Natural disasters and countries' exports: New insights from a new (and an old) database

This paper is the first to uncover in details the impact of different families of disasters on exports from 1979 to 2000 (storms, floods, earthquakes and changes in temperatures). Besides, our paper is the first to compare in a quasi‐systematic way the results across the two data sets at hand, the standard EM‐DAT data and GeoMet data, a newly available data set based on geophysical and meteorological data (European Economic Review, 2013, 58, 18; Journal of Development Economics, 2014, 111, 92). We run series of regressions while accounting progressively for the characteristics of products (all traded goods v/s agriculture ones), the characteristics of the country (size, level of development) and the intensity of the catastrophes. When pooling all countries, and all types of disasters, we do not find any statistical impact on exports. But when focusing on each of them separately and on agricultural goods, the occurrence of an earthquake appears to reduce exports of about 3%, regardless of its location. A windstorm shock, even when it happens to be very severe, has hardly any impact. A flood, on its side, is estimated to reduce export flows of a small country by nearly 3%. The effect of changes in temperatures is ambiguous. All in all, except for temperature‐related disasters, the results are consistent across both data sets, EM‐DAT and GeoMet, although they appear to be slightly more in line with our expectations in the case of GeoMet.     

Solving Models with Jump Discontinuities in Policy Functions

We compare global methods for solving models with jump discontinuities in the policy function. We find that differences between value function iteration (VFI) and other methods are economically significant and Euler equation errors fail to be a sufficient measure of accuracy in such models. VFI fails to accurately identify both the location and size of jump discontinuities, while the endogenous grid method (EGM) and the finite element method (FEM) are much better at approximating this class of models. We further show that combining VFI with a local interpolation step (VFI‐INT) is sufficient to obtain accurate approximations. The combination of computational speed, relatively easy implementation and adaptability make VFI‐INT especially suitable for approximating models with jump discontinuities in policy functions: while EGM is the fastest method, it is relatively complex to implement; implementation of VFI‐INT is relatively straightforward and it is much faster than FEM.     

Does financial development stimulate environmental sustainability? Evidence from a panel study of 115 countries

This paper investigates the moderation effect of financial development (FD) on the environmental Kuznets curve (EKC). Using comprehensive panel data of 115 countries spanning the 1990–2016 period and dividing the countries into different income groups, the researcher found systematic differences in the relationship between significant indicators of environmental degradation and economic growth. More specifically, the interaction effect of FD on the relationship between gross domestic product (GDP) growth and CO₂ emissions are positive; nevertheless, the interaction effect of FD on the relationship between GDP squared and CO₂ emissions become negative for all income groups and therefore supports the EKC. Moreover, the interaction effect of FD is negative on the relationship of GDP with both CH₄ and PM_2.5 emissions in the middle‐income groups, whereas the interaction effect of FD on the relationship between GDP squared and PM_2.5 emissions are negative for the high‐income group. Our results suggest that FD can reduce environmental degradation without adversely impacting on growth.     

Firm heterogeneity and aggregate business services exports: Micro evidence from Belgium,France, Germany and Spain

This paper uses detailed micro data on services exports at the firm–destination–service level to analyse the role of firm heterogeneity in shaping aggregate services exports in Belgium, France, Germany and Spain from 2003 to 2007. We decompose the level and the growth of aggregate services exports into different trade margins paying special attention to firm heterogeneity within countries. We find that the weak export growth of France is at least partly due to poor performance by small exporters. By contrast, small exporters are the most dynamic contributors to the aggregate exports of Belgium, Germany and Spain. Our results highlight the importance of firm heterogeneity in understanding aggregate export growth.     

Environmental Regulations in Gravity Equations: Evidence from Europe

One implication of the pollution haven hypothesis is that countries export more by applying more lenient environmental regulations. Most studies that apply gravity‐type equations do not find robust support for environmental regulations to affect bilateral exports. In this paper, we show that one can obtain robust negative effects of stringency, as long as gravity equations are well specified with respect to theory. Our results, based on the European data, are both very consistent with US studies on environmental regulations and another line of very recent studies that infer non‐biased price or substitution elasticities from trade equations. We show that more stringent environmental regulations, when depicting a pure cost effect, are reducing exports. The coefficient is even larger in the case where exporting countries are Central and Eastern European countries, comparing to the EU15. Further, we show that there is no significant difference in the impact of regulations on trade in case of dirty and clean sectors. Finally, when using GMM estimation, our environmental stringency coefficient gets significantly reinforced.     

Foreign tourism in Greece: An economic analysis

Foreign exchange earnings are vital for developmental efforts, particularly in the industrial sector. However, Greece's visible exports alone do not generate sufficient income for such purposes, thus providing a strong justification for blending tourism into the country's general economic development strategy. From a development perspective, foreign exchange earnings are only one aspect of the total economic picture; eg the development of an export industry has varying repercussions on income, employment and other economic activity. The extent of these effects will vary according to the linkages between industrial sectors. This article assesses the importance of tourism to the Greek economy in terms of its impact on foreign exchange earnings and the balance of payments. Tourism's contribution to gross domestic product, employment and other economic activity is also examined.     

Determining the impact of age and LOS on job satisfaction: a case study of Pakistan automotive industry

This research was conducted to ascertain the impact of age and length of service (LOS) on job satisfaction in engineers of Pakistan public sector. Field survey was conducted using job satisfaction survey (JSS) questionnaire having closed-ended questions. Multistage sampling was conducted using a combination of cluster sampling, stratified sampling and random sampling techniques. Power and Precision software was used to determine the sample size. JSS questionnaires were administered amongst 225 electrical and mechanical engineers from five public sector organizations. 158 usable questionnaires were received and data were analyzed in SPSS. Statistical analyses showed existence of an open mouth U-shaped relationship between LOS/age and job satisfaction. It was found that age moderates relationship between LOS and job satisfaction. Non-responsiveness of senior engineers led to one of the limitations of this study. Results of this study can be used for policy-making decisions.     

A macroeconometric framework for monetary policy evaluation: A case study of Pakistan

This paper attempts to establish the quantitative importance of the various channels of monetary transmission by constructing, estimating and simulating a small macroeconometric model of Pakistan's monetary sector, while using data from the monetary statistics and the monetary survey of the State Bank of Pakistan over 1976–2007. The paper elucidates that the key feature of the study of monetary policy in Pakistan has been preoccupied with neglect either of the demand or the supply function of money and shows how this may lead to imprecise policy actions and mistaken conclusions. Accordingly, we delineate the transmission mechanism of monetary policy by taking into consideration all structural money demand and money supply linkages along with the historically implied identifying assumption in the framework of a marginalized macroeconometric model. The within-sample and out-of-sample evaluations of the model are found satisfactory. The paper presents results of three policy simulations from the estimated model that highlight the impact of alternative monetary policy instruments on the monetary variables under a rule-based and a discretionary policy environment. We find that (i) the SBP subscribes to an unannounced monetary policy rule, (ii) the determination of the policy rate under the announced rule environment stabilizes the monetary sector in that convergence to full equilibrium is smooth and rapid, (iii) a 100 bps reduction in the discount rate, ceteris paribus, decreases money supply by 4.97%, and (iv) the long term implication of reducing (increasing) the reserve requirement ratio on time (demand) deposits, ceteris paribus, is only higher inflation. Finally, we establish that a 100 bps increase in interest rate increases money supply by 3.14% in full equilibrium.     

Direct foreign investment in japan as a means of market entry: The case of European firms 1

Japan, one of the world's largest and strongest economies, attracts a tiny level of inward direct investment. This neglect is particularly true of European multinationals. This article examines a sample of European companies which have Japanese manufacturing affiliates, to assess direct investment as a means of access to the Japanese market. It examines the objectives and strategies of entry and evaluates the outcome in terms of successful penetration of the Japanese market. The joint venture route is a preferred means of initial entry and the research allows evaluation of the advantages and disadvantages of this mode of entry to the Japanese market.     

Out-migration and economic cycles

Out-migration concerns foreigners who decide to leave a country where they used to live. Taking advantage of the OECD bilateral IMS database, we analyze the short-run determinants of out-migration using a panel of Schengen countries between 1995 and 2011. We find that out-migration is counter-cyclical: foreign nationals tend to leave host countries with high unemployment, while they are likelier to stay in good times (i.e. low unemployment). Typically, a 10 % increase in the unemployment rate leads to a 5 % increase in out-migration. Thus, short-term economic fluctuations have the same qualitative effect as restrictive migration policies in economic downturns. However, we find mixed evidence for the role of economic cycles in the potential destination countries of those flows. Movers appear to be sensitive to unemployment changes in their country of origin, but they do not seem to be sensitive to business cycles in potential destinations.