Trade between Euro zone and Arab countries: a panel study

We present empirical evidence regarding unemployment dynamics for women and men in eight OECD countries. Unit-root tests are used to examine the unemployment dynamics of women and men. Failure to reject the unit-root hypothesis is consistent with unemployment hysteresis. Rejection of the unit-root hypothesis indicates that unemployment dynamics are best explained by the natural rate of unemployment or the structuralist view. We find evidence of gender differences in unemployment dynamics in Canada, Germany and the US, but not in other countries. While there are some differences in the extent of persistence across gender and across countries, the degree of persistence for both female and male unemployment rates is fairly low in all countries. Our results, therefore, contrast with substantial empirical evidence of high levels of unemployment persistence in European countries.     

Trade openness and child health: a heterogeneous panel cointegration analysis

ABSTRACT

In this paper, we examine the impact of trade openness on child health, based on a cross-country panel data set covering 66 countries for the period 1960–2013. To account for the time-series properties of the data and potential cross-country heterogeneity in the impact of trade openness, the study employs heterogeneous panel cointegration techniques that are robust to omitted variables and endogeneity problems. The results reveal that trade openness and child health are cointegrated, and that trade works to reduce the child mortality rate significantly in the long-run. The results are robust to the methodology and trade openness and child health indicators employed, as well as to the presence of cross-sectional dependence and changes in the sample composition. The findings also suggest that the impact of trade on child health tends to be stronger in countries with better institutional quality, lower corruption, good governance, political stability, and sound policies that promote private sector development.     

Trade and the Euro: effects on bystanders

This article investigates trade effects of the euro focusing on the impact on bystanders. We use data for Swedish firms and examine the impact on exporting firms’ intensive and extensive margins of trade. Our result shows an overall increase in Swedish firms’ exports to the euro area after the introduction of the single currency, indicating that the euro has decreased trade costs also for outsiders. In addition, we find important heterogeneity in the sample, suggesting that it is the large majority of small firms that has increased trade flows with the Eurozone the most.     

The Feldstein-Horioka puzzle in African countries: A panel cointegration analysis

This paper investigates the Feldstein-Horioka coefficients for 37 African countries using the recently developed Pooled Mean Group (PMG), Fully Modified OLS (FMOLS), and Dynamic OLS (DOLS) panel cointegration techniques. The empirical findings reported in this paper reveal that savings and investment are non-stationary and cointegrated series. The estimated coefficients using FMOLS, DOLS, and PMG are 0.38, 0.58, and 0.36, respectively, for the sample as a whole for the period from 1970 to 2006. These results confirm previous studies' findings that capital was relatively mobile in African countries compared to OECD countries. In addition, our study shows that there are marked differences in savings retention coefficients for different country groups in Africa (CFA franc zone and non-CFA franc zone countries, oil-producing and non-oil-producing countries, civil law and common law countries). These results have some policy implications.     

Trade effects of regional integration: A panel cointegration analysis

The paper quantifies the most likely trade effects of the exceptional cases of the GATT/WTO system, namely, Regional Integration Agreements, on the selected member as well as non-member countries of the EU, NAFTA, MERCOSUR and AFTA. To this end, the gravity model was estimated through fixed effects model and panel cointegration analysis. It was found that the explanatory power of the latter has superseded the former one. For the case of EU, it was found that the intra-union trade-creation effect is approximately six times larger than extra-union effects. In NAFTA, exports to outside countries are significantly diverted. For MERCOSUR, on the other hand, results indicate that the integration has not contributed to intra-union trade. The members are still significantly dependent on extra-union imports, just like the members of AFTA.     

Euro Crises and Euro Scams: Trade not Debt and Deficits Tell the Tale

The euro crisis has been typically presented as excessive fiscal deficits leading to the accumulation of unsustainable public debts. This debt and deficit diagnosis applied most notably in Greece and Italy, but also in Portugal and Spain (the ‘PIGS’). Implicit in much of the analysis, and occasionally explicit, is the suggestion that these were not only profligate but also lazy PIGS that spent beyond their means and abandoned a commitment to international competitiveness. This article demonstrates that the German export-led growth strategy generated large trade and current account deficits throughout the eurozone in the 2000s. When the global financial crisis struck the continent in 2008, these trade-based deficits proved unsustainable. With the exception of Greece, neither public debts nor fiscal deficits represented a major problem among eurozone countries prior to 2008. The analysis leads to measures that could have avoided the crisis of sovereign debt entirely, as well as corrected the unsustainable trade balances in the euro zone. These policies were not seriously considered, with the result that in the second decade of the 21st century the future of the common currency is in doubt.     

欧元对中国对外经贸的影响

欧元作为一种交易货币和储备货币将为中国的经济发展提供机遇，使发展中国家获得一个重要的资金筹措市场，并为全球货币体系与世界金融制度改革提供了示范效应。但是，欧元对中国经济发展的负面影响不容忽视。     

Social security expenditure and GDP in OECD countries: A cointegrated panel analysis

Abstract

Using panel data unit root tests and panel cointegration tests, as well as estimation techniques appropriate for heterogeneous panels such as the full modified OLS, this paper re-examines the long-run co-movement and the causal relationship between GDP and social security expenditure in a bivariate model, employing data on 25 OECD countries from 1980 to 2001. Our cointegration test results show strong evidence in favour of the existence of a long-run equilibrium cointegrating relationship between GDP and social security expenditure after allowing for a heterogeneous country effect. Regarding the panel-based error correction model, we find that GDP and social security expenditure lack short-run causality, but reveal the existence of long-run bidirectional causality. This shows that, in the long run, economic growth must be based on a social welfare policy that should be carried out, and economic growth can facilitate contiguous development in a social welfare policy. Lastly, we also provide evidence to support that social security expenditure can affect growth through the savings and human capital accumulation in OECD countries.     

Determinants of bank risk behaviour in EMU countries

This article investigates the determinants of banking sector risk behaviour in EMU countries over the period 2004Q4–2013Q3. Average ‘Distance-to-default (DtD)’ based on all publicly listed banks headquartered in a particular country is used as an indicator of banking risk. Macroeconomic fundamentals, market sentiments and gross debt-to-GDP together with private debt are considered as factors explaining risk behaviour. Using a panel framework, I found that the market sentiments, debt-to-GDP ratio and nonfinancial institutions debt significantly affect banking sector fragility.     

Exports and growth: Granger causality analysis on OECD countries with a panel data approach

This paper investigates the possibility of Granger causality between the logarithms of real exports and real GDP in twenty-four OECD countries from 1960 to 1997. A new panel data approach is applied which is based on SUR systems and Wald tests with country specific bootstrap critical values. Two different models are used. A bivariate (GDP–exports) model and a trivariate (GDP–exports–openness) model, both without and with a linear time trend. In each case the analysis focusses on direct, one-period-ahead causality between exports and GDP. The results indicate one-way causality from exports to GDP in Belgium, Denmark, Iceland, Ireland, Italy, New Zealand, Spain and Sweden, one-way causality from GDP to exports in Austria, France, Greece, Japan, Mexico, Norway and Portugal, two-way causality between exports and growth in Canada, Finland and the Netherlands, while in the case of Australia, Korea, Luxembourg, Switzerland, the UK and the USA there is no evidence of causality in either direction.     

Correlates of economic growth in developing countries: a panel cointegration approach

The inflow of foreign direct investment (FDI) has been found to play a crucial role in the economic growth of receiving countries. Using panel cointegration techniques, this perception was found to be mitigated by an empirical approach that yields different results from previous studies. While the growth in real FDI has an influence on real GDP growth across developing countries in the short-run, year-to-year periods, it does not explain real GDP in the long-run. Rather, it appears to be the economic factors internal to a country that have the most influence on real GDP over time: human capital (measured by literacy rates), export trade, and monetary and fiscal policy.     

Income inequality,unemployment, and suicide: a panel data analysis of 15 European countries

One of the reasons behind the re-negotiation of the Lomé Convention, resulting in the Cotonou Agreement, was the alleged inability of the trade provisions of Lomé to increase the African, Caribbean and Pacific (ACP) countries' market share of the European Union (EU) market. The Cotonou Agreement may lead to the more advanced ACPs being granted future market access to the EU under a generalized system of preferences (GSP), in conformity with World Trade Organization (WTO) rules. To this end, this paper makes a comparative analysis of the effects of the EU's Lomé Convention and GSP on exports of developing countries using a gravity type of model. The results indicate positive and statistically significant export effects of the both the Lomé Convention and the GSP. The export effects are greater in case of the Lomé Convention throughout the study period running from 1973 to 1992. In addition, the paper illustrates the EU country distribution of the export effects and shows that Belgium and The Netherlands are the EU countries that most have increased their imports from the developing countries under both the Lomé Convention and the GSP.     

Governance and foreign direct investment: a panel gravity model approach

This paper investigates the link between governance and foreign direct investment in the case of 14 transition countries by using a panel gravity model approach in two alternative ways. First, the level of governance in the target country is studied. Second, the absolute difference in the governance level between the source and target country is investigated. In both cases the results suggest that the lack of good governance does not deter, in fact it encourages, foreign direct investment.     

Business cycle fluctuations and household saving in OECD countries: A panel data analysis

We investigate the cyclicality of the household saving to household disposable income ratio for a panel of 16 OECD countries over the period 1969–2012. We find evidence that the household saving ratio is countercyclical. We empirically investigate whether the determinants of saving suggested by a standard buffer stock model of saving can explain this finding. The three main determinants of household saving implied by such a model (i.e., unemployment risk, household wealth and credit constraints) have a significant impact on the household saving ratio while their combined effect completely offsets its countercyclicality. The saving regression results are robust to potential endogeneity of the regressors, to making use of a reduced sample size that leaves out the period of the Great Recession, and to the one-by-one addition of variables suggested by alternative theories that also predict a countercyclical saving ratio.     

Poverty and the resource curse: Evidence from a global panel of countries

This paper contributes to the literature in an attempt to shed further light on the mixed evidence about the link between poverty and the abundance of natural resources, i.e. the resource curse hypothesis effect. It makes use of a large country sample, the Headcount Poverty Index, and a number of panel data methodological approaches, spanning the period 1992–2014. The findings document that fossil energy resources exacerbate poverty, while both democracy and economic freedom alleviate it, with corruption increasing it. These results highlight the need these economies to reinvestment their energy revenues in social programmes.     

Migration and labour markets in OECD countries: a panel cointegration approach

This article examines the interaction between immigration and the host labour market of 14 Organization for Economic Co-operation and Development (OECD) countries using nonstationary panel data methodology. We estimate a trivariate Vector Error Correction Model (VECM) and derive causality tests to simultaneously assess the long- and short-term macroeconomic impact of newcomers on wages and unemployment levels in the host country. The results suggest that an increase of migrants is likely to increase wages in the destination countries in the short run but to increase them in the long run. There is no evidence of adverse effects on unemployment due to immigration in short and long-term except for Anglo-Saxon countries in the short term. Our findings also show that immigration is conditioned by levels of unemployment and wages especially in Anglo-Saxon countries.     

Financial development and economic growth nexus in the MENA countries: Bootstrap panel granger causality analysis

This paper investigates the direction of causality between financial development and economic growth in the Middle East and North African (MENA) countries. The panel causality testing approach, developed by Kónya (2006) [Kónya, L. (2006), exports and growth: Granger causality analysis on OECD countries with a panel data approach, Economic Modelling, 23, 978–992], based on the Seemingly Unrelated Regressions and Wald tests with the country specific bootstrap critical values, is applied to the panel of fifteen MENA countries for the period 1980–2007. In order to capture the different aspects of financial development, six different indicators are used. Empirical results show that there is no clear consensus on the direction of causality between financial development and economic growth for all measurements of financial development and it is also observed that the findings are country specific.     

Portfolio choice of financial investors and European business cycle convergence: a panel analysis for EU countries

We investigate the linkage between business cycle convergence and financial portfolio choice for a panel of 18 EU countries. We construct an index of similarity of financial portfolios which we then put into context with the view that “the financial world” has an impact on business cycles and contributes to business cycle convergence via the consumption-wealth linkage. The model which guides our analysis is the International Asset Pricing Model (IAPM). Portfolios of the 18 EU countries investigated by us turn out to become more similar over time. According to our fixed effects GMM TSLS estimations, similar portfolios contribute to a convergence of business cycles—via a convergence of consumption cycles. This turns out to be especially true for country-pairs that include euro area non-member countries and, thus, have quite different income and wealth structures.     

Markups and fiscal transmission in a panel of OECD countries

This paper studies the role of the markup of price over marginal cost for the transmission of fiscal policy shocks. We construct time series of markups allowing for fluctuations in capacity utilization and total factor productivity and use an aggregate production function that is more general than Cobb–Douglas. Including the constructed markup series in a bias-corrected panel vector autoregression with annual OECD data, we find that a positive shock to government spending tends to lower markups while raising output. The positive output response appears to result less from increases in hours worked than from the positive reaction of capital utilization.