Energy consumption,economic growth and environmental degradation in OECD countries

The interdependence among energy consumption, economic growth and environmental degradation has become an important public policy priority among OECD countries. Yet, the related literature provides conflicting results when describing the dynamic nature of such a relationship and the way it affects countries' development path. Using a sample of 35 OECD countries over the period 2000–2014, we find that economic growth and energy consumption patterns contribute to the enhancement of countries' environmental performance levels. In contrast to a large stream of empirical research, our findings highlight that countries' economic development path and their energy consumption patterns have started to align with their environmental policies. The results are robust since we utilize different aspects of countries' environmental degradation such as carbon dioxide emissions, ecological footprints and countries' environmental performance levels. Finally, the analysis of the dynamic interrelations among countries' energy consumption, economic growth and environmental degradation levels, reveals the necessity to promote sustainable development through a coexistence rather than through a trade-off mechanism.     

Do oil consumption and economic growth intensify environmental degradation? Evidence from developing economies

The purpose of this article is to empirically investigate the impact of economic growth, oil consumption, financial development, industrialization and trade openness on carbon dioxide (CO₂) emissions, particularly in relation to major oil-consuming developing economies. This study utilizes annual data from 1980 to 2012 on a panel of 18 developing countries. Our empirical analysis employs robust panel cointegration tests and a vector error correction model (VECM) framework. The empirical results of three panel cointegration models suggest that there is a significant long-run equilibrium relationship among economic growth, oil consumption, financial development, industrialization, trade openness and CO₂ emissions. Similarly, results from VECMs show that economic growth, oil consumption and industrialization have a short-run dynamic bidirectional feedback relationship with CO₂ emissions. Long-run (error-correction term) bidirectional causalities are found among CO₂ emissions, economic growth, oil consumption, financial development and trade openness. Our results confirm that economic growth and oil consumption have a significant impact on the CO₂ emissions in developing economies. Hence, the findings of this study have important policy implications for mitigating CO₂ emissions and offering sustainable economic development.     

Geopolitics and international organizations: An empirical study on IMF facilities

There is growing awareness that the distribution of IMF facilities may not be influenced only by the economic needs of borrowers. This paper focuses on the fact that the IMF may favour geopolitically important countries in the distribution of IMF loans, differentiating between concessional and non-concessional facilities. To carry out the empirical analysis, we construct a new database that compiles a wide array of proxies for geopolitical importance for 107 IMF countries over 1990–2003, focusing on emerging and developing economies. We use a factor analysis to capture the common underlying characteristic of countries' geopolitical importance as well as a potential analysis since we also want to account for the geographical situation of the loan recipients. While controlling for economic and political determinants, our results show that geopolitical factors influence notably lending decisions when loans are non-concessional, whereas results are less robust and in opposite direction for concessional loans. This study provides empirical support to the view that geopolitical considerations are an important factor in shaping IMF lending decisions, potentially affecting the institution's effectiveness and credibility.     

Enforcing the 1988 Basel Capital Requirements: Did it Curtail Bank Credit in Emerging Economies?

We examine whether the enforcement of bank capital asset requirements (CARs) curtailed the supply of credit in emerging economies. Preliminarily, we identify 16 emerging economies that – according to official and impartial reports – enforced the 1988 Basel standard during the 1990s. Then we perform our twofold econometric analysis. In the former part, we use macro data to test whether, controlling for economic fundamental variables, the enforcement brought about a slowdown in aggregate credit in these countries vis-a-vis other emerging economies. We find some support for our hypothesis. In the latter part, we employ individual bank data to better identify the 'capital crunch' effect of the enforcement. Here, we find that CAR enforcement – according to the 1988 Basel standard – significantly curtailed credit supply, particularly at less well-capitalized banks. The two empirical parts together suggest that the CAR enforcement did curtail aggregate credit in the examined emerging countries and that this result is rooted in the attempt by under-capitalized banks to reduce their loans. We argue that among developing countries – where banks are often the only source of financial intermediation – the positive effect of higher capital requirements, represented by the reduction of poor quality lending, may be offset by their negative impact on bank liquidity and on the level of economic activity. Hence, our results suggest that particular care is required to avoid potential negative macroeconomic effects when phasing in new and higher capital requirements in emerging economies.
(J.E.L.: G18, G21, G28)     

Investigating the Dynamic Interaction between Military Spending and Economic Growth

The relationship and interaction of military spending and economic growth have been theoretically and empirically investigated since the 1970s but it still cannot provide conclusive evidence towards the direction and the quantification of the impact between the two magnitudes. The use of different data sets in terms of time periods, and number and geographic location of countries, different theoretical background leading to different econometric specifications, and single type of econometric methodology, make any comparison impossible. This paper looks into the dynamic interaction between military spending and economic growth during the period 1988–2013 that includes the recent years of economic crisis covering 138 countries without making any prior assumptions about the theoretical channels of influence, while not limited to a single estimation method but employing a wide range of methodologies in order to form a complete picture of the long‐ and short‐run interaction. Furthermore, as such interaction might not be linear, we create three groups of countries based on the countries' income developmental stage. Overall we find no evidence of long‐ and short‐run causality from the military spending to economic growth except for the developing countries (positive in the long run). However, from economic growth to military spending we find a positive impact for all groups except the least developed countries. We also notice the interaction was more prominent prior to the start of the economic crisis.     

Institutions,Institutionalism: 1776–1974

Since developing countries were relatively free from the trade regulations relating to export promotion policies until 1994, the northeast Asian dynamic economies could pursue export promotion policies aggressively during the period of rapid economic growth. Under the current World Trade Organization (WTO) system, there are restrictions or even prohibitions on the developing countries' use of export promotion policies. One may doubt the fairness of the current WTO system, which regulates the use of export promotion policies regardless of different economic development levels. The current paper suggests various ways of allowing developing countries to develop their production capacities and exports of manufactured products. It also provides suggestions on modifying the current WTO regulations in favor of the export promotion policies of developing countries. Such special treatment of developing countries could be justified from the viewpoint of distributional fairness applied to international trade relations.     

Does urbanization increase pollutant emission and energy intensity? evidence from some Asian developing economies

This paper aims to investigate the effects of urbanization on pollutant emissions and energy intensity in selected Asian developing countries after controlling for the effects of disaggregated (renewable and non-renewable) energy consumption, trade liberalization, and economic growth. We use both linear and nonlinear panel data econometric techniques and employ recently introduced mean group estimation methods, allowing for heterogeneity and cross-sectional dependence. However, to check the robustness of our panel results, we also apply the autoregressive distributed lag (ARDL)-bound testing approach to country-level data. In addition, the relationship between affluence and CO₂ emissions is examined in the context of the Environmental Kuznets Curve (EKC) hypothesis. The estimation results identify the population, affluence, and non-renewable energy consumption as major factors in pollutant emissions in Asian countries. However, the results of the EKC hypothesis show that when countries achieve a certain level of economic growth, their emissions tend to decline. Whereas nonlinear results show that renewable energy, urbanization, and trade liberalization reduce emissions, linear estimations do not confirm these outcomes. Thus, substitution of non-renewable for renewable energy consumption, cautious and planned urbanization programs and more liberal trading regimes may be viable options for sustainable growth of these developing Asian economies.     

Financial Development and Economic Activity in Advanced and Developing Open Economies: Evidence from Panel Cointegration

This study considers the effects of financial development on output in a panel cointegration framework, focusing on the implications of trade and financial openness. Our analysis indicates that after controlling for cross‐sectional dependence, the typical relationship between finance and output does not hold in the long run. This relationship, however, is re‐established once we account for economic openness. While trade openness emerges as more important for developing countries, financial openness is more important for advanced economies. In the long run, causality runs from financial development to output in the advanced economies, while in developing economies causality is bidirectional. There is no short‐run causality between financial development and output, however.     

Emerging Market Countries’ Access to International Financial Markets

Recent global imbalances have changed the way international capital flows are shared among developed and developing countries. In the new environment, the U.S., a former lender, has become a borrower. This article discusses how the privileged position of this new borrower might influence developing countries?? access to international financial markets. It suggests that for some emerging market countries, the recent increase in current account surpluses might be because of worsening in their borrowing opportunities. Empirical analysis for 39 emerging market economies shows that the increase in the U.S. deficit limited the access of emerging market economies that we analyzed in Commonwealth of Independent States, Developing Asia, Central and Eastern Europe to international financial markets for the 1980?C2009 time period.     

新兴经济体与后金融危机时代IMF改革

全球金融危机爆发之后,国际货币基金组织不成功的援助措施使各国要求加快其改革进程。同时国际金融体系也在危机后重组,新兴经济体作为新兴力量在世界经济格局中崛起。新兴经济体成为一支独立的联合力量,并在IMF改革中提出自身的主张,要求获得更多话语权。新兴经济体由于其强大的经济实力和发展中国家的支持,促使发达国家依赖其进行IMF改革。同时,新兴经济体在参与IMF改革中也面临发达国家的压力,综合实力对比与金砖国家之间关系均影响着新兴经济体的合作。     

Cross-country evidence on the quality of private sector fiscal forecasts

This paper provides evidence of the quality of private sector forecasts of the budget balance between 1993 and 2009 for a sample of 29 countries, grouped into advanced and emerging countries. We find large differences across the two groups: forecasts for advanced economies are much more accurate than for emerging economies and much less subject to a bias towards optimism (i.e. they are less likely to forecast a bigger budget balance than the realization). Forecasts for both groups, however, exhibit a tendency toward forecast smoothing: forecasts are revised slowly so that revisions to forecasts can be systematically predicted based on past revisions. This tendency proves costly around turning points in the economy when the budget balance moves sharply but the corresponding forecasts only adjust very slowly to the reality of the situation.     

How Bad is Corruption? Cross‐country Evidence of the Impact of Corruption on Economic Prosperity

Most people today would argue that corruption is bad for countries' economic development. Yet, we still lack a reliable empirical estimate of the effect. This study addresses the econometric shortcomings of the literature and provides an estimate of the causal impact of corruption on gross domestic product per capita across countries. Certain dimensions of a country's culture are used as instruments for corruption. These instruments stay strong when the other deep determinants of economic development, geography, and the remaining dimensions of institutions and culture are controlled for. In the process of choosing controls, however, the entire set of variables available in the Quality of Governance online database (QOG) that includes all central variables from the literature on institutions and culture are included. It is found that corruption does exert a significant and negative impact on countries' productivity levels.     

Reducing large net foreign liabilities

In light of persistently large net foreign liability (NFL) positions in several euro area countries, we analyze 138 episodes of sizeable NFL reductions for a broad sample of advanced and emerging economies. We provide stylized facts on the channels through which NFLs were reduced and estimate factors that make episodes “stable”, that is, sustained over the medium term. Our findings show that while GDP growth and valuation effects contribute most to NFL reductions overall, stable reduction episodes also require positive transaction effects (i.e., current account surpluses), in particular in advanced economies. Considering the different components of a country's external balance sheet, we observe that reduction episodes were almost exclusively driven by a decline in gross external liabilities in emerging economies, while in advanced economies also gross external asset accumulation contributed significantly, in particular in stable episodes. Our econometric analysis shows that NFL reductions are more likely to be sustained if a country records strong average real GDP growth during an episode and exits the episode with a larger current account surplus that consists of a combination of relatively high exports, low imports and low net factor income payments. Moreover, we find evidence that nominal effective exchange rate depreciation during an episode is helpful for achieving episode stability in the short run, while IMF programs and sovereign debt restructurings also contribute to longer term stability.     

Openness, Investment Climate, and FDI in Developing Countries

The paper assesses the importance of openness, infrastructure availability, and sound economic and political conditions in increasing developing countries' attractiveness with respect to FDI. The results show that these factors are particularly important for South Asia, Africa, and the Middle East. The paper also shows a higher impact of these factors on FDI in the manufacturing sector than on total FDI. The message to developing countries' policymakers is twofold. First, efforts towards openness should be initiated or further increased in order to make their economies attractive to foreign investors. Second, improvements in other aspects of the investment climate are important complements to openness and result in additional and sensitive increases in FDI inflows.     

Economic Integration,Growth and Income Distribution

This paper constructs a two‐sector growth model with heterogeneous labour, to explore the impact of the economic integration on growth and income distribution. There are two sectors in each country, including the consumption‐good sector and the R&D sector. We suppose that the R&D sector produces new blueprints or ideas for these innovations, and hence provides the engine of growth. Assume that the talent's distribution of workers is the uniform distribution. We show that the economic integration will stimulate the developing countries' economic growth and then decrease its income inequality. In addition, we also demonstrate that if the growth rate of the advanced country rises after the integration, then income inequality of that will increase, and vice versa.     

Demographic structure and the security of property rights: The role of development and democracy

It is often argued that countries with a high population share of children and young workers should attract large capital inflows from aging industrialized economies. However, many of these countries deter foreign investors by a high risk of creeping or outright expropriation. In this paper we explore whether the correlation between countries' demographic structure and the perceived security of property rights reflects a causal relationship. We show that, in low-income countries, the ratio of young to old workers has a positive effect on the perceived security of property rights if the political system is sufficiently democratic. By contrast, this relationship cannot be observed in middle income countries.     

A comparative analysis of the impact of oil prices on oil-rich emerging economies in the Pacific Rim

This paper examines the relationship between raw materials prices and economic growth through two channels, the terms of trade (ToT) and energy efficiency (EF), in three emerging Pacific Rim economies, Russia, Indonesia and Malaysia. We demonstrate positive relationships between changes in output and oil prices and between changes in GDP and energy efficiency (EF). We examine the impact of oil prices on output growth through the ToT and EF channels. The effect of oil prices on ToT in Russia and Malaysia is positive but negative in Indonesia. Oil prices have a positive effect on EF in all three countries.     

Gender Equality and Economic Growth: Is it Equality of Opportunity or Equality of Outcomes?

This article explores the impact of gender equality on economic growth. In particular, we focus on the multidimensional nature of gender equality with the object of identifying the relative salience of different aspects of equality. Using exploratory factor analysis on five measures of gender equality, we identify two distinct dimensions: equality of economic opportunities and equality in economic and political outcomes. Regression analysis conducted on an unbalanced panel of 101 countries taken over nonoverlapping five-year periods from 1990 to 2000 reveals that a standard deviation improvement in equality in economic opportunity increases growth by 1.3 percentage points and a corresponding improvement in participatory equality improves growth by an average of about 1.2 percentage points. However, this impact is contingent on a country's stage of development: while developing economies experience significant improvements in growth from greater equality in opportunity, developed societies see significant improvements resulting from greater equality in outcomes.     

How Do Technical Barriers to Trade Influence Trade?

This paper empirically estimates the trade effects of technical barriers to trade (TBT) based on all TBT notifications from 105 World Trade Organization (WTO) countries during 1995–2008. The paper adopts a modified two‐stage gravity model to control for both sample selection bias and firm heterogeneity bias. It was found that a country's TBT notifications decrease other countries' probability of exporting, but increase their export volumes. The result can be explained by the TBT's differential effects on the fixed and variable cost of export, and consumer confidence. It was further found that (i) a developing country's TBT have significant effects on other developing countries' exports, but no significant effects on the developed countries' exports, (ii) a developed country's TBT have significant effects on the exports from both types of countries, and (iii) exports from developed countries are affected by a developed country's TBT more seriously than a developing country's TBT.     

A refinement of the relationship between economic growth and income inequality

There is mixed evidence in the literature of a clear relationship between income inequality and economic growth. Most of that work has focused almost exclusively on developed economies. In what we believe to be a first effort, our emphasis is solely on developing economics, which we classify as high-income and low-income developing countries (HIDC and LIDC). We make such distinction on theoretical and empirical grounds. Empirically, the World Bank has classified developing economies in this manner since 1978. The data in our sample are also supportive of such classifications. We provide theoretical scaffolding that uses asymmetric credit constraints as a premise for separating developing economies in such a way. We find strong evidence of a negative relationship between income inequality and economic growth in LIDC to be in stark contrast with a positive inequality–growth relationship for HIDC. Both correlations are statistically significant across multiple econometric specifications. Using international data from 1960 to 2010, this article explores the effect of income inequality on economic growth using dynamic panel technique, such as system generalized method of moments (GMM) that is believed to mitigate endogenous problem. These results are strikingly contrasting to the previous estimation results of Forbes (2000) displaying significant positive correlation between two variables in the short to medium term.