource abundance indicator that focuses on non-renewable resources alone rather than the ones commonly used in the literature that include renewable resources, which are inappropriate. The key hypothesis that natural resource economies are not destined to be cursed if they have good institutions is confirmed by the empirical results of the thesis. Specifically, the results suggest that (a) adopting a democratic regime is better than a non-democratic one, in terms of generating growth from resource abundance (b) the electoral rules that a country adopts matter, i.e. having a democratic proportional rather than a democratic majority regime increases the growth benefits of resource abundance (c) as far as the form of government adopted is concerned, a democratic parliamentary rather than a democratic presidential regime generates more economic growth from its abundant natural resource (d) a well functioning banking sector induces more (resource abundant generated) growth and capital accumulation. Therefore, the lessons for policy makers who struggle to overcome the impediments to economic development that potentially accompany the “curse of resource abundance” are the need to develop and maintain better institutions and adopt improved management strategies of the financial proceeds forthcoming from such abundance.

Contrary to conventional theory, a growing body of evidence suggests that economies with abundant natural resources perform badly in terms of economic growth relative to their resource poor counterparts—the so-called resource curse hypothesis. However, this general hypothesis is not robust. It clearly fails to account for the differing experiences of resource abundant economies. For instance, the theory, applied generally, offers no explanation as to why economies like Botswana and Norway have exceptional growth while Saudi Arabia and Nigeria have stagnated. Prompted by these experiences, the thesis investigates the circumstances under which the curse is more or less likely to exist. In particular, the thesis finds evidence that the major reason for the diverging experiences is the differences in the quality of institutions across countries. The thesis tests the hypothesis that the effect of resources on growth is conditional on the type and quality of institutions, by further building on Boschini, Pettersson, and Roine’s (2007) and Mehlum, Moene, and Torvik’s (2006b) influential works on the role of institutions in mitigating the resource curse. Advances are made by: (a) using a panel of up to 53 countries with different levels of development, institutional quality and natural resource abundance over the period 1984-2003; (b) applying a two-step system Generalised Method of Moments (GMM) estimation that accounts for biases associated with omitted variables, endogeneity and unobserved heterogeneity that potentially affect existing cross-country Ordinary Least Squares (OLS) growth results; (c) supplementing results of the commonly used International Country Risk Guide (ICRG) institutional performance indicators with those of institutional design indicators–that is, highlighting the role of electoral rules and form of government; (d) using an institutional quality measure that is more related to financial institutions than just economic or political institutions; (e) using a resource abundance indicator that focuses on non-renewable resources alone rather than the ones commonly used in the literature that include renewable resources, which are inappropriate. The key hypothesis that natural resource economies are not destined to be cursed if they have good institutions is confirmed by the empirical results of the thesis. Specifically, the results suggest that (a) adopting a democratic regime is better than a non-democratic one, in terms of generating growth from resource abundance (b) the electoral rules that a country adopts matter, i.e. having a democratic proportional rather than a democratic majority regime increases the growth benefits of resource abundance (c) as far as the form of government adopted is concerned, a democratic parliamentary rather than a democratic presidential regime generates more economic growth from its abundant natural resource (d) a well functioning banking sector induces more (resource abundant generated) growth and capital accumulation. Therefore, the lessons for policy makers who struggle to overcome the impediments to economic development that potentially accompany the “curse of resource abundance” are the need to develop and maintain better institutions and adopt improved management strategies of the financial proceeds forthcoming from such abundance.

Contrary to conventional theory, a growing body of evidence suggests that economies with abundant natural resources perform badly in terms of economic growth relative to their resource poor counterparts—the so-called resource curse hypothesis. However, this general hypothesis is not robust. It clearly fails to account for the differing experiences of resource abundant economies. For instance, the theory, applied generally, offers no explanation as to why economies like Botswana and Norway have exceptional growth while Saudi Arabia and Nigeria have stagnated. Prompted by these experiences, the thesis investigates the circumstances under which the curse is more or less likely to exist. In particular, the thesis finds evidence that the major reason for the diverging experiences is the differences in the quality of institutions across countries. The thesis tests the hypothesis that the effect of resources on growth is conditional on the type and quality of institutions, by further building on Boschini, Pettersson, and Roine’s (2007) and Mehlum, Moene, and Torvik’s (2006b) influential works on the role of institutions in mitigating the resource curse. Advances are made by: (a) using a panel of up to 53 countries with different levels of development, institutional quality and natural resource abundance over the period 1984-2003; (b) applying a two-step system Generalised Method of Moments (GMM) estimation that accounts for biases associated with omitted variables, endogeneity and unobserved heterogeneity that potentially affect existing cross-country Ordinary Least Squares (OLS) growth results; (c) supplementing results of the commonly used International Country Risk Guide (ICRG) institutional performance indicators with those of institutional design indicators–that is, highlighting the role of electoral rules and form of government; (d) using an institutional quality measure that is more related to financial institutions than just economic or political institutions; (e) using a resource abundance indicator that focuses on non-renewable resources alone rather than the ones commonly used in the literature that include renewable resources, which are inappropriate. The key hypothesis that natural resource economies are not destined to be cursed if they have good institutions is confirmed by the empirical results of the thesis. Specifically, the results suggest that (a) adopting a democratic regime is better than a non-democratic one, in terms of generating growth from resource abundance (b) the electoral rules that a country adopts matter, i.e. having a democratic proportional rather than a democratic majority regime increases the growth benefits of resource abundance (c) as far as the form of government adopted is concerned, a democratic parliamentary rather than a democratic presidential regime generates more economic growth from its abundant natural resource (d) a well functioning banking sector induces more (resource abundant generated) growth and capital accumulation. Therefore, the lessons for policy makers who struggle to overcome the impediments to economic development that potentially accompany the “curse of resource abundance” are the need to develop and maintain better institutions and adopt improved management strategies of the financial proceeds forthcoming from such abundance.

The relationship between politicians and firms has attracted a considerable amount of research, especially in developing countries, where firms' political links are a widespread phenomenon. However, existing literature offers contradicting views about this relationship, espicially regarding the impact of firms' political connections on firms' market-performance. Furthermore, there is limited evidence on the impact of firms' political connections on some of the important corporate decisions, including firms' investment- and dividend-policies. Therefore, this thesis seeks to fill these gaps by offering three empirical essays with Jordan as a case study. The first essay examines the impact of firms' political links on their values by controlling for macroeconomic conditions. Also, in the extended models, by specifying three major events which occurred after 2008, namely, the establishment of the Anti-Corruption Commission (ACC), the Global Financial Crisis, and the Arab Uprisings, we investigate the effects of these events on the relationship between firms' political ties and their value. The findings of this essay indicate that politically-connected firms have higher values compared to their non-connected counterparts in Jordan. Moreover, it is found that firms with stronger political-ties have higher values than firms with weaker ties. Furthermore, the positive effect of political connections continues, even after controlling for the macroeconomic conditions, though the latter are considered to be more important than political connections for firm valuation due to their impact on the share price. Interestingly, findings show that the events occurring after 2008 do not seem to have affected the relationship between political connections and firm value since the significant positive impact of political-ties on firm value persists during the post-event period. The second empirical essay studies the role of political connections in mitigating firms' financing-constraints. Moreover, it investigates the effect of the strength of political connections in alleviating these constraints. Finally, it looks at the impact of the above-mentioned three events which occurred after 2008, notwithstanding the new banking Corporate Governance Code issued in 2007. Findings of this essay reveal that firms' political connections are important in mitigating their financing-constraints. Furthermore, the results show that stronger political connections seem to reduce financing-constraints more than weaker connections. Finally, findings show that the impact of firms' political connections has diminished during the post-event period (2008 - 2014). The third essay examines how a firm's political connections can affect its dividend-policy. It also considers the impact of the strength of political connections on dividend-policy. Finally, we extend the empirical analysis by investigating any shift in the relationship between political connections and dividends due to the events of the Global Financial Crisis, the Arab Uprisings, and the adoption of the International Financial Reporting Standards (IFRS). Results of this essay reveal that a firm's political connections have a significant positive impact on both the propensity to pay dividends and the dividend-payout ratio. Regarding the impact of the strength of political connections on dividends, it is found that firms with weaker political connections pay out more in dividends than firms with stronger connections. In terms of the impact of the events which occurred after 2008 on the relationship between political connections and dividends, the findings show that the impact of these connections on dividends is eliminated.

This study examines the impact of fiscal deficits on economic growth in developing countries. Based on deduction from the relevant theoretical and empirical literature, the study tests the following hypotheses regarding the impact of fiscal deficits on economic growth. First, fiscal deficits have significant positive or negative impact on economic growth in developing countries. Second, the impact of fiscal deficits on economic growth depends on the size of deficits as a percentage of GDP - that is, there is a non-linear relationship between fiscal deficits and economic growth. Third, the impact of fiscal deficits on economic growth depends on the ways in which deficits are financed. Fourth, the impact of fiscal deficits on economic growth depends on what deficit financing is used for. The study also examines whether there are any significant regional differences in terms of the relationship between fiscal deficits and economic growth in developing countries. The study uses panel data for thirty-one developing countries covering the period 1972- 2001, which is analysed based on the econometric estimation of a dynamic growth model using the Arellano and Bond (1991) generalised method of moments (GMM) technique. Overall, the results suggest the following. First, fiscal deficits per se have no any significant positive or negative impact on economic growth. Second, by contrast, when the deficit is substituted by domestic and foreign financing, we find that both domestic and foreign financing of fiscal deficits exerts a negative and statistically significant impact on economic growth with a lag. Third, we find that both categories of economic classification of government expenditure, namely, capital and current expenditure, have no significant impact on economic growth. When government expenditure is disaggregated on the basis of a functional classification, the results suggest that spending on education, defence and economic services have positive but insignificant impact on growth, while spending on health and general public services have positive and significant impact. Fourth, in terms of regional differences with regard to the estimated relationships, the study finds that, while there are some regional differences between the four different regions represented in our sample of thirty-one developing countries - namely, Asia and the Pacific, Latin America and the Caribbean, Middle East and North Africa, and Sub-Saharan Africa - these differences are not statistically significant. On the basis of these findings, the study concludes that fiscal deficits per se are not necessarily good or bad for economic growth in developing countries; how the deficits are financed and what they are used for matters. In addition, the study concludes that there are no statistically significant regional differences in terms of the relationship between fiscal deficits and economic growth in developing countries.

The rapid growth of financial markets and the increasing diffusion of corporate ownership have placed tremendous emphasis on the effectiveness of corporate governance in resolving agency conflicts within the firm. This study investigates the corporate governance and firm performance/failure relation by implementing various econometric modelling methods to disaggregate causal relations and spurious correlations. Using a panel dataset of Australian firms, a comprehensive suite of corporate governance mechanisms are considered; including the ownership, remuneration, and board structures of the firm. Initial ordinary least squares (OLS) and fixed-effects panel specifications report significant causal relations between various corporate governance measures and firm outcomes. However, the dynamic generalised method of moments (GMM) results indicate that no causal relations exist when taking into account the effects of simultaneity, dynamic endogeneity, and unobservable heterogeneity. Moreover, these results remain robust when accounting for the firm??s propensity for fraud. The findings support the equilibrium theory of corporate governance and the firm, suggesting that a firm??s corporate governance structure is an endogenous characteristic determined by other firm factors; and that any observed relations between governance and firm outcomes are spurious in nature. Chapter 2 examines the corporate governance and firm performance relation. Using a comprehensive suite of corporate governance measures, this chapter finds no evidence of a causal relation between corporate governance and firm performance when accounting for the biases introduced by simultaneity, dynamic endogeneity, and unobservable heterogeneity. This result is consistent across all firm performance measures. Chapter 3 explores the corporate governance and likelihood of firm failure relation by implementing the Merton (1974) model of firm-valuation. Similarly, no significant causal relations between a firm??s corporate governance structure and its likelihood of failure are detected when accounting for the influence of endogeneity on the parameter estimates. Chapter 4 re-examines the corporate governance and firm performance/failure relation within the context of corporate fraud. Using KPMG and ASIC fraud databases, the corporate governance and firm outcome relations are estimated whilst accounting for the firms?? vulnerability to corporate fraud. This chapter finds no evidence of a causal relation between corporate governance and firm outcomes when conditioning on a firm??s propensity for fraud.

The rapid growth of financial markets and the increasing diffusion of corporate ownership have placed tremendous emphasis on the effectiveness of corporate governance in resolving agency conflicts within the firm. This study investigates the corporate governance and firm performance/failure relation by implementing various econometric modelling methods to disaggregate causal relations and spurious correlations. Using a panel dataset of Australian firms, a comprehensive suite of corporate governance mechanisms are considered; including the ownership, remuneration, and board structures of the firm. Initial ordinary least squares (OLS) and fixed-effects panel specifications report significant causal relations between various corporate governance measures and firm outcomes. However, the dynamic generalised method of moments (GMM) results indicate that no causal relations exist when taking into account the effects of simultaneity, dynamic endogeneity, and unobservable heterogeneity. Moreover, these results remain robust when accounting for the firm??s propensity for fraud. The findings support the equilibrium theory of corporate governance and the firm, suggesting that a firm??s corporate governance structure is an endogenous characteristic determined by other firm factors; and that any observed relations between governance and firm outcomes are spurious in nature. Chapter 2 examines the corporate governance and firm performance relation. Using a comprehensive suite of corporate governance measures, this chapter finds no evidence of a causal relation between corporate governance and firm performance when accounting for the biases introduced by simultaneity, dynamic endogeneity, and unobservable heterogeneity. This result is consistent across all firm performance measures. Chapter 3 explores the corporate governance and likelihood of firm failure relation by implementing the Merton (1974) model of firm-valuation. Similarly, no significant causal relations between a firm??s corporate governance structure and its likelihood of failure are detected when accounting for the influence of endogeneity on the parameter estimates. Chapter 4 re-examines the corporate governance and firm performance/failure relation within the context of corporate fraud. Using KPMG and ASIC fraud databases, the corporate governance and firm outcome relations are estimated whilst accounting for the firms?? vulnerability to corporate fraud. This chapter finds no evidence of a causal relation between corporate governance and firm outcomes when conditioning on a firm??s propensity for fraud.

This thesis investigates the statistical properties of Kernel Smoothed Empirical Likelihood (KSEL, e.g. Smith, 1997 and 2004) estimator and various associated inference procedures in weakly dependent data. New tests for structural stability are proposed and analysed. Asymptotic analyses and Monte Carlo experiments are applied to assess these new tests, theoretically and empirically. Chapter 1 reviews and discusses some estimation and inferential properties of Empirical Likelihood (EL, Owen, 1988) for identically and independently distributed data and compares it with Generalised EL (GEL), GMM and other estimators. KSEL is extensively treated, by specialising kernel-smoothed GEL in the working paper of Smith (2004), some of whose results and proofs are extended and refined in Chapter 2. Asymptotic properties of some tests in Smith (2004) are also analysed under local alternatives. These special treatments on KSEL lay the foundation for analyses in Chapters 3 and 4, which would not otherwise follow straightforwardly. In Chapters 3 and 4, subsample KSEL estimators are proposed to assist the development of KSEL structural stability tests to diagnose for a given breakpoint and for an unknown breakpoint, respectively, based on relevant work using GMM (e.g. Hall and Sen, 1999; Andrews and Fair, 1988; Andrews and Ploberger, 1994). It is also original in these two chapters that moment functions are allowed to be kernel-smoothed after or before the sample split, and it is rigorously proved that these two smoothing orders are asymptotically equivalent. The overall null hypothesis of structural stability is decomposed according to the identifying and overidentifying restrictions, as Hall and Sen (1999) advocate in GMM, leading to a more practical and precise structural stability diagnosis procedure. In this framework, these KSEL structural stability tests are also proved via asymptotic analysis to be capable of identifying different sources of instability, arising from parameter value change or violation of overidentifying restrictions. The analyses show that these KSEL tests follow the same limit distributions as their counterparts using GMM. To examine the finite-sample performance of KSEL structural stability tests in comparison to GMM's, Monte Carlo simulations are conducted in Chapter 5 using a simple linear model considered by Hall and Sen (1999). This chapter details some relevant computational algorithms and permits different smoothing order, kernel type and prewhitening options. In general, simulation evidence seems to suggest that compared to GMM's tests, these newly proposed KSEL tests often perform comparably. However, in some cases, the sizes of these can be slightly larger, and the false null hypotheses are rejected with much higher frequencies. Thus, these KSEL based tests are valid theoretical and practical alternatives to GMM's.

This analysis studies the phenomenon of the New Keynesian Phillips Curve - its inception from the RBC theory and DSGE modelling via incorporation of nominal rigidities, and its various specifications and empirical issues. The estimates on Czech macroeconomic data using the Generalised Method of Moments show that the hybrid New Keynesian Phillips Curve with the labour income share or the real unit labour cost as driving variables can be considered as an appropriate model describing inflation in the Czech Republic. Compared to other analyses, we show that the inflation process in the Czech Republic exhibits higher backwardness vis-a-vis other researchers' estimates based on US data.