Testing cointegration between health care expenditure and GDP in Japan with the presence of a regime shift

Using quarterly data from 1994 through 2013, this article is the first to use the Hansen and Seo (2002) tests to examine the long-term relationship between real per-capita GDP (PGDP) and real per-capita health care expenditure (PHCE) in Japan with threshold effects. We detect the presence of a threshold cointegrating relationship between the two variables. In addition, we find that error correction adjustments are significantly conducted only through PGDP in a typical regime, whereas both PGDP and PHCE drive the adjustments in the extreme regime. We find that the extreme regime occurred mainly after Q4 2008, implying that the policy introducing the late-stage medical care system for the elderly in April 2008, which expanded the ratio of personal expenses for the elderly, may be effective for attaining a long-run equilibrium between PGDP and PHCE.     

Asymmetric FDI and tax-treaty bargaining: theory and evidence

Tax treaties are often viewed as a mechanism for eliminating tax competition, however, this approach ignores the need for bargaining over the treaty's terms. This paper focuses on how bargaining can affect the withholding taxes set under the treaty. In a simple framework, we develop hypotheses about patterns in treaty tax rates. A key determinant for these patterns is the relative size of bilateral foreign direct investment (FDI) activity. In plausible situations, more asymmetric countries will negotiate treaties with higher tax rates. This theory is then tested using 1992 data from US and Organization for Economic Cooperation and Development (OECD) bilateral tax treaties. Overall, the data supports the prediction that greater asymmetric FDI activity increases the negotiated tax rates.     

Where enterprises lead, people follow? Links between migration and FDI in Germany

Standard neoclassical models of economic integration are based on the assumptions that capital and labor are substitutes and that the geography of factor market integration does not matter. Yet, these two assumptions are violated if agglomeration forces among factors from specific source countries are at work. Agglomeration implies that factors behave as complements and that the country of origin matters. This paper analyzes agglomeration between capital and labor empirically. We use state-level German data to answer the question whether and how migration and foreign direct investment (FDI) are linked. Stocks of inward FDI and of immigrants have similar determinants, and the geography of factor market integration matters. There are higher stocks of inward FDI in German states hosting a large foreign population from the same country of origin. This agglomeration effect is confined to higher-income source countries.     

The Labor Market Effects of FDI: A Panel Data Evidence from Mexico

ABSTRACT

This paper explores the effects of Foreign Direct Investment (FDI) inflows on six labor market outcomes by using a panel data of the Mexican states from 2005 to 2015. By relying on the system Generalized Method of Moments estimator to address potential endogeneity of FDI in the labor market outcomes regressions, this study finds that the FDI inflows result in a reduction in the overall unemployment rate. Moreover, the FDI is associated with a decrease in the percentage of employed people with the need and availability to offer more working hours and an increase in the median hourly wage rate. The FDI is not likely to influence the critical employment, informal sector employment, and unemployment duration.     

Trade-threshold Effect on Inflation in Tunisia: New Evidence Resulting from a Nonlinear Approach

Trade openness is an important determinant of the inflation process. The effect of trade openness on inflation, however, is still an issue of debate at both theoretical and empirical levels. This study tried to provide a contribution to the literature by examining the relationship between inflation and trade openness in Tunisia over the period 1975Q1-2015Q4 using a nonlinear model. The originality of this study stems from the fact that it is the first investigation considering both the Residual-Based Tests for Cointegration in Models with the Regime Shifts and Threshold Regression model. The linear model confirms the existence of a positive relationship between inflation and trade in Tunisia. Yet, considering the nonlinear model, trade openness growth and Consumer Price Index (CPI) inflation growth show a statistically significant negative link as long as the trade openness evolution does not exceed the threshold. Nevertheless, if the trade openness growth is higher than the threshold, integrating the trade positively affects CPI inflation. Furthermore, a positive influence of Money supply growth on this type of inflation was noticed in Tunisia in all the considered regimes proving the effect of monetary factors on inflation level. Consequently, trade openness could be used to control inflation in Tunisia.     

Impact of macroeconomic factors and country risk ratings on GCC stock markets: evidence from a dynamic panel threshold model with regime switching

This study examines the non-linear relationship between stock markets in GCC countries and their country risk ratings as well as with major macroeconomic factors. Based on a dynamic panel threshold model with two and four regimes, the results provide evidence of short-term asymmetry between first-lagged GCC stock returns and the performance of GCC stock markets. In addition, only the financial risk (FR) rating has a significant positive effect on the performance of GCC stock markets according to the prevailing regimes for the GCC lagged returns and the Brent oil market. Among the macroeconomic factors, improvements in the global stock markets, the MSCI Global Islamic Index, and the oil price increased the performance of GCC stock markets, whereas increases in the gold price, the 3-month U.S. Treasury bill rate, and the U.S. Treasury bond rate reduced the performance of the GCC stock markets. These results have important implications for investors, policymakers, and portfolio managers.     

Economic Integration and FDI: An Empirical Analysis of Foreign Investment in the EU and in Central and Eastern Europe

Recent evidence suggests that regional economic integration provides an important stimulus not only to trade, but also to FDI. In contrast, the available theory on FDI does not yet provide empirically testable propositions on the effects of concurrent trade and investment liberalisation. Moreover, given the limits of simulation models, which rely heavily upon parameter choice, in assessing the impact of such liberalisation, there is a need for empirical analysis to identify the principal features of FDI. This paper uses a gravity model approach to assess the impact of the deepening integration between the EU and the CEECs on FDI flows in terms of three key issues. First, we provide systematic estimates of the expected long-term level of FDI in the CEECs. Second, we investigate whether FDI in the CEECs, on the one hand, and source country exports and imports, on the other hand, are complements or substitutes. Finally, we enquire whether an increase in the attractiveness of the CEECs to foreign investors has affected the magnitude of FDI going to other European countries.     

Home country employment and foreign direct investment: evidence from the Italian case

The present paper provides further insights on the relationshipbetween home country employment and foreign direct investment(FDI) undertaken by national firms. The unit of analysis iseach ensemble of firms operating in the same industrial sectorand localised in the same geographical region. That allows usto capture both direct and indirect effects of foreign productionon the parent's environment, which arise through the generationof linkages and externalities. Empirical evidence has been providedwith reference to the Italian case in the decade 1985–95.Results suggest that the impact of outward FDI on the labourintensity of domestic production is negative in the case ofvertical investment undertaken—especially by smaller firms—inless developed countries, and positive for horizontal and market-seekinginvestments in advanced countries.     

Manufacturing FDI and economic growth: evidence from Asian economies

Previous empirical studies on inward foreign direct investment (FDI) and economic growth generate mixed results. This article suggests that the ambiguous results might be caused by the use of total FDI. We study the heterogeneous effects of different sector-level FDI inflows on host country's economic growth. Data from 12 Asian economies over the period of 1987 to 1997 are employed. Strong evidence shows that FDI in manufacturing sector has a significant and positive effect on economic growth in the host economies. FDI inflows in nonmanufacturing sectors do not play a significant role in enhancing economic growth. Furthermore, without the decomposition of total FDI inflows, the effect of manufacturing FDI on host country's economic growth is understated by at least 48%.     

Renewable and nonrenewable energy production and economic growth in sub-Saharan Africa: a hidden cointegration analysis

The objective of this article is to investigate the hypothesis of asymmetric effects between economic growth and renewable and nonrenewable energy production. To this end, both the linear cointegration and the hidden cointegration methodology are employed, with the latter allowing a straightforward delimitation of the data in an economically sensible way. We test for the presence of hidden cointegration across 12 sub-Saharan African countries spanning the period 1971–2011. The empirical results confirm the growth hypothesis for a subset of countries, suggesting that their growth could be adversely affected by conservation policies, while for a second subgroup of countries they confirm the conservation hypothesis, indicating that conservation policies could enhance the growth process in these countries. The differentiation of the results could be captured entirely by the linear approach, indicating that the lack of cointegration between renewable energy production and economic growth found in previous studies may be due to failures to properly delimit the nonlinearity property in the data.     

The relationship between Turkey’s foreign debt and economic growth: an asymmetric causality analysis

Tackling foreign debt that arises as a result of limited and ineffective use of resources is an item that remains on the agenda particularly for developing countries. In this study, we examine the foreign debt debates to date in terms of economic growth and using the time series for the period 2003Q1 to 2017Q1. We used unit root tests to determine the maximum integration degree of series, and we conducted causality analysis. We found a causality relationship between net foreign debt stock and economic growth in causality analyses performed for Turkey. The empirical results of this study indicate that there is a causality relationship, including both positive and negative aspects, between net foreign debt stock and economic growth. The results of our testing showed a significant causal relationship between the variables.     

Foreign direct investment and its impact on real wages: evidence from Turkish micro-level data

This paper analyzes the role of foreign direct investment (FDI) on wages, using Turkish firm-level data from 2003 to 2010, a period which coincides with significant FDI inflows both in manufacturing and service sector firms in the region. We explore the possibility of increased foreign presence translating into shifts in either labor demand or supply curves thereby resulting in changing the total wage bill or wage per worker in the host country. To empirically test this relationship we employ a dynamic specification of the wage equation. After addressing endogeneity concerns, the results reveal that foreign presence measured in terms of intra- and inter-sectoral linkages is related to higher wage bills in the host economy, hence strengthening the argument for attracting greater foreign investment to enhance labor welfare.     

Cointegration and causality in the exports-GDP nexus: The post-war evidence for Canada

This paper tests for unit roots, cointegration, and Granger-causality in the exports-GDP nexus in Canada 1947–96, using both bivariate and trivariate models. Contrary to previous studies we cannot conclude that economic growth is either export-led, or output-driven, but rather that strong bi-directional causality exists between Canadian exports and GDP, and the GDP of its main trading partner, the United States. First version received: April 1998/final version received: March 1999     

Regional foreign direct investment and technology spillover: evidence across different clusters in India

This paper examines whether there exist productivity spillovers from foreign direct investment (FDI) to domestic firms at the regional level, using firm-level panel dataset covering 22 manufacturing industries in India from 2000 to 2012. In order to estimate the productivity spillovers from FDI at the regional level, we select 10 industrial clusters across 4 regions in India. In estimating productivity, we control for a possible simultaneity bias by using semi-parametric estimation techniques. We find that local firms benefit from horizontal and vertical FDI, but the benefits from the latter are found to be substantially stronger. The absorptive capacity of domestic firms is highly relevant to harvest the spilled technology from foreign-owned firms. Furthermore, we find that domestic firms belonging to high-technology industries benefit more from FDI at the regional level. We also find that market concentration is a crucial conduit for firm innovation, technological upgradation, and having a direct effect on local firm total factor productivity.     

The price relationship between organic and non-organic vegetables in the U.S.: evidence from Nielsen scanner data

This study investigates price relationships between organic and conventional carrots, tomatoes, and lettuce in the U.S. utilizing Nielsen scanner data from 2006–2015. We employ a threshold vector error correction model (TVECM), threshold vector autoregressive model (TVAR), and threshold cointegration test to test whether market integration exists between organic and conventional vegetables as well as the existence of asymmetric price transmission. The results find positive long-run relationships between organic and conventional prices of carrots and tomatoes and show the existence of asymmetric price transmission in price pairs of lettuce and tomatoes. Our findings suggest that the price relationship between organic and conventional vegetables varies by characteristics, such as shelf life, volatility in the price premium, and substitutability.     

The two ways of FDI R&D spillovers: evidence from the French manufacturing industry

Using French firm-level panel data, this study investigates R&D spillovers from inward foreign direct investment (FDI) with respect to both horizontal and vertical linkages (backward and forward). Using a Crepon, Duguet and Mairesse (CDM) model, we estimate an R&D-augmented Cobb–Douglas production function to assess the impact of R&D spillovers on firm performance. The results emphasize that international spillovers (from foreign affiliates to local firms) have a greater effect on firm performance than reverse spillovers (from local firms to foreign affiliates) and are more likely to be backward than forward. Moreover, the effect of backward spillovers depends on a firm’s absorptive capacity and is amplified in the case of outsourcing relationships.     

行业差异和FDI对全要素生产率的影响——基于中国大中型制造业的实证分析

利用2006—2010年我国27个大中型制造业行业的时间序列数据,运用面板回归方法对概念模型进行实证检验,探讨了创新资源和行业结构对TFP的直接影响作用,并将FDI作为中介变量纳入研究模型,分析了创新资源和行业结构通过影响FDI进而对TFP产生的间接影响。结果表明:财力资源、市场化程度和经济外向度对FDI流入有显著的正向影响;FDI对TFP有正向作用,但弹性系数较小。